As filed with the Securities and Exchange Commission on August 1, 1997
Registration No. 333-29629
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4/A
PRE-EFFECTIVE AMENDMENT
NO. 1 TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
TRIANGLE BANCORP, INC.
(Exact name of registrant as specified in its charter)
North Carolina 6022 56-1764546
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
-------------------------
4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 27612
(919) 881-0455
(Address, including ZIP Code, and telephone number, including area
code, of registrant's principal executive offices)
-------------------------
ALEXANDER M. DONALDSON, ESQ. HENRY H. RALSTON, ESQ.
SENIOR VICE PRESIDENT With ROBINSON BRADSHAW & HINSON
TRIANGLE BANCORP, INC. Copy 101 NORTH TYRON STREET
4300 GLENWOOD AVENUE to: SUITE 1900
RALEIGH, NORTH CAROLINA 27612 CHARLOTTE, NORTH CAROLINA 28246-1900
(919) 881-0455 (704) 377-2536
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE
SECURITIES TO THE PUBLIC: As soon as practicable after
the Registration Statement becomes effective.
If the securities being registered on this Form are
being offered in connection with the formation of a
holding company and there is compliance with
General Instruction G, check the following box. [ ]
If any of the securities being registered on this
Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [ ]
-------------------------
THIS REGISTRATION STATEMENT COVERS ADDITIONAL SHARES OF THE COMMON
STOCK OF THE REGISTRANT WHICH MAY BE ISSUED TO PREVENT DILUTION RESULTING FROM A
STOCK SPLIT, STOCK DIVIDEND OR SIMILAR TRANSACTION INVOLVING THE COMMON STOCK OF
THE REGISTRANT, PURSUANT TO RULE 416.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
TRIANGLE BANCORP, INC.
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501 OF REGULATION S-K
Item of Form S-4 Caption in Prospectus/Proxy Statement
PART I - INFORMATION REQUIRED IN THE PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus........................... Facing Page of Registration Statement; Cross-Reference
Sheet; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus
Table of Contents; Available Information; Incorporation
of Certain Documents by Reference
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information.................................. Summary - Special Meeting of Mecklenburg Shareholders, -
Parties to the Merger, - Structure and Terms of the
Merger, - Conditions to Consummation of the Merger, -
Required Regulatory Approval, - Certain Federal Income
Tax Consequences, - Appraisal Rights of Dissenting
Shareholders, - Triangle Stock and Mecklenburg Stock;
Comparative Per Share Data; Selected Consolidated
Financial Data
4. Terms of the Transaction........................... The Merger; Summary - Mecklenburg Stock and Triangle
Stock; Comparison of Mecklenburg Stock and Triangle
Stock; Appendix I
5. Pro Forma Financial Information.................... Pro Forma Combined Condensed Financial Information
6. Material Contacts with the Company Being Acquired..
The Merger - Background of and Reasons for the Merger;
The Merger - Interest of Certain Persons in the Merger
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters...... Not Applicable
8. Interest of Named Experts and Counsel.............. Legal and Tax Matters
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities..................... Comparison of Mecklenburg Stock and Triangle Stock -
Indemnification of and Elimination of Director Liability
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants........ Available Information; Incorporation of Certain Documents
by Reference; Summary; Information About Triangle
11. Incorporation of Certain Information by Reference.. Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants. Not Applicable
13. Incorporation of Certain Information by Reference.. Not Applicable
14. Information with Respect to Registrants Other Than S-3
or S-2 Registrants................................. Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies.......... Not Applicable
16. Information with Respect to S-2 or S-3 Companies... Incorporation of Certain Documents by Reference;
Information About Mecklenburg; Selected Consolidated
Financial Data; Summary - Mecklenburg Stock and Triangle
Stock; Comparison of Mecklenburg Stock and Triangle Stock
17. Information with Respect to Companies Other than S-3 or
S-2 Companies...................................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations are
to be Solicited.................................... Summary; Special Meeting of Mecklenburg Shareholders;
Special Meeting of Triangle Shareholders, - The Merger -
Interest of Certain Persons in the Merger; The Merger -
Appraisal Rights of Dissenting Shareholders; Information
About Triangle; Information about Mecklenburg; Appendix IV
19. Information if Proxies, Consents or Authorizations are
not to be Solicited or in an Exchange Offer. Not Applicable
[LETTERHEAD OF TRIANGLE BANCORP]
August __, 1997
To the Shareholders of Triangle Bancorp, Inc.:
You are cordially invited to attend a Special Meeting of the Shareholders
("Special Meeting") of Triangle Bancorp, Inc. ("Triangle") to be held
in the Board Room of Triangle's main office at 4300 Glenwood Avenue, Raleigh,
North Carolina at 3:00 p.m., local time, on Wednesday, September
17, 1997, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a proposal to
approve an Agreement and Plan of Reorganization and Merger, dated as of April
25, 1997 (the "Agreement"), between Triangle and Bank of Mecklenburg
("Mecklenburg"). The Agreement provides for the merger of Mecklenburg with and
into a subsidiary of Triangle, with Mecklenburg being the surviving corporation
(the "Merger"). Thereafter, it is intended that Mecklenburg will be operated as
a wholly-owned subsidiary of Triangle. Upon consummation of the Merger, each
share of Mecklenburg common stock ("Mecklenburg Stock") issued and outstanding
will be exchanged for 1.0 share of Triangle common stock ("Triangle Stock"),
with cash being paid in lieu of issuing fractional shares. At the Special
Meeting, you also will be asked to consider and vote on a proposal to approve an
amendment to Article III, Section 2 of Triangle's Bylaws to increase the maximum
number of directors of Triangle from 26 to 28. Enclosed are the (i) Notice of
Special Meeting of Shareholders, (ii) Joint Proxy Statement/Prospectus, (iii)
proxy card for the Special Meeting, (iv) Mecklenburg's Annual Report to
Shareholders for the year ended December 31, 1996, and (v) Mecklenburg's
Quarterly Report on Form F-4 for the three months ended March 31, 1997. The
Joint Proxy Statement/Prospectus describes in more detail the Agreement and the
Merger and the proposed Bylaw amendment. Please read these materials carefully
and consider thoughtfully the information set forth in them.
The Board of Directors of Triangle has unanimously approved the Agreement and
consummation of the Merger contemplated thereby, and unanimously recommends that
you vote FOR approval of the Agreement. Wheat, First Securities, Inc.,
Triangle's financial advisor, has advised the Board of Directors of Triangle
that, in its opinion, as of August , 1997, the exchange ratio of 1.0 share of
Triangle Stock for each share of Mecklenburg Stock is fair to the shareholders
of Triangle from a financial point of view.
It is important to understand that approval of the Agreement will require the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting by holders of the issued and outstanding shares of Triangle common
stock. Accordingly, whether or not you plan to attend the Special Meeting, you
are urged to complete, sign and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger and your vote on
this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
AGREEMENT AND FOR APPROVAL OF THE AMENDMENT TO THE BYLAWS BY MARKING THE
ENCLOSED PROXY CARD "FOR" PROPOSALS 1 AND 2.
We look forward to seeing you at the Special Meeting.
Sincerely,
Michael S. Patterson
President and Chief Executive Officer
[LETTERHEAD OF BANK OF MECKLENBURG]
August __, 1997
To the Shareholders of Bank of Mecklenburg:
You are cordially invited to attend a Special Meeting of the Shareholders
("Special Meeting") of Bank of Mecklenburg ("Mecklenburg") to be held
in the Lobby of Mecklenburg's main office at 2000 Randolph Road,
Charlotte, North Carolina at 3:00p.m., local time, on Tuesday, September 16,
1997, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a proposal to
approve an Agreement and Plan of Reorganization and Merger, dated as of April
25, 1997 (the "Agreement"), between Mecklenburg and Triangle Bancorp, Inc.
("Triangle"). The Agreement provides for the merger of Mecklenburg with and into
a subsidiary of Triangle, with Mecklenburg being the surviving corporation (the
"Merger"). Thereafter, it is intended that Mecklenburg will be operated as a
wholly-owned subsidiary of Triangle. Upon consummation of the Merger, each share
of Mecklenburg common stock ("Mecklenburg Stock") issued and outstanding will be
exchanged in an anticipated tax-free exchange for 1.0 share of Triangle common
stock ("Triangle Stock"), with cash being paid in lieu of issuing fractional
shares.
Triangle is a registered North Carolina-chartered bank holding company
headquartered in Raleigh, North Carolina. Triangle Stock is listed on the NASDAQ
National Market System. Currently, Triangle pays a quarterly cash dividend of
$0.11 per share. If the Agreement is approved by Mecklenburg's and Triangle's
shareholders and receives all necessary regulatory approvals and all conditions
to the Agreement are met, the Merger is expected to occur in October 1997. After
consummation of the Merger, Mecklenburg shareholders who do not exercise their
statutory dissenters rights will become shareholders of Triangle, will be
entitled to receive any cash or stock dividends or other distributions made by
Triangle to its shareholders, and will be entitled to participate in Triangle's
dividend reinvestment plan. If the Merger is consummated, Triangle will cause
the necessary documents to be sent to you to exchange your Mecklenburg stock
certificates for Triangle stock certificates. You should not send in your stock
certificates at this time and you need not do anything at this time with your
stock certificates.
Enclosed are the (i) Notice of Special Meeting of Shareholders, (ii)
Joint Proxy Statement/Prospectus, (iii) proxy card for the Special Meeting, (iv)
Mecklenburg's Annual Report to Shareholders for the year ended December 31,
1996, and (v) Mecklenburg's Quarterly Report on Form F-4 for the three months
ended March 31, 1997. The Joint Proxy Statement/Prospectus describes in more
detail the Agreement and the Merger, including a description of the conditions
to consummation of the Merger and the effects of the Merger on the rights of
Mecklenburg shareholders. Please read these materials carefully and consider
thoughtfully the information set forth in them.
The Board of Directors of Mecklenburg has unanimously approved the Agreement and
consummation of the Merger contemplated thereby, believes that the proposal to
approve the Agreement and the Merger is in the best interest of Mecklenburg and
its shareholders, employees, depositors, customers, suppliers and community, and
unanimously recommends that you vote FOR approval of the Agreement. Equity
Research Services, Inc., Mecklenburg's financial advisor, has advised the Board
of Directors of Mecklenburg that, in its opinion, as of August , 1997, the
exchange rate of 1.0 share of Triangle Stock for each share of Mecklenburg Stock
is fair to Mecklenburg shareholders from a financial point of view. The Board of
Directors of Triangle also has unanimously approved the Agreement and Merger.
For a discussion of the background of and reasons for the Merger, please read
the section of this Joint Proxy Statement/Prospectus entitled "THE MERGER -
Background of and Reasons for the Merger."
It is important to understand that approval of the Agreement will require the
affirmative vote of two-thirds of the votes entitled to be cast at the Special
Meeting by holders of the issued and outstanding shares of Mecklenburg common
stock. Thus, a failure to vote will have the same effect as a vote against the
Agreement. Accordingly, whether or not you plan to attend the Special Meeting,
you are urged to complete, sign and return promptly the enclosed proxy card. If
your shares are held in the name of your broker, your broker is forwarding this
Joint Proxy Statement/Prospectus to you; your broker will not vote on the Merger
proposal for you. If you attend the Special Meeting, you may vote in person if
you wish, even if you previously have returned your proxy card. The proposed
Merger and your vote on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
AGREEMENT BY MARKING THE ENCLOSED PROXY CARD "FOR" PROPOSAL 1.
Sincerely,
John H. Ketner, Jr.
President and Chief Executive Officer
TRIANGLE BANCORP, INC.
4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 28612
TELEPHONE: (919) 881-0455
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 17, 1997
NOTICE is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of Triangle Bancorp, Inc. ("Triangle") will be held at 3:00 p.m.,
local time, on Wednesday, September 17, 1997 in the Board Room of Triangle's
main office at 4300 Glenwood Avenue, Raleigh, North Carolina for the following
purposes:
1. PROPOSAL TO APPROVE PROPOSED MERGER. To consider and vote on a
proposal to approve the Agreement and Plan of Reorganization and Merger, dated
as of April 25, 1997, and the related Plan of Merger (collectively, the
"Agreement"), by and between Triangle and Bank of Mecklenburg ("Mecklenburg")
and the transactions contemplated pursuant to the Agreement, which include,
among other matters, (i) at the effective time, Mecklenburg will merge with and
into a subsidiary of Triangle, with Mecklenburg being the surviving corporation
and thereby becoming a wholly-owned subsidiary of Triangle (the "Merger"), and
(ii) each outstanding share of the common stock, $2.00 par value per share, of
Mecklenburg will be converted into 1.0 share of the common stock, no par value
per share, of Triangle, all as more fully described in the accompanying Joint
Proxy Statement/Prospectus; and
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE BYLAWS. To consider and vote
on a proposal to amend Article III, Section 2 of Triangle's Bylaws to increase
the maximum number of directors from 26 to 28.
3. OTHER BUSINESS. To transact such other business as may properly come
before the Special Meeting or any adjournments thereof.
Shareholders of record at the close of business on August 11, 1997 are entitled
to notice of, and to vote at, the Special Meeting and any adjournments thereof.
The Board of Directors unanimously recommends that the shareholders vote to
approve the Agreement and to approve the amendment to the Bylaws.
APPROVAL OF THE MERGER REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
OUTSTANDING SHARES OF TRIANGLE STOCK. Each Triangle shareholder is invited to
attend the Special Meeting in person. However, to insure that a quorum is
present at the Special Meeting, each shareholder is urged to complete, date,
sign and return promptly the enclosed proxy in the enclosed pre-paid envelope.
If you return the enclosed proxy, you may still attend the Special Meeting and
vote in person, in which case your returned proxy will be void.
By Order of the Board of Directors
Michael S. Patterson, President and Chief
Executive Officer
Dated: August __, 1997
BANK OF MECKLENBURG
2000 RANDOLPH ROAD
CHARLOTTE, NORTH CAROLINA 28207
TELEPHONE: (704) 375-2265
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 16, 1997
NOTICE is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of Bank of Mecklenburg ("Mecklenburg") will be held at 2:00 p.m.,
local time, on Tuesday, September 16, 1997 in the Lobby of Mecklenburg's main
office at 2000 Randolph Road, Charlotte, North Carolina for the following
purposes:
1. PROPOSAL TO APPROVE PROPOSED MERGER. To consider and vote on a
proposal to approve the Agreement and Plan of Reorganization and Merger, dated
as of April 25, 1997, and the related Plan of Merger (collectively, the
"Agreement"), by and between Triangle Bancorp, Inc. ("Triangle") and Mecklenburg
and the transactions contemplated pursuant to the Agreement, which include,
among other matters, (i) at the effective time, Mecklenburg will merge with and
into a subsidiary of Triangle, with Mecklenburg being the surviving corporation
and thereby becoming a wholly-owned subsidiary of Triangle (the "Merger"), and
(ii) each outstanding share of the common stock, $2.00 par value per share (the
"Mecklenburg Stock"), of Mecklenburg will be converted into 1.0 share of the
common stock, no par value per share, of Triangle, all as more fully described
in the accompanying Joint Proxy Statement/Prospectus; and
2. OTHER BUSINESS. To transact such other business as may properly come
before the Special Meeting or any adjournments thereof.
Under North Carolina law, each holder of Mecklenburg Stock has the right to
dissent from the Merger and to demand payment of the fair value of his or her
shares in the event the Merger is approved and consummated. The right of any
such shareholder to dissent is contingent upon strict compliance with the
requirements of Chapter 55, Article 13 of the North Carolina Business
Corporation Act ("Article 13"). The full text of Article 13 is attached as
Appendix IV to the Joint Proxy Statement/Prospectus which accompanies this
Notice and is incorporated herein by reference.
Shareholders of record at the close of business on August 11, 1997 are entitled
to notice of, and to vote at, the Special Meeting and any adjournments thereof.
The Board of Directors unanimously recommends that the shareholders vote to
approve the Agreement.
APPROVAL OF THE MERGER REQUIRES THE AFFIRMATIVE VOTE OF HOLDERS OF NOT LESS THAN
TWO-THIRDS OF THE OUTSTANDING SHARES OF MECKLENBURG STOCK. Each Mecklenburg
shareholder is invited to attend the Special Meeting in person. However, to
insure that a quorum is present at the Special Meeting, each shareholder is
urged to complete, date, sign and return promptly the enclosed proxy in the
enclosed pre-paid envelope. If you return the enclosed proxy, you may still
attend the Special Meeting and vote in person, in which case your returned proxy
will be void.
By Order of the Board of Directors
John H. Ketner, Jr., President and Chief
Executive Officer
Dated: August __, 1997
PROSPECTUS
TRIANGLE BANCORP, INC.
UP TO 2,420,500 SHARES
COMMON STOCK, NO PAR VALUE
-------------------------
JOINT PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
BANK OF MECKLENBURG
TO BE HELD ON SEPTEMBER 16, 1997
FOR SPECIAL MEETING OF SHAREHOLDERS
TRIANGLE BANCORP, INC.
TO BE HELD ON SEPTEMBER 17, 1997
This Prospectus of Triangle Bancorp, Inc. ("Triangle"), a bank holding
company organized under the laws of the State of North Carolina, relates to the
shares of common stock, no par value per share, of Triangle ("Triangle Stock"),
that are issuable to the shareholders of Bank of Mecklenburg ("Mecklenburg"), a
commercial bank organized under the laws of the State of North Carolina, upon
consummation of the proposed merger described herein, pursuant to which (i)
Mecklenburg will be merged with and into a subsidiary of Triangle, with
Mecklenburg being the surviving corporation and thereby becoming a wholly-owned
subsidiary of Triangle (the "Merger"), and (ii) each outstanding share of common
stock, $2.00 par value per share, of Mecklenburg ("Mecklenburg Stock") will be
converted into 1.0 share of Triangle Stock pursuant to the terms of an Agreement
and Plan of Reorganization and Merger, dated as of April 25, 1997, and the
related Plan of Merger (collectively, the "Agreement"), by and between Triangle
and Mecklenburg. A copy of the Agreement is attached hereto as Appendix I.
Mecklenburg shareholders are entitled to their statutory dissenters'
rights in accordance with North Carolina law. See "THE MERGER-Appraisal Rights
of Dissenting Shareholders." In lieu of issuing fractional shares of Triangle
Stock, cash will be distributed to each Mecklenburg shareholder otherwise
entitled to receive a fractional share in an amount equal to that fraction
multiplied by the "market value" of one whole share of Triangle Stock. See "THE
MERGER -Terms of the Merger".
Upon the consummation of the Merger, except as described herein with
respect to rights of dissenting shareholders, each share of Mecklenburg Stock
outstanding immediately prior to the consummation of the Merger will cease to be
outstanding and will be converted into 1.0 share of Triangle Stock, and any
options to purchase Mecklenburg Stock remaining unexercised upon consummation of
the Merger will be converted into options to purchase 1.0 share of Triangle
Stock per share of Mecklenburg Stock, less any resulting fractional share. As of
August , 1997, based on the closing sale price of Triangle Stock of $____ on
the Nasdaq National Market, 1.0 share of Triangle Stock would be worth $_____.
See "THE MERGER - Structure of the Merger", and "- Terms of the Merger".
This Prospectus also serves as the Proxy Statement of Mecklenburg and
is being furnished by Mecklenburg in connection with the solicitation of proxies
to be used at the special meeting of shareholders of Mecklenburg, including any
adjournments thereof (the "Mecklenburg Special Meeting"), to be held on Tuesday,
September 16, 1997. At the Mecklenburg Special Meeting, shareholders of
Mecklenburg will be asked to approve the Agreement.
This Prospectus also serves as the Proxy Statement of Triangle and is
being furnished by Triangle in connection with the solicitation of proxies to be
used at the special meeting of shareholders of Triangle, including any
adjournments thereof (the "Triangle Special Meeting") to be held on Wednesday,
September 17, 1997. At the Triangle Special Meeting, shareholders of Triangle
will be asked to approve the Agreement and to approve an amendment to Triangle's
Bylaws to increase the maximum number of directors of Triangle from 26 to 28.
This Joint Proxy Statement/Prospectus and related materials enclosed
herewith are being mailed to the shareholders of Mecklenburg and Triangle on or
about August _, 1997.
The address of Triangle's principal executive office is 4300 Glenwood
Avenue, Raleigh, North Carolina 27612 (telephone number (919) 881-0455). The
address of Mecklenburg's principal executive office is 2000 Randolph Road,
Charlotte, North Carolina 28207 (telephone number (704) 375-2265).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR THE FEDERAL DEPOSIT
INSURANCE CORPORATION NOR HAS THE COMMISSION, ANY STATE SECURITIES COMMISSION OR
THE CORPORATION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is August ___, 1997.
ii
No person is authorized to give any information or to make any
representation other than those contained in this Joint Proxy
Statement/Prospectus, and, if given or made, such information or representation
should not be relied upon as having been authorized by Triangle or Mecklenburg.
This Joint Proxy Statement/Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this Joint Proxy
Statement/Prospectus in any jurisdiction in which such offer is not authorized
or to or from any person to whom it is unlawful to make such offer or
solicitation. The information contained or incorporated by reference in this
Joint Proxy Statement/Prospectus regarding Triangle has been furnished by
Triangle and the information contained or incorporated by reference in this
Joint Proxy Statement/Prospectus regarding Mecklenburg has been furnished by
Mecklenburg. Neither the delivery of this Joint Proxy Statement/Prospectus nor
any distribution of the securities being offered hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Triangle or Mecklenburg since the date of this Joint Proxy
Statement/Prospectus or the information contained herein or in the documents
incorporated herein by reference is correct as of anytime subsequent to the date
hereof.
THE SHARES OF TRIANGLE STOCK BEING OFFERED TO MECKLENBURG'S
SHAREHOLDERS ARE NOT DEPOSITS OF ANY BANK OR OTHER FINANCIAL INSTITUTION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
THE SECURITIES ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL INVESTED.
----------------------
TABLE OF CONTENTS
Page
Available Information................................................
Incorporation of Certain Documents by Reference......................
Summary..............................................................
Selected Consolidated Financial Data.................................
Comparative Per Share Data...........................................
Special Meeting of Mecklenburg Shareholders..........................
Record Date and Voting Rights...............................
Voting and Revocation of Proxies............................
Solicitation of Proxies.....................................
Recommendation .............................................
Special Meeting of Triangle Shareholders.............................
Record Date and Voting Rights............................
Voting and Revocation of Proxies.........................
Solicitation of Proxies..................................
Recommendation...........................................
The Merger...........................................................
Parties to the Merger.......................................
Structure of the Merger.....................................
iii
Terms of the Merger.........................................
Exchange Rate......................................
Treatment of Fractional Shares.....................
Closing and Effective Time.........................
Conduct of Business Pending the Merger.............
Conditions to Consummation of the Merger...........
Required Regulatory Approvals......................
Amendment and Waivers..............................
Termination of the Agreement.......................
Background of and Reasons for the Merger....................
Background.........................................
Reasons for the Merger.............................
Recommendation of the Mecklenburg Board of Directors........
Recommendation of Triangle Board of Directors...............
Opinion of Mecklenburg Financial Advisor....................
Comparable Transactions.........................
History of Stock Trading........................
Comparison of Mecklenburg and Triangle to the
Industry......................................
Comparison of Investment and Other
Characteristics of
Mecklenburg and Triangle................
Pro Forma Transaction Analysis..................
Relative Contribution ..........................
Control Premiums................................
Opinion of Triangle Financial Advisor.......................
Comparable Transaction Analysis.................
Impact Analysis.................................
Discounted Dividends Analysis...................
Certain Federal Income Tax Consequences.....................
Accounting Treatment........................................
Interest of Certain Persons in the Merger...................
Expenses and Fees...........................................
Distribution of Triangle Certificates.......................
Resale of Triangle Stock....................................
Appraisal Rights of Dissenting Shareholders.................
Pro Forma Combined Condensed Financial Information...................
Capitalization.......................................................
Information about Triangle...........................................
General.....................................................
Triangle Stock..............................................
Security Ownership of Management............................
Legal Proceedings...........................................
Pending Branch Acquisition..................................
Trust Preferred Securities Offering.........................
Information about Mecklenburg........................................
General.....................................................
Mecklenburg Stock...........................................
Security Ownership of Management and Principal
Shareholders..............................................
Comparison of Mecklenburg Stock and Triangle Stock...................
Capital Structure...........................................
Governing Law ..............................................
Voting......................................................
Preemptive Rights ..........................................
State Law Anti-Takeover Provisions..........................
Business Combinations and Changes in Control................
Amendment of Articles of Incorporation......................
Amendment of Bylaws ........................................
Share Purchase and Option Plans for Affiliates..............
Redemption of Stock.........................................
iv
Transferability by Certain Persons..........................
Assessments; Impairment of Capital..........................
Number, Election and Removal of Directors...................
Indemnification and Elimination of Director Liability.......
Dividend Policy.............................................
Certain Regulatory Matters...........................................
General.....................................................
Bank Holding Company Regulation.............................
Bank Regulation.............................................
Dividends...................................................
Capital Requirements........................................
Legislation and Governmental Policies.......................
Monetary Policy and Economic Controls.......................
The Proposed Bylaw Amendment.........................................
Legal and Tax Matters................................................
Experts..............................................................
Other Matters........................................................
Shareholder Proposals................................................
Appendix I - Agreement and Plan of Reorganization and Merger.........I-1
Appendix II - Fairness Opinion of Equity Research Services, Inc......II-1
Appendix III - Fairness Opinion of Wheat, First Securities, Inc.....III-1
Appendix IV - North Carolina Law Regarding Dissenters' Rights........IV-1
v
AVAILABLE INFORMATION
Triangle is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files proxy statements, reports and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning Triangle can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, NW, Washington, DC 20549; and at the Chicago Regional
Office, Northwestern Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511; and at the New York Regional Office, 13th Floor, 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, NW, Washington, D.C. 20549, at prescribed rates.
Triangle has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Triangle Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, which may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed fees.
Mecklenburg also is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Federal Deposit Insurance Corporation ("FDIC"). Such
reports, proxy statements and other information filed by Mecklenburg may be
obtained from the FDIC at prescribed rates by addressing written requests for
such copies to the FDIC, Registration and Disclosure Section, 550 17th Street,
N.W., Washington, D.C. 20429. In addition, such documents may be inspected and
copied at the public reference facilities of the FDIC at 1776 F Street, N.W.,
Room F-643, Washington, D.C. 20006. Lastly, certain of such documents are
exhibits to the Registration Statement and may be inspected and copied at the
public reference facilities maintained by the Commission at the addresses set
forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Triangle with the
Commission are incorporated by reference into this Joint Proxy
Statement/Prospectus: (i) Triangle's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996; (ii) Triangle's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1997; and (iii) Triangle's Current Reports
on Form 8-K dated April 1, 1997, May 16, 1997, and May 23, 1997. The following
documents previously filed by Mecklenburg with the FDIC (all of which are
exhibits to the Registration Statement) are incorporated by reference into this
Joint Proxy Statement/Prospectus: (i) Mecklenburg's Annual Report on Form F-2
for the fiscal year ended December 31, 1996; (ii) Mecklenburg's Quarterly Report
on Form F-4 for the quarterly period ended March 31, 1997; and (iii)
Mecklenburg's Current Report on Form F-3 dated April 1, 1997.
In addition, all of the documents filed by Triangle pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the dates, the
Mecklenburg Special Meeting and the Triangle Special Meeting have been finally
adjourned shall be deemed to be incorporated by reference herein. Any statements
contained in a document incorporated or deemed to be incorporated by reference
herein will be deemed to be modified or superseded for purposes of this Joint
Proxy Statement/Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part hereof.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE OTHER
DOCUMENTS WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS
RELATED TO TRIANGLE OR MECKLENBURG, INCLUDING EXHIBITS WHICH ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO THOSE DOCUMENTS, BUT EXCLUDING EXHIBITS NOT
SPECIFICALLY INCORPORATED BY REFERENCE IN THOSE DOCUMENTS, ARE AVAILABLE TO EACH
PERSON INCLUDING ANY BENEFICIAL OWNER TO WHOM A COPY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS DELIVERED WITHOUT CHARGE, FOR TRIANGLE UPON REQUEST FROM
THE SECRETARY, TRIANGLE BANCORP, INC., 4300 GLENWOOD AVENUE, RALEIGH, NORTH
CAROLINA 27612, TELEPHONE (919) 881-0455, OR FOR MECKLENBURG UPON REQUEST FROM
THE PRESIDENT, BANK OF MECKLENBURG, 2000 RANDOLPH ROAD, CHARLOTTE, NORTH
CAROLINA 28207, TELEPHONE (704) 375-2265. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS BEFORE THE MECKLENBURG SPECIAL MEETING AND THE TRIANGLE SPECIAL
MEETING, ANY SUCH REQUESTS SHOULD BE MADE BY SEPTEMBER 8, 1997.
The documents are available without charge, but persons requesting
copies of exhibits to such documents which are specifically incorporated by
reference in such documents will be charged the cost of reproduction and
mailing.
MECKLENBURG'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 AND QUARTERLY REPORT ON FORM F-4 FOR THE THREE MONTHS ENDED
MARCH 31, 1997 ACCOMPANY THIS JOINT PROXY STATEMENT/PROSPECTUS.
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION RELATING TO THE
MECKLENBURG SPECIAL MEETING, THE TRIANGLE SPECIAL MEETING, THE AGREEMENT AND THE
MERGER DESCRIBED HEREIN AND IS NOT INTENDED TO BE A SUMMARY OF ALL MATERIAL
INFORMATION RELATING TO TRIANGLE, MECKLENBURG, THE AGREEMENT OR THE MERGER AND
IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES HERETO, AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. AS USED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, THE TERMS "TRIANGLE" AND "MECKLENBURG" REFER TO THE
RESPECTIVE CORPORATIONS AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE
SUBSIDIARIES OF TRIANGLE. SHAREHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE
JOINT PROXY STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES.
SPECIAL MEETING OF MECKLENBURG SHAREHOLDERS
The Mecklenburg Special Meeting will be held on Tuesday, September 16,
1997, at 2:00 p.m., local time, in the Lobby of Mecklenburg's main office at
2000 Randolph Road, Charlotte, North Carolina. At the Mecklenburg Special
Meeting, holders of Mecklenburg Stock will vote upon (i) a proposal to approve
the Agreement, and (ii) such other business as may properly come before the
Special Meeting.
The affirmative vote of at least two-thirds of the outstanding shares
of Mecklenburg Stock entitled to vote at the Mecklenburg Special Meeting is
required for approval of the Agreement.
On August 11, 1997, the record date of shareholders of Mecklenburg
entitled to notice of and to vote at the Mecklenburg Special Meeting (the
"Mecklenburg Record Date"), there were _______ shares of Mecklenburg Stock
outstanding. As of June 30, 1997, directors and executive officers of
Mecklenburg and their affiliates owned and were entitled to vote approximately
____% of the outstanding shares of Mecklenburg Stock. The directors and
executive officers of Mecklenburg and their affiliates are expected to vote
their shares in favor of the proposal to approve the Agreement. See "SPECIAL
MEETING OF MECKLENBURG SHAREHOLDERS."
VOTING OF PROXIES. The persons named to represent Mecklenburg's
shareholders as proxies at the Mecklenburg Special Meeting are H. Perrin
Anderson, John T. Roper, and Allan W. Singer. Shares of Mecklenburg Stock
represented by each appointment of proxy which is properly executed and returned
by a Mecklenburg shareholder, and not revoked, will be voted by the proxies in
accordance with the directions contained therein. If no directions are given,
such shares will be voted by the proxies "FOR" approval of the Agreement and the
transactions contemplated therein. On such other matters that may properly come
before the Mecklenburg Special Meeting, the proxies will be authorized to vote
in accordance with their judgment on such matters. See "SPECIAL MEETING OF
MECKLENBURG SHAREHOLDERS-Voting and Revocation of Proxies."
REVOCATION OF APPOINTMENTS OF PROXY. Any Mecklenburg shareholder who
executes an appointment of proxy has the right to revoke it at any time before
it is exercised by filing with the Secretary of Mecklenburg either an instrument
revoking it or a duly executed appointment of
proxy bearing a later date, or by attending the Mecklenburg Special Meeting and
announcing his or her intention to vote in person. See "SPECIAL MEETING OF
MECKLENBURG SHAREHOLDERS-Voting and Revocation of Proxies."
PROXY SOLICITATION EXPENSES. Except under certain circumstances
involving a wrongful breach or termination of the Agreement, Mecklenburg will
pay the expenses associated with the Mecklenburg Special Meeting, including the
costs of preparing, assembling and mailing this Joint Proxy
Statement/Prospectus. See "THE MERGER - Terms of the Merger - Termination of the
Agreement." In addition to the use of the mail, appointments of proxy may be
solicited personally or by telephone by Mecklenburg's officers, directors and
employees, none of whom will be compensated separately for any such solicitation
activities. Mecklenburg also has hired Corporate Investor Services, Inc., a
proxy solicitation firm, to assist in the solicitation of proxies for use at the
Mecklenburg Special Meeting. For its services, Corporate Investor Services, Inc.
will be paid a fee of $3,200 plus $3.00 per shareholder contacted, for a total
fee of approximately $4,500.
SPECIAL MEETING OF TRIANGLE SHAREHOLDERS
The Triangle Special Meeting will be held on Wednesday, September 17, 1997, at
3:00 p.m., local time, in the Board Room of Triangle's main office at 4300
Glenwood Avenue, Raleigh, North Carolina. At the Triangle Special Meeting,
holders of Triangle Stock will vote upon (i) a proposal to approve the
Agreement, (ii) a proposal to approve an amendment to Article III, Section 2 of
Triangle's Bylaws to increase the maximum number of directors from 26 to 28 (the
"Bylaw Amendment"), and (iii) such other business as may properly come before
the Special Meeting.
The affirmative vote of a majority of the outstanding shares of
Triangle Stock entitled to vote at the Triangle Special Meeting is required for
approval of the Agreement. The affirmative vote of 75% of the eligible votes
present, in person or by proxy, at the Triangle Special Meeting is necessary for
approval of the Bylaw Amendment.
On August 11, 1997, the record date of shareholders of Triangle
entitled to notice of and to vote at the Triangle Special Meeting (the "Triangle
Record Date"), there were _______ shares of Triangle Stock outstanding. As of
June 30, 1997, directors and executive officers of Triangle and their affiliates
owned and were entitled to vote approximately 9.9% of the outstanding shares of
Triangle Stock. The directors and executive officers of Triangle and their
affiliates are expected to vote their shares in favor of the proposal to approve
the Agreement and to approve the Bylaw Amendment. See "SPECIAL MEETING OF
TRIANGLE SHAREHOLDERS."
VOTING OF PROXIES. The persons named to represent Triangle's
shareholders as proxies at the Triangle Special Meeting are William V. Leaming,
Jr., Debra L. Lee, and Steven R. Ogburn. Shares of Triangle Stock represented by
each appointment of proxy which is properly executed and returned by a Triangle
shareholder, and not revoked, will be voted by the proxies in accordance with
the directions contained therein. If no directions are given, such shares will
be voted by the proxies "FOR" approval of the Agreement and the transactions
contemplated therein and "FOR" approval of the Bylaw Amendment. On such other
matters that may properly come before the Triangle Special Meeting, the proxies
will be authorized to vote in accordance with
their judgment on such matters. See "SPECIAL MEETING OF TRIANGLE
SHAREHOLDERS-Voting and Revocation of Proxies."
REVOCATION OF APPOINTMENTS OF PROXY. Any Triangle shareholder who
executes an appointment of proxy has the right to revoke it at any time before
it is exercised by filing with the Secretary of Triangle either an instrument
revoking it or a duly executed appointment of proxy bearing a later date, or by
attending the Triangle Special Meeting and announcing his or her intention to
vote in person. See "SPECIAL MEETING OF TRIANGLE SHAREHOLDERS-Voting and
Revocation of Proxies."
PROXY SOLICITATION EXPENSES. Except under certain circumstances
involving a wrongful breach or termination of the Agreement, Triangle will pay
the expenses associated with the Triangle Special Meeting, including the costs
of preparing, assembling and mailing this Joint Proxy Statement/Prospectus. See
"THE MERGER - Terms of the Merger - Termination of the Agreement." In addition
to the use of the mail, appointments of proxy may be solicited personally or by
telephone by Triangle's officers, directors and employees, none of whom will be
compensated separately for any such solicitation activities.
PARTIES TO THE MERGER
Triangle, a North Carolina corporation, is a bank holding company
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). Triangle's business consists primarily of owning all of the
outstanding shares of Triangle Bank. Triangle Bank is a North Carolina-chartered
commercial bank and is a member bank of the Federal Reserve. Triangle Bank
provides full-service commercial and consumer banking services from its 46
branches in 30 cities located throughout eastern North Carolina. As of March 31,
1997, Triangle had consolidated assets of $1.01 billion, consolidated deposits
of $879 million, and consolidated shareholders' equity of $88 million. The
executive offices of Triangle and Triangle Bank are located at 4300 Glenwood
Avenue, Raleigh, North Carolina 27612 (telephone (919) 881-0455). See "THE
MERGER-Parties to the Merger-Triangle."
Mecklenburg is a North Carolina-chartered, commercial bank under the
supervision of the North Carolina Commissioner of Banks (the "Commissioner") and
the FDIC. Immediately before the Merger Mecklenburg will become a Federal
Reserve member bank and thereupon will be under the supervision of the Federal
Reserve rather than the FDIC. Mecklenburg provides full-service commercial and
consumer banking services through three branches in Charlotte, North Carolina,
which is in Mecklenburg County. As of March 31, 1997, Mecklenburg had assets of
$274 million, deposits of $196 million, and shareholders' equity of $20 million.
The executive offices of Mecklenburg are located at 2000 Randolph Road,
Charlotte, North Carolina 28207 (telephone number (704) 375-2265). See "THE
MERGER-Parties to the Merger-Mecklenburg."
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND.
Mecklenburg. Since its opening in 1989, Mecklenburg has operated as a
community bank serving Mecklenburg County, North Carolina. Mecklenburg's
community-oriented banking philosophy generally has allowed it to compete
effectively and profitably with the other banking institutions in its local
market. Since Mecklenburg's inception, however, competition has dramatically
increased with other types of financial institutions offering services
traditionally offered only by banks and there has been an increase in public
demand for a broader range of services from community banks. Providing such
services and products requires significant amounts of advanced technology and
highly skilled personnel, and Mecklenburg would have to expend significant
amounts of capital to invest in the equipment, software and personnel necessary
to remain competitive and independent. These factors, in addition to changing
banking regulations and other factors affecting the banking industry, have
contributed to a continuing trend toward consolidation among financial
institutions.
In late 1996 and early 1997, Mecklenburg was approached by several
financial institutions about the possibility of those institutions acquiring or
merging with Mecklenburg. In response to those contacts, and based on continuing
discussions about the best long-term strategy for Mecklenburg, the Board of
Directors of Mecklenburg (the "Mecklenburg Board") hired Orr Management Company
("Orr Management") in late February 1997 to advise the Mecklenburg Board and its
Executive Committee about long-term strategy and to help assess whether
Mecklenburg should remain independent or consider combining with another
institution. Orr Management contacted various banking institutions, including
Triangle, and, after receiving expressions of interest from several of those
institutions, Orr Management was authorized to solicit formal bids to acquire or
combine with Mecklenburg. Five institutions submitted bids in response to this
solicitation and Orr Management recommended to the Executive Committee that
Mecklenburg accept the proposal from Triangle to acquire Mecklenburg. The
Mecklenburg Board unanimously agreed to accept Triangle's proposal and
Mecklenburg and Triangle executed a letter of intent on March 27, 1997. During
the following weeks, Mecklenburg and Triangle conducted due diligence
investigations of each other's business and operations and negotiated the
Agreement. On April 22, 1997, based in part on the verbal fairness opinion
issued by its financial advisor, Equity Research Services, Inc. ("Equity
Research"), the Mecklenburg Board concluded the proposed acquisition of
Mecklenburg by Triangle upon the terms of the Agreement would be in the best
interest of Mecklenburg's shareholders, employees, depositors, customers,
suppliers, and community and unanimously approved the Agreement.
For its services to Mecklenburg, Orr Management will receive a fee of
$250,000 which will be paid at the Effective Time.
Triangle. As a result of Triangle's acquisitions during the last four
years, Triangle's management determined that a well executed acquisition plan in
concert with internal growth would allow Triangle to achieve certain benefits
while maintaining loan quality and safe and sound operations. In particular,
management believed a well executed acquisition plan could (i) provide
opportunities to achieve economies of scale that would increase Triangle's
efficiency and profitability; (ii) improve Triangle's ability to compete with
the many financial institutions doing business in Triangle's market area; (iii)
result in an institution better able to respond to
technological changes; (iv) enable the resulting institution to better respond
to the needs of its customers and the communities it serves; and (v) allow the
shareholders of Triangle (including the former shareholders of acquired
institutions) to participate in a financial institution with greater financial
resources, a more expansive banking network and a larger market area. After the
Merger, Triangle will remain a well-capitalized institution and will be the
ninth largest commercial bank in North Carolina, based on assets, with a greater
capacity to compete with larger banks in its market areas. Further, Triangle
Bank will expand its market area into the thriving Charlotte, North Carolina
market. To assist in its deliberations on the Merger, Triangle hired its
financial advisor, Wheat, First Securities, Inc. ("Wheat First"), of Richmond,
Virginia, to render an opinion that the Exchange Rate is fair from a financial
point of view, to Triangle shareholders. Based on these considerations and the
fairness opinion of Wheat First, Triangle's Board of Directors unanimously
approved the Agreement.
REASONS FOR THE MERGER.
Mecklenburg. In reaching its conclusion that the Merger is fair to, and
in the best interests of, Mecklenburg's shareholders, the Mecklenburg Board
consulted with financial, legal, accounting and other advisors, as well as
Mecklenburg's management, and considered a number of factors. The Mecklenburg
Board did not assign any relative or specific weight to the factors considered.
These factors included, among others: the Mecklenburg Board's review of the
business, operations, earnings and financial condition of Mecklenburg and
Triangle, the enhanced opportunities for operating efficiencies and expanded
customer service and growth that the Merger will make possible, and the
respective contributions the parties would bring to a combined institution; a
variety of factors affecting and relating to the overall strategic focus of
Mecklenburg and Triangle; larger historical trading volume, potential liquidity
and dividend history of Triangle Stock; the expectation that the Merger
generally will be a tax-free transaction to Mecklenburg and its shareholders
(see "THE MERGER--Certain Federal Income Tax Consequences"); and the current and
prospective economic and competitive environments facing financial institutions,
including Mecklenburg.
Triangle. The Board of Directors of Triangle constantly analyzes
opportunities to expand its business and geographic markets by entry into new
banking markets, whether by acquisition or de novo branching. Triangle considers
the market served by Mecklenburg to be an attractive area for expansion. While
Triangle could enter this market through de novo branching, the Merger provides
the opportunity to expand Triangle's business without incurring the initial
losses that are normally associated with de novo branching and to gain the
advantages of commencing business in this market with Mecklenburg's existing
deposit base, established customer relationships and proven management and
staff.
For a more detailed discussion of the background of and reasons for the
Merger, see "THE MERGER Background of and Reasons for the Merger."
STRUCTURE AND TERMS OF THE MERGER
Subject to the terms and conditions of the Agreement, at the effective
time of the Merger (the "Effective Time"), Mecklenburg will be merged with and
into a subsidiary of Triangle. Mecklenburg will be the surviving corporation
resulting from the Merger, operating as a North Carolina commercial bank under
Mecklenburg's articles of incorporation and bylaws existing immediately prior to
the Merger. Following the Merger, Mecklenburg will be operated as a wholly-owned
subsidiary of Triangle. See "THE MERGER-Structure of the Merger."
At the Effective Time, with the exception of shares surrendered in
connection with the exercise of dissenters rights by Mecklenburg shareholders,
each issued and outstanding share of Mecklenburg Stock will be converted into
the right to receive 1.0 share of Triangle Stock (the "Exchange Rate"). Any
options to purchase Mecklenburg Stock remaining unexercised upon consummation of
the Merger will be converted into options to purchase 1.0 share of Triangle
Stock per share of Mecklenburg Stock, rounded down to the nearest whole share.
As of August , 1997, based on the closing sale price of Triangle Stock of
$_____ on the Nasdaq National Market, 1.0 share of Triangle Stock would be worth
$_____. See "THE MERGER-Appraisal Rights of Dissenting Shareholders." Each
Mecklenburg shareholder will receive one share of Triangle Stock equal to the
number of shares of Mecklenburg Stock owned by such shareholder multiplied by
the Exchange Rate. Any fractional shares resulting from the Merger will not be
issued and shareholders of Mecklenburg will instead receive cash in lieu of the
issuance of fractional shares. Each share of Mecklenburg Stock automatically
will be canceled by virtue of the Merger. See "THE MERGER - Terms of the Merger
- - Exchange Rate."
As of the Mecklenburg Record Date there were ______ shares of Mecklenburg Stock
outstanding which would be converted into _________ shares of Triangle Stock,
assuming no shareholder exercises his or her right to dissent under Chapter 53,
Article 13 of the North Carolina Business Corporation Act ("Article 13"). Also
as of the Mecklenburg Record Date there were outstanding unexercised options
covering _________ shares of Mecklenburg Stock which would be converted into
options covering ______ shares of Triangle Stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF MECKLENBURG
The Mecklenburg Board believes that the Merger is in the best interests
of Mecklenburg and its shareholders and has unanimously approved the Agreement.
THE MECKLENBURG BOARD UNANIMOUSLY RECOMMENDS THAT MECKLENBURG SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE AGREEMENT.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF TRIANGLE
The Board of Directors of Triangle believes that the Merger is in the
best interests of Triangle and its shareholders and has unanimously approved the
Agreement. TRIANGLE DIRECTORS UNANIMOUSLY RECOMMEND THAT TRIANGLE SHAREHOLDERS
VOTE FOR THE APPROVAL OF THE AGREEMENT.
OPINIONS OF FINANCIAL ADVISORS
Mecklenburg has received a written opinion of Equity Research, an
independent financial advisory firm, that, as of the date of the Agreement and
on the basis of the matters referred to therein, the Exchange Rate is fair, from
a financial point of view, to the holders of Mecklenburg Stock. After its review
of a variety of relevant factors, Equity Research rendered to the Mecklenburg
Board its fairness opinion dated April 25, 1997, which was reissued on August
__, 1997 (the "Mecklenburg Fairness Opinion"). A copy of the Mecklenburg
Fairness Opinion is attached to this Joint Proxy Statement/Prospectus as
Appendix II and should be read in its entirety for information with respect to
the assumptions made and other matters considered by Equity Research in
rendering its opinion. For its services, Mecklenburg agreed to pay Equity
Research a fee of $18,000. Such fee was paid to Equity Research upon the
issuance of the Mecklenburg Fairness Opinion. See "THE MERGER - Opinion of
Mecklenburg Financial Advisor."
Triangle has received a written opinion of Wheat First, a nationally
recognized investment banking firm regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
that, as of the date of this Joint Proxy Statement/Prospectus and on the basis
of the matters referred to therein, the Exchange Rate is fair, from a financial
point of view, to the holders of Triangle Stock. After its review of a variety
of relevant factors, Wheat First rendered to Triangle's Executive Committee its
oral opinion on April 23, 1997, and its written opinion to the Triangle Board of
Directors dated as of the date of this Joint Proxy Statement/Prospectus (the
"Triangle Fairness Opinion"). A copy of the Triangle Fairness Opinion is
attached to this Joint Proxy Statement/Prospectus as Appendix III and should be
read in its entirety for information with respect to the assumptions made and
other matters considered by Wheat First in rendering its opinion. For its
services, Triangle agreed to pay Wheat First a fee of $150,000 plus
out-of-pocket expenses, of which $50,000 was paid upon execution of the
Agreement and the remainder of which fee will be paid at the Effective Time. See
"THE MERGER - Opinion of Triangle Financial Advisor."
CONDITIONS TO CONSUMMATION OF THE MERGER
In addition to required regulatory and shareholder approvals,
consummation of the Merger is conditioned upon the fulfillment of certain other
conditions described in the Agreement, unless waived by the party entitled to
the benefits of such provision, including without limitation, (i) receipt of an
opinion to the effect that, among other things, for federal income tax purposes
the Merger will constitute a tax-free "reorganization" as defined in Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"),
(ii) receipt of the Mecklenburg Fairness Opinion and the Triangle Fairness
Opinion, (iii) receipt by Triangle of assurances in form and content
satisfactory to Triangle from Coopers & Lybrand L.L.P. to the effect that the
Merger may be treated as a pooling-of-interests for accounting purposes, and
(iv) certain other conditions customary in a transaction of this nature. See
"THE MERGER - Conditions to Consummation of the Merger."
REQUIRED REGULATORY APPROVALS
The Merger is subject to the approval of the Federal Reserve and the
Commissioner. Applications for such approvals have been filed. Triangle and
Mecklenburg have no reason to believe that the Merger will not be approved by
the Federal Reserve and the Commissioner. The Merger may not be consummated
until the thirtieth (or possibly the fifteenth day if the Federal Reserve so
approves) following the date of Federal Reserve approval during which time the
United States Department of Justice (the "DOJ") may challenge the Merger on
antitrust grounds. There can be no assurance that the DOJ will not challenge the
Merger. See "THE MERGER - Terms of the Merger."
CONDUCT OF BUSINESS PENDING MERGER
The Agreement provides that, prior to the Effective Time, Mecklenburg
will conduct its business in the regular and usual course consistent with past
practices, and maintain and preserve intact its business organization, officers
and employees and business relationships. Further, except as permitted by the
Agreement, Mecklenburg will refrain from taking certain actions relating to the
operation of its business without the prior approval of Triangle. See "THE
MERGER-Terms of the Merger-Conduct of Business Pending the Merger."
AMENDMENT, WAIVERS, AND TERMINATION
The Agreement may be terminated and the Merger abandoned, at any time
prior to the Effective Time, (i) by the mutual agreement of the Boards of
Directors of Triangle and Mecklenburg or (ii) by either Triangle or Mecklenburg:
(A) if the Effective Time shall not have occurred on or before January 31, 1998;
(B) if any appropriate regulatory authority has denied approval of the Merger;
(C) in the event of a material breach by the other party of any representation,
warranty, covenant or other agreement contained in the Agreement, which breach
is not cured within 30 days after written notice thereof is given by the
non-breaching party; or (D) Mecklenburg's or Triangle's shareholders do not
approve the Merger. See "THE MERGER - Terms of the Merger Termination of the
Agreement." In addition, the Agreement may be terminated and the Merger
abandoned by Triangle: (A) if, after testing, Mecklenburg faces environmental
liabilities in excess of $100,000 (such testing has been completed and potential
environmental liabilities do not exceed $100,000); (B) Mecklenburg fails to take
action necessary to elect Michael S. Patterson, President and Chief Executive
Officer of Triangle, and Debra L. Lee, Executive Vice President and Chief
Financial Officer of Triangle, to the Mecklenburg Board effective immediately
after the Effective Time; (C) upon valuation of Mecklenburg's securities and
derivatives portfolio five days prior to the Effective Time if the sale of such
portfolio on such date would result in a loss on Mecklenburg's income statement
in excess of $250,000; or (D) if the average closing sales price of Triangle
Stock for the 30 calendar days preceding a date three business days before the
Effective Time is greater than $23.75. Further, the Agreement may be terminated
and the Merger abandoned by Mecklenburg if the average closing sales price of
Triangle Stock for the 30 calendar days preceding a date three business days
before the Effective Time is less than $14.25. For the 30 calendar days prior
to August , 1997, the average closing sales price of Triangle Stock was
$_______. See "THE MERGER - Terms of the Merger - Termination of the Agreement."
Such termination and abandonment would not require the approval of the
shareholders of any party to the Agreement. To the extent permitted by law, the
Agreement may be amended upon the written agreement of Triangle and Mecklenburg
without the approval of shareholders; provided, however, that the provisions of
the Agreement relating to the manner or basis in which the shares of Mecklenburg
Stock will be converted into Triangle Stock may not be amended after the
Mecklenburg Special Meeting or the Triangle Special Meeting without the
requisite approval of the holders of the issued and outstanding shares of
Mecklenburg Stock and Triangle Stock entitled to vote thereon. See "THE MERGER -
Terms of Merger - Amendment and Waiver"
INTEREST OF CERTAIN PERSONS IN THE MERGER
In the Merger, Cy N. Bahakel, Chairman of the Board of Directors of
Mecklenburg, will be nominated or appointed to the Board of Directors of
Triangle for a term of two years. For such service, Mr. Bahakel will be paid in
accordance with Triangle's normal practices. The remaining members of the
Mecklenburg Board, other than those who choose not to serve, will remain
directors of Mecklenburg and each such director will be paid in accordance with
Mecklenburg's normal practices.
Pursuant to an employment agreement dated January 28, 1997 between
Mecklenburg and John H. Ketner, Jr., President of Mecklenburg, upon the
consummation of the Merger, Mr. Ketner will have the right to terminate his
employment agreement and receive a severance payment in an amount equal to Mr.
Ketner's base salary for the full two years preceding the Merger (an
aggregate amount of $242,000). In addition, Mr. Ketner shall be entitled to
continued hospitalization, health, dental and medical insurance benefits
for two years after such termination.
To assist Triangle on a post-Merger basis, Triangle anticipates
entering into an agreement with John H. Ketner Jr., President of Mecklenburg as
of the Effective Time. The agreement would provide that Mr. Ketner is to remain
as President of Mecklenburg until March 31, 1998 or, should a new president of
Mecklenburg be hired prior to March 31, 1998, to consult with Mecklenburg until
March 31, 1998 to assist in post-Merger matters. If Mr. Ketner remains in either
position until March 31, 1998, he will be paid $25,000 on that date.
At the Effective Time, Triangle anticipates entering into an employment
agreement with Frank W. Ix, Senior Vice President and Chief Lending Officer of
Mecklenburg. The agreement will be for a period of one year from the Effective
Time and will provide Mr. Ix with a base annual salary of $92,000.
On __________, 1997, Triangle and Gregory L. Gibson, Senior Vice
President of Mecklenburg, entered into an agreement whereby Mr. Gibson has
agreed to remain in the employment of Mecklenburg for 30 days after the
Effective Time to assist in post-Merger matters. Provided Mr. Gibson remains in
the employ of Mecklenburg until 30 days after the Effective Time, Triangle will
cause Mr. Gibson to be paid an amount equal to six times his base monthly salary
(approximately $____________), payable at the Effective Time, and $60,000 on
January 2, 1998. Both payments are contingent on the satisfaction by
Mecklenburg of Section 7.03(k) of the Agreement (which requires that, upon an
evaluation of Mecklenburg's securities and derivatives portfolio five days prior
to the Effective Time, the sale of such portfolio on such date would not result
in a loss on Mecklenburg's income statement in excess of $250,000) and the
satisfaction by Mr. Gibson's department at the Effective Time of the performance
goals established for it under Mecklenburg's incentive compensation plan for
1997.
Subject to availability of positions, Triangle will make a good faith
effort to cause Mecklenburg to continue employment of employees of Mecklenburg
in their current positions with Mecklenburg. Employees of Mecklenburg who are
not offered positions with Mecklenburg after the Merger shall receive severance
compensation mutually agreed upon by Mecklenburg and Triangle.
The Agreement contains provisions relating to indemnification of the
present and former directors and officers of Mecklenburg to the same extent
currently provided by Mecklenburg to its directors and officers should
Mecklenburg be merged into any subsidiary of Triangle. Additionally, options to
purchase shares of Mecklenburg Stock held by directors and officers of
Mecklenburg will be converted into options to purchase shares of Triangle Stock
by multiplying the number of shares of Mecklenburg Stock subject to such options
by the Exchange Rate. The per share exercise price under each option shall be
adjusted by dividing the per share exercise price of the option by the Exchange
Rate.
For a more detailed discussion of these items, See "THE MERGER -
Interest of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
As a condition of the consummation of the Merger, Triangle has received
the opinion (the "Tax Opinion") of Coopers & Lybrand L.L.P., tax advisors to
Triangle, concerning the tax consequences of the Merger. It is expected that
shareholders of Mecklenburg will recognize no gain or loss as a result of the
Merger, except with respect to cash received pursuant to the perfection of
dissenters' rights or with respect to the payment of cash in lieu of the actual
issuance of fractional shares of Triangle Stock. The tax basis of the Triangle
Stock received by Mecklenburg shareholders will generally equal the tax basis of
the Mecklenburg Stock surrendered, and the holding period of the Triangle Stock
received will generally include the holding period of the Mecklenburg Stock
surrendered. See "THE MERGER - Certain Federal Income Tax Consequences."
IT IS RECOMMENDED THAT EACH MECKLENBURG SHAREHOLDER CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE FEDERAL AND ANY APPLICABLE FOREIGN, STATE, AND LOCAL
INCOME TAX CONSEQUENCES OF THE MERGER.
ACCOUNTING TREATMENT
The Agreement requires that the Merger qualify to be treated as a
pooling-of-interests for accounting and financial reporting purposes. Generally,
if the number of fractional shares of Triangle Stock resulting from the Merger
for which cash is paid in effecting the Merger, and shares held by Mecklenburg
shareholders who exercise their dissenters' rights together would represent more
than the 10% of the shares issued by Triangle in connection with the Merger,
then the Merger will not qualify for the pooling-of-interests method of
accounting. In such event, or if for any other reason the Merger could not be
accounted for as a pooling-of-interests, Triangle or Mecklenburg would be
entitled to terminate the Agreement and abandon the Merger. See "THE MERGER -
Accounting Treatment."
EFFECTS OF THE MERGER ON RIGHTS OF SHAREHOLDERS
Following the Merger, the Articles of Incorporation and Bylaws of
Triangle, Triangle Bank and Mecklenburg will remain in full force and effect
without change. However, shareholders of Mecklenburg will be shareholders of
Triangle after the Merger. The provisions of the Articles of Incorporation and
Bylaws of Triangle differ in certain respects from the provisions of the
Articles of Incorporation and Bylaws of Mecklenburg. For a comparison of the
rights of shareholders under the Articles of Incorporation and Bylaws of
Triangle and the Articles of Incorporation and Bylaws of Mecklenburg, see
"COMPARISON OF MECKLENBURG STOCK AND TRIANGLE STOCK." The Merger will not affect
the rights of shareholders of Triangle.
RESALES OF TRIANGLE STOCK RECEIVED IN MERGER
The shares of Triangle Stock into which Mecklenburg Stock will be
converted in the Merger will be freely transferable by the holders thereof
except in the case of shares held by persons who may be deemed to be
"affiliates" of Triangle or Mecklenburg under applicable federal securities
laws. Generally, Mecklenburg's affiliates include its directors, executive
officers, principal shareholders and other persons who may be deemed to
"control" Mecklenburg. (See "THE MERGER-Resale of Triangle Stock").
CERTAIN PROVISIONS THAT MAY BE DEEMED TO HAVE AN ANTI-TAKEOVER EFFECT
The Articles of Incorporation and Bylaws of Triangle contain several
provisions that may be deemed to have an "anti-takeover" effect in that they
would discourage or prevent an acquisition of Triangle unless the potential
acquirer has obtained the approval of Triangle's Board of Directors. Triangle's
Board of Directors believes that an unsolicited, nonnegotiated takeover proposal
could seriously disrupt the business and management of Triangle and cause
Triangle great expense. Although the Board of Directors of Triangle believes
these provisions are beneficial to Triangle shareholders, such provisions may
tend to discourage some acquisition proposals by potential acquirers. See
"COMPARISON OF MECKLENBURG STOCK AND TRIANGLE STOCK." The Merger will not effect
the rights of shareholders of Triangle.
DISTRIBUTION OF TRIANGLE CERTIFICATES
As soon as practicable after the consummation of the Merger,
First-Citizens Bank & Trust Company, Raleigh, North Carolina, Triangle's
transfer agent (the "Exchange Agent"), will mail to each holder of record of
Mecklenburg Stock (other than dissenting shareholders) a letter of transmittal
and instructions for its use in effecting the surrender of the certificates in
exchange for certificates representing shares of Triangle Stock.
See "THE MERGER - Distribution of Triangle Certificates."
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
Subject to certain conditions, each Mecklenburg shareholder has the
right under Article 13 of the North Carolina Business Corporation Act ("NCBCA")
to "dissent" from the Merger and receive the "fair value" of the shareholder's
shares of Mecklenburg Stock in cash ("Dissenters' Rights"). Any Mecklenburg
shareholder may give to Mecklenburg before the vote is taken on the Merger
written notice of his or her intent to demand payment for his or her shares if
the Merger is effected. A vote against the Merger will not be deemed to satisfy
the notice requirement. Such shareholder must not vote his or her shares in
favor of the Merger. ANY HOLDER OF MECKLENBURG STOCK WHO RETURNS A SIGNED PROXY
BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH SHARES ARE TO
BE VOTED WILL BE DEEMED TO HAVE VOTED IN FAVOR OF THE MERGER AND WILL NOT BE
ENTITLED TO ASSERT DISSENTERS' RIGHTS OF APPRAISAL. No later than ten days after
the Merger is effected, Mecklenburg must send to each shareholder exercising
Dissenters' Rights by registered or certified mail a written dissenters' notice
stating when the payment demand must be sent and where certificates for shares
must be deposited and setting a date by which Mecklenburg must receive the
payment demand which shall not be fewer than 30 nor more than 60 days after the
date such notice is mailed. The shareholder sent such notice must demand payment
and deposit certificates in accordance with the terms of the notice. A
Mecklenburg shareholder who (i) submits, before the vote is taken on the Merger,
written notice of intent to demand payment for the shareholder's shares, (ii)
does not vote in favor of the Agreement, (iii) demands payment and deposits the
shareholder's share certificates by the date set forth in and in accordance with
the terms and conditions of a "dissenter's notice" sent to such shareholder, and
(iv) otherwise satisfies the requirements specified in Appendix IV to this Joint
Proxy Statement/Prospectus, will be offered the amount Mecklenburg estimates to
be the fair value of the shareholder's shares of Mecklenburg Stock, plus accrued
interest to the date of payment, and will be paid such amount in cash provided
the shareholder agrees in writing to accept such amount in full satisfaction of
the shareholder's demand. In order to exercise Dissenters' Rights, a Mecklenburg
shareholder must follow carefully all steps prescribed in Appendix IV. See "THE
MERGER - Appraisal Rights of Dissenting Shareholders" and Appendix IV.
As no entity is merging into Triangle, Triangle's shareholders do not
have Dissenters' Rights in the Merger.
MARKET FOR TRIANGLE STOCK AND MECKLENBURG STOCK
Transactions in Triangle Stock are quoted on the Nasdaq National
Market. As of the Triangle Record Date, there were _________ shares of Triangle
Stock outstanding and held by approximately _____ holders of record.
Mecklenburg Stock is not traded on any exchange. Mecklenburg Stock
prices are reported over-the-counter in the "pink sheets" by the National Daily
Quotation System and such prices generally can be found in the Charlotte
Observer on a daily basis. As of the Mecklenburg Record Date, there were _______
shares of Mecklenburg Stock outstanding and held by approximately _____ holders
of record.
The following table sets forth quarterly information on the price range
of Triangle Stock and Mecklenburg Stock for the periods indicated and shows the
high and low sale prices as quoted by the Nasdaq National Market and the high
and low sales prices as known to management of Mecklenburg, respectively. The
sale prices shown are without retail markups, markdowns or commissions.
TRIANGLE STOCK MECKLENBURG STOCK(1)
HIGH LOW HIGH LOW
1997
1st Quarter ................ $20.50 $16.00 $17.00 $13.00
2nd Quarter ................ $22.50 $18.50 $18.50 $17.00
1996
1st Quarter ................ $16.00 $13.88 $11.50 $11.00
2nd Quarter ................ $15.00 $13.50 $11.75 $11.50
3rd Quarter ................ $15.25 $13.50 $13.00 $11.50
4th Quarter ................ $16.38 $14.50 $13.00 $13.00
1995
1st Quarter ................ $10.75 $9.125 $11.75 $9.50
2nd Quarter ................ $10.75 $9.00 $9.625 $9.50
3rd Quarter ................ $14.75 $10.00 $10.00 $9.50
4th Quarter ................ $15.25 $11.75 $10.75 $10.00
- ---------------------------------------------------------------------------
(1) Mecklenburg Stock prices are reported over-the-counter in the "pink sheets"
by the National Daily Quotation System published by the National Quotation
Bureau, Inc. Quotations do not necessarily represent actual transactions in
Mecklenburg Stock and should not be taken to indicate the existence of any
established trading market.
On March 26, 1997, the last full business day preceding the public
announcement of the Merger, the last sale price for a share of Triangle Stock
was $18.75. The last sale price of Mecklenburg Stock prior to the announcement
of the Merger and known to management was $14.00 for 2,000 shares on March 10,
1997. On August , 1997, the latest practical date for which such prices were
available, the last sale price of a share of Triangle Stock was $_____ and the
last sale price of Mecklenburg Stock since the announcement of the Merger and
known to management of Mecklenburg was $_____ for ____ shares on _______, 1997.
DIVIDENDS
Triangle paid its first cash dividend on Triangle Stock on September
30, 1994 in the form of a quarterly dividend of $0.04 per share. Prior to the
formation of Triangle, Triangle Bank had not declared or paid any dividends
since its organization in 1988. Under North Carolina law, Triangle Bank was not
permitted to pay dividends until three years after it was organized. Therefore,
Triangle Bank was first able to pay dividends under North Carolina law on
January 5, 1991.
The holders of Triangle Stock are entitled to receive dividends when
and if declared by Triangle's Board of Directors out of funds legally available
therefor. There can be no assurance that after the Merger any dividends will be
declared or paid or, if declared and paid, continued in the future. 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. Subject to the foregoing, it
is currently Triangle's intent to continue to pay quarterly cash dividends. The
principal sources of funds for the payment of dividends by Triangle are
dividends from Triangle Bank. See "CERTAIN REGULATORY MATTERS - Dividends" for
information regarding certain restrictions on the payment of dividends by
Triangle Bank to Triangle.
The holders of Mecklenburg Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Mecklenburg paid its first cash dividend on Mecklenburg Stock on May
10, 1994 in the form of a quarterly dividend of $0.03 per share. Under North
Carolina law, Mecklenburg was not permitted to pay dividends until three years
after it was organized. Therefore, Mecklenburg was first able to pay dividends,
under North Carolina law on July 12, 1992. Pursuant to the terms of the
Agreement, Mecklenburg may continue to pay, but may not increase, its
quarterly cash dividend at the rate of $0.03 per share. Like Triangle, the
payment of cash dividends by Mecklenburg is limited by certain regulatory
restrictions, and is dependent upon its business conditions, operating results,
capital and reserve requirements, and its Board of Directors' consideration of
other relevant factors. See "INFORMATION ABOUT MECKLENBURG - Mecklenburg Stock."
There can be no assurance that, in the absence of the consummation of the
Merger, dividends would be paid by Mecklenburg in the future.
At March 31, 1997, under dividend restrictions imposed by federal and
state laws, and without obtaining regulatory approvals, Triangle Bank could
declare approximately $22 million in cash dividends and Mecklenburg could
declare approximately $4 million in cash dividends. Sources of cash available to
Triangle for the payment of cash dividends are cash on hand at Triangle, cash
made available to Triangle from Triangle Bank in the form of dividends to
Triangle, and borrowed funds. Except for the receipt of cash in exchange for
shares of Triangle Stock in connection with the exercise of outstanding options
and warrants, Triangle does not generate cash other than the dividends received
from Triangle Bank and earnings on investments. After giving effect to the
Merger, at March 31, 1997, Triangle Bank and Mecklenburg could declare
approximately $26 million in cash dividends on a combined basis, which amount in
turn would be available to Triangle.
The following table sets forth the cash dividends paid per share for
the indicated periods.
TRIANGLE(1) MECKLENBURG
-------- -----------
1997
1st Quarter $.10 $.03
2nd Quarter $.11 $.03
1996
1st Quarter $.07 $.03
2nd Quarter $.08 $.03
3rd Quarter $.08 $.03
4th Quarter $.10 $.03
1995
1st Quarter $.04 $.03
2nd Quarter $.04 $.03
3rd Quarter $.06 $.03
4th Quarter $.06 $.03
(1) The dividends shown are dividends historically paid by Triangle on shares
of Triangle Stock outstanding on the date declared without restating such
dividends to reflect acquisitions of other entities by Triangle which were
accounted for as pooling-of-interests.
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical consolidated
financial information for Triangle and Mecklenburg. This information has been
derived from the audited and unaudited consolidated financial statements of
Triangle and Mecklenburg, including the related notes thereto, incorporated
herein by reference and should be read in conjunction therewith. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." For a discussion of recent
and pending transactions, see "PRO FORMA COMBINED CONDENSED INFORMATION" and
"INFORMATION ABOUT TRIANGLE - Pending Branch Acquisition" and
"INFORMATION ABOUT TRIANGLE - Trust Preferred Securities Offering."
TRIANGLE BANCORP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------------------------------
1997 1996 1996 1995 1994 1993(1) 1992
---- ---- ---- ---- ---- ---- ----
AT PERIOD END
Loans Outstanding - Net $ 671,749 $587,369 $639,718 $559,707 $467,842 $395,398 $274,895
Investment Securities Available for 163,684 144,192 146,086 127,904 102,427 -- --
Sale
Investment Securities Held to 90,396 80,128 97,112 76,285 75,899 173,198 127,951
Maturity
Total Assets 1,009,600 897,386 971,105 853,926 742,438 681,131 470,615
Total Deposits 879,494 763,082 847,764 714,590 636,276 583,571 407,890
Advances from FHLB 20,000 14,500 10,000 19,500 10,500 5,500 --
Shareholders' Equity $88,156 $80,590 $86,896 $79,407 $68,306 $65,304 $50,487
SUMMARY OF OPERATIONS
Net Interest Income $10,600 $9,442 $40,256 $35,101 $30,601 $21,213 $18,990
Provision for Loan Losses 500 312 2,100 428 1,250 2,147 1,905
Noninterest Income 1,988 2,048 8,494 8,066 5,758 6,278 4,558
Noninterest Expenses 7,261 7,145 29,169 30,719(2) 28,719 20,492 18,035
Net Income $3,042 $2,547 $11,301 $7,858 $4,182 $3,855 $3,122
PER SHARE DATA
Primary Earnings per Share $0.28 $0.24 $1.05 $0.74 $0.41 $0.47 $0.38
Fully Diluted Earnings per Share $0.28 $0.24 $1.04 $0.73 $0.41 $0.47 $0.38
Book Value $8.40 $7.72 $8.30 $7.62 $6.70 $6.62 $6.27
Cash Dividends $0.10 $0.07 $0.31 $0.17 $0.07 $0.02 $0.01
SELECTED RATIOS
Net Income to Average Assets 1.25% 1.18% 1.22% 1.00% 0.60% 0.78% 0.69%
Net Income to Average Equity 14.01% 12.69% 13.63% 10.63% 6.21% 7.25% 6.33%
Shareholders' Equity/Assets 8.73% 8.98% 8.95% 9.30% 9.20% 9.59% 10.73%
(1) December 1993, Triangle Bank merged with New East Bancorp ("New East") and
New East's five bank subsidiaries. This acquisition was accounted for as a
purchase and added approximately $131 million in assets to Triangle.
(2) Increased primarily due to merger expenses.
BANK OF MECKLENBURG
CONSOLIDATED SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------- -------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
AT PERIOD END (Unaudited)
Loan Outstanding-Net .......... $123,019 $ 88,963 $112,681 $ 79,850 $58,262 $54,340 $47,269
Securities Available for Sale . 80,325 118,632 140,424 88,619 54,318 -- --
Securities Held to Maturity ... 1,000 14,715 1,000 13,167 10,528 40,173 32,244
Trading Assets ................ 54,447 -- -- -- -- -- --
Total Assets .................. 273,512 243,587 270,289 200,231 135,545 110,769 89,885
Total Deposits ................ 196,160 165,147 177,988 130,288 101,112 90,731 71,036
Advances from the Federal
Home Loan Bank ............ 46,500 40,000 48,000 40,000 10,000 -- --
Other Borrowed Funds........... 8,183 18,618 23,018 10,292 8,741 4,104 3,710
Shareholder's Equity .......... $ 19,572 $ 17,504 $ 18,840 $ 17,463 $ 14,581 $ 15,056 $ 14,376
SUMMARY OF OPERATIONS
Net Interest Income ........... $ 1,413 $ 1,245 $ 5,381 $ 4,355 $ 3,810 $ 3,194 $ 2,590
Provision for Loan Losses ..... 44 95 230 95 49 125 215
Non-interest Income ........... 430 414 1,408(1) 379 98 160 91
Non-interest Expense .......... 888 867 3,552 2,883 2,404 2,261 2,076
Net Income .................... $ 534 $ 467 $ 1,919 $ 1,256 $ 1,002 $ 680 $ 344
PER SHARE DATA
Net Income .................... $ .25 $ .22 $ .91 $ .59 $ .48 $ .33 $ .17
Book Value (2) (3)........... 9.24 8.26 8.94 8.15 7.68 7.30 6.97
Cash Dividends ................ $ .03 $ .03 $ .12 $ .12 $ .10 $ -- $ --
SELECTED RATIOS
Net Income to Average
Assets .................. .84% .90% .77% .79% .83% .72% .44%
Net Income to Average
Equity (3)............... 11.30% 10.96% 10.73% 7.57% 6.45% 4.63% 2.43%
Shareholder's Equity/
Assets (3)............... 7.21% 7.19% 7.01% 8.62% 11.98% 13.59% 15.99%
(1) Includes $1.2 million in gain on sales of securities.
(2) Adjusted for five-four stock split to shareholders of record on May 16,
1995 and on May 11, 1993.
(3) Excludes net unrealized gains or losses on available-for-sale securities.
COMPARATIVE PER SHARE DATA
The following unaudited consolidated financial information reflects certain
comparative per share data relating to (i) net income and book value per common
share for Triangle and Mecklenburg on a historical basis; (ii) net income and
book value per common share on a pro forma basis for Triangle after giving
effect to the Merger; and (iii) net income and book value per common share on a
pro forma equivalent basis for Mecklenburg assuming that the Merger had been
effected for the periods presented and had been accounted for as a
pooling-of-interests. The data presented should be read in conjunction with and
has been derived from historical consolidated financial statements of Triangle
and Mecklenburg and the related notes thereto incorporated herein by reference
and in conjunction with the unaudited pro forma combined condensed financial
information, including the related notes thereto, included elsewhere in this
Prospectus/Proxy Statement. The pro forma comparative per share information
presented is not necessarily indicative of what the actual financial results
would have been had such transaction been completed at each of the periods
presented and is not indicative of future financial position or future results.
See "PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
THREE MONTHS YEAR ENDED
ENDED MARCH 31 DECEMBER 31
-------------- ------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
Per Common Share:
Primary Earnings Per Share:
Triangle - historical: ....................$ .28 $ .24 $1.05 $ .74 $ .41
Mecklenburg - historical .................. .25 .22 .91 .59 .48
Triangle/Mecklenburg pro forma combined: .. .28 .23 1.03 72 .42
Mecklenburg pro forma equivalent: ......... .28 .23 1.03 .72 .42
Fully Diluted Earnings Per Share:
Triangle - historical: ................... .28 .24 1.04 .73 .41
Mecklenburg - historical: .............. .25 .22 .91 .59 .48
Triangle/Mecklenburg pro forma combined: .. .28 .23 1.02 .71 .42
Mecklenburg pro forma equivalent: ........ .28 .23 1.02 .71 .42
Cash Dividends:
Triangle - historical: ................... .10 .07 .31 .17 .07
Mecklenburg - historical: .............. .03 .03 .12 .12 .10
Triangle/Mecklenburg pro forma combined: ... .09 .06 .28 .16 .07
Mecklenburg pro forma equivalent: ........ .09 .06 .28 .16 .07
Book Value: At 3/31/97 At 12/31/96
Triangle - historical: ................... $ 8.40 $ 8.30
Mecklenburg - historical: .............. 9.24 8.94
Triangle/Mecklenburg pro forma combined: .. 8.54 8.41
Mecklenburg pro forma equivalent: ........ 8.54 8.41
Market Value per Share (1)(2):
At March 26, 1997
Triangle Stock .................................................. $ 18.75
Mecklenburg Stock................................................ $ 14.00
Equivalent pro forma Mecklenburg Stock (giving effect to
Merger only).................................................. $ 18.75
- ----------------------
(1) The closing price for Triangle Stock is the closing sale price on
the Nasdaq National Market on the indicated date. The price for Mecklenburg
Stock is the last sale price known to management on the indicated date.
(2) Equivalent pro forma amount is calculated by multiplying the
Triangle Stock market value by the Exchange Rate. The equivalent pro forma
market value per share is dependent on the price of Triangle Stock on any given
date and the amount shown is not indicative of what the value of Triangle Stock
will be after the Merger.
SPECIAL MEETING OF MECKLENBURG SHAREHOLDERS
This Joint Proxy Statement/Prospectus is being furnished to
shareholders of record of Mecklenburg Stock as of the close of business on
August 11, 1997, in connection with the solicitation of proxies by the
Mecklenburg Board for use at the Mecklenburg Special Meeting to be held on
Tuesday, September 16, 1997, at 2:00 p.m., local time, in the Lobby of
Mecklenburg's main office at 2000 Randolph Road, Charlotte, North Carolina and
at any adjournments thereof to consider and take action upon (i) a proposal to
approve the Agreement and (ii) such other business as may properly come before
the Mecklenburg Special Meeting. Each copy of this Joint Proxy
Statement/Prospectus being furnished to the holders of record of Mecklenburg
Stock is accompanied by a form of proxy for use at the Mecklenburg Special
Meeting.
HOLDERS OF MECKLENBURG STOCK ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
RECORD DATE AND VOTING RIGHTS
The Mecklenburg Board has fixed the close of business on August 11,
1997 (the "Mecklenburg Record Date") as the record date for the determination of
shareholders of Mecklenburg entitled to receive notice of and to vote at the
Mecklenburg Special Meeting. As of the Mecklenburg Record Date, there were
_______ shares of Mecklenburg Stock issued and outstanding held by approximately
_____ holders of record. Each share of Mecklenburg Stock issued and outstanding
as of the Mecklenburg Record Date is entitled to one vote on each of the matters
to be decided at the Mecklenburg Special Meeting. The affirmative vote of at
least two-thirds of the total shares of Mecklenburg Stock issued and outstanding
is necessary for approval of the Agreement. Because the affirmative vote of at
least two-thirds of the total shares issued and outstanding is required,
abstentions, broker non-votes and shares otherwise not voted in the affirmative
will have the same effect as votes against the Agreement.
As of June 30, 1997, the directors and executive officers of
Mecklenburg and their affiliates owned and were entitled to vote approximately
____% of the Mecklenburg Stock. The directors and executive officers are
expected to vote their shares in favor of the proposal to approve the Agreement.
Information as to the stock holdings of such persons is included in the section
of this Joint Proxy Statement/Prospectus entitled "INFORMATION ABOUT MECKLENBURG
- - Security Ownership of Management and Principal Shareholders."
VOTING AND REVOCATION OF PROXIES
The shares of Mecklenburg Stock represented by properly executed
proxies received in time for the Mecklenburg Special Meeting will be voted as
directed by the shareholders, unless such proxies are revoked as described
below. If no instructions are given, such proxies will be voted FOR
approval of the proposal to approve the Agreement. If any other matter
is properly brought before the Mecklenburg Special Meeting, such
proxies will be voted in the discretion of a majority of the proxy
holders named in the Mecklenburg proxy card. Management of Mecklenburg
is not aware of any other business to be presented at the Mecklenburg
Special Meeting.
Any shareholder may revoke a proxy at any time before it is voted by
attending and voting in person at the Mecklenburg Special Meeting or by giving a
written notice of revocation to the Secretary of Mecklenburg provided such
notice is actually received prior to the vote of shareholders. A later dated
proxy that is actually voted at the Mecklenburg Special Meeting also will revoke
an earlier dated proxy. A proxy will not be revoked by the death or incapacity
of the shareholder executing it unless, before the shares are voted, notice of
such death or incapacity is filed with the Secretary of Mecklenburg or with any
other person authorized to tabulate votes on behalf of Mecklenburg. Whether or
not you plan to attend the Mecklenburg Special Meeting, please complete, sign
and return the enclosed proxy card.
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers and employees of
Mecklenburg by mail, in person or by telephone or telegraph. Such persons will
receive no additional compensation for such services. In addition, Mecklenburg
has hired Corporate Investor Services, Inc., a proxy solicitation firm, to
assist in the solicitation of proxies for use at the Mecklenburg Special
Meeting. For its services, Corporate Investor Services, Inc. will be paid a fee
of $3,200 plus $3.00 per shareholder contacted, for a total fee of approximately
$4,500. Mecklenburg may make arrangements with brokerage firms and other
custodians, nominees, and fiduciaries, if any, for the forwarding of
solicitation materials to the beneficial owners of Mecklenburg Stock held of
record by such persons. Any such brokers, custodians, nominees, and fiduciaries
will be reimbursed for the reasonable out-of-pocket expenses incurred by them
for such services. Except under certain circumstances involving a wrongful
breach or termination of the Agreement by Triangle, Mecklenburg will pay all
expenses of its solicitation of proxies and of holding the Mecklenburg Special
Meeting. This Joint Proxy Statement/Prospectus, Notice of the Mecklenburg
Special Meeting and form of proxy, are first being mailed to shareholders of
Mecklenburg on or about August , 1997. (See "THE MERGER - Terms of the Merger
- - Termination of the Agreement.")
RECOMMENDATION
The Mecklenburg Board has unanimously approved the Agreement and the
Merger, believes that the proposal to approve the Agreement and the Merger is in
the best interest of Mecklenburg and its shareholders, employees, depositors,
customers, suppliers and community, and unanimously recommends that Mecklenburg
shareholders vote FOR approval of the Agreement and the Merger. In making its
recommendation, the Mecklenburg Board has considered, among other things, the
Mecklenburg Fairness Opinion that Triangle's proposal is fair to Mecklenburg
shareholders from a financial point of view.
SPECIAL MEETING OF TRIANGLE SHAREHOLDERS
This Joint Proxy Statement/Prospectus is being furnished to
shareholders of record of Triangle Stock as of the close of business on August
11, 1997, in connection with the solicitation of proxies by the Board of
Directors of Triangle for use at the Triangle Special Meeting to be held on
Wednesday, September 17, 1997, at 3:00 p.m., local time, in the Board Room of
Triangle's main office at 4300 Glenwood Avenue, Raleigh, North Carolina and at
any adjournments thereof to consider and take action upon (i) a proposal to
approve the Agreement, (ii) a proposal to approve the Bylaw Amendment, and (iii)
such other business as may properly come before the Triangle Special Meeting.
Each copy of this Joint Proxy Statement/Prospectus being furnished to the
holders of record of Triangle Stock is accompanied by a form of proxy for use at
the Triangle Special Meeting.
HOLDERS OF TRIANGLE STOCK ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
RECORD DATE AND VOTING RIGHTS
Triangle's Board of Directors has fixed the close of business on August
11, 1997 (the "Triangle Record Date") as the record date for the determination
of shareholders of Triangle entitled to receive notice of and to vote at the
Triangle Special Meeting. As of the Triangle Record Date, there were _______
shares of Triangle Stock issued and outstanding held by approximately _____
holders of record. Each share of Triangle Stock issued and outstanding as of the
Triangle Record Date is entitled to one vote on each of the matters to be
decided at the Triangle Special Meeting.
The affirmative vote of a majority of the total shares of Triangle
Stock issued and outstanding is necessary for approval of the Agreement. Because
the affirmative vote of a majority of the total shares issued and outstanding is
required, abstentions, broker non-votes and shares otherwise not voted in the
affirmative will have the same effect as votes against the Agreement.
The affirmative vote of 75% of the eligible votes present, in person or
by proxy, at the Triangle Special Meeting is necessary for approval of the Bylaw
Amendment. The failure of a shareholder to vote, including abstentions and
broker non-votes, will have no effect as the vote is determined only by shares
actually voted, not by shares outstanding.
As of December 31, 1996, the directors and executive officers of
Triangle and their affiliates owned and were entitled to vote approximately
10.1% of the Triangle Stock. The directors and executive officers are expected
to vote their shares in favor of the proposal to approve the Agreement and to
approve the Bylaw Amendment. Information as to the stock holdings of such
persons is included in the section of this Joint Proxy Statement/Prospectus
entitled "INFORMATION ABOUT TRIANGLE - Security Ownership of Management."
VOTING AND REVOCATION OF PROXIES
The shares of Triangle Stock represented by properly executed proxies
received in time for the Triangle Special Meeting will be voted as directed by
the shareholders, unless such proxies are
revoked as described below. If no instructions are given, such proxies will be
voted "FOR" approval of the proposal to approve the Agreement and "FOR" approval
of the proposal to approve the Bylaw Amendment. If any other matter is properly
brought before the Triangle Special Meeting, such proxies will be voted in the
discretion of a majority of the proxy holders named in the Triangle proxy card.
Management is not aware of any other business to be presented at the Triangle
Special Meeting.
Any shareholder may revoke a proxy at any time before it is voted by
attending and voting in person at the Triangle Special Meeting or by giving a
written notice of revocation to the Secretary of Triangle provided such notice
is actually received prior to the vote of shareholders. A later dated proxy that
is actually voted at the Triangle Special Meeting also will revoke an earlier
dated proxy. A proxy will not be revoked by the death or incapacity of the
shareholder executing it unless, before the shares are voted, notice of such
death or incapacity is filed with the Secretary of Triangle or with any other
person authorized to tabulate votes on behalf of Triangle. Whether or not you
plan to attend the Triangle Special Meeting, please complete, sign and return
the enclosed proxy card.
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers and employees of
Triangle by mail, in person or by telephone or telegraph. Such persons will
receive no additional compensation for such services. Triangle may 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 Stock held of record by such persons. Any such
brokers, custodians, nominees, and fiduciaries will be reimbursed for the
reasonable out-of-pocket expenses incurred by them for such services. Except
under certain circumstances involving a wrongful breach or termination of the
Agreement by Triangle, Triangle will pay all expenses of its solicitation of
proxies and of holding the Triangle Special Meeting. This Joint Proxy
Statement/Prospectus, Notice of the Triangle Special Meeting and form of proxy,
are first being mailed to shareholders of Triangle on or about August , 1997.
(See "THE MERGER - Terms of the Merger - Termination of the Agreement.")
RECOMMENDATION
The Triangle Board of Directors has unanimously approved the Agreement
and the Merger, believes that the proposal to approve the Agreement and the
Merger is in the best interest of Triangle and its shareholders, and
unanimously recommends that Triangle shareholders vote FOR approval of the
Agreement and the Merger. In making its recommendation, the Triangle Board of
Directors has considered, among other things, the Triangle Fairness Opinion
that Triangle's proposal is fair to Triangle shareholders from a financial
point of view.
THE MERGER
The following information describes certain of the important terms and
conditions of the Agreement and the Merger. This description does not purport to
be complete and is qualified in its entirety by reference to the Agreement, the
Mecklenburg Fairness Opinion, the Triangle Fairness Opinion, and Article 13, all
of which are attached hereto as Appendices to this Joint Proxy
Statement/Prospectus. Mecklenburg and Triangle shareholders are urged to read
these materials in their entirety.
PARTIES TO THE MERGER
TRIANGLE. Triangle, a North Carolina corporation, is a bank holding
company registered with the Federal Reserve under the BHC Act. Triangle owns all
of the outstanding shares of Triangle Bank, a state commercial bank under the
supervision of the Commissioner and the Federal Reserve. Triangle Bank provides
full-service commercial and consumer banking services from its 46 branches in 30
cities located throughout central and eastern North Carolina. As of March 31,
1997, Triangle had consolidated assets of $1.01 billion, consolidated
deposits of $879 million, and
consolidated shareholders' equity of $88 million. The executive offices of
Triangle and Triangle Bank are located at 4300 Glenwood Avenue, Raleigh, North
Carolina 27612 (telephone number (919) 881-0455).
MECKLENBURG. Mecklenburg is a North Carolina-chartered commercial bank
under the supervision of the Commissioner and the FDIC. Immediately before the
Merger, Mecklenburg will become a Federal Reserve member bank and will come
under the supervision of the Federal Reserve in addition to that of the
Commissioner. Mecklenburg will become a Federal Reserve member bank because
Triangle Bank is a Federal Reserve member bank. Mecklenburg provides
full-service commercial and consumer banking services through three branches in
Charlotte, North Carolina. As of March 31, 1997, Mecklenburg had assets of $274
million, deposits of $196 million, and shareholders' equity of $20 million. The
executive offices of Mecklenburg are located at 2000 Randolph Road, Charlotte,
North Carolina 28207 (telephone number (704) 375-2265).
STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Agreement, at the Effective
Time, Mecklenburg will be merged with and into a subsidiary of Triangle.
Mecklenburg will be the surviving corporation resulting from the Merger,
operating as a North Carolina banking corporation under its articles of
incorporation and bylaws as existing immediately prior to the Merger. Following
the Merger, Mecklenburg will be operated as a wholly-owned subsidiary of
Triangle. At the Effective Time, the issued and outstanding shares of
Mecklenburg Stock will be converted into the right to receive shares of Triangle
Stock at the Exchange Rate. See "- Terms of the Merger - Exchange Rate." Each
share of Mecklenburg Stock issued and outstanding at the Effective Time will be
automatically canceled by virtue of the Merger. With the exception of the
issuance of additional shares of Triangle Stock in connection with the Merger,
the issued and outstanding shares of Triangle Stock will not be changed as a
result of the Merger. See "- Terms of the Merger."
Mecklenburg maintains a stock option plan for employees and a stock
option plan for directors (the "Mecklenburg Option Plans") under which it has
granted options to purchase shares of Mecklenburg Stock (the "Mecklenburg
Options"). At March 31, 1997, Mecklenburg Options to purchase a total of 301,555
shares of Mecklenburg Stock were outstanding. All such Mecklenburg Options will
be converted into options to purchase Triangle Stock at the Effective Time and
thereafter shall provide for the purchase of that number of shares of Triangle
Stock equal to the product of the number of shares of Mecklenburg Stock subject
to the Mecklenburg Option immediately prior to the Effective Time multiplied by
the Exchange Rate and rounded down to the nearest whole number. The per share
exercise price immediately prior to the Effective Time shall be adjusted by
dividing such per share price by the Exchange Rate. See "- Terms of the
Merger - Exchange Rate."
After the Effective Time, the holders of record of shares of
Mecklenburg Stock will have voting rights and dividend rights with respect to
that number of shares of Triangle Stock for which the shares of Mecklenburg
Stock that such persons owned immediately prior to the Effective Time are
exchanged.
For a discussion of the rights of dissenting shareholders see "-
Appraisal Rights of Dissenting Shareholders."
TERMS OF THE MERGER
EXCHANGE RATE. Subject to the rights of Mecklenburg shareholders who
dissent from the Merger and seek appraisal rights, shares of Mecklenburg Stock
issued and outstanding immediately prior to the Effective Time will be converted
into the right to receive shares of Triangle Stock at the Exchange Rate as
provided in the Agreement. The Exchange Rate is 1.0. As of August , 1997, based
on the closing sale price of Triangle Stock of $_____ on the Nasdaq National
Market, 1.0 share of Triangle Stock would be worth $_____. Each Mecklenburg
shareholder will receive a number of shares of Triangle Stock equal to the
number of shares of Mecklenburg Stock owned by such shareholder multiplied by
the Exchange Rate. No fractional shares will be issued but Mecklenburg
shareholders, in lieu of the issuance of fractional shares, will receive cash as
determined in the Agreement.
TREATMENT OF FRACTIONAL SHARES. No fraction of a share of Triangle
Stock will be issued in connection with the Merger. Each Mecklenburg shareholder
(and each holder of a Mecklenburg Option) who otherwise would be entitled to
receive a fraction of a share of Triangle Stock upon the conversion of that
shareholder's shares of Mecklenburg Stock at the Effective Time (or upon the
exercise of the Mecklenburg Option) shall receive, in lieu thereof, cash
(without interest) in an amount equal to that fraction multiplied by the Market
Value of one whole share of Triangle Stock at the Effective Time (or, in the
case of a Mecklenburg Option, on the date of exercise). As used above, Market
Value shall be equal to the closing sale price of Triangle Stock as quoted on
the Nasdaq National Market (as reported by THE WALL STREET JOURNAL or, if not so
reported, by any other authoritative source) on the trading day three days
preceding the Closing Date (or, in the case of a Mecklenburg Option, the date of
exercise). As of August , 1997, the closing sale price of Triangle Stock on the
Nasdaq National Market was $____. No Mecklenburg shareholders will be entitled
to any dividend or other distribution or any voting or other rights as a
shareholder with respect to any fractional share of Triangle Stock.
CLOSING AND EFFECTIVE TIME. The Merger will not be consummated unless
and until the Agreement and the transactions contemplated thereby are approved
by the requisite vote of the shareholders of Mecklenburg and Triangle, the
required regulatory approvals are received, and the other conditions to the
Merger are satisfied (or waived to the extent permitted by applicable law). The
Agreement provides that the closing of the Merger shall occur on a date
specified by Triangle after the expiration of all required waiting periods
following receipt of the required regulatory approvals, but in no event more
than 30 days after the expiration of all such required waiting periods. The
Effective Time shall occur not later than ten days after the closing. The Merger
will become effective on the date and at the time on which Articles of Merger
shall have been accepted for filing by the North Carolina Secretary of State (or
such later date and time as may be specified in the Articles of Merger). The
Effective Time is currently anticipated to occur in October 1997.
Upon consummation of the Merger, Mecklenburg will become the
wholly-owned subsidiary of Triangle and will be operated as such for a period of
at least three years after the Effective Time, unless Triangle decides that
operation of Mecklenburg as a separate bank subsidiary would impose a financial
or administrative burden on Triangle. After the Merger, Mecklenburg's offices
will remain offices of Mecklenburg.
CONDUCT OF BUSINESS PENDING THE MERGER. The Agreement provides that,
during the period from April 25, 1997 (the date the Agreement was executed) to
the Effective Time, except as
provided in the Agreement, Mecklenburg will conduct its business in the
regular and usual course consistent with past practice, and maintain and
preserve intact its business organization, officers and employees and business
relationships. The Agreement further provides that Triangle may enter into
agreements to acquire other financial institutions prior to the Effective Time.
In addition to other restrictions described elsewhere herein, the
Agreement provides that, prior to the Effective Time and except in the ordinary
course of its business or as otherwise required by applicable law or regulation,
Mecklenburg may not, among other prohibited actions, (i) incur indebtedness for
borrowed money, (ii) sell, transfer, mortgage, pledge or otherwise dispose of
any of its properties or assets, or acquire any significant assets, (iii)
increase the compensation or benefits of any of its employees, (iv) settle any
claim, action or proceeding against it involving monetary damages, (v) make any
change in its capital stock, or issue, sale, purchase, redeem or retire shares
of such stock, (vi) amend its charter or bylaws, (vii) grant or issue any
additional stock options, (viii) enter into any new employment agreements or
adopt any new employee benefit plans, (ix) change its accounting practices, (x)
acquire or open any new branch offices, or (xi) enter into any contract other
than in the ordinary course of its business.
CONDITIONS TO CONSUMMATION OF THE MERGER. Consummation of the Merger is
subject to various conditions described in the Agreement, including without
limitation: (i) approval of the Agreement by Mecklenburg's shareholders; (ii)
receipt of all required regulatory approvals without the imposition by any
regulatory agency of a condition to any such approval that is considered by
Triangle or Mecklenburg to be materially disadvantageous or burdensome or to
impact the economic or business benefits of the Merger so adversely that it
would not be advisable to consummate it; (iii) receipt of the Tax Opinion; and
(iv) receipt of the Mecklenburg Fairness Opinion and the Triangle Fairness
Opinion.
Triangle's and Mecklenburg's separate obligations under the Agreement
are subject to various other conditions described in the Agreement, unless
waived by the party entitled to the benefits of such provision, including
without limitation: (i) the absence of a material adverse change in the
financial condition, results of operations or business of the other party; (ii)
compliance by the other party with all laws and regulations applicable to the
transactions described in the Agreement; (iii) the absence of any violation or
breach by the other party of any of its obligations, covenants, agreements,
representations or warranties under the Agreement; and (iv) the receipt of
certain certificates and opinions of the other party's senior officers and legal
counsel.
Additionally, Triangle's obligations are subject to certain additional
conditions, unless waived by Triangle, including without limitation: (i) receipt
of a written agreement as to certain matters from persons who are considered
"affiliates" of Mecklenburg (see " - Resale of Triangle Stock"); and (ii)
receipt by Triangle of assurances from Coopers & Lybrand L.L.P. in form and
content satisfactory to Triangle to the effect that the Merger may be treated as
a "pooling-of-interests" for accounting purposes.
REQUIRED REGULATORY APPROVALS. The Merger and the transactions
contemplated by the Agreement are contingent upon receipt of the following
approvals:
Federal Reserve. On July 2, 1997, Mecklenburg was approved to become a
member of the Federal Reserve System of which Triangle also is a member.
Mecklenburg will become a member bank immediately before the Merger. Because
Mecklenburg has been approved as a Federal Reserve member bank and will be the
resulting bank following the Merger, the Merger is subject to the approval of
the Federal Reserve under the Bank Merger Act, which prohibits the
merger or consolidation of any Federal Reserve member bank with any other
depository institution without Federal Reserve approval. Triangle has made
application to the Federal Reserve and has no reason to believe that the Federal
Reserve will not approve the Merger.
North Carolina Commissioner of Banks. Because Mecklenburg and the
subsidiary which will merge with and into Mecklenburg are North
Carolina-chartered commercial banks, the Merger is also subject to the approval
of the Commissioner. North Carolina law prohibits the merger or consolidation of
any state bank with any other depository institution without the approval of the
Commissioner. Triangle has made application to the Commissioner and has no
reason to believe that the Commissioner will not approve the Merger.
Other Approvals. Triangle and Mecklenburg are not aware of any other
governmental approvals or actions that may be required for consummation of the
Merger except those described above. Should any such approval or action be
required, it is presently contemplated that such approval or action would be
sought. There can be no assurance, however, that any such approval or action, if
needed, could be obtained and, if obtained, would not be conditioned in a manner
that would cause the parties to abandon the Merger.
AMENDMENT AND WAIVERS. Prior to the Effective Time, any provision of
the Agreement (other than provisions relating to regulatory approvals,
shareholder approvals and other approvals required by law) may be waived by the
party entitled to the benefits of such provision. Additionally, the Agreement
may be amended, modified or supplemented by Triangle and Mecklenburg at any time
prior to the Effective Time, and whether before or after approval by
Mecklenburg's or Triangle's shareholders, by an agreement in writing approved by
a majority of members of their respective Boards of Directors. However, except
as otherwise provided in the Agreement, following approval of the Agreement by
Mecklenburg's or Triangle's shareholders, no such amendment may change the
Exchange Rate without approval of such change by Mecklenburg's and Triangle's
shareholders.
TERMINATION OF THE AGREEMENT. The Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time, whether before or
after approval by Mecklenburg's or Triangle's shareholders, upon the mutual
agreement of Triangle and Mecklenburg, and may be terminated by either Triangle
or Mecklenburg if, among other things: (i) the other party shall have violated
or failed to perform fully any of its obligations, covenants or agreements in
any material respect; (ii) any of the other party's representations or
warranties shall have been false or misleading in any material respect when
made, or if there has occurred any event or development or there exists any
condition or circumstance which has caused or, with the lapse of time or
otherwise, may or could cause any such representations or warranties to become
false or misleading; (iii) Mecklenburg's or Triangle's shareholders fail to
ratify and approve the Agreement; or (iv) any condition to the obligations of
the terminating party is not satisfied or effectively waived, or the Merger has
not become effective by January 31, 1998 (or such later date as shall be
mutually agreeable to Triangle and Mecklenburg).
Additionally, Triangle may terminate the Agreement if, based on the
advice of its legal counsel or consultants, it believes Mecklenburg or Triangle,
as the owner of Mecklenburg, could incur or become responsible or liable at any
time or over a period of time in an amount equal to or greater than $100,000 for
expenses or monetary damages on account of any and all remediation,
corrective action or damages relating to any discharge, disposal, release or
emission by any person of any "hazardous substance" (as defined in the
Agreement) on, from or relating to any real property belonging to Mecklenburg or
serving as collateral for any of Mecklenburg's loans, or relating to any
condition or event with respect to any such real property which constitutes a
violation of any "environmental laws" (as defined in the Agreement). Testing
has been completed and potential environmental liabilities do not exceed
$100,000.
Additionally, Triangle may terminate the Agreement if, based upon a
valuation of Mecklenburg's securities and derivatives portfolio to be done five
days prior to the Effective Time, the portfolio were to be sold and the sale
would result in a loss on Mecklenburg's income statement in excess of $250,000.
Additionally, Triangle may terminate the Agreement if the average
closing sales price of Triangle Stock for the 30 calendar days preceding a date
three business days before the Effective Time is greater than $23.75. Further,
Mecklenburg may terminate the Agreement if the average closing sales price of
Triangle Stock for the 30 calendar days preceding a date three business days
before the Effective Time is less than $14.25. For the 30 calendar days prior to
August , 1997, the average closing sales price of Triangle Stock was $ .
In the event of the termination and abandonment of the Merger pursuant
to the termination provisions of the Agreement, the Agreement will become void
and have no effect, except that certain provisions of the Agreement relating to
expenses, indemnification and confidentiality of information obtained pursuant
to the Agreement or in connection with the negotiation thereof will survive any
such termination and abandonment.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND.
Mecklenburg. Since its opening in 1989, Mecklenburg has operated as a
community bank serving Charlotte and Mecklenburg County, North Carolina.
Mecklenburg's community-oriented banking philosophy generally has allowed it to
compete effectively and profitability with other banking institutions in its
local market. Since Mecklenburg's inception, however, competition has
dramatically increased with other types of financial institutions offering
services traditionally offered only by banks, and there has been an increase in
public demand for a broader range of services from community banks. Providing
these services and products requires significant amounts of advanced technology
and highly skilled personnel, and Mecklenburg would have to expend significant
amounts of capital to invest in the equipment, software and personnel necessary
to remain competitive and independent. These factors, in addition to changing
banking regulations and other factors affecting the banking industry, have
contributed to a continuing trend toward consolidation among financial
institutions.
In late 1996 and early 1997, Mecklenburg was approached by several
financial institutions about the possibility of those institutions acquiring or
merging with Mecklenburg. In response to those contacts, and based on continuing
discussions about the best long term strategy for Mecklenburg, the Mecklenburg
Board hired Orr Management in late February 1997 to advise the Board and its
Executive Committee about long-term strategy and to help asses whether
Mecklenburg should remain independent or consider combining with another
institution. In order to determine what prospects existed for Mecklenburg to
merge with another institution, Orr Management contacted at least 17 banking
institutions, including Triangle, that it considered to be likely candidates to
combine with or acquire Mecklenburg. After receiving expressions of interest
from several institutions, Orr Management was authorized to solicit formal bids
to combine with or acquire Mecklenburg. Five institutions submitted bids in
response to this solicitation, and Orr Management recommended to the Executive
Committee that Mecklenburg accept the proposal from Triangle to merge with
Mecklenburg. The Executive Committee presented Triangle's proposal to the
Mecklenburg Board, which unanimously agreed to accept the proposal and
authorized Mecklenburg's management to execute a letter of intent on March 27,
1997. During the following weeks, Mecklenburg and Triangle conducted due
diligence investigations of each other's business and operations and negotiated
a definitive merger agreement. During this time, the Mecklenburg Board engaged
Equity Research as financial advisor to provide financial advice and to opine,
from a financial point of view, as to the fairness to Mecklenburg's shareholders
of the final, definitive offer by Triangle.
On April 22, 1997, the Mecklenburg Board considered the proposed
definitive Agreement. At this meeting, the Mecklenburg Board considered the
terms of the proposed Agreement, the strategic and financial goals of
Mecklenburg and Triangle, the financial prospects for the combination of
Mecklenburg and Triangle, and the degree of possibility that significantly
better proposals could be obtained from other companies. The Mecklenburg Board
received reports on due diligence investigations of Triangle and a valuation
report on Triangle conducted by Equity Research. In addition, Equity Research
rendered its opinion that the proposed Merger is fair, from a financial point of
view, to the shareholders of Mecklenburg.
Based on these considerations, the Board concluded that the proposed
acquisition of Mecklenburg by Triangle upon the terms of the Agreement would be
in the best interest of Mecklenburg's shareholders, employees, depositors,
customers, suppliers and community and unanimously approved the Agreement.
Triangle. As a result of Triangle's acquisitions during the last four
years, Triangle's management determined that a well executed acquisition plan in
concert with internal growth would allow Triangle to achieve certain benefits
while maintaining loan quality and safe and sound operations. In particular,
management believed a well executed acquisition plan could (i) provide
opportunities to achieve economies of scale that would increase Triangle's
efficiency and profitability; (ii) improve Triangle's ability to compete with
the many financial institutions doing business in Triangle's market area; (iii)
result in an institution better able to respond to technological changes; (iv)
enable the resulting institution to better respond to the needs of its customers
and the communities it serves; and (v) allow the shareholders of Triangle
(including the former shareholders of acquired institutions) to participate in a
financial institution with greater financial resources, a more expansive banking
network and a larger market area. After the Merger, Triangle will remain a
well-capitalized institution and will be the ninth largest commercial bank in
North Carolina, based on assets, with a greater capacity to compete with larger
banks in its market area. Further, Triangle will expand its market area into
Mecklenburg County.
REASONS FOR THE MERGER.
Mecklenburg. In considering the proposed Merger, the Mecklenburg Board
was attracted to the prospect of affiliating with an institution that has
greater financial resources and a larger banking network with a greater array of
services and higher lending limits. Further, the Mecklenburg Board considered it
important to recognize the contribution of its employees to the profitability of
Mecklenburg. Since the proposed Merger would involve the addition of a new
market for Triangle, the Merger would offer a greater likelihood of maintaining
Mecklenburg's existing branch and employee structure when compared to an
acquisition by a banking institution with existing branches and personnel in
Mecklenburg's market area.
In evaluating the Merger and determining whether to approve the
Agreement, the Mecklenburg Board consulted with financial, legal, accounting and
other advisors as well as Mecklenburg's management, and considered a number of
factors. In addition to those discussed above, and without assigning any
relative or specific weight to any factors, the Mecklenburg Board considered the
following:
(i) The assessment of Triangle's business, operations, earnings,
prospects and financial condition, and enhanced opportunities for growth,
operating efficiencies and expanded customer services expected to result from
the Merger;
(ii) The advice and recommendation of Orr Management that a merger with
Triangle is in the best long-term interests of Mecklenburg;
(iii) The opinion of Mecklenburg's financial advisor, Equity Research,
that the Merger is fair, from a financial point of view, to the shareholders of
Mecklenburg;
(iv) A variety of factors affecting and relating to the overall
strategic focus of Mecklenburg and Triangle, including similarities in business
outlook, approach and corporate culture;
(v) The expectation that the Merger will be a tax-free transaction to
Mecklenburg and its shareholders (see "-- Certain Federal Income Tax
Consequences");
(vi) The larger average trading volume and potential for greater
liquidity offered by the Triangle Stock to be received by Mecklenburg's
shareholders in the Merger;
(vii) By affiliation with Triangle on the terms proposed in the
Agreement, the dividends, earnings and book value per share of Mecklenburg
Stock would be significantly increased; and
(viii) The current and prospective economic and competitive environment
facing financial institutions, including Mecklenburg, and the likelihood of a
continuing trend of consolidation in the financial services industry.
Triangle. The Board of Directors of Triangle constantly analyzes
opportunities to expand its business and geographic markets by entry into new
banking markets, whether by acquisition or de novo branching. Triangle's
particular interest in the Merger results from the opportunity to enter into
Mecklenburg's geographic market that Triangle considers to be an attractive area
for expansion. Triangle currently operates no branches in Mecklenburg County,
North Carolina. While Triangle could enter this market through de novo
branching, the Merger provides the opportunity to expand Triangle's business
without incurring the initial losses that are normally associated with de novo
branching and to gain the advantages of commencing business in these markets
with Mecklenburg's existing deposit base, established customer relationships and
proven management and staff.
RECOMMENDATION OF THE MECKLENBURG BOARD OF DIRECTORS
FOR THE REASONS DESCRIBED ABOVE, THE MECKLENBURG BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF MECKLENBURG VOTE FOR APPROVAL OF
THE AGREEMENT.
RECOMMENDATION OF THE TRIANGLE BOARD OF DIRECTORS
FOR THE REASONS DESCRIBED ABOVE, THE TRIANGLE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF TRIANGLE VOTE FOR APPROVAL OF
THE AGREEMENT.
OPINION OF MECKLENBURG FINANCIAL ADVISOR
Equity Research was retained as financial advisor to Mecklenburg in
connection with the Merger and, on April 25, 1997, rendered an opinion to the
Mecklenburg Board that, as of that date, the Exchange Rate was fair, from a
financial point of view, to Mecklenburg's shareholders. Equity Research has
updated the Mecklenburg Fairness Opinion to August ___, 1997. Equity Research
did not participate in the negotiations between Mecklenburg and Triangle. The
full text of Equity Research's Fairness Opinion is included as Appendix II to
this Joint Proxy Statement/Prospectus and should be read in its entirety with
respect to the procedures followed, assumptions made, matters considered and the
qualifications and limitations on the review undertaken by Equity Research in
connection with the Mecklenburg Fairness Opinion.
The Mecklenburg Fairness Opinion is solely directed to the Mecklenburg
Board and addresses only the fairness, from a financial point of view, of the
Exchange Rate. It does not address Mecklenburg's underlying business decision to
effect the Merger, nor does it constitute a recommendation to any Mecklenburg
shareholder as to how such shareholder should vote with respect to the Merger or
as to any other matter.
The Mecklenburg Fairness Opinion was one of many factors taken into
consideration by the Mecklenburg Board in making its determination to approve
the Agreement and the receipt of the Mecklenburg Fairness Opinion is a condition
precedent to Mecklenburg's consummation of the Merger. The Mecklenburg Fairness
Opinion does not address the relative merits of the Merger as compared to
alternative business strategies that might exist for Mecklenburg or the effect
of any other business combination in which Mecklenburg might engage.
Equity Research is a North Carolina-based corporation primarily engaged
in: (i) performing valuations of, and valuations related to, closely held and
publicly traded companies and (ii) conducting research on the performance and
investment characteristics of publicly-traded companies and publishing such
analysis in the form of reports which are made available to the respective
companies and the investment community. All reports generated by Equity Research
for the purpose of investor relations are designated "Investor Relations
Reports" and Equity Research receives a fee (from the company whose securities
are described) for producing such reports. The reports do not contain a purchase
or investment rating but do consider certain investment characteristics of the
respective company's securities. In addition, Equity Research regularly fields
inquiries from brokers, shareholders and others who have questions about the
respective company.
In connection with the services including and related to the "Investor
Relations Reports", the majority of Equity Research's clients are banks that are
located in North Carolina. Until September 30, 1995, one of Equity Research's
clients was Triangle. Equity Research's engagement by Triangle began on January
17, 1993 and during the period of its engagement, Equity Research provided for
the production of the above-mentioned "Investor Relations Reports" and fielded
questions about Triangle as discussed above.
Equity Research was selected by Mecklenburg as its financial advisor
because of its knowledge of and experience in valuations and capital markets and
expertise in the commercial banking industry. No instructions were given or
limitations imposed by Mecklenburg upon Equity Research regarding the scope of
its investigation or the procedures it followed in rendering its opinion. Equity
Research does not trade in the securities of either Mecklenburg or Triangle for
its own account or for its clients.
In connection with rendering the Mecklenburg Fairness Opinion, Equity
Research, among other things, (i) reviewed the financial terms of the Agreement;
(ii) reviewed drafts of the Joint Proxy Statement/Prospectus; (iii) reviewed and
analyzed the financial position and performance of Mecklenburg and Triangle as
reflected in certain information provided to it for this purpose by their
respective managements; (iv) reviewed historical stock prices of Mecklenburg and
Triangle as well as, to the extent possible, trading activity in their common
stock; (v) reviewed information including but not limited to, annual reports to
shareholders, Forms 10-K and Forms F-2, quarterly reports to shareholders, Forms
10-Q and Forms F-4, proxy statements, Uniform Bank Performance Reports and Call
Reports, and made a general and financial comparison of the two companies to one
another, as well as to comparable institutions; and (vi) analyzed the terms of
other control transactions involving whole bank mergers of commercial banks in
the Southeast. Equity Research also analyzed overall market, economic and other
financial considerations as well. In providing the Mecklenburg Fairness Opinion,
Equity Research relied, without independent verification, on the accuracy and
completeness of the financial and other information provided to it or that was
publicly available and did not independently verify such information.
The following is a summary of certain aspects of the analysis performed
by Equity Research in connection with the Mecklenburg Fairness Opinion.
COMPARABLE TRANSACTIONS. As part of its analysis, Equity Research
reviewed other transactions involving whole-bank acquisitions that had occurred
in the Southeast. Specifically, Equity Research considered more than 250
transactions that occurred between January 1, 1991 and April 25, 1997 in the
following states: North Carolina, South Carolina, Virginia, Georgia, Tennessee
and Alabama. For each of the transactions, Equity Research considered various
factors in an attempt to develop a group of banks which were comparable to
Mecklenburg. These factors included, but were not limited to, asset size,
capital ratios, level of profitability (measured both by return on average
assets as well as return on average equity) and asset quality. Equity Research
also analyzed the type of consideration provided to the seller (stock, cash or
both) and excluded any transactions which had not closed.
Based on its analysis, Equity Research identified 30 transactions which
involved selling companies that it believed had size, financial and other
characteristics that were, on the whole, similar to Mecklenburg. Equity Research
then looked at the terms of those transactions and considered the prices paid
for those institutions based on a variety of ratios in comparison to the price
to be paid to Mecklenburg shareholders in the Merger. Equity Research used
financial data as of December 31, 1996 for purposes of calculating Mecklenburg's
respective ratios and a price of $18.75 per share (the closing price on March
26, 1997) for Triangle Stock for purposes of calculating the value of the
transaction to Mecklenburg's shareholders. The closing price of Triangle Stock
on April 25, 1997 was $19.50.
The range of multiples to stated book value for the 30 above mentioned
transactions was from 135% of book value to 304% of book value. The median price
paid was 209% of stated book value. The comparable figure for Mecklenburg was
210%, slightly higher than the median.
On the basis of tangible book value, the range of multiples was higher
than the multiples of stated book value - from a low of 156% of tangible book
value to a high of 308% of tangible book value. The median multiple of tangible
book value for the 30 transactions was 213%. The comparable figure for
Mecklenburg was 221%, slightly higher than the median.
Likewise, the multiple of trailing 12 month earnings was slightly
higher for Mecklenburg than for the median of the 30 transactions. While the
median price paid on the 30 acquisitions was 19.9 times trailing 12 month
earnings, it was 20.6 times for Mecklenburg. The price to be paid to Mecklenburg
shareholders in the Merger as a percentage of assets was slightly lower than the
median, while it was higher on the basis of deposits. Additionally, the tangible
book premium (excess of the consideration to be received in the transaction less
the tangible book value) as a percentage of core deposits was higher for
Mecklenburg. For the 30 transactions, the median price paid as a percentage of
assets was 18.5% versus 15.6% for Mecklenburg. The median percentage of deposits
was 20.8% versus 23.6% for Mecklenburg. The median tangible book premium as a
percentage of core deposits was 12.7% for the 30 transactions, versus 17.9% for
Mecklenburg. While not all of the multiples in the Mecklenburg transaction were
higher than the medians, they were within a range Equity Research would consider
reasonable.
HISTORY OF STOCK TRADING. Equity Research reviewed the trading history
of Triangle and compared its relative performance to broader market averages for
the period from September 30, 1991 (the earliest date for which it was able to
obtain reliable data) through March 31, 1997. Mecklenburg had no formal market
for its stock and historical pricing data was quite limited. As a result, Equity
Research focused most of its analysis on the price performance of Triangle
Stock. Since closing prices for Triangle Stock as of the end of each quarter
were not available for part of the period considered (it was not listed on
Nasdaq until 1994), Equity Research used the average of the high and low prices
during certain quarters as approximations of the closing price for those
quarters. Based on the above, Triangle Stock increased in value from $5.45 at
September 30, 1991 to $19.125 at March 31, 1997 representing an increase of more
than 251%. It should be noted that these increases only represent
approximations, particularly in light of assumptions Equity Research made which
are discussed above, and should not be interpreted as being actual or exact
percentages of appreciation.
Equity Research compared the trading history of Triangle Stock to three
indices. First, it compared the stock performance of Triangle to the S&P 500.
The S&P 500 index increased at an annual rate of 13.0% between September 30,
1991 and March 31, 1997 (versus 25.5% for Triangle). Equity Research also
compared the stock price performance of Triangle to the S&P Regional Bank index.
This index is represented by approximately 18 regional banks located throughout
the nation. From September 30, 1991 through December 31, 1996 (the most recently
published data available), the index increased at an annual rate of 19.3%
(versus Triangle's 23.3% annual increase over the same period). While the index
is a better benchmark for comparison to Triangle's stock price performance than
is the S&P 500, it still contains many banking institutions which are
significantly larger than Triangle. Equity Research therefore constructed an
index represented by approximately 10 smaller regional banking institutions.
These institutions were located in North Carolina, South Carolina, Georgia and
Virginia and generally had total assets of less than $1 billion. The annual
growth rate in the index between September 30, 1991 and March 31, 1997 was
22.1%, slightly less than Triangle's 25.5% annual return over the same period.
COMPARISON OF MECKLENBURG AND TRIANGLE TO THE INDUSTRY. Equity Research
also compared Mecklenburg and Triangle to a group of publicly-traded commercial
banks operating in the Southeast. Equity Research considered factors including,
but not limited to, asset size, capitalization, asset quality and reserve
coverage, dividend yield, profitability ratios and valuation measures. Equity
Research's analysis indicated that Triangle Stock trades at multiples of
earnings and book value which are slightly higher than the medians of the group,
although Triangle's multiples were slightly closer to the average for the group.
Triangle had a slightly lower level of capitalization, as measured by its equity
to assets ratio, and had a lower level of nonperforming assets than the median
for the 21 banks used in the analysis. Reserve coverage, as measured by the
ratio of the allowance for loan losses to total nonperforming assets, was
significantly higher than the median. Return on average assets was slightly
below the median of the group, while return on average equity was slightly
higher than the median of the group.
Equity Research also compared Mecklenburg to a set of institutions,
although because of Mecklenburg's smaller size, these institutions were
generally smaller than those with which Triangle was compared. Mecklenburg had a
significantly lower level of nonperforming assets and, like Triangle, its
reserve coverage was higher than the median for the group. Its level of
profitability was slightly below the median for the 37 institutions included in
the sample. Based on a price for Mecklenburg Stock of $14.00 per share (the
latest known trading price for Mecklenburg Stock before the proposed Merger was
announced), the price to earnings ratio was slightly lower than the median for
the group, as was the price to book value. Based on the $18.75 per share price
offered to Mecklenburg's shareholders (calculated as Triangle's stock price of
$18.75 per share at the time of the announcement times the Exchange Ratio of
1.0), the multiples of earnings and book value would exceed the medians for the
group.
COMPARISON OF INVESTMENT AND OTHER CHARACTERISTICS OF MECKLENBURG AND
TRIANGLE. Equity Research also considered as part of its analysis differences in
the operating performance, financial condition and the investment
characteristics of Mecklenburg and Triangle. Specific considerations included,
but were not limited to, (i) relative levels of profitability and the components
of those profits; (ii) the composition of the balance sheet; (iii) asset quality
and reserve coverage; (iv) capitalization; (v) management depth; (vi) price
appreciation and liquidity of common stocks; (vii) dividend policy; (viii)
deposit market share; (ix) primary market demographics; and (x) trends in many
of these and other factors.
As part of this analysis, Equity Research compared growth rates of
Triangle and Mecklenburg from 1994 through 1996, as well as for the year ended
December 31, 1996. Among Equity Research's conclusions were that both banks had
experienced rapid growth in earnings, although Triangle's earnings per share had
higher sustained growth. Mecklenburg's growth in deposits and loans was higher
in the 1994 - 1996 as well as the 1995 - 1996 time periods. Mecklenburg had a
slightly higher percentage of deposits in its markets than did Triangle. Most of
the demographic measures Equity Research considered were favorable for
Triangle's and Mecklenburg's primary markets. Triangle also had a more liquid
stock, as defined
by trading volume, superior historical appreciation, and its
dividend represented a significantly higher yield, based on market prices for
their respective stocks.
PRO FORMA TRANSACTION ANALYSIS. Equity Research also considered certain
pro forma effects on Triangle resulting from the acquisition of Mecklenburg.
Specific considerations included, but were not limited to, the impact of the
merger on Triangle's assets, net loans, deposits, equity, equity per share,
earnings, as well as other selected measures. Equity Research also considered
the anticipated impact of the Merger on projected earnings and profitability
ratios, based largely on representations made to it by Mecklenburg and Triangle.
These projections and the pro forma analysis are based on data available at the
time the projections were made and the analysis performed and should not be
construed as necessarily being indicative of the actual impact of the Merger on
Triangle when consummated.
According to the terms of the Agreement, Mecklenburg will merge into a
subsidiary of Triangle. The transaction will be a tax-free stock-for-stock
exchange which is structured as an exchange of 1.0 share of Triangle Stock for
each share of Mecklenburg Stock. Based on Mecklenburg's total outstanding number
of shares as of December 31, 1996 (approximately 2,118,000) and an Exchange
Ratio of 1.0, the total number of shares of Triangle Stock anticipated to be
issued in the Merger is approximately 2,118,000. This number of shares would
represent approximately 16.8% of the total outstanding stock of Triangle after
the Merger.
RELATIVE CONTRIBUTION. Equity Research also analyzed the relative
contributions of Mecklenburg and Triangle to the (i) assets; (ii) deposits;
(iii) net loans; (iv) stockholders' equity; and (v) earnings of the pro forma
combined entities as of December 31, 1996. Equity Research also analyzed the
contribution to projected 1997 earnings of the pro forma combined companies.
Mecklenburg contributed 21.8% of assets as of December 31, 1996. Mecklenburg
contributed 17.4% of deposits, 15.0% of net loans and 17.8% of equity. For the
year ended December 31, 1996, Mecklenburg would have contributed 14.5% to
earnings. Mecklenburg would contribute 15.2% to projected earnings for fiscal
1997. Equity Research excluded from these projections any restructuring charges
and transaction costs since these amounts would generally be nonrecurring.
Although this level of projected earnings did not include the branches that are
to be acquired by Triangle, Mecklenburg would have contributed a lower
percentage of earnings had the operations of the acquired branches been included
in 1997 pro forma earnings. While Mecklenburg would be contributing these
percentages of assets, equity, deposits and earnings, its shareholders would own
approximately 16.8% of the outstanding stock of the combined entity, as was
stated above.
CONTROL PREMIUMS. Another measure Equity Research considered in
arriving at its opinion was the premium of the purchase price over the
pre-announcement price of Mecklenburg's stock price. As was stated previously,
trading activity in Mecklenburg's stock was quite limited. According to
management at Mecklenburg, the most recent trade of which it was aware (which
preceded the announcement of the transaction) occurred at $14.00 per share.
Based on the price of Triangle Stock on the date of the announcement ($18.75),
the value of the consideration offered to Mecklenburg's shareholders was $18.75
per share, which would imply a control premium of 33.9% from the $14.00 price.
Numerous studies have been performed to quantify the premiums paid in
control transactions involving publicly traded stocks. While Equity Research
believes Mecklenburg's
trading activity is more limited than most of the stocks included in
such studies, Equity Research nevertheless considered these studies in its
analysis. Control premiums may be influenced by many factors, such as trading
liquidity, concentration of ownership, relative attraction of the acquiree as
well as other factors. Based on the studies, control premiums have generally
been between 20% and 50% (i.e., the price paid in the acquisition was 20% to 50%
higher than the pre-announcement price). Accordingly, the premium being paid for
Mecklenburg is within the typical range of premiums. It should be noted that the
studies referred to above reflect control premiums for a broad cross-section of
firms and are not necessarily limited to the financial services industry.
The preparation of the Mecklenburg Fairness Opinion requires the
consideration of the most appropriate methods of financial analysis and their
applications. The applications of that analysis consider many factors, all of
which considered together result in a final opinion of fairness or not. As a
result, the evaluation is not susceptible to partial analysis. Accordingly, none
of the above analysis should be considered as a single determinant of fairness
but should be construed as part of an overall analysis.
In its analysis, Equity Research made numerous assumptions with respect
to business conditions, economic conditions, projections of Mecklenburg's and
Triangle's performance, as well as other matters, many of which are beyond
Mecklenburg's and Triangle's control. Any estimates contained in Equity
Research's analysis are not necessarily indicative of future results or values,
nor do any estimates of value purport to be appraisals or reflect prices at
which securities could actually be bought or sold.
Pursuant to a letter agreement dated April 7, 1997, Mecklenburg engaged
Equity Research to render the Mecklenburg Fairness Opinion and agreed to pay
Equity Research $18,000 for its services. Mecklenburg also agreed to reimburse
Equity Research for its reasonable out-of-pocket expenses and to indemnify
Equity Research against certain liabilities, including certain liabilities under
federal securities laws.
OPINION OF TRIANGLE FINANCIAL ADVISOR
Triangle retained Wheat First to act as its financial advisor in
connection with the Merger and to render an oral opinion to Triangle's Effective
Committee and a written opinion to the Triangle Board of Directors as to the
fairness, from a financial point of view, to the holders of Triangle Stock, of
the Exchange Rate. 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. 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 and its prior
relationship with Wheat First. Wheat First regularly publishes research reports
regarding the financial services industry and the businesses and securities of
publicly owned companies in that industry, including Triangle. In the ordinary
course of its business, Wheat First and its affiliates may actively trade in the
equity securities of Triangle for its account and the accounts of its customers,
and therefore may from time to time hold long or short positions in such
security.
Representatives of Wheat First attended the meeting of the Triangle
Executive Committee on April 23, 1997 at which the Agreement was
considered and approved. At the meeting,
Wheat First issued an oral opinion that, as of such date, the Exchange Rate
was fair, from a financial point of view, to the holders of Triangle Stock. A
written opinion dated as of the date of this Joint Proxy Statement/Prospectus
has been delivered to the Triangle Board of Directors to the effect that, as of
the date of this Joint Proxy Statement/Prospectus, the Exchange Rate is fair,
from a financial point of view, to the holders of Triangle Stock.
The full text of Wheat First's opinion, dated as of August ______,
1997, which sets forth certain assumptions made, matters considered and
limitations on review undertaken, is attached as Appendix III 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 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 the Triangle 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 is directed only
to the fairness, from a financial point of view, of the Exchange Rate to the
holders of Triangle Stock and does not constitute a recommendation to any
shareholder of Triangle as to how such shareholder should vote on the Merger.
In arriving at its opinion, Wheat First reviewed certain publicly
available business and financial information relating to Triangle and
Mecklenburg and certain other information provided to it, including the
following: (i) Triangle's Annual Reports to Stockholders, Annual Reports on Form
10-K and related financial information for the three fiscal years ended December
31, 1996; (ii) Triangle's Quarterly Report on Form 10-Q and related financial
information for the quarter ended March 31, 1997; (iii) Triangle's Proxy
Statement dated March 21, 1997; (iv) Mecklenburg's Annual Reports to
Stockholders, Annual Reports on Form F-2 and related financial information for
the three fiscal years ended December 31, 1996; (v) Mecklenburg's Quarterly
Report on Form F-4 for the quarter ended March 31, 1997; (vi) Mecklenburg's
Proxy Statement dated March 24, 1997; (vii) certain publicly available
information with respect to historical market prices and trading activities for
the Triangle Stock and the Mecklenburg Stock and for certain publicly traded
financial institutions which Wheat First deemed relevant; (viii) certain
publicly available information with respect to banking companies and the
financial terms of certain other mergers and acquisitions which Wheat First
deemed, relevant; (ix) the Agreement; (x) certain estimates of the cost savings
and revenue enhancements projected by Triangle and Mecklenburg for the combined
company; (xi) other financial information concerning the businesses and
operations of Triangle and Mecklenburg, including certain audited financial
information and certain internal financial analyses and forecasts for Triangle
and Mecklenburg prepared by senior managements of these companies; and (xii)
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 Mecklenburg 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
Mecklenburg included in the Agreement, and Wheat First has not assumed
any responsibility for independent verification of such information. Wheat First
relied upon the managements of Triangle and Mecklenburg 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 judgements of such management 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 Mecklenburg are adequate to cover such
losses. Wheat First did not review any individual credit files of Triangle and
Mecklenburg, nor did it make an independent evaluation or appraisal of the
assets or liabilities of Triangle and Mecklenburg. Wheat First also assumed that
the Merger will be consummated in accordance with the terms and conditions of
the Agreement in due course without unnecessary delay.
Additionally, Wheat First considered certain financial and stock market
data of Triangle and Mecklenburg and compared that data with similar data for
certain publicly-held financial institutions and considered the financial terms
of certain other comparable transactions that recently have been announced or
effected, as further discussed below.
In connection with rendering its opinion, 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 Rate to holders of
Triangle Stock was to some extent a subjective one based on the experience and
judgement 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 as a whole, 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 Mecklenburg.
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 Mecklenburg. 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 Triangle.
Wheat First's opinion is just one of the many factors taken into
consideration by the Triangle Board of Directors in determining to approve the
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.
The following is a summary of the analyses performed by Wheat First in
connection with its oral opinion delivered to the Triangle Executive Committee
on April 23, 1997:
COMPARABLE ACQUISITIONS ANALYSIS. Wheat First performed an analysis of
premiums paid in twelve selected recently completed whole-bank acquisitions with
deal values between $23 and $55 million in Virginia and North Carolina announced
between August 30, 1995 and April 23, 1997 (the "Selected Transactions").
Multiples of book value, trailing twelve months earnings and annualized latest
quarter earnings were compared to the multiples and premiums implied by the
consideration offered to Mecklenburg in the Merger. The Selected Transactions
included the following pending and completed transactions: United
Bankshares/First Patriot Bankshares Corporation; LSB Bankshares, Inc./Old North
State Bank; FCFT, Inc./Blue Ridge Bank; CCB Financial Corporation/Salem Trust
Bank; MainStreet Bankgroup/Hanover Bank; Centura Banks, Inc./FirstSouth Bank;
MainStreet Bankgroup/FNB of Clifton Forge; Centura Banks, Inc./First Community
Bank; Centura Banks, Inc./First Commercial Holding Corporation; F&M National
Corporation/FB&T Financial Corporation; United Carolina Bancshares
Corporation/Triad Bank; First Charter Corporation/Bank of Union.
Based on the market value of Triangle Stock on April 22, 1997, and
financial data for Mecklenburg as of March 31, 1997, the analysis yielded ratios
of the implied consideration based on the Exchange Rate offered by Triangle to
Mecklenburg: (i) to book value of 211.04% compared to an average of 253.11%, a
minimum of 177.74%, and a maximum of 303.85% for the Selected Transactions; and
(ii) to trailing twelve months earnings per share multiple of 20.74 times
compared to an average of 21.55 times, a minimum of 17.19 times, and a maximum
of 28.84 times for the Selected Transactions; and (iii) to latest quarter
earnings per share annualized of 19.50 times compared to an average of 19.19
times, a minimum of 16.38 times, and a maximum of 24.58 times for the Selected
Transactions.
The following comparisons were based on financial data as of and for
the three-month period ended March 31, 1997, for Mecklenburg and the twelve
months reporting period prior to the announcement of each transaction for each
acquiree in the Selected Transactions. Mecklenburg had : (i) equity to assets of
7.16% compared to an average of 9.69%, a minimum of 7.04%, and a maximum of
19.74% for the Selected Transaction acquirees; (ii) nonperforming assets to
total assets of 0.00% compared to an average of 0.38%, a minimum of 0.00%, and a
maximum of 1.10% for the Selected Transaction acquirees; (iii) returns on
average assets before extraordinary items of 0.84% compared to an average of
1.22%, a minimum of 0.92%, and a maximum of 2.12% for the Selected Transaction
acquirees; (iv) returns on average equity before extraordinary items of 11.30%
compared to an average of 12.63%, a minimum of 9.39%, and a maximum of 15.94%
for the Selected Transaction acquirees; and (v) an efficiency ratio of 48.18%
compared to an average of 62.33%, a minimum of 36.78%, and a maximum of 78.05%
for the Selected Transaction acquirees.
In addition, Wheat First performed an analysis of the market valuations
prior to the transaction announcement of the acquirors in the Selected
Transactions. The following comparisons were based on financial data as of March
31, 1997 for Triangle and the twelve months reporting period prior to the
announcement of each transaction for each acquirer in the Selected Transactions:
Triangle had (i) market price to book value of 222.95% versus an average of
187.54% for the Selected Transaction acquirors; and (ii) market price to latest
twelve months earnings per share of 17.36 times versus an average of 13.40 times
for the Selected Transaction acquirors.
IMPACT ANALYSIS. Wheat First estimated the impact of the transaction to
Triangle's book value and 1997 estimated earnings per share assuming that the
Merger qualifies as a pooling-of-interests for accounting and financial
reporting purposes. Utilizing financial data as of March 31,
1997 for both Triangle and Mecklenburg, Wheat First noted that the transaction
should result in 0.56% dilution to Triangle's book value per share, 0.64%
accretion to Triangle's 1997 estimate earnings per share (the consensus of
investment research analysts' estimates as compiled by nationally recognized
earnings estimate services) assuming expense savings of 13.3% of Mecklenburg's
latest quarter expenses annualized, and that the expense savings were realized
for the full year.
DISCOUNTED DIVIDENDS ANALYSIS. Using discounted dividends analysis,
Wheat First estimated the present value of the future stream of dividends that
Mecklenburg 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 expense savings were achieved. Wheat First
then estimated the terminal values for Mecklenburg Stock at the end of the
period by applying multiples ranging from 15 times to 18 times earnings
projected in year five. The dividend streams and terminal values were then
discounted to present values using different discount rates (ranging from 14% to
16%) chosen to reflect different assumptions regarding the required rates of
return to holders or prospective buyers of Mecklenburg Stock. This discounted
dividends analysis indicated reference ranges of between $18.93 and $24.28 per
share for Mecklenburg Stock. These values compare to the implied consideration
based on the Exchange Rate offered by Triangle to Mecklenburg in the Merger of
$19.50 based on the market value of Triangle Stock on April 22, 1997.
No company or transaction used as a comparison in the above analysis is
identical to Triangle, Mecklenburg or the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
subjective judgements 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.
The Triangle Fairness 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 the
date of this Joint Proxy Statement/Prospectus. Events occurring after the date
of this Joint Proxy Statement/Prospectus could materially affect the assumptions
and conclusions contained in the Triangle Fairness Opinion. Wheat First has not
undertaken to reaffirm or revise the Triangle Fairness Opinion or otherwise
comment on any events occurring after the date thereof.
As compensation for Wheat First's services, Triangle has agreed to pay
Wheat First a financial advisory fee equal to $150,000 payable as follows:
$50,000 upon the execution of the Agreement and $100,000 upon the date of
closing of the Merger. Triangle also has agreed 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. In the past, Triangle has retained Wheat First to provide financial
advisory services from time to time, for which it received financial advisory
fees in customary amounts.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax consequences of
the Merger generally applicable to Mecklenburg and its shareholders under the
Code. It does not include consequences of state, local or other tax laws or
special consequences to particular Mecklenburg shareholders having special
situations. Accordingly, each Mecklenburg shareholder is urged to consult with
his or her own tax advisor regarding specific tax consequences of the Merger.
As a condition of the consummation of the Merger, Triangle has received
an opinion of Coopers & Lybrand L.L.P., tax advisors to Triangle, concerning the
tax consequences of the Merger, which provides, in substance, that the federal
income tax consequences of the Merger are as follows:
(i) The Merger will constitute a tax-free reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code;
(ii) The conversion of Mecklenburg Stock into Triangle Stock
will not give rise to any income to, and no gain or loss will be recognized by,
Mecklenburg shareholders except with respect to any cash payments in lieu of
fractional shares or dissenter's rights (see subparagraphs (v) and (vi)
below);
(iii) The aggregate tax basis of the shares of Triangle Stock
received by a Mecklenburg shareholder will be equal to the tax basis of the
shares of Mecklenburg Stock converted into such shares of Triangle Stock;
(iv) The holding period of the shares of Triangle Stock
received by a Mecklenburg shareholder will include the holding period of the
shares of Mecklenburg Stock converted into such shares of Triangle Stock
provided that such stock was held as a capital asset on the date of consummation
of the Merger;
(v) The payment of cash to Mecklenburg shareholders in lieu
of the actual issuance of fractional shares of Triangle Stock will be treated
for tax purposes as if fractional shares of Triangle Stock were in fact issued
and the cash was then distributed by Triangle in a redemption of such fractional
shares subject to the provisions and limitations of Section 302 of the Code
("Section 302"). Any gain or loss recognized will be capital gain or loss,
assuming that the shares of Triangle Stock would have been a capital asset in
the hands of the shareholder; and,
(vi) The receipt of cash by a dissenting Mecklenburg
shareholder will be treated as received by that shareholder as a distribution by
Mecklenburg in redemption of such shareholder's common stock, subject to the
provisions and limitations of Section 302.
Any gain or loss recognized will be capital gain or loss, assuming that the
shares of Mecklenburg Stock are a capital asset in the hands of the
shareholder.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN OF THE ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. MECKLENBURG SHAREHOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER
APPLICABLE TAX LAWS, THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS, AND THE
TAX CONSEQUENCES OF SALES OF TRIANGLE STOCK.
ACCOUNTING TREATMENT
The Agreement requires that the Merger be treated as a
pooling-of-interests for accounting purposes. Accordingly, under generally
accepted accounting principles, the assets and liabilities of Mecklenburg will
be reported on the books of Triangle at their book values at the Effective Time
and Triangle's consolidated financial statements for prior periods will be
restated to reflect the consolidated assets, liabilities and operations of
Mecklenburg for such periods. No goodwill or other intangible assets will be
created in connection with the Merger.
Among other requirements, in order for the Merger to qualify for
pooling-of-interests accounting treatment, substantially all (at least 90%) of
the outstanding shares of Mecklenburg Stock must be exchanged for Triangle
Stock. Generally, if the number of fractional shares of Triangle Stock resulting
from the Merger for which cash is paid, and shares held by Mecklenburg
shareholders who exercise their Dissenters' Rights together represent more than
10% of the shares to be issued by Triangle in connection with the Merger, then
the Merger will not qualify for the pooling-of-interests method of accounting.
Consummation of the Merger is conditioned on receipt by Triangle, unless waived,
in whole or in part, of assurances in form and content satisfactory to Triangle
from its independent accountants, Coopers & Lybrand L.L.P., that the Merger may
be treated as a pooling-of-interests for accounting purposes. (See "- Conditions
to Consummation of the Merger.")
INTEREST OF CERTAIN PERSONS IN THE MERGER
DIRECTORS. As soon as practicable following the Effective Time, Cy N.
Bahakel, Chairman of the Board of Directors of Mecklenburg, will be appointed to
the Board of Directors of Triangle for a term of two years from the Effective
Time. Mr. Bahakel shall be compensated in accordance with Triangle's then
current policies and procedures. The remaining members of the Board of Directors
of Mecklenburg, other than those who choose not to serve, will remain on the
Mecklenburg Board of Directors following the Effective Time. Each such person
shall be compensated in accordance with Mecklenburg's then current policies and
procedures.
As a result of the Merger and pursuant to the terms of the Mecklenburg
Option Plan for Directors, at the Effective Time all Mecklenburg Options held by
directors of Mecklenburg will automatically vest in full. Currently, Mecklenburg
Options granted to directors vest 20% a year. The following table sets forth
information for directors and executive officers of Mecklenburg who held options
as of June 30, 1997, giving effect to the automatic vesting of Mecklenburg
Options held by directors of Mecklenburg as if the Merger had occurred on June
30, 1997.
Number of Option Market
Name Title Vested Options Price Value(1)
- ---- -------- -------------- -------- ---------
Helen C. Adams Director 15,000 $11.50 $337,550
H. Perrin Anderson Director and 15,000 $11.50 $337,550
Vice Chmn
Cy N. Bahakel Director and 15,000 $11.50 $337,550
Chairman
Carl G. Belk Director 15,000 $11.50 $337,550
W. E. Bryant, Jr. Director 15,000 $11.50 $337,550
Claude T. Davis, Sr. Director 15,000 $11.50 $337,550
Aubrey J. Elam Director 15,000 $11.50 $337,550
Dee-Dee W. Harris Director 15,000 $11.50 $337,550
John H. Ketner, Jr. Director, President 74,373 $ 8.86(2) $658,945
and CEO
John T. Roper, M.D. Director 15,000 $11.50 $337,550
Paul J. Simon Director 15,000 $11.50 $337,550
Allan W. Singer Director 15,000 $11.50 $337,550
Frank W. Ix Senior Vice Pres. 16,905 $ 7.67(2) $129,661
Gregory L. Gibson Senior Vice Pres. 625 $ 8.40(2) $ 5,250
Jean Galloway Senior Vice Pres. 8,592 $ 8.34(2) $ 71,657
Total 265,495 -- 4,578,013
(1) Based on the closing sale price of Triangle Stock of $22.50 on June 30, 1997.
(2) Represents the average option price.
OFFICERS. Pursuant to an employment agreement dated January 28, 1997
between Mecklenburg and John H. Ketner, Jr., President of Mecklenburg, upon the
consummation of the Merger, Mr. Ketner will have the right to terminate his
employment agreement and receive a severance payment in an amount equal to Mr.
Ketner's base salary for the full two years preceding the Merger ($242,000). In
addition, Mr. Ketner shall be entitled to continued hospitalization, health,
dental and medical insurance benefits for two years after such termination.
To assist in post-Merger matters, Triangle anticipates entering into an
agreement with John H. Ketner Jr., President of Mecklenburg as of the Effective
Time. Pursuant to the agreement, Mr. Ketner will remain as President of
Mecklenburg until March 31, 1998, or should a new President be hired before that
time, Mr. Ketner will consult with Triangle until March 31, 1998, for which Mr.
Ketner will be paid $25,000.
At the Effective Time, Triangle anticipates entering into an employment
agreement with Frank W. Ix, Senior Vice President and Chief Lending Officer of
Mecklenburg. The agreement will be for a period of one year from the Effective
Time and will provide Mr. Ix with a base annual salary of $92,000.
On , 1997, Triangle and Gregory L. Gibson, Senior Vice
President of Mecklenburg, entered into an agreement whereby Mr. Gibson has
agreed to remain in the employment of Mecklenburg for 30 days after the
Effective Time to assist in post-Merger matters. Provided Mr. Gibson remains in
the employ of Mecklenburg until 30 days after the Effective Time, Triangle will
cause Mr. Gibson to be paid an amount equal to six times his base monthly salary
(approximately $ ), payable at the Effective Time, and $60,000 on
January 2, 1998. Both payments are contingent on the satisfaction by
Mecklenburg of Section 7.03(k) of the Agreement (which reqires that, upon an
evaluation of Mecklenburg's securities and derivatives portfolio five days prior
to the Effective Time, the sale of such portfolio on such date would not result
in a loss on Mecklenburg's income statement in excess of $250,000) and the
satisfaction by Mr. Gibson's department at the Effective Time of the performance
goals established for it under Mecklenburg's incentive compensation plan for
1997.
EMPLOYEES. Subject to the availability of suitable positions,
Triangle shall make a good faith effort to cause Mecklenburg to continue
employment of all employees of Mecklenburg employed by Mecklenburg immediately
prior to the Effective Time. If any employee is not retained by Mecklenburg at
the Effective Time, Mecklenburg will pay to each employee its standard severance
package.
The Agreement provides that Mecklenburg's employee benefit plans will
be reviewed and appropriate amendments, consolidations or terminations will be
made thereto at or after the Effective Time; provided, however, that the
employees of Mecklenburg (i) shall be eligible to receive group hospitalization,
medical, life, disability and similar benefits on the same basis and under the
same terms available to the present employees of Triangle and its subsidiaries,
(ii) in the event a Mecklenburg employee benefit plan is terminated, the rights
and benefits of a Mecklenburg employee thereunder shall become fully vested,
with each participating Mecklenburg employee having the right or option either
to receive the benefits to which he or she is entitled as a result of such
termination or to have such benefits "rolled" into the appropriate Triangle
employee benefit plan, on the same basis and applying the eligibility standards
as would apply to the employees of Triangle and its subsidiaries as if such
employee's prior service to Mecklenburg had been performed on behalf of Triangle
and its subsidiaries for qualification, participation and vesting (but not for
funding purposes), and (iii) in the event a Mecklenburg employee benefit plan is
merged into a Triangle and its subsidiaries employee benefit plan, shall be
entitled to participate in such plan on the same basis and applying the same
eligibility standards as would apply to employees of Triangle and its
subsidiaries. Triangle has agreed that for purposes of qualification,
participation and vesting, the employees of Mecklenburg shall receive credit for
their periods of service to Mecklenburg.
MECKLENBURG OPTIONS. Under the Agreement at the Effective Time, all
rights with respect to Mecklenburg Options which are outstanding at the
Effective Time, whether or not then exercisable, will be converted into and will
become rights with respect to Triangle Stock, and Triangle will assume
Mecklenburg's obligations with respect to each such Mecklenburg Option, in
accordance with the terms of the applicable Mecklenburg Option Plan and the
related option agreements. From and after the Effective Time, (i) each
Mecklenburg Option assumed by Triangle may be exercised solely for shares of
Triangle Stock, (ii) the number of shares of Triangle Stock subject to each
Mecklenburg Option will be equal to the number of shares of Mecklenburg Stock
subject to such Mecklenburg Option immediately prior to the Effective Time
multiplied by the Exchange Rate, rounded down to the nearest whole share, and
(iii) the per share exercise price under each such Mecklenburg Option will be
adjusted by dividing the per share exercise price thereunder by the Exchange
Rate and rounding up to the nearest cent, provided that the number of shares
of Triangle Stock subject to each Mecklenburg Option and the per share exercise
price will, in accordance with the terms of the Mecklenburg Option and the per
share exercise price, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or other similar
transaction subsequent to the Effective Time.
INDEMNIFICATION. Pursuant to the Agreement, if following the Effective
Time Mecklenburg is merged into another subsidiary of Triangle and Mecklenburg
is not the surviving entity, Triangle will indemnify the present and former
officers and directors of Mecklenburg against liabilities from actions in their
official capacities as directors and officers of Mecklenburg to the same extent
Mecklenburg indemnifies its directors and officers.
EXPENSES AND FEES
The Agreement provides that Mecklenburg and Triangle each will pay its own
legal, accounting and financial advisory fees and all its other costs and
expenses (including filing fees, printing costs and travel expenses) incurred or
to be incurred in connection with the performance of its obligations under the
Agreement or otherwise in connection with the Merger.
DISTRIBUTION OF TRIANGLE CERTIFICATES
First-Citizens Bank & Trust Company, Raleigh, North Carolina, will
serve as the Exchange Agent to effect the exchange of certificates in connection
with the Merger. Immediately prior to the Effective Time, Triangle shall deposit
with the Exchange Agent the number of shares of Triangle Stock and the amount of
cash necessary to consummate the Merger. Promptly after the Effective Time, the
Exchange Agent will forward to each holder of record certificates that
immediately prior to that date represented outstanding shares of Mecklenburg
Stock (other than dissenting shareholders) a letter of transmittal and
instructions for the record holder's use in effecting the surrender of the
certificates in exchange for certificates representing shares of Triangle Stock.
SHAREHOLDERS OF MECKLENBURG SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE
UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS IS RECEIVED. Upon surrender of
any certificate for exchange and cancellation, together with a duly endorsed
letter of transmittal, if applicable, the holder of such certificate shall be
entitled to receive in exchange therefor (i) certificates evidencing the number
of whole shares of Triangle Stock into which their shares of Mecklenburg Stock
will have been converted, together with cash for any fractional share, or (ii)
in the case of a shareholder properly exercising dissenters' rights, the amount
of cash determined as provided in Article 13 of the NCBCA.
Until surrendered as described above, each Mecklenburg certificate will
be deemed for all corporate purposes to evidence only the right to receive the
number of shares of Triangle Stock to which the shareholder has become entitled.
However, after the Effective Time and regardless of
whether they have surrendered their Mecklenburg certificates, Mecklenburg
shareholders shall be entitled to vote and to receive any dividends or other
distributions (for which the record date is after the Effective Time) on the
number of whole shares of Triangle Stock into which their Mecklenburg Stock has
been converted; provided, however, that no such dividends or other distributions
will be paid to the holders of such Mecklenburg certificates unless and until
their Mecklenburg certificates are surrendered. Upon surrender of each
Mecklenburg certificate, there will be paid the amount, without interest
thereon, of dividends and other distributions, if any, that became payable on
the shares of Triangle Stock represented by such certificate after the Effective
Time but had not been paid to the record owner thereof.
Shareholders whose Mecklenburg certificates have been lost, stolen or
destroyed will be required to furnish evidence satisfactory to Triangle of
ownership of such Mecklenburg certificates and of such loss, theft or
destruction, and to furnish appropriate and customary indemnification (which may
include an indemnity bond), in order to receive the Triangle certificates or
cash to which they are entitled.
If any certificates for shares of Triangle Stock are to be issued in a
name other than that in which the certificates surrendered for exchange are
issued, the certificates so surrendered shall be properly endorsed or otherwise
be in proper form for transfer. The person requesting such exchange shall affix
any requisite stock transfer tax stamps to the certificates surrendered, provide
funds for such purpose, or establish to the satisfaction of the Exchange Agent
that such taxes are not payable.
After the Effective Time, there will be no transfers on the transfer
books of Mecklenburg of the shares of Mecklenburg Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates representing such shares are presented for transfer to the Exchange
Agent, they will be canceled and exchanged for a certificate representing shares
of Triangle Stock pursuant to the terms of the Agreement.
Neither Mecklenburg, Triangle, the Exchange Agent nor any other person
will be liable to former holders of Mecklenburg Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar law.
RESALE OF TRIANGLE STOCK
Although the shares of Triangle Stock to be issued in the Merger have
been registered under the Securities Act, such shares may not be traded freely
and without restriction by those shareholders deemed to be "affiliates" of
Mecklenburg prior to the Effective Time. "Affiliates" are generally defined as
persons who control, are controlled by, or are under common control with
Mecklenburg and generally include directors, executive officers, and any current
shareholder of Mecklenburg who owns an amount of Mecklenburg Stock equal or
greater than 10% of the issued and outstanding shares of Mecklenburg Stock.
Persons deemed to be affiliates of Mecklenburg may not resell shares of Triangle
Stock received by them in connection with the Merger unless (i) sales are made
pursuant to an effective registration statement under the Securities Act, (ii)
sales are made in compliance with Rule 145 promulgated under the Securities Act,
or (iii) sales are made pursuant to another exemption from registration under
the Securities Act. In addition, as a condition of treating the Merger as a
pooling-of-interests for accounting purposes, affiliates of Triangle and
Mecklenburg will be prohibited from selling or transferring any shares of
Triangle
Stock from the date generally 30 days prior to consummation of the
Merger and until Triangle shall have published results of its operations for a
period covering at least 30 days following the Effective Time. The stock
certificates representing the shares of Triangle Stock issued to persons deemed
to be affiliates of Mecklenburg in the Merger will bear a legend summarizing the
above restrictions, and Triangle will instruct its transfer agent to impose stop
orders with respect to such certificates.
This Joint Proxy Statement/Prospectus may not be used for the resale of
any shares of Triangle Stock received in connection with the Merger.
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
The following is only a summary of the rights of a dissenting
Mecklenburg shareholder under Article 13 of the NCBCA. Any Mecklenburg
shareholder who intends to dissent to the Merger should carefully review the
text and comply with the requirements of Article 13 of the NCBCA included herein
as Appendix IV, and should also consult with his or her attorney. FAILURE TO
COMPLY WITH THE PROCEDURES PRESCRIBED BY APPLICABLE LAW WILL RESULT IN THE LOSS
OF DISSENTERS' RIGHTS. No further notice of the events giving rise to
dissenters' rights or any steps associated therewith will be furnished to
Mecklenburg shareholders and no notice of approval of the Merger will be given
to a dissenting shareholder.
Article 13 of the NCBCA, the text of which is attached as Appendix IV,
provides in detail the procedure which must be followed by any Mecklenburg
shareholder objecting to the Merger and desiring to be paid the fair value of
his or her shares. The Merger gives rise to shareholder dissenter's rights under
such statute which, in summary, provides as follows:
(a) Any Mecklenburg shareholder may give to Mecklenburg before the vote
is taken on the Merger written notice of his or her intent to demand payment for
his or her shares if the Merger is effected. A dissenting shareholder's notice
to Mecklenburg should be mailed to John H. Ketner Jr., President, Bank of
Mecklenburg, 2000 Randolph Road, Charlotte, North Carolina 28207, telephone
(704) 375-2265. A vote against the Merger will not be deemed to satisfy the
notice requirement.
(b) Such shareholder must not vote his or her shares in favor of the
Merger. ANY HOLDER OF MECKLENBURG STOCK WHO RETURNS A SIGNED PROXY BUT FAILS TO
PROVIDE INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH SHARES ARE TO BE VOTED WILL
BE DEEMED TO HAVE VOTED IN FAVOR OF THE MERGER AND WILL NOT BE ENTITLED TO
ASSERT DISSENTERS' RIGHTS OF APPRAISAL.
(c) No later than ten days after the Merger is effected, Mecklenburg
must send to such shareholder by registered or certified mail, return receipt
requested, a written dissenter's notice stating when the payment demand must be
sent and where certificates for certificated shares must be deposited, informing
holders of such shares as to the restrictions on transfer of such shares,
supplying a form for demanding payment and setting a date by which Mecklenburg
must receive the payment demand, which shall not be fewer than 30 nor more than
60 days after the date such notice is mailed. The shareholder must also be
provided a copy of Article 13. The shareholder receiving such notice must demand
payment and deposit certificates in accordance with the terms of the notice.
(d) As soon as the Merger is effected, or upon receipt of a payment
demand, Mecklenburg shall offer to pay each dissenter who has complied with the
requirements of the statute, the amount Mecklenburg estimates to be the fair
value of his or her shares, plus interest accrued to the date of payment, in
full satisfaction of the demand of each dissenting shareholder who agrees in
writing to accept the same. The offer of payment must be accompanied by
Mecklenburg's most recent available balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of offer of payment, an income
statement for that year, a statement of cash flows for that year, the latest
available interim financial statements, if any, a statement of Mecklenburg's
estimate of the fair value of the shares, an explanation of how the interest was
calculated, a statement of the dissenting shareholder's rights to demand payment
and a copy of Article 13.
(e) If the shareholder believes the amount offered by Mecklenburg is
less than the fair value of his or her shares or the interest was incorrectly
calculated or Mecklenburg fails to make payment within 30 days after the
dissenting shareholder accepts its offer, the dissenting shareholder must
notify, in writing, Mecklenburg of his or her own estimate of the fair value of
his or her shares and the amount of interest due, and demand payment of the
same, or notify Mecklenburg of its failure to act promptly. Such notice must be
given within 30 days after Mecklenburg offers payment or fails to perform.
(f) If demand for payment remains unsettled, the shareholder may,
within 60 days after the date of his or her payment demand, petition the court
to determine the fair value of the shares and accrued interest. If the
dissenting shareholder does not commence the proceeding within the 60 day
period, he or she shall have an additional 30 days to either: (i) accept in
writing Mecklenburg's offer or (ii) assume the status of a nondissenting
shareholder.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma combined condensed balance sheet as
of March 31, 1997 and the unaudited pro forma combined condensed statements of
income for the three months ended March 31, 1997 and for the years ended
December 31, 1996, 1995 and 1994 combine (i) the historical financial statements
of Triangle and Mecklenburg using the pooling-of-interests method of accounting
for business combinations, and (ii) Triangle and Mecklenburg pro forma combined
financial information and (a) the historical financial information of eight
branches of United Carolina Bank and two branches of Branch Banking and Trust
that Triangle has agreed to acquire (the "Branch Acquisition") under the
purchase method of accounting for business combinations and (b) the trust
securities issued by a subsidiary trust of Triangle in June 1997 (the "Trust
Securities"). The pro forma combined condensed balance sheet gives effect to the
Merger and Branch Acquisition as if the transactions had occurred on March 31,
1997. The pro forma income statements give effect to the Merger as if the
transaction had occurred on January 1, 1994 and the Branch Acquisition as if the
transaction had occurred on January 1, 1996. The pooling-of-interests method of
accounting requires all assets and liabilities to be carried at their book
values. The purchase method of accounting requires that all assets and
liabilities be adjusted to their estimated fair values as of the date of the
acquisition. See "INFORMATION ABOUT TRIANGLE AND TRIANGLE BANK Pending Branch
Acquisition", and "- Trust Securities Issuance".
The pro forma statements are provided for informational purposes. The
unaudited pro forma financial information presented is not necessarily
indicative of what the actual financial position or results of operations would
have been had such transactions been completed as of March 31, 1997 or as of the
beginning or each of the periods presented and is not indicative of future
financial position or future results. The unaudited pro forma financial
information does not reflect any non-recurring expenses which may be realized in
connection with the transactions. Current estimates of non-recurring expenses
for 1997 are $1.2 million after tax. The cost savings associated with the
possible operating efficiencies and synergies have not been quantified, nor are
any such savings assured. The pro forma financial statements should be read in
conjunction with the audited financial statements and the notes thereto of
Triangle and Mecklenburg and their unaudited interim financial statements
incorporated herein by reference.
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Balance Sheet
March 31, 1997
(Unaudited)
(In Thousands)
Pro Forma
Pro Forma Combined
Combined Trust Securities Triangle Bancorp,
Triangle Bancorp and Trust Securities, Bank
Triangle Bank of and Bank UCB/BBT of Mecklenburg and
Assets Bancorp Mecklenburg Adjustments of Mecklenburg Branches (1) Adjustments UCB/BBT Branches
- -------------------------- ---------------------------------------------------------------------------------------------------
Cash and Due From Banks $ 29,623 $ 5,595 $ -- $ 35,218 $ 141,599 $ (17,452)(2) $ 36,868
(122,497)(3)
Investment Securities 254,080 135,772 -- 389,852 19,950(12) 122,497 (3) 532,299
--
Federal Funds Sold 4,170 -- -- 4,170 -- -- 4,170
Loans, net 671,749 123,019 -- 794,768 71,080 (1,066)(4) 864,782
Premises and Equipment 19,913 6,415 -- 26,328 2,231 28,559
Intangible Assets 11,290 915 -- 12,205 -- 17,452 (2) 30,723
1,066 (4)
Other Assets 18,775 1,796 -- 20,571 -- -- 20,571
Total Assets $ 1,009,600 $ 273,512 $-- $ 1,283,112 $ 234,860 -- $ 1,517,972
Liabilities
Noninterest Bearing Demand $ 132,745 $ 11,030 $-- $ 143,775 $ 20,028 $ -- $ 163,803
Interest Bearing Demand 77,457 61,032 -- 138,489 24,825 -- 163,314
Savings and Money Market
Deposits 198,905 6,386 -- 205,291 36,743 -- 242,034
Time Deposits 470,387 117,712 -- 588,099 133,314 -- 721,413
Total Deposits 879,494 196,160 -- 1,075,654 214,910 -- (11) 1,290,564
Borrowed Funds 30,467 54,683 -- 85,150 -- -- 85,150
Redeemable Capital Securities of
Subsidiary Trust holding Junior
Subordinated Debentures of the
Company -- 19,950(12) -- 19,950
Other Liabilities 11,483 3,097 -- 14,580 -- -- 14,580
Total Liabilities 921,444 253,940 -- 1,175,384 234,860 -- 1,410,244
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Balance Sheet (cont'd)
March 31, 1997
(Unaudited)
(In Thousands)
Pro Forma
Pro Forma Combined
Combined Trust Securities Triangle Bancorp,
Triangle Bancorp and Trust Securities, Bank
Triangle Bank of and Bank UCB/BBT of Mecklenburg and
Bancorp Mecklenburg Adjustments of Mecklenburg Branches (1) Adjustments UCB/BBT Branches
-----------------------------------------------------------------------------------------------------
Shareholders' Equity
- ------------------------
Common Stock 61,425 4,238 10,892 (5) 76,555 -- -- 76,555
Surplus -- 10,892 (10,892)(5) -- -- -- --
Retained Earnings 27,238 4,341 -- 31,579 -- -- 31,579
Unrealized (Gain/Loss) on
Securities AFS (507) 101 -- (406) -- -- (406)
Total Shareholders'
Equity 88,156 19,572 -- 107,728 -- -- 107,728
Total Liabilities and
Shareholders' Equity $ 1,009,600 $ 273,512 $-- $ 1,283,112 $ 234,860 $-- $ 1,517,972
See Notes to Pro Forma Combined Condensed Financial Information.
52
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
March 31, 1997
(Unaudited)
(In Thousands)
Pro Forma Pro Forma
Combined Triangle Bancorp,
Triangle Trust Securities,
Bancorp and Trust Securities UCB/BB&T and
Triangle Bank of Bank of and UCB/BB&T Bank of
Bancorp Mecklenburg Adjustments Mecklenburg Branches (1,6) Adjustments Mecklenburg
-------------------------------------------------------------------------------------------------
Interest Income
Loans $ 15,573 $2,573 $ - $18,146 $1,641 $(89) (9) $19,698
Federal Funds Sold 111 44 - 155 - - 155
Investment Securities 3,556 1,789 - 5,345 309 1,899 (7) 7,553
-------------------------------------------------------------------------------- -------------
Total Interest Income 19,240 4,406 - 23,646 1,950 1,810 27,406
-------------------------------------------------------------------------------- -------------
Interest Expense
Deposits 8,216 2,287 - 10,503 2,266 - 12,769
Redeemable Capital Securities
of Subsidiary Trust holding
Junior Subordinated Debentures 468 (13) 468
of the Company
-------------------------------------------------------------------------------- -------------
Total Interest Expense 8,640 2,993 - 11,633 2,734 - 14,367
-------------------------------------------------------------------------------- -------------
Net Interest Income
before Provision for Loan
Losses 10,600 1,413 - 12,013 (784) 1,810 13,039
Provision for Loan
Losses 500 44 - 544 - 50 (8) 594
-------------------------------------------------------------------------------- -------------
Net Interest Income after
Provision for Losses 10,100 1,369 - 11,469 (784) 1,760 12,445
Noninterest income 1,988 430 - 2,418 387 2,805
193 (8)
Noninterest expenses 7,261 888 - 8,149 659 436 (9) 9,437
-------------------------------------------------------------------------------- -------------
Net Income before taxes 4,827 911 - 5,738 (1,056) 1,131 5,813
Income Taxes 1,785 377 - 2,162 - 28 (10) 2,190
-------------------------------------------------------------------------------- -------------
Net Income $3,042 $534 $ - $3,576 $(1,056) $1,103 $3,623
-------------------------------------------------------------------------------------------------
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
March 31, 1997
(Unaudited)
(In Thousands)
Pro Forma Pro Forma
Combined Triangle Bancorp,
Triangle Trust Securities,
Bancorp and Trust Securities UCB/BB&T and
Triangle Bank of Bank of and UCB/BB&T Bank of
Bancorp Mecklenburg Adjustments Mecklenburg Branches (1,6) Adjustments Mecklenburg
-------------------------------------------------------------------------------------------------
Primary Earnings per
Share $ 0.28 $ 0.25 $ 0.27 $ .28
======================= =========== ================
Fully diluted earnings
per share $ 0.28 $ 0.25 $ 0.27 $ .28
======================= =========== ================
See Notes to Pro Forma Combined Condensed Financial Information.
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
December 31, 1996
(Unaudited)
(In Thousands)
Pro Forma
Pro Forma Combined
Combined Trust Triangle Bancorp,
Triangle Securities Trust Securities
Triangle Bank of Bancorp and Bank and UCB/BBT UCB/BB&Tand Bank
Bancorp Mecklenburg Adjustments of Mecklenburg Branches (1,6) Adjustments of Mecklenburg
---------------------------------------------------------------------------------------------------------
Interest Income
Loans $ 59,179 $ 8,454 $ - $ 67,633 $ 6,564 $ (356) (9) $ 73,841
Federal Funds Sold 222 74 - 296 - - 296
Investment Securities 13,465 8,565 - 22,030 1,236 $ 7,596 (7) 30,862
----------------------------------------------------------------------------------------- ---------------
Total Interest Income 72,866 17,093 - 89,959 7,800 7,240 104,999
-------------------------------------------------------------------------------------- ---------------
Interest Expense
Deposits 30,738 8,239 38,977 9,064 - 48,041
Borrowed funds 1,872 3,473 5,345 - - 5,345
Redeemable Capital
Securities of
Subsidiary Trust
holding Junior
(13) 1,872
-------------------------------------------------------------------------------------- ---------------
Total Interest Expense 32,610 11,712 - 44,322 10,936 - 55,258
-------------------------------------------------------------------------------------- ---------------
Net Interest Income before
Provision for Loan
Losses 40,256 5,381 - 45,637 (3,136) 7,240 49,741
Provision for Loan
Losses 2,100 230 2,330 - 200 (8) 2,530
-------------------------------------------------------------------------------------- ---------------
Net Interest Income after
Provision for Losses 38,156 5,151 - 43,307 (3,136) 7,040 47,211
Noninterest income 8,494 1,408 9,902 1,549 11,451
772 (8)
Noninterest expenses 29,169 3,551 32,720 2,637 1,745 (9) 37,874
-------------------------------------------------------------------------------------- ---------------
Net Income before taxes 17,481 3,008 - 20,489 (4,224) 4,523 20,788
Income Taxes 6,180 1,089 - 7,269 - 111 (10) 7,380
-------------------------------------------------------------------------------------- ---------------
Net Income $ 11,301 $ 1,919 $ - $ 13,220 $ (4,224) $ 4,412 $ 13,408
-------------------------------------------------------------------------------------- ---------------
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
December 31, 1996
(Unaudited)
(In Thousands)
Pro Forma
Pro Forma Combined
Combined Trust Triangle Bancorp,
Triangle Securities Trust Securities
Triangle Bank of Bancorp and Bank and UCB/BBT UCB/BB&Tand Bank
Bancorp Mecklenburg Adjustments of Mecklenburg Branches (1,6) Adjustments of Mecklenburg
---------------------------------------------------------------------------------------------------------
Primary Earnings per Share $ 1.05 $ .91 $ 1.01 $ 1.04
============================ ================ ==============
Fully diluted earnings per
share $ 1.04 $ .91 $ 1.01 $ 1.04
============================ ================ ==============
See Notes to Pro Forma Combined Condensed Financial Information.
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
December 31, 1995
(Unaudited)
(In Thousands)
Pro Forma
Combined
Triangle Bancorp
Triangle Bank of and Bank of
Bancorp Mecklenburg Adjustments Mecklenburg
------------------------------------------------------------
Interest Income
Loans $50,125 $ 6,372 $ -- $56,497
Federal Funds Sold 472 53 -- 525
Investment Securities 11,644 5,058 -- 16,702
----------------------------------------- ----------------
Total Interest Income 62,241 11,483 -- 73,724
----------------------------------------- ----------------
Interest Expense
Deposits 25,665 5,623 -- 31,288
Borrowed funds 1,475 1,506 -- 2,981
----------------------------------------- ----------------
Total Interest Expense 27,140 7,129 -- 34,269
----------------------------------------- ----------------
Net Interest Income
before Provision for Loan
Losses 35,101 4,354 -- 39,455
Provision for Loan
Losses 428 95 -- 523
----------------------------------------- ----------------
Net Interest Income after
Provision for Losses 34,673 4,259 -- 38,932
Noninterest income 8,066 379 -- 8,445
Noninterest expenses 30,719 2,882 -- 33,601
----------------------------------------- ----------------
Net Income before taxes 12,020 1,756 -- 13,776
Income Taxes 4,162 500 -- 4,662
----------------------------------------- ----------------
Net Income $ 7,858 $ 1,256 $ -- $ 9,114
----------------------------------------- ----------------
Primary earnings per share $ 0.74 $ 0.71
======== ================
Fully diluted earnings per $ 0.73 $ 0.70
======== ================
See Notes to Pro Forma Combined Condensed Financial Information.
Triangle Bancorp, Inc.
Pro Forma Combined Condensed Statements of Income
December 31, 1994
(Unaudited)
(In Thousands)
Pro Forma
Combined
Triangle Bancorp
Triangle Bank of and Bank of
Bancorp Mecklenburg Adjustments Mecklenburg
------------------------------------------------------------
Interest Income
Loans $40,020 $ 4,632 $ -- $44,652
Federal Funds Sold 508 93 -- 601
Investment Securities 9,937 2,836 -- 12,773
----------------------------------------- ----------------
Total Interest Income 50,465 7,561 -- 58,026
----------------------------------------- ----------------
Interest Expense
Deposits 18,257 3,178 -- 21,435
Borrowed funds 1,607 574 -- 2,181
----------------------------------------- ----------------
Total Interest Expense 19,864 3,752 -- 23,616
----------------------------------------- ----------------
Net Interest Income
before Provision for Loan
Losses 30,601 3,809 -- 34,410
Provision for Loan
Losses 1,250 49 -- 1,299
----------------------------------------- ----------------
Net Interest Income after
Provision for Losses 29,351 3,760 -- 33,111
Noninterest income 5,758 98 -- 5,856
Noninterest expenses 28,719 2,403 -- 31,122
----------------------------------------- ----------------
Net Income before taxes 6,390 1,455 -- 7,845
Income Taxes 2,208 453 -- 2,661
----------------------------------------- ----------------
Net Income $ 4,182 $ 1,002 $ -- 5,184
----------------------------------------- ----------------
Primary earnings per share $ 0.41 $ 0.42
=========== ================
Fully diluted earnings per $ 0.41 $ 0.42
=========== ================
See Notes to Pro Forma Combined Condensed Financial Information.
Notes to Pro Forma Combined Condensed Financial Information
(Unaudited)
1. Financial information is the sum of the information available on the
branches to be acquired. As the liabilities of the branches to be assumed
exceed the assets, the balance sheet of the branches has been balanced
through the "Cash and Due from Banks" caption.
2. This adjustment records the decrease in cash received by Triangle Bank
due to the premium paid in the Branch Acquisition.
3. This adjustment reflects the expected utilization of excess cash received
upon closing of the transactions, less cash needed for branch operations of
$1,650,000.
4. This adjustment reduced the acquired loans to the estimated fair value
based on a preliminary assessment of the loan portfolio yields, mix and
maturities. The estimated fair value is subject to a final evaluation.
5. Adjustment reflects the movement of surplus to common stock as Triangle
Stock has no par value.
6. All noninterest income and expense represents the historical charges and
credits and includes no significant intercompany allocations. Interest
income on loans and interest expense on deposits are based on the acquired
balances of loans and deposits multiplied by the applicable branch's
portfolio yields and costs, respectively, as of December 31, 1996. The
average loan yield is 9.23% and the average cost of deposits is 4.22%.
7. These amounts represent the estimated incremental revenues on investments
created by the Branch Acquisition and the issuance of the Trust Securities
based on Triangle's historical investment yields. The rate utilized of 6.2%
represents Triangle's tax equivalent yield on investments for the calendar
year 1996.
8. This adjustment reflects anticipated additional expenses as if the branches
had been operating as a stand alone bank for the period presented. Expenses
were estimated considering similar sized Triangle Bank branches operating
expenses as well as additional infrastructure costs.
9. This adjustment represents the amortization of the intangible assets based
on the straight-line method over an estimated ten years for the deposit
premium ($17,452,000) and three years for the loan premium ($1,066,000).
10. This adjustment represents federal and state income tax expense on
incremental net operating income before taxes related to the Branch
Acquisition and the issuance of the Trust Securities (discussed in Note
12), calculated by adding the net income before taxes reflected in this
column and the "Trust Securities and UCB/BB&T Branches" column and dividing
the sum by the combined federal and state tax rate of 37%
([$1,131,000+($1,056,000)]/.37=$28,000).
11. Based on a preliminary review of the types and costs of the deposits to be
acquired, no adjustment to market value appears to be necessary as a part
of the Branch Acquisition.
12. Adjustment represents the addition of $19,950,000 in redeemable capital
securities of a subsidiary trust, holding Junior Subordinated Debentures of
Triangle. Such capital securities were sold on June 3, 1997. (See
"INFORMATION ABOUT TRIANGLE AND TRIANGLE BANK--Trust Securities
Issuance.").
13. Adjustment represents interest expense on the Trust Securities described in
Note 12 above. The Trust Securities bear interest at a rate of 9.375%.
CAPITALIZATION
The following table sets forth: (i) the unaudited historical
capitalization of Triangle as of March 31, 1997; (ii) the unaudited historical
capitalization of Mecklenburg of March 31, 1997; and (iii) the unaudited pro
forma capitalization of Triangle and Mecklenburg assuming the Merger had been
consummated on March 31, 1997. This information has been based on, and should be
read in conjunction with, Triangle's and Mecklenburg's interim unaudited
financial statements, including the related notes thereto, which are
incorporated by reference in this Joint Proxy Statement/Prospectus. (See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.")
Pro Forma
Triangle Mecklenburg Adjustments Combined(1)
(In Thousands)
Short-term borrowings $ 25,467 $ 54,683 $ - $ 80,150
Long-term Debt - Federal Home Loan Bank Advances 5,000 - - 5,000
Redeemable Capital Securities of Subsidiary Trust
holding Junior Subordinated Debentures of Triangle - - 19,950 (2) 19,950
--------------------------------------------------------
Total 30,467 54,683 19,950 105,100
--------------------------------------------------------
Shareholders' Equity
Capital Stock 61,425 4,238 10,892 (3) 76,555
Additional Paid-In Capital - 10,892 (10,892) (3) -
Retained Earnings 27,238 4,341 - 31,579
Unrealized Loss on Securities AFS (507) 101 - (406)
-----------------------------------------------------------
Total Shareholders' Equity 88,156 19,572 - 107,728
-----------------------------------------------------------
Total Borrowings and
Shareholders' Equity $ 118,623 $ 74,255 $ 19,950 $212,878
==========================================================
- --------------------------------
1 Assumes that the Merger became effective March 31, 1997 and that all
2,118,945 currently outstanding shares of Mecklenburg Stock were converted into
2,118,945 shares of Triangle Stock at the Exchange Rate. A total of 10,488,854
shares of Triangle Stock were outstanding at March 31, 1997.
2 Reflects issuance of debt on June 3, 1997
3 Reclass Mecklenburg's additional paid in capital to no par value
common stock
For information on regulatory capitol levels required to be maintained
by Triangle, Triangle Bank and Mecklenburg. See "CERTAIN REGULATORY
MATTERS - Capital Requirement."
INFORMATION ABOUT TRIANGLE AND TRIANGLE BANK
GENERAL
Triangle is a business corporation incorporated on November 27, 1991,
under the laws of the State of North Carolina for the purpose of becoming a
one-bank holding company. Triangle acquired Triangle Bank in August 1992 as part
of the reorganization of Triangle Bank into a one-bank holding company
structure. Pursuant to the reorganization, the former shareholders of Triangle
Bank became shareholders of Triangle. Triangle holds all of the outstanding
stock of Triangle Bank. Triangle has not engaged in any material activities
independent of the activities of Triangle Bank except for the establishment of
Delaware grantor trust subsidiary to effect the issuance of $20 million in trust
preferred securities. See - "Trust Preferred Securities Offering".
Triangle Bank, headquartered in Raleigh, North Carolina, is chartered
as a state bank under the laws of the State of North Carolina and is a member of
the Federal Reserve. Deposit insurance is provided by the Bank Insurance Fund
("BIF") of the FDIC. The sole business of Triangle Bank is to provide banking
services to businesses and individuals through its 46 offices in 30 cities
located in the Triangle area and throughout the central and eastern region of
North Carolina. Triangle also offers securities and insurance products to its
customers. Triangle Bank primarily serves small and medium-sized businesses as
well as consumers within its markets. Triangle Bank began business on January 4,
1988. On June 30, 1991, Enterprise Bancorp, Inc., a North Carolina bank holding
company, and its wholly-owned subsidiary, Enterprise Bank, National Association,
a national bank, merged into Triangle Bank. On December 28, 1993, New East
Bancorp and its five subsidiary state banks merged into Triangle Bank. On
February 23, 1995, Columbus National Bank, a national bank headquartered in
Whiteville, North Carolina, merged into Triangle Bank. On March 31, 1995,
Standard Bank and Trust Company, a North Carolina-chartered commercial bank
headquartered in Dunn, North Carolina, merged into Triangle Bank. Also, on March
31, 1995, Atlantic Community Bancorp, Inc.("Atlantic"), a North Carolina
corporation and registered bank holding company headquartered in Rocky Mount,
North Carolina, merged with and into Triangle. Atlantic's wholly-owned
subsidiary, Unity Bank & Trust Company, a North Carolina-chartered commercial
bank also headquartered in Rocky Mount, North Carolina, merged into Triangle
Bank on May 11, 1995. On November 1, 1995, The Village Bank, a North
Carolina-chartered commercial bank headquartered in Chapel Hill, North Carolina,
merged into Triangle Bank. On ___________, 1995, Triangle Bank acquired three
branches and approximately $________ million in deposits from NationsBank of
North Carolina, and on January 12, 1996, Triangle acquired four branches and
approximately $55 million in deposits from First Union National Bank of North
Carolina. On October 24, 1996, Granville United Bank, a North Carolina-chartered
commercial bank headquartered in Oxford, North Carolina, merged into Triangle
Bank. On May 20, 1997, Triangle Bank entered into an agreement to acquire eight
branches from United Carolina Bank and two branches from Branch Banking and
Trust Company. See "-Pending Acquisition."
TRIANGLE STOCK
For information regarding Triangle Stock, the market therefor and other
matters, see "SUMMARY - Market for Triangle Stock and Mecklenburg Stock."
Triangle has outstanding warrant agreements acquired upon its merger
with Atlantic in March 1995. Triangle has reserved 12,000 shares of Triangle
Stock for such warrants. Each warrant entitles the holder to purchase a number
of shares of Triangle Stock at a purchase price of $9.17 per share. The warrants
expire on December 31, 2000.
In April 1995, Triangle's Board of Directors authorized the repurchase
of up to 1% of the shares of Triangle Stock outstanding at that time which
represented approximately 88,000 shares of Triangle Stock. The repurchase was
principally undertaken to fund Triangle's various stock benefit plans. Through
March 31, 1997, Triangle had repurchased 61,400 shares pursuant to this
authorization prior to its expiration in April 1997. In May 1997, Triangle's
Board of Directors authorized the repurchase of up to 170,000 shares of Triangle
Stock. The repurchase was principally undertaken to fund Triangle's various
stock benefit plans. The repurchase is expected to be effected in small amounts
by May 1999.
SECURITY OWNERSHIP OF MANAGEMENT
Information regarding the ownership of Triangle Stock by management of
Triangle and information regarding directors and executive officers of Triangle,
executive compensation and certain relationships and related transactions with
management of Triangle is incorporated herein by reference to Triangle's Annual
Report on Form 10-K for the year ended December 31, 1996.
LEGAL PROCEEDINGS
Triangle Bank has been named as a defendant in a lender liability suit
currently pending in state court in North Carolina in which the plaintiff claims
that Triangle Bank breached an oral commitment to make a $100,000 loan to the
plaintiff. The plaintiff is asserting that he is entitled to $5 million in
damages and is seeking to have these damages trebled and an award of attorney's
fees. The suit is scheduled to go to trial in early November 1997. Triangle
disputes the plaintiff's theories of liabilities and damages and intends to
continue to defend the suit vigorously.
PENDING BRANCH ACQUISITION
On May 20, 1997, Triangle Bank entered into a Purchase and Assumption
Agreement to acquire two branch offices from Branch Banking and Trust Company
and eight branch offices from United Carolina Bank, all of which branches are
being divested in connection with the merger of those two companies. The ten
branches are located in the North Carolina counties of Duplin, Lee, Richmond,
Robeson, Washington and Wayne. In the Branch Acquisition, Triangle Bank will
assume approximately $215 million in deposits and approximately $71 million in
aggregate principal amount in loans associated with the ten branches. Triangle
Bank will pay a premium of approximately $17.5 million for the assumption of the
deposits. The Branch Acquisition will be accounted for as a purchase and is
expected to close during the third quarter of 1997. Consummation of the Branch
Acquisition is subject to the approval of the appropriate regulatory agencies.
Moreover, closing of the Branch Acquisition is subject to various contractual
conditions precedent. No assurance can be given that the conditions precedent to
consummating the Branch Acquisition will be satisfied in a manner that will
result in consummation or that necessary regulatory approvals will be received.
For additional information with respect to the branch acquisition, see
"PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION."
TRUST SECURITIES ISSUANCE
In May 1997, Triangle caused a Delaware statutory business trust
subsidiary to be created which issued trust preferred securities in the amount
of $19.33 million to eight qualified institutional buyers, and $619,000 in trust
common securities to Triangle, both sales occurring on June 3, 1997. The Trust
Securities have a maturity of 30 years, pay dividends at the rate of 9.375% and
may be treated as tier 1 capital by Triangle. To fund the trust, Triangle sold
to the trust $20 million of junior subordinated notes with a yield and maturity
identical to the Trust Securities. Holders of the Trust Securities are entitled
to receive preferential cumulative cash distributions accumulating from the date
of original issuance and payable semi-annually in arrears on the first day of
June and December of each year, commencing December 1, 1997, at an annual rate
equal to 9.375%. The distribution rate and distribution payment dates of the
Trust Securities correspond to the interest rate and interest payment dates of
the junior subordinated debentures, which are the sole assets of the trust.
Triangle, through various agreements, has irrevocably and unconditionally
guaranteed all of the trust's obligations under the Trust Securities regarding
the payment of distributions and payment on liquidation or redemption of the
Trust Securities, but only to the extent of funds held by the trust. The Trust
Securities are subject to mandatory redemption in whole, but not in part, upon
repayment of the junior subordinated debentures at their stated maturity or upon
their early redemption. The junior subordinated debentures may be redeemed prior
to their stated maturity upon the occurrence of certain events or at the option
of Triangle on or after June 1, 2007. Triangle caused the Trust Securities to be
issued because they are a relatively inexpensive form of capital that qualifies
as regulatory capital for Triangle. The sale of the Trust Securities was
effected with the assistance of Wheat First in a transaction exempt from the
registration requirements of the Securities Act. See "PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION."
INFORMATION ABOUT MECKLENBURG
GENERAL
Mecklenburg is a North Carolina-chartered commercial bank under the
supervision of the Commissioner and the FDIC. On July 2, 1997, Mecklenburg was
approved to become a Federal Reserve member bank which it will do immediately
prior to the Merger. Mecklenburg was incorporated on September 8, 1988 and
commenced operations on July 12, 1989. Mecklenburg conducts business from its
main office located at 2000 Randolph Road, Charlotte, North Carolina with
additional full service branches located at 6816 Morrison Boulevard and 1000
East Boulevard, both in Charlotte. Mecklenburg's primary market area is
Mecklenburg County, North Carolina. Mecklenburg provides full service commercial
and consumer banking services.
MECKLENBURG STOCK
Mecklenburg Stock is not traded on any exchange. Mecklenburg Stock
prices are reported over-the-counter in the "pink sheets" by the National Daily
Quotation System. Mecklenburg has paid cash dividends on a quarterly basis since
May 10, 1994. See "SUMMARY - Market for Triangle Stock and Mecklenburg Stock."
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
As of June 30, 1997, the following shareholder identified in the
following table beneficially owned more than 5% of Mecklenburg Stock.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS (2)
----------------------- ------------------------ --------------------
Cy N. Bahakel
Bahakel Communications, Ltd. 533,329 25.12%
P.O. Box 32488
Charlotte, NC 28232
- -------------
(1) Mr. Bahakel exercises sole voting and investment power with respect to all
shares shown as beneficially owned.
(2) The calculation of the percentage of class beneficially owned by Mr.
Bahakel is based on a number of total outstanding shares equal to 2,119,445
shares outstanding as of June 30, 1997 plus 3,000 shares for
which Mr. Bahakel has the right to acquire within 60 days of June 30, 1997
through the exercise of stock options.
As of June 30, 1997, the beneficial ownership of Mecklenburg Stock by
current directors individually, and by current directors and executive
officers as a group, was as follows:
AMOUNT AND
NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2)
------------------------ ------------------------ ---------
Helen C. Adams 19,842 0.93%
H. Perrin Anderson 25,792 1.21
Cy N. Bahakel 533,329 25.12
Carl G. Belk 13,307 0.62
W.E. Bryant, Jr. 23,040 1.08
Claude T. Davis, Sr. 13,503 0.63
Aubrey J. Elam 38,329 1.80
Dee-Dee W. Harris 37,354 1.75
John H. Ketner, Jr. (3) 89,011 4.09
Beverly B. Poston 1,778 0.08
John T. Roper, M.D. 23,635 1.11
Paul J. Simon 18,743 0.88
Allan W. Singer 15,898 0.74
All current directors and
executive officers as a group 883,218 39.40%
(16 persons) (4)
- ---------------
(1) The above individuals and group exercise sole voting and investment power
with respect to all shares shown as beneficially owned.
(2) Unless otherwise noted, the calculation of the percentage of class
beneficially owned by each individual and by the group is based on a number
of total outstanding shares equal to the 2,119,445 shares outstanding as of
June 30, 1997, plus 3,000 shares that each director has the right to
acquire within 60 days of June 30, 1997 through the exercise of stock
options.
(3) Includes 59,373 shares that Mr. Ketner has the right to acquire within 60
days of June 30, 1997 through the exercise of stock options. The
calculation of the percentage of class beneficially owned by Mr. Ketner is
based on a number of total outstanding shares equal to the 2,119,445 shares
outstanding as of June 30, 1997, plus 59,373 shares that Mr. Ketner has the
right to acquire within 60 days of June 30, 1997 through the exercise of
stock options.
(4) Includes 36,000 shares that directors and 85,995 shares that executive
officers have the right to acquire within 60 days of June 30, 1997 through
the exercise of stock options. The calculation of the percentage of class
beneficially owned by all current directors and executive officers as a
group based on a number of total outstanding shares equal to the 2,119,445
shares outstanding as of June 30, 1997 plus 121,995 shares that the current
directors and executive officers have the right to acquire within 60 days
of June 30, 1997 through the exercise of stock options.
COMPARISON OF MECKLENBURG STOCK
AND TRIANGLE STOCK
Upon consummation of the Merger, the shareholders of Mecklenburg (other
than those who perfect dissenters' rights of appraisal) will become shareholders
of Triangle, and their rights as such will be determined by North Carolina
corporation law and Triangle's Articles of Incorporation and Bylaws. The
following is a summary of certain provisions of Mecklenburg's Articles of
Incorporation and Bylaws and Triangle's Articles of Incorporation and Bylaws,
the relevant provisions of North Carolina law and the material changes in the
rights of shareholders of Mecklenburg that would occur as a result of the
Merger. The following discussion is qualified in its entirety by reference to
Mecklenburg's Articles of Incorporation and Bylaws and Triangle's Articles of
Incorporation and Bylaws and the North Carolina General Statutes. SHARES OF
TRIANGLE STOCK AND MECKLENBURG STOCK ARE NOT, AND CANNOT BE, INSURED BY THE
FDIC.
CAPITAL STRUCTURE
The authorized capital stock of Mecklenburg consists of 10,000,000
shares of common stock, par value $2.00 per share, of which 2,118,945 shares
were outstanding as of March 31, 1997. The authorized capital stock of Triangle
consists of 20,000,000 shares of common stock, no par value per share, of which
10,488,854 shares were outstanding as of March 31, 1997 and of which it is
anticipated approximately 12,607,799 shares will be outstanding upon
consummation of the Merger.
GOVERNING LAW
Triangle is chartered under the laws of the State of North Carolina and
is subject to the provisions of the NCBCA. Mecklenburg, a North
Carolina-chartered, commercial bank, is subject to the provisions of Chapter 53
of the North Carolina General Statutes ("Chapter 53"), and to the extent it is
not inconsistent with Chapter 53, the NCBCA. The following is a brief summary of
certain material provisions of the NCBCA, Chapter 53 and certain material
differences between the respective Articles of Incorporation and Bylaws of
Mecklenburg and the Articles of Incorporation and Bylaws of Triangle.
VOTING
The holders of Mecklenburg Stock and Triangle Stock are entitled to one
vote per share held of record on all matters submitted to a vote of
shareholders. The shareholders of Triangle and Mecklenburg 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 shareholders may not elect any
directors. The absence of cumulative voting makes it more difficult for
shareholders who hold a minority of outstanding shares of Mecklenburg Stock or
Triangle Stock to elect representatives of their choice.
PREEMPTIVE RIGHTS
The holders of Mecklenburg Stock and Triangle Stock do not have
preemptive rights to acquire other or additional shares that may be issued from
time to time. As shareholders of Triangle Stock have no preemptive rights, their
ownership interest in Triangle Stock may be diluted if Triangle issues
additional shares of Triangle Stock in the future.
STATE LAW ANTI-TAKEOVER PROVISIONS
NORTH CAROLINA SHAREHOLDER PROTECTION ACT. The North Carolina
Shareholder Protection Act (the "Shareholder Act") generally requires that,
unless certain "fair price" and procedural requirements are satisfied, the
affirmative vote of 95% of the voting shares of a corporation is required to
approve certain business combination transactions with another entity that is
the beneficial owner, directly or indirectly, of more than 20% of the voting
shares of the corporation or which is an affiliate of the corporation and
previously has been a 20% beneficial holder of such voting shares. Mecklenburg
is subject to the provisions of the Shareholder Act but the Merger is not
subject to the provisions of the Shareholder Act. Triangle is not subject to the
provisions of the Shareholder Act pursuant to the terms of its Articles of
Incorporation.
NORTH CAROLINA CONTROL SHARE ACQUISITION ACT. The North Carolina
Control Share Acquisition Act (the "Control Act") generally provides that,
except as provided below, "Control Shares" will not have any voting rights.
Control Shares are shares acquired by a person under certain circumstances which
when added to other shares owned, would give such person effective control over
one-fifth, one-third or a majority of all voting power in the election of the
corporation's directors. However, voting rights will be restored to Control
Shares by a resolution approved by the affirmative vote of the holders of a
majority of the corporation's voting stock (other than shares held by the owner
of the Control Shares, officers of the corporation, and directors employed by
the corporation). If voting rights are granted to Control Shares which give the
holder a majority of all voting power in the election of the corporation's
directors, then the corporation's other shareholders may require the corporation
to redeem their shares at their fair value. Mecklenburg is not subject to the
provisions of the Control Act pursuant to its Bylaws and a resolution of the
Mecklenburg Board. Triangle is not subject to the provisions of the Control Act
pursuant to the terms of its Articles of Incorporation.
BUSINESS COMBINATIONS AND CHANGES IN CONTROL
While Triangle is subject to the NCBCA, Triangle's Articles of
Incorporation provide that the affirmative vote of the holders of not less than
80% of the outstanding shares of Triangle 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 shareholder
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. 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
shareholders, 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 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 shareholders to
benefit from certain transactions opposed by the Board of Directors of Triangle.
The constituency provision would allow the Board of Directors of Triangle 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.
The Merger is not subject to the supermajority voting provision as it
has been approved unanimously by Triangle's Board of Directors.
Mecklenburg's Articles of Incorporation and Bylaws contain the same 80%
vote requirement as required of Triangle. However, as the Merger has been
approved unanimously by the Mecklenburg Board, the Merger is not subject to the
supermajority voting provisions. Chapter 53 requires the affirmative vote of
two-thirds of the outstanding shares of Mecklenburg to approve a merger.
AMENDMENT OF ARTICLES OF INCORPORATION
Mecklenburg is subject to the requirements of the NCBCA with respect to
amendments of its Articles of Incorporation. Generally, the NCBCA requires that
the votes cast in favor of an amendment to the Articles of Incorporation must
exceed the votes cast against such amendment in order for Mecklenburg to amend
its Articles of Incorporation. In addition, Mecklenburg's Articles of
Incorporation and Bylaws provide that the 80% supermajority voting requirement
for business combinations and dissolution of Mecklenburg may be amended only by
the affirmative vote of 80% of the outstanding shares of Mecklenburg, unless
such amendment has been approved by two-thirds of all directors of Mecklenburg
then in office.
While Triangle is subject to the NCBCA, Triangle's Articles of
Incorporation require the affirmative vote of 75% of all outstanding shares
present at a meeting where the issue considered is to amend its Articles of
Incorporation. This provision of Triangle's Articles of Incorporation makes it
more difficult for amendments to the Articles of Incorporation to be approved by
Triangle's shareholders. Accordingly, such provision makes it more difficult for
provisions in the Articles of Incorporation to be changed in the event of a
hostile takeover attempt.
AMENDMENT OF BYLAWS
Mecklenburg's bylaws and Triangle's bylaws may be amended or repealed
and new bylaws may be adopted by action of the Board of Directors or
shareholders of Mecklenburg or Triangle, respectively, except as otherwise
provided in each company's Articles of Incorporation or by the NCBCA. Under the
NCBCA and the bylaws of Mecklenburg and Triangle, the Board of Directors may not
readopt, amend or repeal a bylaw adopted, amended or repealed by the
shareholders if neither the Articles of Incorporation nor a bylaw adopted by the
shareholders authorizes the Board of Directors to adopt, amend or repeal that
particular bylaw or the bylaws generally. The shareholders may amend or repeal
the bylaws of Mecklenburg or Triangle, respectively, 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 shareholders or action by
shareholders; (2) providing for management of the company otherwise than by the
Board of Directors or the 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. Mecklenburg's bylaws further provide that
the Board of Directors has no power to adopt a bylaw: (1) requiring more than a
majority of the voting shares for a quorum at a meeting of shareholders or more
than a majority of the votes cast to constitute action by the shareholders,
except where higher percentages are required by law; (2) providing for the
management of Mecklenburg otherwise than by the Board of Directors or its
Executive Committee; (3) increasing or decreasing the number of directors; 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 26, although the Bylaw Amendment proposes
to increase the maximum to 28. The Board of Directors may set the number of
directors in this range without shareholder 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 shareholder approval. The supermajority
requirement for a shareholder vote to change the range of the number of
directors makes it more difficult for Triangle's shareholders to increase the
size of the Board of Directors and elect directors to fill the vacancies created
thereby. Accordingly, one or more shareholders seeking to gain control of the
Board (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 the Board of Directors to be increased without the existing Board of
Directors' consent.
The Bylaws of Mecklenburg provides that the number of directors shall
be at least nine but not more than 30. The Mecklenburg Board may set the number
of directors in this range without shareholder approval
SHARE PURCHASE AND OPTION PLANS FOR AFFILIATES
The affirmative vote of two-thirds of the issued and outstanding shares
of Mecklenburg and the approval of the Commissioner pursuant to Chapter 53 is
required for Mecklenburg to issue rights, options, or warrants for the purchase
of shares of its capital stock, with the Mecklenburg Board determining the terms
upon which the rights, options or warrants are issued and their form and
content. Shares of capital stock of Mecklenburg may not be issued for less than
85% of the fair market value of the shares on the date the purchase price is
fixed and options may not be granted at less than 100% of the fair market value
on the date of grant. The foregoing rights, options, warrants or shares of
capital stock of Mecklenburg may generally be issued to or for the benefit of
officers, directors, and employees of Mecklenburg free of restrictions, except
as noted above or, as required under the Securities Act. See "THE MERGER -
Resale of Triangle Stock."
Under the NCBCA, Triangle may issue rights, options, or warrants for
the purchase of shares of its capital stock, with the Board of Directors of
Triangle determining the terms upon which the rights, options or warrants are
issued, their form and content, and the consideration for which the shares are
to be issued. Shares of capital stock of Triangle may be issued for
consideration determined by the Board of Directors to be adequate. The foregoing
rights, options, warrants or shares of capital stock of Triangle may generally
be issued to or for the benefit of officers, directors, and employees of
Triangle or its subsidiaries free of restrictions, except as set forth above or
as required under the Securities Act. See "THE MERGER - Resale of Triangle
Stock."
REDEMPTION OF STOCK
Triangle may repurchase shares of Triangle Stock, provided that certain
requirements as to the effect of the repurchase on Triangle solvency and the
relationship between its assets and liabilities are fulfilled.
As a bank holding company, Triangle is required to give the Federal
Reserve Bank of Richmond (the "Federal Reserve Bank") prior written notice of
any purchase or redemption of any shares of its outstanding equity securities if
the gross consideration to be paid for such purchase or redemption, when
aggregated with the net consideration paid by Triangle for all purchases or
redemption of its equity securities during the 12 months preceding the date of
notification, equals or exceeds 10% of its consolidated net worth as of the date
of such notice. The Federal Reserve Bank must either approve the transaction
described in the notice within 30 days of receipt of the notice or refer it to
the Federal Reserve for action within 60 days after the Federal Reserve Bank's
receipt thereof.
Under Chapter 53, Mecklenburg is generally required to obtain the prior
approval of the holders of two-thirds of its outstanding shares before it can
repurchase any shares of Mecklenburg Stock. Additionally, the prior approval of
the Commissioner and the FDIC is required for the redemption or retirement of
any shares of Mecklenburg Stock.
TRANSFERABILITY BY CERTAIN PERSONS
Mecklenburg Stock, unlike that of Triangle, is exempt from the
registration requirements of the Securities Act and the North Carolina
Securities Act. The effect of such exemptions is to allow Mecklenburg and its
shareholders to sell shares of Mecklenburg Stock without registration under such
laws. In contrast, the public sale by Triangle of its stock and resales of
Triangle Stock by certain persons who are at the time of resale "affiliates" of
Triangle must be registered under the Securities Act and the North Carolina
Securities Act or meet certain statutory and regulatory requirements to qualify
for an exemption from registration. The exemption from registration under the
Securities Act most often used by affiliates of public corporations is Rule 144
which requires, among other things, that affiliates' shares be sold in "brokers'
transactions" without any solicitation of offers to purchase such shares.
ASSESSMENTS; IMPAIRMENT OF CAPITAL
Under Chapter 53, holders of Mecklenburg Stock may be assessed for the
amount of any impairment in the capital stock of Mecklenburg due to losses or
any other cause when the surplus and undivided profits of Mecklenburg are
insufficient to make good such impairment. No such equivalent assessment
provisions are contained in North Carolina law with respect to the Triangle
Stock or Triangle's shareholders.
NUMBER, ELECTION AND REMOVAL OF DIRECTORS
The Board of Directors of Triangle 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.
Triangle's Articles of Incorporation provide that a director may be
removed without cause by the shareholders only if (i) the removal without cause
is recommended to the shareholders by the Board of Directors pursuant to a vote
of not less than 75% of the directors then in office and (ii) the shareholders
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 shareholders with
cause pursuant to a vote of 75% of the outstanding shares of Triangle Stock, but
no specific director recommendation is required. The 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
discourages 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 shareholders. Management believes that, for a financial institution,
allowing Board members to be removed and replaced without cause by the
shareholders would open Triangle to acquisition or control by interests that
might not follow through with the Board's business plan for Triangle.
The Board of Directors of Mecklenburg 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 successors are elected and qualified or
until his or her earlier death, resignation, retirement, removal or
disqualification. A director may be removed from office, with or without cause,
by a vote of shareholders holding a majority of the shares entitled to vote at
an election of directors. However, unless the entire Board is removed, an
individual director may not be removed if the number of shares voting against
the removal would be sufficient to elect a director if such shares were voted
cumulatively at the annual meeting.
INDEMNIFICATION AND ELIMINATION OF DIRECTOR LIABILITY
The NCBCA provides for indemnification by a corporation of its
officers, directors, employees and agents, and any person who is or was serving
at the corporation's request as a director, officer, employee or agent of
another entity or enterprise or as a trustee or administrator under an employee
benefit plan, against liability and expenses, including reasonable attorneys'
fees, 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.
PERMISSIBLE INDEMNIFICATION. Under the NCBCA, a corporation may, but is
not required to, indemnify any such person against liability and expenses
incurred in any such proceeding, provided such person conducted himself or
herself in good faith and (i) in the case of conduct in his or her official
corporate capacity, reasonably believed that his or her conduct was in the
corporation's best interests, and (ii) in all other cases, reasonably believed
that his or her conduct was at least not opposed to the corporation's best
interests; and, in the case of a criminal proceeding, where he or she had no
reasonable cause to believe his or her conduct was unlawful. However, a
corporation may not indemnify such person either in connection with a proceeding
by or in the right of the corporation in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging improper
personal benefit to such person (whether or not involving action in an official
capacity) in which such person was adjudged liable on the basis that personal
benefit was improperly received.
MANDATORY INDEMNIFICATION. Unless limited by the corporation's charter,
the NCBCA requires a corporation to indemnify a director or officer of the
corporation who is wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such person was a party because he or she is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding.
ADVANCE FOR EXPENSES. Expenses incurred by a director, officer,
employee or agent of the corporation in defending a proceeding may be paid by
the corporation in advance of the final disposition of the proceeding as
authorized by the board of directors in the specific case, or as authorized by
the charter or bylaws or by any applicable resolution or contract, upon receipt
of an undertaking by or on behalf of such person to repay amounts advanced
unless it ultimately is determined that such person is entitled to be
indemnified by the corporation against such expenses.
VOLUNTARY INDEMNIFICATION. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, 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 any 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. However, the corporation
may not indemnify or agree to indemnify a person against liability or expenses
he may incur on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws or in a contract
or resolution may include provisions for recovery from the corporation of
reasonable costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and enforcing such
rights.
COURT-ORDERED INDEMNIFICATION. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court deems necessary, may
order indemnification if it determines either (i) that the director or officer
is entitled to mandatory indemnification as described above, in which case the
court also will order the corporation to pay the reasonable expenses incurred to
obtain the court-ordered indemnification, or (ii) that the director or officer
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such person met the requisite standard of conduct
or was adjudged liable to the corporation in connection with a proceeding by or
in the right of the corporation or on the basis that personal benefit was
improperly received in connection with any other proceeding so charging (but if
adjudged so liable, indemnification is limited to reasonable expenses incurred).
PARTIES ENTITLED TO INDEMNIFICATION. The NCBCA defines "director" to
include ex-directors and the estate or personal representative of a director.
Unless its charter provides otherwise, a corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with public
policy, as may be provided in its charter or bylaws, by general or specific
action of its board of directors, or by contract.
INDEMNIFICATION BY TRIANGLE AND MECKLENBURG. The Articles of
Incorporation of Mecklenburg provide for indemnification of directors and
officers of Mecklenburg to the fullest extent permitted by North Carolina law.
The Bylaws of Triangle provide for indemnification of its directors and officers
to the fullest extent permitted by North Carolina law. Under the NCBCA, 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 and Mecklenburg each currently maintains directors' and officers'
liability insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling Triangle,
Triangle has been informed that, in the opinion of the Commission, such
indemnification is against public policy expressed in the Securities Act and is,
therefore, unenforceable.
ELIMINATION OF DIRECTOR LIABILITY. The Articles of Incorporation of
Mecklenburg and 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.
DIVIDEND POLICY
Triangle paid its first cash dividend on September 30, 1994 in the form
of a quarterly dividend of $0.04 per share. Prior to the formation of Triangle,
Triangle Bank had not declared or paid any dividends since its organization in
1988. Under Chapter 53, Triangle Bank was not permitted to pay dividends until
three years after it was organized. Therefore, Triangle Bank was first able to
pay dividends under North Carolina law on January 5, 1991.
The holders of Triangle Stock are entitled to receive dividends when
and if declared by its Board of Directors out of funds legally available
therefor. There can be no assurance that after the Merger any dividends will be
declared or paid or, if declared and paid, continued in the future. The
declaration and payment of dividends will depend upon business conditions,
operating results, capital and reserve requirements, and Triangle's Board of
Directors' consideration of other relevant factors. Subject to the foregoing, it
is currently Triangle's intent to pay quarterly cash dividends. The principal
sources of funds for the payment of dividends by Triangle are dividends from
Triangle Bank. See "CERTAIN REGULATORY MATTERS - Dividends" for information
regarding certain restrictions on the payment of dividends by Triangle Bank to
Triangle.
The holders of Mecklenburg Stock are entitled to receive dividends when
and if declared by the Mecklenburg Board out of funds legally available
therefor. Mecklenburg paid its first cash dividend on May 10, 1994 in the form
of a quarterly dividend of $.03 per share. Like Triangle, the payment of cash
dividends by Mecklenburg is limited by certain regulatory restrictions and is
dependent upon business conditions, operating results, capital and reserve
requirements, and the Mecklenburg Board's consideration of other relevant
factors.
CERTAIN REGULATORY MATTERS
GENERAL
Bank holding companies and banks are extensively regulated under both
federal and state law. The following discussion summarizes some of the statutory
and regulatory restrictions imposed upon the operations of Triangle, Triangle
Bank and Mecklenburg. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. Any change in
applicable law or regulation may have a material effect on the business of
Triangle, Triangle Bank and Mecklenburg. Supervision, regulation, and
examination of financial institutions by the regulatory agencies are intended
primarily for the protection of depositors rather than the holders of
Mecklenburg Stock or Triangle Stock.
From time to time bills are introduced in the United States Congress
which would provide for wide-ranging proposals for altering the structure,
regulation, and competitive relationships of the nation's financial
institutions. Among such bills which have recently been considered by Congress
and which may be introduced in the future are proposals to prohibit financial
institutions and holding companies from conducting certain activities, to
subject financial institutions to increased disclosure and reporting
requirements, and to further alter the regulatory structure relative to
financial institutions. It cannot be predicted with accuracy whether or in what
form any of these proposals will be adopted or the extent of their effect upon
all financial institutions.
BANK HOLDING COMPANY REGULATION
Triangle is a bank holding company, registered with the Federal Reserve
under the BHC Act, and with the Commissioner under the North Carolina Bank
Holding Company Act of 1984, as amended (the "North Carolina Act"). As such,
Triangle is subject to the supervision, examination, and reporting requirements
contained in the BHC Act and the North Carolina Act and the regulations of the
Federal Reserve and the Commissioner.
BANK REGULATION
As banks, Triangle Bank and Mecklenburg are subject to numerous state
and federal statutes and regulations that affect their business, activities and
operations. Triangle Bank is supervised and examined by the Federal Reserve.
Currently, Mecklenburg is supervised and examined by the FDIC, but has been
accepted for membership in the Federal Reserve System and immediately before the
Merger will become a state member bank and, like Triangle Bank, will be
supervised and examined by the Federal Reserve. In addition, Triangle Bank and
Mecklenburg are supervised and examined by the Commissioner. The Federal
Reserve, the FDIC and the Commissioner are required to regularly examine the
operations of banks over which they exercise jurisdiction. They have the
authority to approve or disapprove the establishment of branches, mergers,
consolidations, and other similar corporate actions, and to prevent the
continuance or development of unsafe or unsound banking practices and other
violations of law. The Federal Reserve, the FDIC, and the Commissioner regulate
and monitor all areas of the operations of banks and their subsidiaries,
including loans, mortgages, issuances of securities, capital adequacy, loss
reserves, and compliance with the Community Reinvestment Act and other laws and
regulations. Interest and certain other charges collected and contracted for by
the banks are also subject to state usury laws and certain federal laws
concerning interest rates.
The deposit accounts of Triangle Bank and Mecklenburg are insured by
the BIF of the FDIC up to a maximum of $100,000 per insured depositor. The FDIC
issues regulations and conducts periodic examinations, requires the filing of
reports, and generally supervises the operations of its insured banks. The
approval of the FDIC is required prior to a bank's merger or consolidation,
assumption of deposit liabilities, or establishment or relocation of an office
facility, unless, as in the case of Triangle Bank and Mecklenburg, such matters
are subject to the jurisdiction of the Federal Reserve. This supervision and
regulation is intended primarily for the protection of depositors. Any insured
bank that is not operated in accordance with or does not conform to federal
regulations, policies, and directives may be sanctioned for noncompliance. Civil
and criminal proceedings may be instituted against any insured bank or any
director, officer, or employee of such bank for the violation of applicable laws
and regulations, breaches of fiduciary duties, or engaging in any unsafe or
unsound practice. The FDIC has the authority to terminate insurance of accounts
pursuant to procedures established for that purpose.
DIVIDENDS
Although Triangle is not subject to any direct legal or regulatory
restrictions on dividends (other than the requirements under the NCBCA that a
distribution may not be made if after giving it effect the corporation would not
be able to pay its debts as they become due in the usual course of business or
the corporation's total assets would be less than its liabilities), Triangle's
ability to pay cash dividends is dependent upon the amount of dividends paid by
Triangle Bank. The ability of Triangle Bank and Mecklenburg to pay dividends is
subject to statutory and regulatory restrictions on the payment of cash
dividends, including the requirement under the North Carolina banking laws that
cash dividends be paid only out of undivided profits and only if the bank has
surplus of a specified level. Federal bank regulatory agencies also have the
general authority to limit the dividends paid by insured banks and bank holding
companies if such payment may be deemed to constitute an unsafe and unsound
practice.
CAPITAL REQUIREMENTS
Triangle and Triangle Bank are required by federal regulations to
maintain certain minimum capital levels. Federal regulators impose capital
requirements on federally insured depository institutions and their holding
companies to ensure that such institutions have a sufficient capital base to
absorb operating losses and to provide a cushion to the federal deposit
insurance funds. At March 31, 1997, Triangle and Triangle Bank exceeded their
respective capital requirements.
Upon consummation of the Merger, Triangle and Triangle Bank will
continue to remain in compliance with all existing capital requirements as shown
in the table below.
TRIANGLE BANCORP, INC.
PRO FORMA CAPITAL CALCULATION
AS OF MARCH 31, 1997
PRO FORMA
COMBINED
TRIANGLE,
MECKLENBURG,
TRIANGLE UCB/BB&T BRANCHES MINIMUM
TRIANGLE MECKLENBURG(2) COMBINED AND TRUST REGULATORY
SECURITIES RATIOS
Tier 1 capital to 11.04% 15.79% 11.72% 10.90% 4.0%
risk weighted assets
Total capital to risk 12.29% 16.85% 12.97% 12.15% 8.0%
weighted assets
Leverage ratio(1) 7.91% 7.21% 7.77% 6.70% 4.0%
(1) Leverage ratio is calculated as Tier 1 capital divided by quarterly
average assets less goodwill and other disallowed intangibles.
(2) As Mecklenburg will be operating as a separate subsidiary, there
will be no effect on its capital ratios immediately after the Merger.
TRIANGLE BANK
PRO FORMA CAPITAL CALCULATION
AS OF MARCH 31, 1997
PRO FORMA COMBINED
TRIANGLE BANK,
TRIANGLE UCB/BB&T BRANCHES MINIMUM
BANK AND TRUST SECURITIES REGULATORY RATIOS
Tier 1 capital to 10.97% 8.82% 4.0%
risk weighted assets
Total capital to risk 12.23% 10.07% 8.0%
weighted assets
Leverage ratio(1) 7.86% 5.77% 4.0%
(1) Leverage ratio is calculated as Tier 1 capital divided by quarterly
average assets less goodwill and other disallowed intangibles.
The capital requirements currently in effect could be increased by the
federal regulators. Moreover, the management of Triangle may determine that it
is advisable, or banking regulators may require, that Triangle and Triangle Bank
raise additional capital as a result of growth, unanticipated losses or
inadequate financial performance, or for other reasons. No assurances can be
given that any such additional capital would be available to Triangle or
Triangle Bank.
LEGISLATION AND GOVERNMENTAL POLICIES
Legislative and regulatory proposals regarding changes in banking, and
the regulation of banks, savings and loan associations, and other financial
institutions are considered from time to time by the executive branch of the
Federal government, Congress, and various state governments, including North
Carolina. Certain of these proposals, if adopted, could significantly change the
regulation of banks and the financial services industry generally. It cannot be
predicted whether any of these proposals will be adopted, and, if adopted, how
these will affect Triangle, Triangle Bank or Mecklenburg.
In September 1994, Congress passed the Interstate Banking and Branching
Efficiency Act (the "Interstate Act"). The Interstate Act permits adequately
capitalized bank holding companies to acquire control of banks in any state.
States may require the bank being acquired to have been in existence for a
certain length of time but not in excess of five years. No bank may acquire more
than 10% of nationwide insured deposits or 30% of any state's insured deposits.
States have the right to waive the 30% limit. As of June 1, 1997, banks may
merge under the Interstate Act with other banks across state lines. States could
opt-in to such interstate branching earlier or could opt-out of interstate
branching by June 1, 1997. The states of Texas and Montana have opted out of
interstate branching. Under the Interstate Act, establishing new branches in
another state will require that state's specific approval. Legislation to have
North Carolina opt in for earlier adoption of interstate branching was passed in
1995. During 1993, North Carolina adopted legislation authorizing interstate
mergers. There can be no assurance as to what impact such legislation or the
Interstate Act might have upon Triangle and its subsidiaries.
MONETARY POLICY AND ECONOMIC CONTROLS
Triangle, Triangle Bank and Mecklenburg are directly affected by
government monetary policy and by regulatory measures affecting the financial
services industry in general. Of primary importance is the Federal Reserve,
whose actions directly affect the money supply and, in general, affect the
lending ability of financial institutions by increasing or decreasing the cost
and availability of funds to financial institutions. The Federal Reserve
regulates the availability of credit in order to combat recession and curb
inflationary pressures in the economy by open market operations in United States
government securities, changes in the discount rate on member bank borrowings
and changes in reserve requirements against bank deposits.
Deregulation of interest rates paid by banks and savings and loan
associations on deposits and the types of deposits that may be offered by such
institutions have eliminated minimum balance requirements and rate ceilings on
various types of time deposit accounts. The effect of these specific actions
and, in general, the deregulation of deposit interest rates have made such
institutions much more sensitive to fluctuations in money market rates. In view
of the changing conditions in the national economy and money markets, as well as
the effect of actions by monetary and fiscal authorities, no prediction can be
made as to possible future changes in interest rates, deposit levels, loan
demand, or the business and earnings of Triangle, Triangle Bank or Mecklenburg.
THE PROPOSED BYLAW AMENDMENT
The Board of Directors of Triangle has voted to recommend to the
shareholders a proposed amendment to Article III, Section 2 of Triangle's
Amended and Restated Bylaws to increase the maximum number of directors from 26
to 28. Under the current Bylaws, the number of directors may be between 10 and
26 with a number within that range to be set by the Board of Directors. The
Board of Directors of Triangle has reached its maximum membership of 26
directors. In order to fulfill its obligations under the Agreement without
requesting the resignation of presently serving directors, Triangle must
increase the maximum number of directors under its Bylaws. The Board of
Directors of Triangle recommends that its shareholders adopt the Bylaw Amendment
to increase the authorized number of Triangle directors to accommodate
Triangle's obligations under the Agreement which requires that Mr. Cy N.
Bahakel, Chairman of the Board of Directors of Mecklenburg, be elected to the
Triangle Board of Directors. Increasing the maximum directors to 28 also would
allow for future flexibility in expanding the number of directors if and when
such expansion is deemed advisable by the Board of Directors and if a qualified
candidate for such directorship had been identified. The text of Article III,
Section 2 as proposed to be amended is as follows:
The number of Directors constituting the Board of Directors of the
Corporation shall be not less than 10 nor more than 28 as from time
to time may be fixed or changed within said minimum or maximum by the
affirmative vote of a majority of Directors present at any regular or
special meeting of the Board of Directors at which a quorum is
present. Such minimum and maximum may not be changed by the Board of
Directors, but only by the affirmative vote of 75% of all eligible
votes present, in person or by proxy, at a meeting of shareholders at
which a quorum is present. Such minimum and maximum may not be
changed at a meeting of shareholders unless the notice of the meeting
states that the purpose, or one of the purposes, of the meeting is to
change the number of Directors of the Corporation.
THE BOARD OF DIRECTORS OF TRIANGLE RECOMMENDS THAT ITS SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE BYLAW AMENDMENT.
LEGAL AND TAX MATTERS
Alexander M. Donaldson, Senior Vice President and General Counsel of
Triangle, will deliver an opinion at the Effective Time to the effect that
Triangle Stock to be issued to the shareholders of Mecklenburg in connection
with the Merger, when issued as contemplated in the Agreement, will be validly
issued, fully paid, and non-assessable.
Coopers & Lybrand L.L.P., tax advisors to Triangle, has delivered an
opinion to Triangle and Mecklenburg concerning certain federal income tax
consequences of the Merger as required by the Agreement. See "THE MERGER -
Certain Federal Income Tax Consequences."
Certain other legal matters in connection with the Merger will be
passed upon for Triangle by Mr. Donaldson and for Mecklenburg by Robinson,
Bradshaw, & Hinson, P.A., Charlotte, North Carolina.
EXPERTS
The consolidated balance sheets of Triangle Bancorp, Inc. as of
December 31, 1996 and 1995, and the consolidated statements of income, changes
in stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1996, have been incorporated by reference herein and
in the Registration Statement in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The balance sheets of Bank of Mecklenburg as of December 31, 1996 and
1995, and the statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996, have been
incorporated by reference herein and in the Registration Statement in reliance
on the report of KPMG Peat Marwick LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing. The independent
auditors' report on the financial statements referred to above contains an
explanatory paragraph for Mecklenburg's adoption of Statement of Financial
Accounting Standards No. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES", on January 1, 1994.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Mecklenburg Special Meeting, and representatives of Coopers & Lybrand L.L.P.
are expected to be present at the Triangle Special Meeting, and will have an
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the Board of
Directors of Mecklenburg did not know of any matters that will be presented for
consideration at the Mecklenburg Special Meeting other than as described in this
Joint Proxy Statement/Prospectus. However, if any other matters shall come
before the Mecklenburg Special Meeting or any adjournment thereof and be voted
upon, the enclosed proxy will be deemed to confer discretionary authority to the
individuals named as proxies therein to vote the shares represented by such
proxy as to any such matters.
As of the date of the Joint Proxy Statement/Prospectus, the Board of
Directors of Triangle did not know of any matters that will be presented for
consideration at the Triangle Special Meeting other than as described in this
Joint Proxy Statement/Prospectus. However, if any other matters shall come
before the Triangle Special Meeting or any adjournment thereof and be voted
upon, the enclosed proxy will be deemed to confer discretionary authority to the
individuals named as proxies therein to vote the shares represented by such
proxy as to any such matters.
SHAREHOLDER PROPOSALS
If the Merger is not consummated for any reason, Mecklenburg expects to
hold its 1998 annual meeting of shareholders in April 1998. In such event, any
proposal of a shareholder that is intended to be presented at the 1998 annual
meeting of shareholders must be received by Mecklenburg at its main office in
Charlotte, North Carolina no later than December 22, 1997 in order that any such
proposal be timely received for inclusion in the proxy statement and appointment
of proxy to be issued in connection with such meeting.
Whether or not the Merger is consummated, Triangle expects to hold its
1998 annual meeting of shareholders in April 1998. Any proposal of a shareholder
of Triangle which is intended to be presented at the 1998 annual meeting, must
be received by Triangle at its principal executive office in Raleigh, North
Carolina no later than December 26, 1997 in order to be included in Triangle's
proxy statement and form of appointment of proxy to be issued in connection with
that meeting.
=============================================================================
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APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED APRIL 25, 1997
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BY AND BETWEEN
BANK OF MECKLENBURG
AND
TRIANGLE BANCORP, INC.
APRIL 25, 1997
I-1
TABLE OF CONTENTS
ARTICLE I. AGREEMENT TO MERGE................................................................................... 2
1.01. Names of Merging Corporations.................................................................. 2
1.02. Nature of Transaction.......................................................................... 2
1.04. Assets and Liabilities of Interim.............................................................. 2
1.05. Conversion and Exchange of Stock............................................................... 3
a. Conversion of Mecklenburg Stock........................................................... 3
b. Exchange Procedures....................................................................... 3
c. Treatment of Fractional Shares............................................................ 4
d. Surrender of Certificates................................................................. 4
e. Antidilutive Adjustments.................................................................. 5
f. Dissenters................................................................................ 5
g. Lost Certificates......................................................................... 5
h. Treatment of Mecklenburg's Stock Options.................................................. 5
i. Outstanding Triangle Stock ............................................................... 7
1.06. Articles, By-Laws and Management............................................................... 7
1.07. Closing; Plan of Merger; Effective Time........................................................ 7
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF MECKLENBURG........................................................8
2.01. Organization; Standing; Power................................................................. 8
2.02. Capital Stock.................................................................................. 8
2.03. Principal Shareholders......................................................................... 8
2.04. Subsidiaries....................................................................................8
2.05. Convertible Securities, Options, Etc............................................................9
2.06. Authorization and Validity of Agreement....................................................... 9
2.07. Validity of Transactions; Absence of Required .................................................10
2.08. Mecklenburg Books and Records..................................................................10
2.10. Mecklenburg Financial Statements...............................................................11
2.11. Tax Returns and Other Tax Matters..............................................................11
2.12. Absence of Material Adverse Changes or Certain Other Events ...................................12
2.13. Absence of Undisclosed Liabilities............................................................ 12
2.14. Compliance with Existing Obligations.......................................................... 12
2.15. Litigation and Compliance with Law.............................................................13
2.16. Real Properties............................................................................... 14
2.17. Loans, Accounts, Notes and Other Receivables...................................................15
2.18. Securities Portfolio and Investments.......................................................... 16
2.19. Personal Property and Other Assets............................................................ 16
2.20. Patents, Trademarks and Licenses.............................................................. 16
2.21. Environmental Matters......................................................................... 17
2.22. Absence of Brokerage or Finders Commissions....................................................18
2.23. Material Contracts............................................................................ 19
i
2.24. Employment Matters; Employee Relations........................................................ 19
2.25. Employee Agreements; Employee Benefit Plans................................................... 20
2.26. Insurance..................................................................................... 21
2.27. Insurance of Deposits......................................................................... 22
2.28. Affiliates.....................................................................................22
2.29. Obstacles to Regulatory Approval, Accounting Treatment or Tax Treatment........................22
2.30. Disclosure.................................................................................... 22
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE HOLDING COMPANY............................................ 23
3.01. Organization; Standing; Power................................................................. 23
3.02. Capital Stock................................................................................. 23
3.03. Authorization and Validity of Agreement....................................................... 23
3.04. Validity of Transactions; Absence of Required Consents or Waivers..............................24
3.05 Holding Company Books and Records..............................................................24
3.06. Holding Company Reports....................................................................... 25
3.07. Holding Company Financial Statements.......................................................... 25
3.08. Absence of Material Adverse Changes........................................................... 25
3.09. Litigation and Compliance with Law............................................................ 26
3.10 Absence of Brokerage or Finders Commissions................................................... 27
3.11. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment..................................................................28
3.12. Disclosure.....................................................................................28
ARTICLE IV. COVENANTS OF MECKLENBURG........................................................................... 28
4.01. Affirmative Covenants of Mecklenburg.......................................................... 28
a. "Affiliates" of Mecklenburg............................................................... 28
b. Conduct of Business Prior to Effective Time............................................... 28
c. Periodic Information Regarding Loans...................................................... 29
d. Notice of Certain Changes or Events....................................................... 30
e. Consents to Assignment of Leases.......................................................... 30
f. Further Action; Instruments of Transfer, etc.............................................. 31
g. Conversion to State Member Bank........................................................... 31
4.02. Negative Covenants of Mecklenburg......................................................... 31
a. Amendments to Articles of Incorporation or Bylaws..........................................31
b. Change in Capital Stock................................................................... 31
c. Options, Warrants and Rights.............................................................. 31
d. Dividends................................................................................. 31
e. Employment, Benefit or Retirement Agreements or Plans..................................... 31
f. Increase in Compensation; Additional
Compensation............................................................................ 32
g. Accounting Practices...................................................................... 32
h. Acquisitions; Additional Branch Offices................................................... 32
i. Changes in Business Practices............................................................. 32
ii
j. Exclusive Merger Agreement................................................................ 33
l. Debt; Liabilities......................................................................... 34
m. Liens; Encumbrances....................................................................... 34
n. Waiver of Rights.......................................................................... 34
o. Other Contracts........................................................................... 34
ARTICLE V. COVENANTS OF THE HOLDING COMPANY.....................................................................35
5.01. Operation as Subsidiary........................................................................35
5.02. Board of Directors.............................................................................35
5.03. NASDAQ National Market System Notification of Listing of Additional Shares of Triangle
Stock.........................................................................................35
5.04 Notice of Certain Changes or Events............................................................35
5.05 The Holding Company to Provide Necessary.......................................................
5.06 The Holding Company to File Form 8-K...........................................................36
ARTICLE VI. MUTUAL AGREEMENTS.................................................................................. 36
6.01. Shareholders' Meetings; Registration Statement; Joint Proxy
Statement/Prospectus.........................................................................36
a. Meetings of Shareholders.................................................................. 36
b. Preparation and Distribution of Joint Proxy Statement/Prospectus...........................36
c. Registration Statement and "Blue Sky" Approvals........................................... 37
d. Recommendation of Mecklenburg's Board of
Directors................................................................................. 37
e. Information for Joint Proxy Statement/Prospectus and Registration Statement............... 37
6.02. Regulatory Approvals.......................................................................... 38
6.03. Access........................................................................................ 38
6.04. Costs..........................................................................................39
6.05. Announcements................................................................................. 39
6.06. Environmental Studies......................................................................... 39
6.07. Employees; Severance Payments; Employee
Benefits.....................................................................................40
a. Employment of Mecklenburg Employees....................................................... 40
b. Severance Payment......................................................................... 41
c. Employee Benefits......................................................................... 41
6.08. Confidentiality........................................................................... 41
6.09. Reorganization for Tax Purposes............................................................... 42
6.10. Accounting Treatment...........................................................................42
6.11. Other Permissible Transactions.................................................................42
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER.................................................................... 43
7.01. Conditions to all Parties' Obligations........................................................ 43
iii
a. Approval by Governmental or Regulatory Authorities; No Disadvantageous
Conditions.................................................................................43
b. Effectiveness of Registration Statement; Compliance with Securities and Other
"Blue Sky" Requirements................................................................... 43
c. Adverse Proceedings, Injunction, Etc...................................................... 43
d. Approval by Boards of Directors and Shareholders........................................ 44
e. Fairness Opinions......................................................................... 44
f. Tax Opinion............................................................................... 44
g. No Termination or Abandonment............................................................. 45
7.02. Additional Conditions to Mecklenburg's Obligations............................................ 45
b. Compliance with Laws...................................................................... 45
c. The Holding Company's Representations and Warranties and Performance of
Agreements; Officers' Certificate....................................................... 45
d. Legal Opinion of the Holding Company's Counsel............................................ 46
e. Other Documents and Information from the Holding Company ................................ 46
f. Acceptance by Mecklenburg's Counsel....................................................... 46
7.03. Additional Conditions to the Holding Company's Obligations.....................................46
a. Material Adverse Change............................................................... ....46
b. Compliance with Laws; Adverse Proceedings,Injunction, Etc................................. 47
c. Mecklenburg's Representations and Warranties and Performance of Agreements;
Officers' Certificate............................................................... 47
d. Agreements from Mecklenburg Affiliates.................................................... 47
e. Accounting Treatment.......................................................................47
f. Legal Opinion of Mecklenburg's Counsel.................................................... 48
g. Other Documents and Information from Mecklenburg......................................... 48
h. Consents to Assignment of Real Property Leases............................................ 48
i. Acceptance by the Holding Company's Counsel............................................... 48
j. Mecklenburg Board of Directors............................................................ 48
k. Mecklenburg Securities Portfolio.......................................................... 48
l. Exercise of Dissenters Rights............................................................. 48
ARTICLE VIII. TERMINATION; BREACH; REMEDIES.....................................................................49
8.01. Mutual Termination.............................................................................49
8.02. Unilateral Termination.........................................................................49
a. Termination by the Holding Company ....................................................... 49
b. Termination by Mecklenburg................................................................ 50
8.03. Breach; Remedies.............................................................................. 51
a. Breach of Agreement ...................................................................... 51
b. Termination Fee........................................................................... 51
ARTICLE IX. INDEMNIFICATION.................................................................................... 52
9.01. Indemnification Following Effective Time.......................................................52
9.02 Procedure for Claiming Indemnification........................................................ 52
iv
ARTICLE X. MISCELLANEOUS PROVISIONS............................................................................ 52
10.01...."Previously Disclosed" Information; "Material
Adverse Effect"............................................................................52
10.02. Survival of Representations, Warranties,Indemnification and Other
Agreements.................................................................................. 53
a. Representations, Warranties and Other Agreements........................................... 53
b. Indemnification............................................................................ 53
10.03. Waiver........................................................................................ 53
10.04. Amendment..................................................................................... 54
10.05. Notices........................................................................................54
10.06. Further Assurance............................................................................. 54
10.07. Headings and Captions......................................................................... 55
10.08. Entire Agreement.............................................................................. 55
10.09. Severability of Provisions.................................................................... 55
10.10. Assignment.................................................................................... 55
10.11. Counterparts.................................................................................. 55
10.12. Governing Law................................................................................. 55
10.13. Inspection.....................................................................................55
v
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND BETWEEN
BANK OF MECKLENBURG
AND
TRIANGLE BANCORP, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
(hereinafter called "Agreement") entered into as of the 25th day of April, 1997,
by and between BANK OF MECKLENBURG ("Mecklenburg") and TRIANGLE BANCORP, INC.
(the "Holding Company").
WHEREAS, Mecklenburg is a North Carolina banking corporation
with its principal office and place of business located in Charlotte, North
Carolina; and,
WHEREAS, the Holding Company is a North Carolina business
corporation with its principal office and place of business located in Raleigh,
North Carolina; and,
WHEREAS, the Holding Company and Mecklenburg have agreed that
it is in their mutual best interests and in the best interests of their
respective shareholders for Mecklenburg to be acquired by and become the
wholly-owned subsidiary of the Holding Company (the "Acquisition") with the
effect that each of the outstanding shares of Mecklenburg's common stock will be
converted into newly issued shares of the Holding Company' common stock, all in
the manner and upon the terms and conditions contained in this Agreement; and,
WHEREAS, to effect the Acquisition, the Holding Company shall
cause the formation of an interim bank corporation under the laws of the State
of North Carolina, to be named Triangle-Mecklenburg Interim Bank ("Interim"),
which shall be the wholly-owned subsidiary of the Holding Company; and,
WHEREAS, to effectuate the foregoing, the Holding Company and
Mecklenburg desire to adopt this Agreement as a plan of reorganization in
accordance with the provisions of Section 368(a) of the Internal Revenue Code of
1986, as amended; and,
WHEREAS, while Mecklenburg's Board of Directors has approved
this Agreement, Mecklenburg has executed this Agreement subject to the approval
of its shareholders and has agreed to call a special meeting of its shareholders
for the purpose of voting on the Agreement and will recommend to its
shareholders that they approve the Agreement and the transactions described
herein; and,
WHEREAS, the Holding Company's Board of Directors has approved
this Agreement and the transactions described herein, including the issuance by
the Holding Company of shares of its common stock to Mecklenburg's shareholders
to effectuate such transactions, the Holding Company has executed this Agreement
subject to the approval of its shareholders and has
1
agreed to call a special meeting of its shareholders for the purpose of voting
on the Agreement and will recommend to its shareholders that they approve the
Agreement and the transactions described herein.
NOW, THEREFORE, in consideration of the premises, the mutual
benefits to be derived from this Agreement, and of the representations,
warranties, conditions, covenants and promises herein contained, and subject to
the terms and conditions hereof, the Holding Company and Mecklenburg hereby
adopt and make this Agreement and mutually agree as follows:
ARTICLE I. AGREEMENT TO MERGE
1.01. NAMES OF MERGING CORPORATIONS. The names of the corporations
proposed to be merged are BANK OF MECKLENBURG ("Mecklenburg") and
TRIANGLE-MECKLENBURG INTERIM BANK ("Interim").
1.02. NATURE OF TRANSACTION. Subject to the provisions of this
Agreement, at the "Effective Time" (as defined in Paragraph 1.07. below),
Interim shall be merged into and with Mecklenburg pursuant to N.C. GEN.
STAT. ' 53-12 (the "Merger").
1.03. EFFECT OF MERGER; SURVIVING CORPORATION. At the Effective Time
and as provided in N.C. GEN. STAT. '' 53-13, by reason of the Merger the
separate corporate existence of Interim shall cease while the corporate
existence of Mecklenburg as the surviving corporation in the Merger shall
continue with all of its purposes, objects, rights, privileges, powers and
franchises, all of which shall be unaffected and unimpaired by the Merger.
Following the Merger, Mecklenburg shall operate as the wholly-owned banking
subsidiary of the Holding Company and, as a North Carolina banking corporation,
will continue to conduct its business at the then legally established branches
and main offices of Mecklenburg. The duration of the corporate existence of
Mecklenburg, as the surviving corporation, shall be perpetual and unlimited.
1.04. ASSETS AND LIABILITIES OF INTERIM. At the Effective Time and by
reason of the Merger, and in accordance with N.C. GEN. STAT. " 53-13, 53-17 and
55-11-06, all of Interim's property, assets and rights of every kind and
character (including without limitation all real, personal or mixed property,
all debts due on whatever account, all other choses in action and all and
every other interest of or belonging to or due to Interim, whether tangible or
intangible) shall be transferred to and vest in Mecklenburg, and Mecklenburg
shall succeed to all the rights, privileges, immunities, powers, purposes and
franchises of a public or private nature (including all trust and fiduciary
properties, powers and rights) of Interim, all without any conveyance,
assignment or further act or deed; and Mecklenburg shall become responsible
for all of the liabilities, duties and obligations of every kind, nature and
description (including duties as trustee or fiduciary) of Interim as of the
Effective Time.
2
1.05. CONVERSION AND EXCHANGE OF STOCK
A. CONVERSION OF MECKLENBURG STOCK. At the Effective Time,
all rights of Mecklenburg's shareholders with respect to all then outstanding
shares of Mecklenburg's common stock ($2.00 par value) ("Mecklenburg Stock")
shall cease to exist, and, as consideration for and to effectuate the Merger
(and except as otherwise provided below) each such outstanding share of
Mecklenburg Stock (other than any shares held by Mecklenburg as treasury
shares or shares held by the Holding Company or as to which rights of dissent
and appraisal are properly exercised as provided below) shall be converted,
without any action on the part of the holder of such share, the Holding Company,
Interim or Mecklenburg, into 1.00 (the "Exchange Rate") newly issued share of
the Holding Company's no par value common stock ("Triangle Stock"), provided,
however, that in the event the average closing sales price of Triangle Stock
for the thirty (30) calendar days preceding a date three (3) business days
before the Effective Time shall be greater than $23.75, the Holding Company,
at its option and without penalty, may terminate this Agreement, and in the
event the average closing sales price of Triangle Stock for the thirty (30)
calendar days preceding a date three (3) business days before the Effective
Time shall be less than $14.25, Mecklenburg, at its option and without
penalty, may terminate this Agreement.
At the Effective Time, and without any action by Mecklenburg,
Interim, the Holding Company or any holder thereof, Mecklenburg's stock transfer
books shall be closed as to holders of Mecklenburg Stock immediately prior to
the Effective Time and, thereafter, no transfer of Mecklenburg Stock by any such
holder may be made or registered; and the holders of shares of Mecklenburg Stock
shall cease to be, and shall have no further rights as, shareholders of
Mecklenburg other than as provided herein. Following the Effective Time,
certificates representing shares of Mecklenburg Stock outstanding at the
Effective Time (herein sometimes referred to as "Old Certificates") shall
evidence only the right of the registered holder thereof to receive, and may be
exchanged for, (I) certificates for the number of whole shares of the Triangle
Stock to which such holders shall have become entitled on the basis set forth
above, plus cash for any fractional share interests as provided herein, or (II)
in the case of shares as to which rights of dissent and appraisal are properly
exercised (as provided below), cash as provided in Article 13 of the North
Carolina Business Corporation Act.
B. EXCHANGE PROCEDURES. As promptly as practicable following
the Effective Time, the Holding Company shall cause First-Citizens Bank & Trust
Company, the transfer agent for Triangle Stock (the "Exchange Agent"), to mail
to each former shareholder of Mecklenburg of record immediately prior to the
Effective Time written instructions and transmittal materials (a "Transmittal
Letter") for use in surrendering Old Certificates to the Exchange Agent. Upon
the proper delivery to the Exchange Agent (in accordance with the above
instructions, and accompanied by a properly completed Transmittal Letter) by a
former shareholder of Mecklenburg of his or her Old Certificates, the Exchange
Agent shall register in the name of such shareholder the shares of the Triangle
Stock and deliver said New Certificates to the individual shareholder entitled
thereto upon and in exchange for the surrender and delivery to the Exchange
Agent by said individual shareholder of his or her Old Certificates.
3
C. TREATMENT OF FRACTIONAL SHARES. No scrip or certificates
representing fractional shares of Triangle Stock will be issued to any former
shareholder of Mecklenburg, and, except as provided below, no such shareholder
will have any right to vote or receive any dividend or other distribution on, or
any other right with respect to, any fraction of a share of the Triangle Stock
resulting from the above exchange. In the event the exchange of shares would
result in the creation of fractional shares, then, in lieu of the issuance of
fractional shares of Triangle Stock, the Holding Company shall deliver cash to
the Exchange Agent in an amount equal to the aggregate market value of all such
fractional shares, and the Exchange Agent shall divide such cash among and remit
it (without interest) to the former shareholders of Mecklenburg in accordance
with their respective interests. For purposes of this Paragraph 1.05.c., the
"aggregate market value" of all fractional shares of the Triangle Stock shall be
equal to the total of such fractional shares multiplied by the closing sales
price of Triangle Stock as quoted on the National Market System of the Nasdaq
Stock Market, Inc. ("Nasdaq National Market System") (as reported by THE WALL
STREET JOURNAL or, if not reported thereby, any other authoritative source) on
the last trading day preceding the Effective Time (as defined in Paragraph 1.07
below).
D. SURRENDER OF CERTIFICATES. Subject to Paragraph 1.05.f.
below, no certificate for any shares, or cash for any fractional share, of
Triangle Stock shall be delivered to any former shareholder of Mecklenburg
unless and until such shareholder shall have properly surrendered to the
Exchange Agent the Old Certificate(s) formerly representing his or her shares of
Mecklenburg Stock, together with a properly completed Transmittal Letter in such
form as shall be provided to the shareholder by the Holding Company for that
purpose. Further, until such Old Certificate(s) are so surrendered, no dividend
or other distribution payable to holders of record of Triangle Stock as of any
date subsequent to the Effective Time shall be delivered to the holder of such
Old Certificate(s). However, upon the proper surrender of such Old
Certificate(s) the Exchange Agent shall pay to the registered holder of the
shares of Triangle Stock represented by such Old Certificate(s) the amount of
any such cash, dividends or distributions which have accrued but remain unpaid
with respect to such shares. Neither the Holding Company, Interim, Mecklenburg,
nor the Exchange Agent, shall have any obligation to pay any interest on any
such cash, dividends or distributions for any period prior to such payment.
Further, and notwithstanding any other provision of this Agreement, neither the
Holding Company, Interim, Mecklenburg, nor the Exchange Agent shall be liable to
a former holder of Mecklenburg Stock for any amount paid or property delivered
in good faith to a public official pursuant to any applicable abandoned
property, escheat, or similar law.
E. ANTIDILUTIVE ADJUSTMENTS. If, following the date of this
Agreement, the Holding Company shall change the number of outstanding shares of
Triangle Stock as a result of a dividend payable in shares of Triangle Stock, a
stock split, a reclassification or other subdivision or combination of
outstanding shares, and if the record date of such event occurs prior to the
Effective Time, then an appropriate and proportionate adjustment shall be made
to the Exchange Rate so as to appropriately and proportionately increase or
decrease the number of shares of Triangle Stock to be issued in exchange for
each of the shares of Mecklenburg Stock.
4
F. DISSENTERS. Any shareholder of Mecklenburg who has and
properly exercises the right of dissent and appraisal with respect to the Merger
as provided in Article 13 of the North Carolina Business Corporation Act
("Dissenters Rights") shall be entitled to receive payment of the fair value of
his or her shares of Mecklenburg Stock in the manner and pursuant to the
procedures provided therein. Shares of Mecklenburg Stock held by persons who
exercise Dissenters Rights shall not be converted into Triangle Stock as
provided in Paragraph 1.05.a. above. However, if any shareholder of Mecklenburg
who exercises Dissenters Rights shall fail to perfect his or her right to
receive cash as provided above, or effectively shall waive or lose such right,
then each of his or her shares of Mecklenburg Stock, at the Holding Company's
sole option, shall be deemed to have been converted into the right to receive
Triangle Stock as of the Effective Time as provided in Paragraph 1.05.a. above.
G. LOST CERTIFICATES.Any shareholder of Mecklenburg whose
certificate evidencing shares of Mecklenburg Stock has been lost, destroyed,
stolen or otherwise is missing shall be entitled to receive a certificate
representing the shares of Triangle Stock to which he or she is entitled in
accordance with and upon compliance with conditions imposed by the Exchange
Agent or the Holding Company pursuant to the provisions of N.C. GEN. STAT. '
25-8-405 and N.C. GEN. STAT. ' 25-8-104 (including without limitation a
requirement that the shareholder provide a lost instruments indemnity or surety
bond in form, substance and amount satisfactory to the Exchange Agent and the
Holding Company).
H. TREATMENT OF MECKLENBURG'S STOCK OPTIONS. (I) At the
Effective Time, each option or other right to purchase shares of Mecklenburg
Stock pursuant to stock options ("Mecklenburg Options") granted by Mecklenburg
under the Bank of Mecklenburg 1988 Incentive Stock Option Plan and the Bank of
Mecklenburg 1996 Director Stock Option Plan (collectively, the "Mecklenburg
Stock Plans"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Triangle
Stock, and the Holding Company shall assume each Mecklenburg Option, in
accordance with the terms of the Mecklenburg Stock Plans and stock option
agreement by which it is evidenced, except that from and after the Effective
Time (A) the Holding Company and its Compensation Committee shall be substituted
for Mecklenburg and the Committee of Mecklenburg's Board of Directors
(including, if applicable, the entire Board of Directors of Mecklenburg)
administering the Mecklenburg Stock Plans, (B) each Mecklenburg Option assumed
by the Holding Company may be exercised solely for shares of Triangle Stock, (C)
the number of shares of Triangle Stock subject to such Mecklenburg Option shall
be equal to the number of shares of Mecklenburg Stock subject to such
Mecklenburg Option immediately prior to the Effective Time multiplied by the
Exchange Rate and rounding down to the nearest whole share, and (D) the per
share exercise price under each such Mecklenburg Option shall be adjusted by
dividing the per share exercise price under each such Mecklenburg Option by the
Exchange Rate and rounding up to the nearest cent.
(II) As soon as practicable after the Effective Time, the Holding
Company shall deliver to the participants in the Mecklenburg Stock Plans an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants pursuant to the Mecklenburg Stock Plans shall continue in effect on
the same terms and conditions (subject to the adjustments required by
5
Paragraph 1.05.a. after giving effect to the Merger). At or prior to the
Effective Time, the Holding Company shall take all corporate action necessary to
reserve for issuance sufficient shares of Triangle Stock for delivery upon
exercise of Mecklenburg Options assumed by it in accordance with this Paragraph
1.05.h. As soon as practicable after the Effective Time, the Holding Company
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
Triangle 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.
(III) All restrictions or limitations on transfer with respect to
Mecklenburg Stock awarded under the Mecklenburg Stock Plans or any other plan,
program, or arrangement of Mecklenburg, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plans, program, or arrangement, shall remain in full force and
effect with respect to shares of Triangle Stock into which such restricted stock
is converted pursuant to this Agreement.
(IV) Notwithstanding the foregoing provisions of this Paragraph
1.05.h., in no event shall options to purchase more than 301,555 shares of
Mecklenburg Stock be converted into options to purchase Triangle Stock in
connection with the transactions contemplated by this Agreement. Mecklenburg
agrees to cooperate with the Holding Company to insure the implementation of
this Paragraph 1.05.h.
(V) The Holding Company hereby acknowledges that (A) the Merger may be
grounds for the acceleration of vesting of the options issued and outstanding
under the Mecklenburg Stock Plans at the Effective Time, and (B) it shall assume
each Mecklenburg Option subject to any rights to accelerated vesting as a result
of the Merger and consistent with the other terms and conditions of this
Agreement.
I. OUTSTANDING TRIANGLE STOCK. The status of the shares of
Triangle Stock which are outstanding immediately prior to the Effective Time
shall not be affected by the Merger.
1.06. ARTICLES, BY-LAWS AND MANAGEMENT. The Articles of Incorporation
and By-Laws of Mecklenburg in effect at the Effective Time shall be the Articles
of Incorporation and By-Laws of Mecklenburg as the surviving corporation. The
officers and directors of Mecklenburg in office at the Effective Time shall
continue to hold such offices until removed as provided by law or until the
election or appointment of their respective successors.
1.07. CLOSING; ARTICLES OF MERGER; EFFECTIVE TIME. The closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of the Holding Company in Raleigh, North Carolina, or at such other
place as the Holding Company shall designate, on a date specified by the Holding
Company (the "Closing Date") after the expiration of any and all required
waiting periods following the effective date of required approvals of the Merger
by governmental or regulatory authorities (but in no event more than thirty (30)
days
6
following the expiration of all such required waiting periods). At the
Closing, the Holding Company, Interim and Mecklenburg shall take such actions
(including without limitation the delivery of certain closing documents) as are
required herein and as shall otherwise be required by law to consummate the
Merger and cause it to become effective, and shall execute Articles of Merger
under North Carolina law which shall contain a "Plan of Merger" substantially in
the form attached as Schedule A hereto.
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of governmental and regulatory
authorities), the Merger shall be effective on the date and at the time (the
"Effective Time") designated in the Articles of Merger executed at the Closing
and filed with the North Carolina Secretary of State in accordance with law;
provided, however, that the date and time so specified as the Effective Time
shall in no event be more than ten (10) days following the Closing Date. If the
Articles of Merger do not designate a date or specific time as the Effective
Time, then the Effective Time shall be that date and time when the Articles of
Merger are properly filed with the North Carolina Secretary of State.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF MECKLENBURG
Except as otherwise specifically provided herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to the Holding Company,
Mecklenburg hereby makes the following representations and warranties to the
Holding Company:
2.01. ORGANIZATION; STANDING; POWER. Mecklenburg (I) is duly
organized and incorporated, validly existing and in good standing as a banking
corporation under the laws of North Carolina; (II) has all requisite power and
authority (corporate and other) to own, lease and operate its properties and to
carry on its business as now being conducted; (III) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or in which
the transaction of its business makes such qualification necessary, except where
failure so to qualify would not have a material adverse effect on Mecklenburg;
and (IV) is not transacting business or operating any properties owned or leased
by it in violation of any provision of federal or state law or any rule or
regulation promulgated thereunder, which violation would have a material adverse
effect on Mecklenburg.
2.02. CAPITAL STOCK. Mecklenburg's authorized capital stock
consists of 10,000,000 shares of common stock, $2.00 par value per share. As of
March 31, 1997, 2,118,945 shares of Mecklenburg Stock were issued and
outstanding, which constitute Mecklenburg's only issued and outstanding
securities. Mecklenburg has 22,791 shares of Mecklenburg Stock available for
issuance under the Mecklenburg Stock Plans and options to purchase 301,555
shares of Mecklenburg Stock are outstanding.
Each outstanding share of Mecklenburg Stock (I) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent assessable under applicable North Carolina
banking law), (II) has not been issued in violation of the preemptive rights of
any shareholder, and (III) has been issued pursuant to and in compliance with
7
the requirement of an applicable exemption from registration requirements under
the Securities Act of 1933, as amended (the "1933 Act").
The Mecklenburg Stock is registered with the Federal Deposit
Insurance Corporation ("FDIC") under the Securities Exchange Act of 1934 (the
"Exchange Act"); Mecklenburg is subject to the periodic reporting requirements
of the Exchange Act.
2.03. PRINCIPAL SHAREHOLDERS. No person or entity is known to
Mecklenburg to beneficially own, directly or indirectly, more than 5% of the
outstanding shares of Mecklenburg Stock.
2.04. SUBSIDIARIES. Mecklenburg has one active subsidiary,
Mecklenburg Financial Services, Inc. ("Subsidiary"), and, other than Subsidiary,
Mecklenburg does not own any stock or other equity interest in any corporation,
service corporation, joint venture, partnership or other entity. Subsidiary's
authorized capital stock consists of 100 shares of common stock ("Subsidiary
Stock"), of which 100 shares are issued and outstanding and constitute the only
securities issued by Subsidiary. All outstanding shares of Subsidiary Stock are
owned of record and beneficially by Mecklenburg. Each outstanding share of
Subsidiary Stock (I) has been duly authorized, is validly issued and
outstanding, and is fully paid and nonassessable, (II) has not been issued in
violation of the preemptive rights of any shareholder, and (III) has been issued
pursuant to and in compliance with the requirement of an applicable exemption
from registration requirements under the 1933 Act. The representations and
warranties of Mecklenburg contained in Paragraphs 2.05 through 2.09, 2.11
through 2.21, and 2.23 through 2.26 hereof shall be deemed to have been made by
Subsidiary as well.
2.05. CONVERTIBLE SECURITIES, OPTIONS, ETC. With the
exception of options to purchase an aggregate of 301,555 shares of Mecklenburg
Stock which have been issued and are outstanding under the Mecklenburg Stock
Plans, Mecklenburg does not have any outstanding (I) securities or other
obligations (including debentures or other debt instruments) which are
convertible into shares of Mecklenburg Stock or any other securities of
Mecklenburg, (II) options, warrants, rights, calls or other commitments of any
nature which entitle any person to receive or acquire any shares of Mecklenburg
Stock or any other securities of Mecklenburg, or (III) plan, agreement or other
arrangement pursuant to which shares of Mecklenburg Stock or any other
securities of Mecklenburg, or options, warrants, rights, calls or other
commitments of any nature pertaining thereto, have been or may be issued.
2.06. AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement
has been duly and validly approved by Mecklenburg's Board of Directors and
executed and delivered on Mecklenburg's behalf. Subject only to approval of this
Agreement by the shareholders of Mecklenburg in the manner required by law (as
contemplated by Paragraph 6.01.a. below), (I) Mecklenburg has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations and agreements and carry out the transactions described herein, (II)
all corporate proceedings and approvals required to authorize Mecklenburg to
enter into this Agreement and to perform its obligations and agreements and
carry out the transactions described
8
herein have been duly and properly completed or obtained, and (III) this
Agreement has been executed on behalf of Mecklenburg and constitutes a valid and
binding agreement of Mecklenburg enforceable in accordance with its terms
(except to the extent enforceability may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect which affect creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies, and (C) general principles of equity
and applicable laws or court decisions limiting the enforceability of
indemnification provisions).
2.07. VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS
OR WAIVERS. Except where the same would not have a material adverse effect on
Mecklenburg, neither the execution and delivery of this Agreement, nor the
consummation of the transactions described herein, nor compliance by Mecklenburg
with any of its obligations or agreements contained herein, will: (I) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, Mecklenburg's Articles of
Incorporation or Bylaws, or any contract, agreement, lease, mortgage, note,
bond, indenture, license, or obligation or understanding (oral or written) to
which Mecklenburg is bound or by which it, its business, capital stock or any of
its properties or assets may be affected; (II) result in the creation or
imposition of any lien, claim, interest, charge, restriction or encumbrance upon
any of Mecklenburg's properties or assets; (III) violate any applicable federal
or state statute, law, rule or regulation, or any judgment, order, writ,
injunction or decree of any court, administrative or regulatory agency or
governmental body; (IV) result in the acceleration of any obligation or
indebtedness of Mecklenburg; or (V) interfere with or otherwise adversely affect
Mecklenburg's ability to carry on its business as presently conducted.
No consents, approvals or waivers are required to be obtained
from any person or entity in connection with Mecklenburg's execution and
delivery of this Agreement, or the performance of its obligations or agreements
or the consummation of the transactions described herein, except for required
approvals of Mecklenburg's shareholders as described in Paragraph 7.01.c. below
and of governmental or regulatory authorities as described in Paragraph 7.01.a.
below and other consents or approvals, the failure of which to obtain would not
have a material adverse effect on Mecklenburg or its ability to consummate the
Merger.
2.08. MECKLENBURG BOOKS AND RECORDS. Mecklenburg's books of
account and business records have been maintained in material compliance with
all applicable legal and accounting requirements and in accordance with good
business practices, and such books and records are complete and reflect
accurately in all material respects Mecklenburg's items of income and expense
and all of its assets, liabilities and stockholders' equity. The minute books of
Mecklenburg accurately reflect in all material respects the corporate actions
which its shareholders and board of directors, and all committees thereof, have
taken during the time periods covered by such minute books. All such minute
books have been or will be made available to Triangle and its representatives.
2.09. MECKLENBURG REPORTS. Since January 1, 1992, and where
the failure to file has had or could have a material and adverse effect on
Mecklenburg, Mecklenburg has filed all
9
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were required to be filed with (I) the FDIC,
(II) the North Carolina Commissioner of Banks (the "Commissioner"), or (III) any
other governmental or regulatory authorities having jurisdiction over
Mecklenburg. All such reports, registrations and statements filed by Mecklenburg
with the FDIC, the Commissioner or other such regulatory authority are
collectively referred to herein as the "Mecklenburg Reports." As of their
respective dates, each Mecklenburg Report complied in all material respects with
all the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which it was filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and Mecklenburg has
not been notified that any such Mecklenburg Report was deficient in any material
respect as to form or content. Following the date of this Agreement, Mecklenburg
shall deliver to the Holding Company, simultaneous with the filing thereof, a
copy of each report, registration, statement or other regulatory filing made by
it with the FDIC, the Commissioner or any other such regulatory authority.
2.10. MECKLENBURG FINANCIAL STATEMENTS. Mecklenburg has
delivered to Triangle a copy (I) of its balance sheets as of December 31, 1995
and December 31, 1996, and its statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31, 1994,
December 31, 1995 and December 31, 1996, together with notes thereto (the
"Mecklenburg Financial Statements"), and (II) a copy of its balance sheet as of
March 31, 1997 and its statement of operations for the three months ended March
31, 1997 (the "Mecklenburg Interim Financial Statements"); and, following the
date of this Agreement, Mecklenburg promptly will deliver to Triangle all other
annual or interim financial statements prepared by or for Mecklenburg. The
Mecklenburg Financial Statements and the Mecklenburg Interim Financial
Statements (including any related notes and schedules thereto) (I) are in
accordance with Mecklenburg's books and records, and (II) were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and present fairly in all
material respects Mecklenburg's financial condition, assets and liabilities,
results of operations, changes in stockholders' equity and changes in cash flows
as of the dates indicated and for the periods specified therein. The Mecklenburg
Financial Statements have been audited and certified by Mecklenburg's
independent certified public accountants, KPMG Peat Marwick L.L.P.
2.11. TAX RETURNS AND OTHER TAX MATTERS. (I) Mecklenburg has
timely filed or caused to be filed all federal, state and local tax returns and
reports which are required by law to have been filed, and, to the best knowledge
and belief of management of Mecklenburg, all such returns and reports were true,
correct and complete and contained all material information required to be
contained therein; (II) all federal, state and local income, profits, franchise,
sales, use, occupation, property, excise and other taxes (including interest and
penalties), charges and assessments which have become due from or been assessed
or levied against Mecklenburg or its property have been fully paid, and, with
respect to any such taxes to become due from Mecklenburg for any period or
periods through and including March 31, 1997, adequate provision has been made
for the payment of all such taxes and such provision is reflected in the
Mecklenburg Financial Statements; (III) Mecklenburg's tax returns and reports
have been examined or closed by applicable
10
statutes of limitations through the tax year ended December 31, 1992, and
Mecklenburg has not received any indication of the pendency of any audit or
examination in connection with any tax return or report and has no knowledge
that any such return or report is subject to adjustment; and (IV) Mecklenburg
has not executed any waiver or extended the statute of limitations (or been
asked to execute a waiver or extend a statute of limitation) with respect to any
tax year, the audit of any tax return or report or the assessment or collection
of any tax. Any deferred taxes of Mecklenburg have been provided for in the
Mecklenburg Financial Statements in all material respects.
2.12. ABSENCE OF MATERIAL ADVERSE CHANGES OR CERTAIN OTHER
EVENTS.
(I) Since December 31, 1996, Mecklenburg has
conducted its business only in the ordinary course, and there has been no
material adverse change, and there has occurred no event or development and, to
the best knowledge of management of Mecklenburg, there currently exists no
condition or circumstance (other than conditions or circumstances affecting the
banking industry generally, but excluding movements in interest rates in the
economy) which, with the lapse of time or otherwise, is reasonably likely to
cause, create or result in a material adverse change, in or affecting the
financial condition of Mecklenburg or in its results of operations, prospects,
business, assets, loan portfolio, investments, properties or operations.
(II) Since December 31, 1996, and other than
in the ordinary course of its business, including its normal salary review for
1997, Mecklenburg has not incurred any material liability or engaged in any
material transaction or entered into any material agreement, increased the
salaries, compensation or general benefits payable to its employees, suffered
any loss, destruction or damage to any of its properties or assets, or made a
material acquisition or disposition of any assets or entered into any material
contract or lease.
2.13. ABSENCE OF UNDISCLOSED LIABILITIES. Mecklenburg has no
liabilities or obligations, whether known or unknown, matured or unmatured,
accrued, absolute, contingent or otherwise, whether due or to become due
(including without limitation tax liabilities or unfunded liabilities under
employee benefit plans or arrangements), other than (I) those reflected in the
Mecklenburg Financial Statements and the Mecklenburg Interim Financial
Statements, or (II) obligations or liabilities incurred in the ordinary course
of its business since March 31, 1997, and which are not reasonably likely to,
individually or in the aggregate, cause a material adverse change in
Mecklenburg.
2.14. COMPLIANCE WITH EXISTING OBLIGATIONS. Mecklenburg has
performed in all material respects all obligations required to be performed by
it under, and it is not in default in any material respect under, or in
violation in any material respect of, the terms and conditions of its Articles
of Incorporation or Bylaws, and/or any contract, agreement, lease, mortgage,
note, bond, indenture, license, obligation, understanding or other undertaking
(whether oral or written) to which Mecklenburg is bound or by which it, its
business, capital stock or any of its properties or assets may be affected.
2.15. LITIGATION AND COMPLIANCE WITH LAW.
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(I) There are no actions, suits, arbitrations,
controversies or other proceedings (or, to the best knowledge and belief of
management of Mecklenburg, any facts or circumstances which reasonably could
result in such), including without limitation any action by any governmental or
regulatory authority, which currently exists or is ongoing, pending or, to the
best knowledge and belief of management of Mecklenburg threatened, contemplated
or probable of assertion, against, relating to or otherwise affecting
Mecklenburg or any of its properties or assets which, if determined adversely,
could result in liability on the part of Mecklenburg for, or subject it to,
monetary damages, fines or penalties, or an injunction, and which could have a
material adverse effect on Mecklenburg's financial condition, results of
operations, prospects, business, assets, loan portfolio, investments, properties
or operations or on the ability of Mecklenburg to consummate the Merger;
(II) Mecklenburg has all licenses, permits,
orders, authorizations or approvals ("Permits") of any federal, state, local or
foreign governmental or regulatory body that are material to or necessary for
the conduct of its business or to own, lease and operate its properties; all
such Permits are in full force and effect; no violations are or have been
recorded in respect of any such Permits; and no proceeding is pending or, to the
best knowledge of management of Mecklenburg, threatened or probable of assertion
to suspend, cancel, revoke or limit any Permit;
(III) Mecklenburg is not subject to any
supervisory agreement, enforcement order, writ, injunction, capital directive,
supervisory directive, memorandum of understanding or other similar agreement,
order, directive, memorandum or consent of, with or issued by any regulatory or
other governmental authority (including without limitation the FDIC or the
Commissioner) relating to its financial condition, directors or officers,
operations, capital, regulatory compliance or otherwise; there are no judgments,
orders, stipulations, injunctions, decrees or awards against Mecklenburg which
in any manner limit, restrict, regulate, enjoin or prohibit any present or past
business or practice of Mecklenburg; and Mecklenburg has not been advised and
has no reason to believe that any regulatory or other governmental authority or
any court is contemplating, threatening or requesting the issuance of any such
agreement, order, injunction, directive, memorandum, judgment, stipulation,
decree or award; and,
(IV) Mecklenburg is not in violation or
default in any material respect under, and has complied in all material respects
with, all laws, statutes, ordinances, rules, regulations, orders, writs,
injunctions or decrees of any court or federal, state, municipal or other
governmental or regulatory authority having jurisdiction or authority over it or
its business operations, properties or assets (including without limitation all
provisions of North Carolina law relating to usury, the Consumer Credit
Protection Act, and all other laws and regulations applicable to extensions of
credit by Mecklenburg) and there is no basis for any claim by any person or
authority for compensation, reimbursement or damages or otherwise for any
violation of any of the foregoing that would have any material adverse effect on
the financial condition of Mecklenburg.
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2.16. REAL PROPERTIES. Mecklenburg has Previously Disclosed
to the Holding Company a listing of all real property owned or leased by
Mecklenburg (including Mecklenburg's banking facilities and all other real
estate or foreclosed properties owned by Mecklenburg) (the "Real Property")
and all leases, if any, pertaining to any such Real Property to which
Mecklenburg is a party (the "Real Property Leases"). With respect to all Real
Property owned by Mecklenburg, Mecklenburg has good and marketable fee simple
title to such Real Property and owns the same free and clear of all mortgages,
liens, leases, encumbrances, title defects and exceptions to title other than
(I) the lien of current taxes not yet due and payable, and (II) such
imperfections of title and restrictions, covenants and easements (including
utility easements) which do not affect materially the value of the Real Property
and which do not and will not materially detract from, interfere with or
restrict the present or future use of the properties subject thereto or affected
thereby. With respect to each Real Property Lease (I) such lease is valid and
enforceable in accordance with its terms, (II) there currently exists no
circumstance or condition which constitutes an event of default by Mecklenburg
or its lessor or which, with the passage of time or the giving of required
notices will or could constitute such an event of default, and (iii) subject to
any required consent of Mecklenburg's lessor, each such Real Property Lease may
be assigned to the Holding Company and the execution and delivery of this
Agreement does not constitute an event of default thereunder.
To the best of the knowledge and belief of
management of Mecklenburg, the Real Property complies in all material respects
with all applicable federal, state and local laws, regulations, ordinances or
orders of any governmental authority, including those relating to zoning,
building and use permits, and the Real Property may be used under applicable
zoning ordinances for commercial banking facilities as a matter of right rather
than as a conditional or nonconforming use.
All improvements and fixtures included in or
on the Real Property are in good condition and repair, ordinary wear and tear
excepted, and, except as may have been Previously Disclosed pursuant to
Paragraph 2.21 below, there does not exist any condition which interferes with
Mecklenburg's use or affects the economic value thereof.
2.17. LOANS, ACCOUNTS, NOTES AND OTHER RECEIVABLES.
(I) All loans, accounts, notes and other receivables
reflected as assets on Mecklenburg's books and records (A) have resulted from
bona fide business transactions in the ordinary course of Mecklenburg's
operations, (B) in all material respects were made in accordance with
Mecklenburg's customary loan policies and procedures, and (C) are owned by
Mecklenburg free and clear of all liens, encumbrances, assignments,
participation or repurchase agreements or other exceptions to title or to the
ownership or collection rights of any other person or entity.
(II) All records of Mecklenburg regarding all
outstanding loans, accounts, notes and other receivables, and all other real
estate owned, are accurate in all material respects, and, with respect to each
loan which Mecklenburg's loan documentation indicates is secured by any real
or personal property or property rights ("Loan Collateral"), such loan is
secured
13
by valid, perfected and enforceable liens on all such Loan Collateral having
the priority described in Mecklenburg's records of such loan.
(III) To the best knowledge of management of
Mecklenburg, each loan reflected as an asset on Mecklenburg's books, and each
guaranty therefor, is the legal, valid and binding obligation of the obligor or
guarantor thereon, and no defense, offset or counterclaim has been asserted with
respect to any such loan or guaranty.
(IV) Mecklenburg has Previously Disclosed to the Holding
Company a listing of (A) each loan, extension of credit or other asset of
Mecklenburg which, as of March 31, 1997, is classified by the FDIC, the
Commissioner or by Mecklenburg as "Loss", "Doubtful", "Substandard" or "Special
Mention" (or otherwise by words of similar import), or which Mecklenburg has
designated as a special asset or for special handling or placed on any "watch
list" because of concerns regarding the ultimate collectibility or deteriorating
condition of such asset or any obligor or Loan Collateral therefor, and (B) each
loan or extension of credit of Mecklenburg which, as of March 31, 1997, was past
due thirty (30) days or more as to the payment of principal and/or interest, or
as to which any obligor thereon (including the borrower or any guarantor)
otherwise was in default, is the subject of a proceeding in bankruptcy or
otherwise has indicated any inability or intention not to repay such loan or
extension of credit. Each such listing is accurate and complete as of the date
indicated.
(V) To the best knowledge and belief of Mecklenburg's
management, each of Mecklenburg's loans and other extensions of credit (with the
exception of those loans and extensions of credit specified in the written
listings described in Subparagraph (iv) above) is collectible in the ordinary
course of Mecklenburg's business in an amount which is not less than the amount
at which it is carried on Mecklenburg's books and records.
(VI) Mecklenburg's reserve for possible loan losses (the
"Loan Loss Reserve") shown in the Mecklenburg Interim Financial Statements has
been established in conformity with GAAP, sound banking practices and all
applicable requirements of the FDIC and rules and policies of the Commissioner
and, in the best judgment of Mecklenburg's management, is reasonable in view of
the size and character of Mecklenburg's loan portfolio, current economic
conditions and other relevant factors, and is adequate to provide for losses
relating to or the risk of loss inherent in Mecklenburg's loan portfolio and
other real estate owned.
14
2.18. SECURITIES PORTFOLIO AND INVESTMENTS. All securities
owned by Mecklenburg (whether owned of record or beneficially) are held free and
clear of all mortgages, liens, pledges, encumbrances or any other restriction or
rights of any other person or entity, whether contractual or statutory, which
would materially impair the ability of Mecklenburg to dispose freely of any such
security and/or otherwise to realize the benefits of ownership thereof at any
time (other than pledges of securities in the ordinary course of Mecklenburg's
business to secure public funds deposits and in connection with repurchase
agreements with customers and Federal Home Loan Bank borrowings). There are no
voting trusts or other agreements or undertakings to which Mecklenburg is a
party with respect to the voting of any such securities. With respect to all
"repurchase agreements" to which Mecklenburg has "purchased" securities under
agreement to resell (if any), Mecklenburg has a valid, perfected first lien or
security interest in the government securities or other collateral securing the
repurchase agreement, and the value of the collateral securing each such
repurchase agreement equals or exceeds the amount of the debt owed to
Mecklenburg which is secured by such collateral.
Except for fluctuations in the market values of United States Treasury
and agency or municipal securities, since March 31, 1997, there has been no
significant deterioration or material adverse change in the quality, or any
material decrease in the value, of Mecklenburg's securities portfolio greater
than that provided in Paragraph 7.03.k. hereof.
2.19. PERSONAL PROPERTY AND OTHER ASSETS. All assets of
Mecklenburg (including without limitation all banking equipment, data
processing equipment, vehicles, and all other personal property located in or
used in the operation of each office of Mecklenburg or otherwise used by
Mecklenburg in the operation of its business) are owned by Mecklenburg free
and clear of all liens, leases, encumbrances, title defects or exceptions to
title. All of Mecklenburg's banking equipment is in good operating condition
and repair, ordinary wear and tear excepted.
2.20. PATENTS, TRADEMARKS AND LICENSES. Mecklenburg owns,
possesses or has the right to use any and all patents, licenses, trademarks,
trade names, copyrights, trade secrets and proprietary and other confidential
information necessary to conduct its business as now conducted; and, to its best
knowledge, Mecklenburg has not violated, and is not currently in conflict with,
any patent, license, trademark, trade name, copyright or proprietary right of
any other person or entity.
2.21. ENVIRONMENTAL MATTERS. Mecklenburg has Previously
Disclosed and provided to the Holding Company copies of all written reports,
correspondence, notices or other materials, if any, in its possession
pertaining to environmental reports, surveys, assessments, notices of
violation, notices of regulatory requirements, penalty assessments, claims,
actions or proceedings, past or pending, of the Real Property or any of its Loan
Collateral and any improvements thereon, or to any violation of Environmental
Laws (as defined below) on, affecting or otherwise involving the Real Property,
any Loan Collateral or otherwise involving Mecklenburg.
To the best of the knowledge and belief of management of Mecklenburg:
(I) there has been no presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing,
15
processing, emission, discharge, release, threatened release, control or
clean-up, in a reportable or regulated quantity, of any hazardous, toxic or
otherwise regulated materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, oil or other
petroleum products or byproducts, asbestos or materials containing (or presumed
to contain) asbestos, polychlorinated biphenyls, or radioactive materials,
and/or any hazardous, toxic, regulated or dangerous waste, substance or material
defined as such by the United States Environmental Protection Agency or any
other federal, state or local government or agency or political subdivision
thereof, or for the purpose of any Environmental Laws (as defined herein), as
may now or hereafter (through the Effective Time) be defined or in effect
("Hazardous Substances") by any person on, from or relating to any parcel of the
Real Property;
(II) Mecklenburg has not violated any federal,
state or local law, rule, regulation, order, permit or other requirement
relating to health, safety or the environment or imposing liability,
responsibility or standards of conduct applicable to environmental conditions
(all such laws, rules, regulations, orders and other requirements being herein
collectively referred to as "Environmental Laws"), and, there has been no
violation of any Environmental Laws (including any violation with respect to or
relating to any Loan Collateral) by any other person or entity for whose
liability or obligation with respect to any particular matter or violation
Mecklenburg is or may be responsible or liable;
(III) Mecklenburg is not subject to any
claims, demands, causes of action, suits, proceedings, losses, damages,
penalties, liabilities, obligations, costs or expenses of any kind and nature
which arise out of, under or in connection with, or which result from or are
based upon the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, reporting, testing,
processing, emission, discharge, release, threatened release, control or
clean-up of any Hazardous Substances on, from or relating to the Real Property
or any Loan Collateral, by Mecklenburg or any other person or entity; and,
(IV) no facts, events or conditions relating
to the Real Property or any Loan Collateral, or the operations of Mecklenburg at
any of its office locations, will prevent, hinder or limit continued compliance
with Environmental Laws, or give rise to any investigatory, remedial or
corrective actions, obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental Laws.
For purposes of this Agreement, "Environmental Laws" shall
include:
(I) all federal, state and local statutes,
regulations, ordinances, orders, decrees, and similar provisions having the
force or effect of law,
(II) all contractual agreements, and
(III) all common law,
16
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all standards of
conduct and bases of obligations relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control or clean-up of any Hazardous Substances (including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act, the Superfund Amendment and Reauthorization Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the Clean Water
Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollutant Act,
the Coastal Zone Management Act, any "Superfund" or "Superlien" law, the North
Carolina Oil Pollution and Hazardous Substances Control Act, the North Carolina
Water and Air Resources Act and the North Carolina Occupational Safety and
Health Act, including any amendments thereto from time to time) as such may now
or hereafter (through the Effective Time) be defined or in effect.
2.22. ABSENCE OF BROKERAGE OR FINDERS COMMISSIONS. (I) All
negotiations relative to this Agreement and the transactions described herein
have been carried on by Mecklenburg directly with the Holding Company; (II) no
person or firm has been retained by or has acted on behalf of, pursuant to any
agreement, arrangement or understanding with, or under the authority of,
Mecklenburg or its Board of Directors, as a broker, finder or agent or has
performed similar functions or otherwise is or may be entitled to receive or
claim a brokerage fee or other commission in connection with the transactions
described herein; and (III) Mecklenburg has not agreed to pay any brokerage fee
or other commission to any person or entity in connection with the transactions
described herein.
2.23. MATERIAL CONTRACTS. Except for leases on Mecklenburg's
branch offices, Mecklenburg is not a party to or bound by any agreement
involving money or other property in an amount or with a value in excess of
$100,000 (I) which is not to be performed in full prior to December 31, 1997,
(II) which calls for the provision of goods or services to Mecklenburg and
cannot be terminated without material penalty upon written notice to the other
party thereto, (III) which is material to Mecklenburg and was not entered into
in the ordinary course of business, (IV) which involves hedging, options or
any similar trading activity, or interest rate exchanges or swaps, (V) which
commits Mecklenburg to extend any loan or credit (with the exception of letters
of credit, lines of credit and loan commitments extended in the ordinary course
of Mecklenburg's business), (VI) which involves the purchase or sale of any
assets of Mecklenburg, or the purchase, sale, issuance, redemption or transfer
of any capital stock or other securities issued by Mecklenburg, or (VII) with
any director, officer or principal shareholder of Mecklenburg (including without
limitation any employment or consulting agreement, but not including any
agreement relating to loans or other banking services which were made in the
ordinary course of Mecklenburg's business and on substantially the same terms
and conditions as were prevailing at that time for similar agreements with
unrelated persons).
Mecklenburg is not in default in any material respect, and
there has not occurred any event which with the lapse of time or giving of
notice or both would constitute such a default, under any contract, lease,
insurance policy, commitment or arrangement to which it is a party or by which
17
it or its property is or may be bound or affected or under which it or its
property receives benefits, where the consequences of such default would have a
material adverse effect on the financial condition, results of operations,
prospects, business, assets, loan portfolio, investments, properties or
operations of Mecklenburg.
2.24. EMPLOYMENT MATTERS; EMPLOYEE RELATIONS. Mecklenburg (I)
has paid in full to or accrued on behalf of all its directors, officers and
employees all wages, salaries, commissions, bonuses, fees, sick pay, severance
pay, all other amounts promised to the extent required by law or when
Mecklenburg has a policy of making such payments and other direct compensation
for all services performed by them to the date of this Agreement and (II) is in
compliance with all federal, state and local laws, statutes, rules and
regulations with regard to employment and employment practices, terms and
conditions, and wages and hours and other compensation matters; and no person
has, to the knowledge of management of Mecklenburg, asserted that Mecklenburg is
liable in any amount for any arrearages in wages or employment taxes or for any
penalties for failure to comply with any of the foregoing.
There is no action, suit or proceeding by any person
pending or, to the best knowledge of management of Mecklenburg, threatened,
against Mecklenburg (or any of its employees), involving employment
discrimination, sexual harassment, wrongful discharge or similar claims.
Mecklenburg is not a party to or bound by any collective
bargaining agreement with any of its employees, any labor union or any other
collective bargaining unit or organization. There is no pending or threatened
labor dispute, work stoppage or strike involving Mecklenburg and any of its
employees, or any pending or threatened proceeding in which it is asserted that
Mecklenburg has committed an unfair labor practice; and Mecklenburg is not aware
of any activity involving it or any of its employees seeking to certify a
collective bargaining unit or engaging in any other labor organization activity.
2.25. EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFIT PLANS
(I) Mecklenburg is not a party to or bound by any
employment agreements with any of its directors, officers or employees.
(II) Mecklenburg has Previously Disclosed and has
delivered or made available to the Holding Company prior to the execution of
this Agreement copies, in each case, of all pension, stock ownership, severance
pay, vacation, bonus, or other incentive plan, all other written employee
programs, arrangements, 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 "employee benefit plans" as that term is defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), currently adopted, maintained by, sponsored in whole or in
part by, or contributed to by Mecklenburg 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
18
other beneficiaries are eligible toparticipate (collectively, the "Mecklenburg
Benefit Plans"). Any of the Mecklenburg Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Mecklenburg ERISA Plan." No Mecklenburg ERISA Plan is
also a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) or is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA. Neither Mecklenburg nor any affiliate of Mecklenburg
has ever been required to contribute to a multi-employer plan, as defined in
Section 3(37) of ERISA.
(III) All Mecklenburg Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
laws, rules or regulations, the breach or violation of which are reasonably
likely to have, individually or in the aggregate, a material adverse effect on
Mecklenburg. Each Mecklenburg ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and Mecklenburg is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. To the knowledge of Mecklenburg, Mecklenburg has not
engaged in a transaction with respect to any Mecklenburg Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject Mecklenburg to a tax 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
Mecklenburg.
(IV) Mecklenburg has no liability for retiree health and life
benefits under any of the Mecklenburg Benefit Plans and there are no
restrictions on the rights of Mecklenburg to amend or terminate any such Plan
without incurring any liability thereunder, which liability is reasonably likely
to have a material adverse effect on Mecklenburg.
(V) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (A) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of Mecklenburg from
Mecklenburg under any Mecklenburg Benefit Plan or otherwise, (B) increase any
benefits otherwise payable under any Mecklenburg Benefit Plan or otherwise, or
(C) result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a material adverse effect on
Mecklenburg.
(VI) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of Mecklenburg and their respective beneficiaries have been
fully reflected on the Mecklenburg Financial Statements to the extent required
by and in accordance with GAAP.
2.26. INSURANCE. Mecklenburg has in effect a "banker's blanket
bond" and such other policies of general liability, casualty, directors and
officers liability, employee fidelity, errors and omissions and other property
and liability insurance as have been Previously Disclosed to the 19
Holding Company (the "Policies"). The Policies provide coverage in such amounts
and against such liabilities, casualties, losses or risks as is customary or
reasonable for entities engaged in Mecklenburg's business or as is required by
applicable law or regulation; and, in the reasonable opinion of management of
Mecklenburg, the insurance coverage provided under the Policies is considered
reasonable and adequate in all respects for Mecklenburg. Each of the Policies is
in full force and effect and is valid and enforceable in accordance with its
terms, and is underwritten by an insurer of recognized financial responsibility
and which is qualified to transact business in North Carolina; and Mecklenburg
has taken all requisite actions (including the giving of required notices) under
each such Policy in order to preserve all rights thereunder with respect to all
matters. Mecklenburg is not in default under the provisions of, has not received
notice of cancellation or nonrenewal of or any material premium increase on, or
has any knowledge of any failure to pay any premium on or any inaccuracy in any
application for any Policy. There are no pending claims with respect to any
Policy (and Mecklenburg is not aware of any facts which would form the basis of
any such claim), and Mecklenburg has no knowledge of any state of facts or of
the occurrence of any event that is reasonably likely to form the basis for any
such claim.
2.27. INSURANCE OF DEPOSITS. All deposits of Mecklenburg are
insured by the Bank Insurance Fund of the FDIC to the maximum extent permitted
by law, all deposit insurance premiums due from Mecklenburg to the FDIC have
been paid in full in a timely fashion, and, to the best of the knowledge and
belief of Mecklenburg's executive officers, no proceedings have been commenced
or are contemplated by the FDIC or otherwise to terminate such insurance.
2.28. AFFILIATES. Mecklenburg has Previously Disclosed to the
Holding Company a listing of those persons deemed by Mecklenburg and its counsel
as of the date of this Agreement to be "Affiliates" of Mecklenburg (as that term
is defined in Rule 405 promulgated under the Securities Act of 1933), including
persons, trusts, estates, corporations or other entities related to persons
deemed to be Affiliates of Mecklenburg.
2.29. OBSTACLES TO REGULATORY APPROVAL, ACCOUNTING TREATMENT OR
TAX TREATMENT. To the best of the knowledge and belief of management of
Mecklenburg, there exists no fact or condition (including Mecklenburg's record
of compliance with the Community Reinvestment Act) relating to Mecklenburg that
may reasonably be expected to (I) prevent or materially impede or delay the
Holding Company or Mecklenburg from obtaining the regulatory approvals required
in order to consummate transactions described herein, (II) prevent the Merger
from qualifying to be a reorganization under Section 368(a)(1)(A) of the Code,
or (III) prevent the Merger from being treated as a "pooling-of-interests" for
accounting purposes; and, if any such fact or condition becomes known to
Mecklenburg, Mecklenburg shall promptly (and in any event within three days
after obtaining such knowledge) communicate such fact or condition to the
President of the Holding Company.
2.30. DISCLOSURE. To the best of the knowledge and
belief of Mecklenburg, no written statement, certificate, schedule, list or
other written information furnished by or on behalf of Mecklenburg at any time
to the Holding Company in connection with this Agreement (including without
limitation information "Previously Disclosed" by Mecklenburg), when considered
as a
20
whole, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. Each document delivered or to be delivered by
Mecklenburg to the Holding Company is or will be a true and complete copy of
such document, unmodified except by another document delivered by Mecklenburg.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE HOLDING
COMPANY
Except as otherwise specifically described herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to Mecklenburg, the Holding
Company hereby makes the following representations and warranties to
Mecklenburg.
3.01. ORGANIZATION; STANDING; POWER. The Holding Company and
its subsidiaries each (I) is duly organized and incorporated, validly existing
and in good standing under the laws of North Carolina, (II) has all requisite
power and authority (corporate and other) to own its respective properties and
conduct its respective businesses as now being conducted, (III) is duly
qualified to do business and is in good standing in each other jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its respective businesses makes such qualification necessary,
except where failure so to qualify would not have a material adverse effect on
the Holding Company and its subsidiaries considered as one enterprise, and (IV)
is not transacting business, or operating any properties owned or leased by it,
in violation of any provision of federal or state law or any rule or regulation
promulgated thereunder, which violation would have a material adverse effect on
the Holding Company and its subsidiaries considered as one enterprise.
3.02. CAPITAL STOCK. The Holding Company's authorized capital
stock consists of 20,000,000 shares of Triangle Stock. As of March 31, 1997, an
aggregate of 10,488,854 shares of Triangle Stock were issued and outstanding.
The Holding Company's outstanding capital stock has been duly authorized and
validly issued, and is fully paid and nonassessable, and the shares of Triangle
Stock issued to Mecklenburg's shareholders pursuant to this Agreement, when
issued as described herein, will be duly authorized, validly issued, fully paid,
nonassessable and freely tradable by all holders other than Affiliates.
3.03. AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement
has been duly and validly approved by the Holding Company's Board of Directors
and executed and delivered on the Holding Company's behalf. (I) The Holding
Company has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations and agreements and carry out the
transactions described herein, (II) all corporate proceedings required to be
taken to authorize the Holding Company to enter into this Agreement and to
perform its obligations and agreements and carry out the transactions described
herein have been duly and properly taken, and (III) this Agreement constitutes
the valid and binding agreement of the Holding Company enforceable in accordance
with its terms (except to the extent enforceability may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect 21
which affect creditors' rights generally, (B) by legal and equitable limitations
on the availability of injunctive relief, specific performance and other
equitable remedies, and (C) general principles of equity and applicable laws or
court decisions limiting the enforceability of indemnification provisions).
3.04. VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED CONSENTS
OR WAIVERS. Except where the same would not have a material adverse effect on
the Holding Company and its subsidiaries considered as one enterprise, neither
the execution and delivery of this Agreement, nor the consummation of the
transactions described herein, nor compliance by the Holding Company with any of
its obligations or agreements contained herein, will: (I) conflict with or
result in a breach of the terms and conditions of, or constitute a default or
violation under any provision of, the Holding Company's Articles of
Incorporation or Bylaws, or any contract, agreement, lease, mortgage, note,
bond, indenture, license, or obligation or understanding (oral or written) to
which the Holding Company is bound or by which it, its business, capital stock
or any of its properties or assets may be affected; (II) result in the creation
or imposition of any lien, claim, interest, charge, restriction or encumbrance
upon any of the Holding Company's properties or assets; (III) violate any
applicable federal or state statute, law, rule or regulation, or any order,
writ, injunction or decree of any court, administrative or regulatory agency or
governmental body; (IV) result in the acceleration of any obligation or
indebtedness of the Holding Company; or (V) interfere with or otherwise
adversely affect the Holding Company's ability to carry on its business as
presently conducted.
No consents, approvals or waivers are required to be obtained
from any person or entity in connection with the Holding Company's execution and
delivery of this Agreement, or the performance of its obligations or agreements
or the consummation of the transactions described herein, except for the
required approvals of the Holding Company's shareholders as described in
Paragraph 7.01.c. below and of governmental or regulatory authorities described
in Paragraph 7.01.a. below.
3.05. HOLDING COMPANY BOOKS AND RECORDS. The Holding Company's
books of account and business records have been maintained in substantial
compliance with all applicable legal and accounting requirements and in
accordance with good business practices, and such books and records are
complete and reflect accurately in all material respects the Holding Company's
items of income and expense and all of its assets, liabilities and stockholders'
equity. The minute books of the Holding Company accurately reflect in all
material respects the corporate actions which its shareholders and board of
directors, and all committees thereof, have taken during the time periods
covered by such minute books. All such minute books have been or will be made
available to Mecklenburg and its representatives.
3.06. HOLDING COMPANY REPORTS. Since January 1, 1992, and
where the failure to file has had or could have a material and adverse effect on
the Holding Company and its subsidiaries considered as one enterprise, the
Holding Company and its consolidated subsidiaries have filed all reports,
registrations and statements, together with any amendments that were required to
be made with respect thereto, that were required to be filed with (I) the
Securities and
22
Exchange Commission (the "SEC"), (II) the Board of Governors of the Federal
Reserve System (the "FRB"), (III) the FDIC, (IV) the Commissioner, and (V) any
other governmental or regulatory authorities having jurisdiction over the
Holding Company or its subsidiaries. All such reports and statements filed with
the SEC, the FRB, the FDIC, the Commissioner or other such regulatory authority
are collectively referred to herein as the "Holding Company Reports." As of
their respective dates, the Holding Company Reports complied in all material
respects with all the statutes, rules and regulations enforced or promulgated by
the regulatory authority with which they were filed and did 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; and the Holding
Company has not been notified that any of the Holding Company Reports were
deficient in any material respect as to form or content. Following the date of
this Agreement, the Holding Company shall deliver to Mecklenburg upon its
request a copy of any report, registration, statement or other regulatory filing
made by the Holding Company or its subsidiaries with the SEC, the FRB, the FDIC,
the Commissioner or any other such regulatory authority.
3.07. HOLDING COMPANY FINANCIAL STATEMENTS. The Holding
Company has delivered to Mecklenburg (I) a copy of the Holding Company's
consolidated balance sheets as of December 31, 1995 and December 31, 1996, and
its consolidated statements of income, changes in shareholders' equity, and cash
flows for the years ended December 31, 1994, December 31, 1995 and December 31,
1996 (the "Holding Company Financial Statements"), and (II) a copy of the
Holding Company's balance sheet as of March 31, 1997 and its statement of
operations for the three months ended March 31, 1997 (the "Holding Company
Interim Financial Statements"). The Holding Company Financial Statements and the
Holding Company Interim Financial Statements were prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated and present
fairly in all material respects the Holding Company's consolidated financial
condition, assets and liabilities, results of operations, changes in
shareholders' equity and changes in cash flows as of the dates and for the
periods specified therein. The Holding Company Financial Statements have been
audited by the Holding Company's independent accountants, Coopers & Lybrand
L.L.P.
3.08. ABSENCE OF MATERIAL ADVERSE CHANGES. Since March 31,
1997 there has been no material adverse change, and there has occurred no event
or development and, to the best knowledge of management of the Holding Company,
there currently exists no condition or circumstance (other than conditions or
circumstances affecting the banking industry generally, but excluding movements
in interest rates in the economy) which, with the lapse of time or otherwise, is
reasonably likely to cause, create or result in a material adverse change, in or
affecting the Holding Company's consolidated financial condition or results of
operations, or in its consolidated assets, loan portfolio, investments,
properties or operations.
23
3.09. LITIGATION AND COMPLIANCE WITH LAW.
(I) There are no actions, suits, arbitrations,
controversies or other proceedings or investigations (or, to the best knowledge
and belief of management of the Holding Company, any facts or circumstances
which reasonably could result in such), including without limitation any such
action by any governmental or regulatory authority, which currently exists or is
ongoing, pending or, to the best knowledge and belief of management of the
Holding Company, threatened, contemplated or probable of assertion, against,
relating to or otherwise affecting the Holding Company or any of its properties
or assets which, if determined adversely, could result in liability on the part
of the Holding Company for, or subject it to, monetary damages, fines or
penalties, or an injunction, and which could have a material adverse change in
or affecting the Holding Company's consolidated financial condition or results
of operations, or in its consolidated assets, loan portfolio, investments,
properties or operations or on the ability of the Holding Company to consummate
the Merger;
(II) The Holding Company and its subsidiaries
each has all licenses, permits, orders, authorizations or approvals ("Permits")
of any federal, state, local or foreign governmental or regulatory body that are
material to or necessary for the conduct of its business or to own, lease and
operate its properties; all such Permits are in full force and effect; no
violations are or have been recorded in respect of any such Permits; and no
proceeding is pending or, to the best knowledge of management of the Holding
Company, threatened or probable of assertion to suspend, cancel, revoke or limit
any Permit;
(III) Neither the Holding Company nor any of
its subsidiaries is subject to any supervisory agreement, enforcement order,
writ, injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive, memorandum or
consent of, with or issued by any regulatory or other governmental authority
(including without limitation the FDIC, the FRB or the Commissioner) relating to
its financial condition, directors or officers, operations, capital, regulatory
compliance or otherwise; there are no judgments, orders, stipulations,
injunctions, decrees or awards against the Holding Company or any of its
subsidiaries which in any manner limit, restrict, regulate, enjoin or prohibit
any present or past business or practice of the Holding Company or any of its
subsidiaries; and neither the Holding Company nor any of its subsidiaries has
been advised or has any reason to believe that any regulatory or other
governmental authority or any court is contemplating, threatening or requesting
the issuance of any such agreement, order, injunction, directive, memorandum,
judgment, stipulation, decree or award; and,
(IV) Neither the Holding Company nor any of
its subsidiaries is in violation or default in any material respect under, and
each has complied in all material respects with, all laws, statutes, ordinances,
rules, regulations, orders, writs, injunctions or decrees of any court or
federal, state, municipal or other governmental or regulatory authority having
jurisdiction or authority over it or its business operations, properties or
assets (including without limitation all provisions of North Carolina law
relating to usury, the Consumer Credit Protection Act, and all other laws and
regulations applicable to extensions of credit by the Holding Company's bank
24
subsidiary) and there is no basis for any claim by any person or authority for
compensation, reimbursement or damages or otherwise for any violation of any of
the foregoing that would have any material effect on the consolidated financial
condition of the Holding Company.
3.10. ABSENCE OF BROKERAGE OR FINDERS COMMISSIONS.
(I) All negotiations relative to this Agreement and the transactions described
herein have been carried on by the Holding Company directly with Mecklenburg;
(II) no person or firm has been retained by or has acted on behalf of, pursuant
to any agreement, arrangement or understanding with, or under the authority of,
the Holding Company or its Board of Directors, as a broker, finder or agent or
has performed similar functions or otherwise is or may be entitled to receive or
claim a brokerage fee or other commission in connection with the transactions
described herein; and (III) the Holding Company has not agreed to pay any
brokerage fee or other commission to any person or entity in connection with the
transactions described herein.
3.11. OBSTACLES TO REGULATORY APPROVAL, ACCOUNTING TREATMENT
OR TAX TREATMENT. To the best of the knowledge and belief of the executive
officers of the Holding Company, no fact or condition (including the Holding
Company's bank subsidiary's record of compliance with the Community Reinvestment
Act) relating to the Holding Company exists that may reasonably be expected to
(I) prevent or materially impede or delay the Holding Company regulatory
approvals required in order to consummate the transactions described herein,
(II) prevent the Merger from qualifying to be a reorganization under Section
368(a)(1)(A) of the Code, or (III) prevent the Merger from being treated as a
"pooling-of-interests" for accounting purposes; and, if any such fact or
condition becomes known to the executive officers of the Holding Company, it
promptly (and in any event within three days after obtaining such knowledge)
shall communicate such fact or condition to the President of Mecklenburg.
3.12. DISCLOSURE. To the best of the knowledge and
belief of the Holding Company, no written statement, certificate, schedule, list
or other written information furnished by or on behalf of the Holding Company at
any time to Mecklenburg in connection with this Agreement (including without
limitation information "Previously Disclosed" by the Holding Company), when
considered as a whole, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered
by the Holding Company to Mecklenburg is or will be a true and complete copy of
such document, unmodified except by another document delivered by the Holding
Company.
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ARTICLE IV. COVENANTS OF MECKLENBURG
4.01. AFFIRMATIVE COVENANTS OF MECKLENBURG. Mecklenburg hereby
covenants and agrees as follows with the Holding Company.
A. "AFFILIATES" OF MECKLENBURG. Mecklenburg will use its
best efforts to cause each person who shall be deemed by the Holding Company
or its counsel, in their sole discretion, to be an Affiliate of Mecklenburg
(as defined in Paragraph 2.28 above), to execute and deliver to the Holding
Company at least thirty (30) days prior to the Closing a written agreement
(the "Affiliates' Agreement") relating to restrictions on shares of Triangle
Stock to be received by such Affiliates pursuant to this Agreement and which
Affiliates' Agreement shall be in form and content reasonably satisfactory
to the Holding Company and substantially in the form attached as Schedule B
to this Agreement. Certificates for the shares of Triangle Stock issued to
Affiliates of Mecklenburg shall bear a restrictive legend (substantially in
the form as shall be set forth in the Affiliates' Agreement) with respect to
the restrictions applicable to such shares.
B. CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. While the
parties recognize that the operation of Mecklenburg until the Effective Time is
the responsibility of Mecklenburg and its Board of Directors and officers,
Mecklenburg agrees that, between the date of this Agreement and the Effective
Time, Mecklenburg will carry on its business, in and only in the regular and
usual course in substantially the same manner as such business heretofore was
conducted, and, to the extent consistent with such business and within its
ability to do so, Mecklenburg agrees that it will:
(I) preserve intact its present business organization,
keep available its present officers and employees, and preserve its
relationships with customers, depositors, creditors, correspondents, suppliers,
and others having business relationships with it;
(II) maintain all its properties and equipment in
customary repair, order and condition, ordinary wear and tear excepted;
(III) maintain its books of account and records in the
usual, regular and ordinary manner in accordance with sound business practices
applied on a consistent basis;
(IV) comply with all laws, rules and regulations
applicable to it, its properties and to the conduct of its business;
(V) continue to maintain in force insurance such as is
described in Paragraph 2.26. above; not modify any bonds or policies of
insurance in effect as of the date hereof unless the same, as modified, provides
substantially equivalent coverage; and not cancel, allow to be terminated or, to
the extent available, fail to renew, any such bond or policy of insurance unless
the same is replaced with a bond or policy providing substantially equivalent
coverage;
(VI) provide to the Holding Company on a monthly basis
Mecklenburg's market value report on its investment portfolio and on its hedging
portfolio; and,
26
(VII) promptly provide to the Holding Company such
information about Mecklenburg and its financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations, as it reasonably shall request.
C. PERIODIC INFORMATION REGARDING LOANS. All new extensions of
unsecured credit in excess of $100,000 and of secured credit in excess of
$250,000 will be submitted by Mecklenburg to the Holding Company on an
after-the-fact basis for the Holding Company's review within fifteen (15)
business days of the end of the month in which the extension of credit was made.
Additionally, Mecklenburg agrees to make available
and provide to the Holding Company the following information with respect to
Mecklenburg's loans and other extensions of credit (such assets herein referred
to as "Loans") as of March 31, 1997, and each month thereafter until the
Effective Time, such information for each month to be in form and substance as
is usual and customary in the conduct of Mecklenburg's business and to be
furnished within fifteen (15) business days of the end of each month ending
after the date hereof:
(I) a list of Loans past due for sixty (60) days
or more as to principal or interest;
(II) an analysis of the Loan Loss Reserve and
management's assessment of the adequacy of
the Loan Loss Reserve, which analysis and
assessment shall include a list of all
classified or "watch list" Loans, along with
the outstanding balance and amount
specifically allocated to the Loan Loss
Reserve for each such classified or "watch
list" Loan (this report shall be delivered
quarterly rather than monthly);
(III) a list of Loans in nonaccrual status;
(IV) a list of all Loans over $50,000 without
principal reduction for a period of longer
than one year;
(V) a list of all foreclosed real property or
other real estate owned and all repossessed
personal property;
(VI) a list of reworked or restructured Loans over
$50,000 and still outstanding, including
original terms, restructured terms and
status; and
(VII) a list of any actual or threatened litigation
by or against Mecklenburg pertaining to any
Loans or credits, which list shall contain a
description of circumstances surrounding such
litigation, its present status and
management's evaluation of such litigation.
27
D. NOTICE OF CERTAIN CHANGES OR EVENTS. Following the
execution of this Agreement and up to the Effective Time, Mecklenburg promptly
will notify the Holding Company in writing of and provide to it such information
as it shall request regarding (I) any material adverse change (other than
changes relating to or resulting from changes affecting the banking industry
generally, but excluding movements in interest rates in the economy) in its
financial condition, results of operations, prospects, business, assets, loan
portfolio, investments, properties or operations, or of the actual or
prospective occurrence of any condition or event which, with the lapse of time
or otherwise, is reasonably likely to cause, create or result in any such
material adverse change, or (II) the actual or prospective existence or
occurrence of any condition or event which, with the lapse of time or otherwise,
has caused or may or could cause any statement, representation or warranty of
Mecklenburg herein, or any information that has been Previously Disclosed by
Mecklenburg to the Holding Company, to be or become materially inaccurate,
misleading or incomplete, or which has resulted or may or could cause, create or
result in the material breach or violation of any of Mecklenburg's covenants or
agreements contained herein or in the failure of any of the conditions described
in Paragraphs 7.01. or 7.03. below.
E. CONSENTS TO ASSIGNMENT OF LEASES. Mecklenburg will use its
reasonable best efforts to obtain all consents of its landlords and lessors to
the acquisition of Mecklenburg by the Holding Company as may be required under
the Real Property Leases and all other leases, each of which consents shall be
in form and substance reasonably satisfactory to the Holding Company.
F. FURTHER ACTION; INSTRUMENTS OF TRANSFER, ETC. Mecklenburg
covenants and agrees with the Holding Company that it (I) will use its
reasonable best efforts in good faith to take or cause to be taken all action
required of it hereunder as promptly as practicable so as to permit the
consummation of the transactions described herein at the earliest possible date,
(II) shall perform all acts and execute and deliver to the Holding Company all
documents or instruments required herein or as otherwise shall be reasonably
necessary or useful to or requested by either of them in consummating such
transactions, and, (III) will cooperate with the Holding Company in every way in
carrying out, and will pursue diligently the expeditious completion of, such
transactions.
G. CONVERSION TO STATE MEMBER BANK. Mecklenburg shall use its
reasonable best efforts in good faith to become a member of the Federal Reserve
System as soon as possible after the date of this Agreement.
4.02. NEGATIVE COVENANTS OF MECKLENBURG. Mecklenburg hereby
covenants and agrees that, between the date hereof and the Effective Time,
Mecklenburg will not do any of the following things or take any of the following
actions without the prior written consent and authorization of the President of
the Holding Company.
A. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS.
Mecklenburg will not amend its Articles of Incorporation or Bylaws.
28
B. CHANGE IN CAPITAL STOCK. Except for Mecklenburg Stock to be
issued under the Mecklenburg Stock Plans, Mecklenburg will not (I) make any
change in its authorized capital stock, or create any other or additional
authorized capital stock or other securities, or (II) issue, sell, purchase,
redeem, retire, reclassify, combine or split any shares of its capital stock or
other securities issued by Mecklenburg, other than the issuance of shares upon
the exercise of stock options which are outstanding as of the date of this
Agreement (including securities convertible into capital stock), or enter into
any agreement or understanding with respect to any such action.
C. OPTIONS, WARRANTS AND RIGHTS. Mecklenburg will not grant or
issue any options, warrants, calls, puts or other rights of any kind relating to
the purchase, redemption or conversion of shares of its capital stock or any
other securities (including securities convertible into capital stock) or enter
into any agreement or understanding with respect to any such action.
D. DIVIDENDS. Except for the payment of a three cent ($.03)
cash dividend per share each quarter (consistent with past practices)
Mecklenburg will not declare or pay any dividends or make any other
distributions on or in respect of any shares of its capital stock or otherwise
to its shareholders.
E. EMPLOYMENT, BENEFIT OR RETIREMENT AGREEMENTS OR PLANS.
Except as required by law and except as may occur under the Mecklenburg Stock
Plans, Mecklenburg will not (I) enter into or become bound by any contract,
agreement or commitment for the employment or compensation of any officer,
employee or consultant which is not immediately terminable by Mecklenburg
without cost or other liability on no more than thirty (30) days notice; (II)
adopt, enter into or become bound by any new or additional profit-sharing,
bonus, incentive, change in control or "golden parachute", stock option, stock
purchase, pension, retirement, insurance (hospitalization, life or other) or
similar contract, agreement, commitment, understanding, plan or arrangement
(whether formal or informal) with respect to or which provides for benefits for
any of its current or former directors, officers, employees or consultants; or
(III) enter into or become bound by any contract with or commitment to any labor
or trade union or association or any collective bargaining group.
F. INCREASE IN COMPENSATION; ADDITIONAL COMPENSATION. Except
as otherwise provided herein, Mecklenburg will not increase the compensation
or benefits of, or pay any bonus or other special or additional compensation
to, any of Mecklenburg's directors, officers, employees or consultants.
Notwithstanding anything contained herein to the contrary, this Paragraph
4.02.f. shall not prohibit annual merit increases in the salaries of its
employees or other payments made to employees or directors in connection with
existing compensation or benefit plans, so long as such increases or payments
are effected at such times and in such manner and amounts as shall be
consistent with Mecklenburg's past compensation policies and practices and,
in the case of payments made pursuant to compensation or benefit plans,
consistent with the terms of those plans.
G. ACCOUNTING PRACTICES. Mecklenburg will not make any
changes in its accounting methods, practices or procedures or in depreciation or
amortization policies, schedules
29
or rates heretofore applied (except as required by generally accepted accounting
principles or governmental regulations).
H. ACQUISITIONS; ADDITIONAL BRANCH OFFICES. Mecklenburg will
not directly or indirectly (I) acquire or merge with, or acquire any branch or
all or any significant part of the assets of, any other person or entity, (II)
open any new branch office, or (III) enter into or become bound by any contract,
agreement, commitment or letter of intent relating to, or otherwise take or
agree to take any action in furtherance of, any such transaction or the opening
of a new branch office.
I. CHANGES IN BUSINESS PRACTICES. Except as may be required
by the FDIC, the Commissioner or any other governmental or other regulatory
agency or as shall be required by applicable law, regulation or this Agreement,
Mecklenburg will not (I) change in any material respect the nature of its
business or the manner in which it conducts its business, (II) discontinue any
material portion or line of its business, or (III) change in any material
respect its lending, investment, asset-liability management or other material
banking or business policies (except to the extent required by Paragraph 4.01.b.
above).
J. EXCLUSIVE MERGER AGREEMENT. Mecklenburg will not, directly
or indirectly, through any person (I) encourage, solicit or attempt to initiate
or procure discussions, negotiations or offers with or from any person or entity
(other than the Holding Company) relating to a merger or other acquisition of
Mecklenburg, or the purchase or acquisition of any Mecklenburg Stock, any branch
office of Mecklenburg or all or any significant part of Mecklenburg's assets; or
provide assistance to any person in connection with any such offer; (II) except
as the fiduciary duties of its Board of Directors may require, disclose to any
person or entity any information not customarily disclosed to the public
concerning Mecklenburg or its business, or afford to any other person or entity
access to its properties, facilities, books or records; (III) except for the
fiduciary duties of its Board of Directors may require, sell or transfer any
branch office of Mecklenburg or all or any significant part of its assets to any
other person or entity; or (IV) except for the fiduciary duties of its Board of
Directors may require, enter into or become bound by any contract, agreement,
commitment or letter of intent relating to, or otherwise take or agree to take
any action in furtherance of, any such transaction.
K. ACQUISITION OR DISPOSITION OF ASSETS. Mecklenburg will
not, without the prior written consent of the Holding Company, which consent
shall not be unreasonably withheld:
(I) sell or lease (as lessor), or enter into or become
bound by any contract, agreement, option or commitment relating to the sale,
lease (as lessor) or other disposition of any real estate; or sell or lease (as
lessor), or enter into or become bound by any contract, agreement, option or
commitment relating to the sale, lease (as lessor) or other disposition of any
equipment or any other fixed or capital asset having a value on Mecklenburg's
books or a fair market value, whichever is greater, of more than $50,000 for any
individual item or asset, or more than $200,000 in the aggregate for all such
items or assets;
30
(II) purchase or lease (as lessee), or enter into or
become bound by any contract, agreement, option or commitment relating to the
purchase, lease (as lessee) or other acquisition of any real property; or
purchase or lease (as lessee), or enter into or become bound by any contract,
agreement, option or commitment relating to the purchase, lease (as lessee) or
other acquisition of any equipment or any other fixed assets having a purchase
price, or involving aggregate lease payments, in excess of $50,000 for any
individual item or asset, or more than $200,000 in the aggregate for all such
items or assets;
(III) enter into any purchase commitment for supplies or
services which calls for prices of goods or fees for services materially higher
than current market prices or fees or which obligates Mecklenburg for a period
longer than twelve (12) months;
(IV) other than in the ordinary course of business and
at a level consistent with past practice but excluding the purchase of any loan
participation greater than $500,000, sell, purchase or repurchase, or enter into
or become bound by any contract, agreement, option or commitment to sell,
purchase or repurchase, any loan or other receivable or any participation in any
loan or other receivable; or
(V) other than in the ordinary course of business and at
a level consistent with past practice, sell or dispose of, or enter into or
become bound by any contract, agreement, option or commitment relating to the
sale or other disposition of, any other asset of Mecklenburg (whether tangible
or intangible, and including without limitation any trade name, copyright,
service mark or intellectual property right or license); or assign its right to
or otherwise give any other person its permission or consent to use or do
business under Mecklenburg's corporate name or any name similar thereto; or
release, transfer or waive any license or right granted to it by any other
person to use any trademark, trade name, copyright or intellectual property
right.
L. DEBT; LIABILITIES. Except in the ordinary course of its
business consistent with its past practices (including routine borrowings for
liquidity purposes from the Federal Home Loan Bank of Atlanta and other
correspondent banks), Mecklenburg will not (I) enter into or become bound by any
promissory note, loan agreement or other agreement or arrangement pertaining to
its borrowing of money, (II) assume, guarantee, endorse or otherwise become
responsible or liable for any obligation of any other person or entity, or (III)
incur any other liability or obligation (absolute or contingent).
M. LIENS; ENCUMBRANCES. Mecklenburg will not mortgage, pledge
or subject any of its assets to, or permit any of its assets to become or
(except as Previously Disclosed) remain subject to, any lien or any other
encumbrance (other than in the ordinary course of business consistent with its
past practices in connection with securing of public funds deposits, securities
repurchase agreements or other similar operating matters).
N. WAIVER OF RIGHTS. Mecklenburg will not waive, release or
compromise any material rights in its favor (except in the ordinary course of
business) except in good faith for fair
31
value in money or money's worth, nor waive, release or compromise any rights
against or with respect to any of its officers, directors or shareholders or
members of families of officers, directors or shareholders.
O. OTHER CONTRACTS. Mecklenburg will not enter into or become
bound by any contracts, agreements, commitments or understandings (other than
those described elsewhere in this Paragraph 4.02.) (I) for or with respect to
any charitable contributions greater than $25,000 in the aggregate; (II) with
any governmental or regulatory agency or authority; (III) pursuant to which
Mecklenburg would assume, guarantee, endorse or otherwise become liable for the
debt, liability or obligation of any other person; (IV) which is entered into
other than in the ordinary course of its business; and (V) which, in the case of
any one contract, agreement, commitment or understanding and whether or not in
the ordinary course of its business, would obligate or commit Mecklenburg to
make expenditures of more than $25,000.
ARTICLE V. COVENANTS OF THE HOLDING COMPANY
The Holding Company hereby covenants and agrees as follows with
Mecklenburg.
5.01. OPERATION AS SUBSIDIARY. For a period of at least three
(3) years after the Effective Time, the Holding Company shall operate
Mecklenburg as a wholly-owned subsidiary, provided such separate operation does
not appear to give rise to safety and soundness concerns or present any
financial or administrative burden on the Holding Company and its subsidiaries
as a whole.
5.02. BOARD OF DIRECTORS. Subject to any necessary regulatory
and shareholder approval, as soon as practicable following the Effective Time,
the Holding Company shall take such steps as appropriate to appoint Cy N.
Bahakel, or to cause him to be elected, as a member of the Holding Company's
Board of Directors for a term of two (2) years after the Effective Time, and,
for such service, Mr. Bahakel shall be compensated in accordance with the
Holding Company's standard arrangements for the compensation of its directors.
5.03. NASDAQ NATIONAL MARKET SYSTEM NOTIFICATION OF
LISTING OF ADDITIONAL SHARES OF TRIANGLE STOCK. On or before the fifteenth day
prior to the Effective Time, the Holding Company shall file with the NASDAQ
National Market System such notifications and other materials (and shall pay
such fees) as shall be required for the listing on the NASDAQ National Market
System of the shares of Triangle Stock to be issued to Mecklenburg's
shareholders at the Effective Time.
5.04. NOTICE OF CERTAIN CHANGES OR EVENTS. Following the
execution of this Agreement and up to the Effective Time, the Holding Company
promptly will notify Mecklenburg in writing of and provide to it such
information as it shall request regarding (I) any material adverse change (other
than changes relating to or resulting from changes affecting the banking
industry generally, but excluding movements in interest rates in the economy) in
its consolidated financial condition, results of operations, prospects,
business, assets, loan portfolio,
32
investments, properties or operations, or of the actual or prospective
occurrence of any condition or event which, with the lapse of time or otherwise,
is reasonably likely to cause, create or result in any such material adverse
change, or (II) the actual or prospective existence or occurrence of any
condition or event which, with the lapse of time or otherwise, has caused or may
or could cause any statement, representation or warranty of the Holding Company
herein, or any information that has been Previously Disclosed by the Holding
Company to Mecklenburg, to be or become materially inaccurate, misleading or
incomplete, or which has resulted or may or could cause, create or result in the
material breach or violation of any of the Holding Company's covenants or
agreements contained herein or in the failure of any of the conditions described
in Paragraphs 7.01. or 7.02. below.
5.05. THE HOLDING COMPANY TO PROVIDE NECESSARY INFORMATION. The Holding
Company will promptly provide to Mecklenburg information regarding the Holding
Company and its subsidiaries that Mecklenburg reasonably requests in order to
satisfy any of its obligations under Paragraph 4.01.e.
5.06. THE HOLDING COMPANY TO FILE FORM 8-K. As soon as practicable, the
Holding Company will file a Form 8-K with the SEC reflecting the combined
operations of the Holding Company and Mecklenburg for the thirty (30) days
following the Effective Time.
ARTICLE VI. MUTUAL AGREEMENTS
6.01. SHAREHOLDERS' MEETINGS; REGISTRATION STATEMENT; JOINT
PROXY STATEMENT/PROSPECTUS.
A. MEETINGS OF SHAREHOLDERS. Mecklenburg shall cause a meeting
of its shareholders (the "Mecklenburg Shareholder Meeting", which may be a
regular annual meeting or a specially called meeting) to be held as soon as
reasonably possible (but in no event less than twenty (20) days following the
mailing to Mecklenburg's shareholders of the "Joint Proxy Statement/Prospectus"
described below) for the purpose of Mecklenburg's shareholders voting on the
approval of the Agreement and the Merger. The Holding Company shall cause a
special meeting of its shareholders (the "Triangle Shareholders Meeting") to be
held as soon as reasonably possible for the purpose of the Holding Company's
shareholders voting on the approval of the Agreement and the Acquisition. In
connection with the call and conduct of and all other matters relating to the
Mecklenburg Shareholder Meeting and the Triangle Shareholder Meeting (including
the solicitation of proxies), Mecklenburg and the Holding Company shall fully
comply with all provisions of applicable law and regulations and with their
respective Articles of Incorporation and By-laws.
33
B. PREPARATION AND DISTRIBUTION OF JOINT PROXY
STATEMENT/PROSPECTUS. The Holding Company and Mecklenburg jointly will prepare a
"Joint Proxy Statement/Prospectus" for distribution to Mecklenburg's and the
Holding Company's shareholders as their respective proxy statement relating to
their solicitation of proxies for use at the Mecklenburg Shareholder Meeting and
the Triangle Shareholder Meeting and as the Holding Company's prospectus
relating to the offer and distribution of Triangle Stock as described herein.
The Joint Proxy Statement/ Prospectus shall be in such form and shall contain or
be accompanied by such information regarding the Mecklenburg Shareholder
Meeting, the Triangle Shareholder Meeting, this Agreement, the parties hereto,
the Merger and other transactions described herein as is required by applicable
law and regulations and otherwise as shall be agreed upon by the Holding Company
and Mecklenburg. The Holding Company shall include the Joint Proxy
Statement/Prospectus as the prospectus in its "Registration Statement" described
below, and Mecklenburg shall cause the Joint Proxy Statement/Prospectus to be
filed with the FDIC for review; and each party hereto will cooperate with the
other in good faith and will use their best efforts to cause the Joint Proxy
Statement/Prospectus to comply with any comments of the SEC and the FDIC
thereon.
The Holding Company and Mecklenburg will mail the Joint Proxy
Statement/Prospectus to Mecklenburg's shareholders not less than twenty (20)
days prior to the scheduled date of the Mecklenburg Shareholder Meeting;
provided, however, that no such materials shall be mailed to Mecklenburg's
shareholders unless and until the Holding Company shall have determined to its
own satisfaction that the conditions specified in Paragraph 7.03.d. below have
been satisfied and shall have approved such mailing.
C. REGISTRATION STATEMENT AND "BLUE SKY" APPROVALS. As soon
as practicable following the execution of this Agreement, the Holding Company
will prepare and file with the SEC a registration statement on Form S-4 (or on
such other form as the Holding Company shall determine to be appropriate) (the
"Registration Statement") covering the Triangle Stock to be issued to
shareholders of Mecklenburg pursuant to this Agreement and will use its
reasonable best efforts in good faith to see that the Registration Statement is
declared effective by the SEC under the 1933 Act. Additionally, the Holding
Company shall take all such other actions, if any, as shall be required by
applicable state securities or "blue sky" laws (I) to cause the Triangle Stock
to be issued upon consummation of the Merger, at the time of the issuance
thereof, to be duly qualified or registered (unless exempt) under such laws,
(II) to cause all conditions to any exemptions from qualification or
registration under such laws to have been satisfied, and (III) to obtain any and
all required approvals or consents to the issuance of such stock.
D. RECOMMENDATION OF MECKLENBURG'S BOARD OF DIRECTOR. Unless,
due to a material change in circumstances or for any other reason Mecklenburg's
Board of Directors reasonably believes that such a recommendation would violate
the directors' duties or obligations as such to Mecklenburg or to its
shareholders, Mecklenburg's Board of Directors will recommend to and actively
encourage Mecklenburg's shareholders that they vote their shares of Mecklenburg
Stock at the Mecklenburg Shareholder Meeting to ratify and approve this
Agreement and the Merger, and the Joint Proxy Statement/Prospectus mailed to
Mecklenburg's shareholders will so
34
indicate and state that Mecklenburg's Board of Directors considers the Merger to
be advisable and in the best interests of Mecklenburg and its shareholders.
E. INFORMATION FOR JOINT PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. The Holding Company and Mecklenburg each agrees to
respond promptly, and to use its reasonable best efforts to cause its directors,
officers, accountants and affiliates to respond promptly, to requests by any
other such party and its counsel for information for inclusion in the various
applications for regulatory approvals and in the Joint Proxy
Statement/Prospectus. The Holding Company and Mecklenburg each hereby covenants
with the others that none of the information provided by it for inclusion in the
Joint Proxy Statement/Prospectus will, at the time of its mailing to
Mecklenburg's shareholders, contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not false or misleading; and, at all times following such
mailing up to and including the Effective Time, none of such information
contained in the Joint Proxy Statement/Prospectus, as it may be amended or
supplemented, will contain an untrue statement of a material fact or omit any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not false or misleading.
6.02. REGULATORY APPROVALS. Promptly following the date of this
Agreement, the Holding Company and Mecklenburg each shall use their respective
reasonable best efforts in good faith to (I) prepare and file, or cause to be
prepared and filed, all applications for regulatory approvals and actions as may
be required of them, respectively, by applicable law and regulations with
respect to the transactions described herein (including applications to the FRB,
the FDIC, the Commissioner and the North Carolina State Banking Commission, and
to any other applicable federal or state banking, securities or other regulatory
authority), and (II) obtain all necessary regulatory approvals required for
consummation of the transactions described herein. Each such party shall
cooperate with each other party in the preparation of all applications to
regulatory authorities and, upon request, promptly shall furnish all documents,
information, financial statements or other material that may be required by any
other party to complete any such application; and, before the filing therefore,
each party to this Agreement shall have the right to review and comment on the
form and content of any such application to be filed by any other party. Should
the appearance of any of the officers, directors, employees or counsel of any of
the parties hereto be requested by any other party or by any governmental agency
at any hearing in connection with any such application, such party shall
promptly use its best efforts to arrange for such appearance.
6.03. ACCESS. Following the date of this Agreement and to and
including the Effective Time, Mecklenburg shall provide the Holding Company and
its employees, accountants and counsel, access to all its books, records, files
and other information (whether maintained electronically or otherwise), to all
its properties and facilities, and to all its employees, accountants, counsel
and consultants, for purposes of the conduct of such reasonable investigation
and review as they shall, in their sole discretion, consider to be necessary or
appropriate; provided, however, that any such review conducted by the Holding
Company shall be performed in such a manner as will
35
not interfere unreasonably with Mecklenburg's normal operations, or with
Mecklenburg's relationship with its customers or employees, and shall be
conducted in accordance with procedures established by the parties having due
regard for the foregoing.
6.04. COSTS. Subject to the provisions of Paragraph 8.03. below,
and whether or not this Agreement shall be terminated or the Merger shall be
consummated, Mecklenburg and the Holding Company each shall pay its own legal,
accounting and financial advisory fees and all its other costs and expenses
incurred or to be incurred in connection with the execution and performance of
its obligations under this Agreement or otherwise in connection with this
Agreement and the transactions described herein (including without limitation
all accounting fees, legal fees, filing fees, printing costs, travel expenses,
and, in the case of Mecklenburg, all fees owed to Equity Research, Inc. ("Equity
Research") for the cost of Mecklenburg's fairness opinion described in Paragraph
7.01.d. below, and to Orr Management, Inc. for financial advice, and, in the
case of the Holding Company, the cost of the "Environmental Survey" described in
Paragraph 6.06. below) and all fees owed to Wheat First Securities, Inc. ("Wheat
First") for the cost of the Holding Company's fairness opinion described in
Paragraph 7.01.d. below. However, subject to the provisions of Paragraph 8.03.
below, all costs incurred in connection with the printing and mailing of the
Joint Proxy Statement/Prospectus shall be deemed to be incurred and shall be
paid fifty percent (50%) by Mecklenburg and fifty percent (50%) by the Holding
Company.
6.05. ANNOUNCEMENTS. Mecklenburg and the Holding Company
each agrees that no person other than the parties to this Agreement is
authorized to make any public announcement or statement about this Agreement or
any of the transactions described herein, and that, without the prior review and
consent of the others (which consent shall not unreasonably be denied or
delayed), no party hereto may make any public announcement, statement or
disclosure as to the terms and conditions of this Agreement or the transactions
described herein, except for such disclosures as may be required incidental to
obtaining the prior approval of any regulatory agency or official, or the
consent of any lessor or landlord of Mecklenburg to the consummation of the
transactions described herein. However, notwithstanding anything contained
herein to the contrary, prior review and consent shall not be required if in the
good faith opinion of counsel to the Holding Company or Mecklenburg any such
disclosure by such entity is required by law or otherwise is prudent.
6.06. ENVIRONMENTAL STUDIES. At its option the Holding Company may
cause to be conducted Phase I environmental assessments of the Real Property,
the real estate subject to any Real Property Lease, or the Loan Collateral, or
any portion thereof, together with such other studies, testing and intrusive
sampling and analyses as the Holding Company shall deem necessary or desirable
(collectively, the "Environmental Survey"). The Holding Company shall complete
all such Phase I environmental assessments within sixty (60) days following the
date of this Agreement and thereafter conduct and complete any such additional
studies, testing, sampling and analyses within sixty (60) days following
completion of all Phase I environmental assessments. Subject to the provisions
of Paragraph 8.03. below, the costs of the Environmental Survey shall be paid by
the Holding Company. If (I) the final results of any Environmental Survey (or
any related analytical data) reflect that there likely has been any discharge,
disposal, release or emission by any
36
person of any Hazardous Substance on, from or relating to any of the Real
Property, real estate subject to a Real Property Lease or Loan Collateral at any
time prior to the Effective Time, or that any action has been taken or not
taken, or a condition or event likely has occurred or exists, with respect to
any of the Real Property, real estate subject to a Real Property Lease or Loan
Collateral which constitutes or would or may constitute a violation of any
Environmental Laws, and if, (II) based on the advice of its legal counsel or
other consultants, the Holding Company believes that Mecklenburg is reasonably
likely to become responsible for the remediation of such discharge, disposal,
release or emission or for other corrective action with respect to any such
violation, or that Mecklenburg is reasonably likely to become liable for
monetary damages (including without limitation any civil or criminal penalties
or assessments) resulting therefrom (or that, in the case of any of the Loan
Collateral, Mecklenburg is reasonably likely to incur any such liability if it
acquired title to such Loan Collateral), and if, (III) based on the advice of
its legal counsel or other consultants, the Holding Company believes the amount
of expenses or liability which Mecklenburg is reasonably likely to incur or for
which Mecklenburg could become responsible or liable on account of any and all
such remediation, corrective action or monetary damages at any time or over any
period of time could equal or exceed an aggregate of $100,000, then the Holding
Company shall give Mecklenburg written notice thereof (together with all
information in its possession relating thereto) within fifteen (15) days of the
completion of the Environmental Survey and, at the Holding Company's sole option
and discretion, at any time thereafter and up to the Effective Time, the Holding
Company may terminate this Agreement without further obligation or liability to
Mecklenburg or its shareholders.
6.07. EMPLOYEES; SEVERANCE PAYMENTS; EMPLOYEE BENEFITS.
A. EMPLOYMENT OF MECKLENBURG EMPLOYEES. Provided they remain
employed by Mecklenburg at the Effective Time, the Holding Company will in good
faith cause Mecklenburg to continue employment of all employees of Mecklenburg
(other than employees serving pursuant to an employment agreement) at their
current positions, salary and benefits it being understood that neither the
Holding Company nor Mecklenburg shall have any obligation with respect to any
specific employee. Each such person's employment shall be on an "at-will" basis,
and nothing in this Agreement shall be deemed to constitute an employment
agreement with any such person or to obligate the Holding Company or Mecklenburg
to employ any such person for any specific period of time or in any specific
position or to restrict the Holding Company's or Mecklenburg's right to
terminate the employment of any such person at any time and for any reason
satisfactory to it.
B. SEVERANCE PAYMENT. Except as otherwise may be agreed to by
the Holding Company and Mecklenburg, to the extent Mecklenburg maintains any
plan or arrangement for the payment of severance or salary continuation benefits
to employees, such plan or arrangement (unless specifically provided to the
contrary hereunder) shall be terminated at the Effective Time.
C. EMPLOYEE BENEFITS. Except as otherwise
provided in this Paragraph 6.07, the benefit plans of Mecklenburg ("Mecklenburg
Benefit Plans") will be reviewed and appropriate amendments, consolidations or
terminations will be made thereto at or after the Effective Time;
37
provided, however, that the employees of Mecklenburg (i) shall be eligible to
receive group hospitalization, medical, life, disability and similar benefits on
the same basis and under the same terms available to the present employees of
the Holding Company and its subsidiaries, (ii) in the event a Mecklenburg
Benefit Plan is terminated, the rights and benefits of Mecklenburg's employees
thereunder shall become fully vested, with each participating Mecklenburg
employee having the right or option either to receive the benefits to which he
or she is entitled as a result of such termination or to have such benefits
"rolled" into the appropriate Holding Company benefit plan ("Triangle Benefit
Plan"), on the same basis and applying the eligibility standards as would apply
to the employees of the Holding Company and its subsidiaries as if such
employee's prior service to Mecklenburg had been performed on behalf of the
Holding Company and its subsidiaries for qualification, participation and
vesting, but not for funding, purposes, and (iii) in the event a Mecklenburg
Benefit Plan is merged into a Triangle Benefit Plan, shall be entitled to
participate in such Triangle Benefit Plan on the same basis and applying the
same eligibility standards as would apply to employees of the Holding Company
and its subsidiaries. Mecklenburg and the Holding Company agree that for
purposes of qualification, participation and vesting in Triangle Benefit Plans,
the employees of Mecklenburg shall receive credit for their prior continuous
periods of service to Mecklenburg.
6.08. CONFIDENTIALITY. The Holding Company and
Mecklenburg each agrees that it will treat as confidential and not disclose to
any unauthorized person any documents or other information obtained from or
learned about the others during the course of the negotiation of this Agreement
and the carrying out of the events and transactions described herein (including
any information obtained during the course of any due diligence investigation or
review provided for herein or otherwise) and which documents or other
information relates in any way to the business, operations, personnel, customers
or financial condition of such other parties; and that it will not use any such
documents or other information for any purpose except for the purposes for which
such documents and information were provided to it and in furtherance of the
transactions described herein. However, the above obligations of confidentiality
shall not prohibit the disclosure of any such document or information by any
party to this Agreement to the extent (I) such document or information is then
available generally to the public or is already known to the person or entity to
whom disclosure is proposed to be made (other than through the previous actions
of such party in violation of this Paragraph 6.08), (II) such document or
information was available to the disclosing party on a nonconfidential basis
prior to the same being obtained pursuant to this Agreement, (III) disclosure is
required by subpoena or order of a court or regulatory authority of competent
jurisdiction, or by the SEC or regulatory authorities in connection with the
transactions described herein, or (IV) to the extent that, in the reasonable
opinion of legal counsel to such party, disclosure otherwise is required by law.
In the event this Agreement is terminated for any reason, then
each of the parties hereto immediately shall return to the other parties all
copies of any and all documents or other written materials or information of or
relating to such other parties which were obtained from them during the course
of the negotiation of this Agreement and the carrying out of the events and
transactions described herein (whether during the course of any due diligence
investigation or
38
review provided for herein or otherwise) and which documents or other
information relates in any way to the business, operations, personnel, customers
or financial condition of such other parties.
The parties' obligations of confidentiality under this
Paragraph 6.08 shall survive and remain in effect following any termination of
this Agreement
6.09 REORGANIZATION FOR TAX PURPOSES. The Holding Company and
Mecklenburg each undertakes and agrees to use its reasonable best efforts to
cause the Merger to qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Code, and that it will not intentionally take any action
that would cause the Merger to fail to so qualify.
6.10. ACCOUNTING TREATMENT. The Holding Company and Mecklenburg each
undertakes and agrees to use its reasonable best efforts to cause the Merger to
qualify to be treated as a "pooling-of-interests" for accounting purposes and
that it will not intentionally take any action that would cause the Merger to
fail to so qualify.
6.11. OTHER PERMISSIBLE TRANSACTIONS. The Holding Company and
Mecklenburg agree that the Holding Company and its subsidiaries may offer to
acquire, enter into agreements to acquire and acquire financial institution
holding companies and their subsidiaries, financial institutions or financial
services entities and their subsidiaries, leasing companies and other entities
which are permissible for financial institution holding companies and financial
institutions to own, and/or the assets and liabilities of such entities prior to
the Effective Time.
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER
7.01. CONDITIONS TO ALL PARTIES' OBLIGATIONS. Notwithstanding any other
provision of this Agreement to the contrary, the obligations of each of the
parties to this Agreement to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
39
A. APPROVAL BY GOVERNMENTAL OR REGULATORY AUTHORITIES; NO
DISADVANTAGEOUS CONDITIONS. (I) The Merger and other transactions described
herein shall have been approved, to the extent required by law, by the FRB, the
FDIC, the Commissioner and the North Carolina State Banking Commission, and by
all other governmental or regulatory agencies or authorities having jurisdiction
over such transactions, (II) no governmental or regulatory agency or authority
shall have withdrawn its approval of such transactions or imposed any condition
on such transactions or conditioned its approval thereof, which condition is
reasonably deemed by the Holding Company or Mecklenburg to be materially
disadvantageous or burdensome or to impact so adversely the economic or business
benefits of this Agreement as to render it inadvisable for such party to
consummate the Merger; (III) all waiting periods required following necessary
approvals by governmental or regulatory agencies or authorities shall have
expired, and, in the case of the waiting period following approval by the FRB
and the FDIC, no unwithdrawn objection to the Merger shall have been raised by
the U.S. Department of Justice; and (IV) all other consents, approvals and
permissions, and the satisfaction of all of the requirements prescribed by law
or regulation, necessary to the carrying out of the transactions contemplated
herein shall have been procured.
B. EFFECTIVENESS OF REGISTRATION STATEMENT; COMPLIANCE WITH
SECURITIES AND OTHER "BLUE SKY" REQUIREMENTSEFFECTIVENESS OF REGISTRATION
STATEMENT; COMPLIANCE WITH SECURITIES AND OTHER "BLUE SKY" REQUIREMENTS. The
Registration Statement shall be effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. The Holding Company shall have taken all such actions, if
any, as required by applicable state securities laws (I) to cause the Triangle
Stock to be issued upon consummation of the Merger, at the time of the issuance
thereof, to be duly qualified or registered (unless exempt) under such laws,
(II) to cause all conditions to any exemptions from qualification or
registration under such laws to have been satisfied, and (III) to obtain any and
all required approvals or consents with respect to the issuance of such stock,
and any such required approvals or consents shall have been obtained and shall
remain in effect.
C. ADVERSE PROCEEDINGS, INJUNCTION, ETC. There shall not be
(I) any order, decree or injunction of any court or agency of competent
jurisdiction which enjoins or prohibits the Merger or any of the other
transactions described herein or any of the parties hereto from consummating any
such transaction, (II) any pending or threatened investigation of the Merger or
any of such other transactions by the U.S. Department of Justice, or any actual
or threatened litigation under federal antitrust laws relating to the Merger or
any other such transaction, or (III) any suit, action or proceeding by any
person (including any governmental, administrative or regulatory agency),
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit Mecklenburg or the Holding Company from
consummating the Merger or carrying out any of the terms or provisions of this
Agreement, or (IV) any other suit, claim, action or proceeding pending or
threatened against Mecklenburg or the Holding Company or any of their officers
or directors which shall reasonably be considered by Mecklenburg or the Holding
Company to be materially burdensome in relation to the proposed Merger or
materially adverse in relation to the financial condition of either such
corporation, and which has not been
40
dismissed, terminated or resolved to the satisfaction of all parties hereto
within ninety (90) days of the institution or threat thereof.
D. APPROVAL BY BOARDS OF DIRECTORS AND SHAREHOLDERS. The
Boards of Directors of Mecklenburg and the Holding Company shall have duly
approved and adopted this Agreement by appropriate resolutions, and the
shareholders of Mecklenburg and the Holding Company shall have duly approved,
ratified and confirmed this Agreement, all to the extent required by and in
accordance with the provisions of this Agreement, applicable law, and applicable
provisions of their respective Articles of Incorporation and By-Laws.
E. FAIRNESS OPINIONS. Mecklenburg shall have received from
Equity Research a written opinion, in form and substance satisfactory to
Mecklenburg, dated as of the date of this Agreement and as of the date of the
Joint Proxy Statement/Prospectus to Mecklenburg's shareholders in connection
with the Mecklenburg Shareholder Meeting, to the effect that the terms of the
Merger are fair, from a financial point of view, to Mecklenburg and its
shareholders. The Holding Company shall have received from Wheat First a written
opinion, dated as of the date of this Agreement and as of the date of the Joint
Proxy Statement/Prospectus to the Holding Company's shareholders in connection
with the Triangle Shareholder Meeting, to the effect that the terms of the
Acquisition are fair, from a financial point of view, to the Holding Company and
its shareholders.
F. TAX OPINION. The Holding Company shall have received, in
form and substance satisfactory to the Holding Company and Mecklenburg, an
opinion of Coopers & Lybrand L.L.P. substantially to the effect that: (I) for
federal income tax purposes, consummation of the Merger will constitute a
"reorganization" as defined in ' 368(a)(1)(A) of the Code; (II) that no taxable
gain will be recognized by a shareholder of Mecklenburg upon such shareholder's
receipt of Triangle Stock in exchange for his or her Mecklenburg Stock; (III)
that the basis of the Triangle Stock received by the shareholder in the Merger
will be the same as his or her Mecklenburg Stock surrendered in exchange
therefor; (IV) that, if Mecklenburg Stock is a capital asset in the hands of the
shareholder at the Effective Time, then the holding period of the Triangle Stock
received by the shareholder in the Merger will include the holding period of
Mecklenburg Stock surrendered in exchange therefor; and (V) a shareholder who
receives cash in lieu of a fractional share of Triangle Stock will recognize
gain or loss equal to any difference between the amount of cash received and the
shareholder's basis in the fractional share interest. In rendering its opinion,
Coopers & Lybrand L.L.P. may rely on representations contained in certificates
of officers of the Holding Company and Mecklenburg.
G. NO TERMINATION OR ABANDONMENT. This Agreement shall not
have been terminated by any party hereto.
7.02. ADDITIONAL CONDITIONS TO MECKLENBURG'S OBLIGATION.
Notwithstanding any other provision of this Agreement to the contrary,
Mecklenburg's obligation to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
41
A. MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change (other than changes relating to or resulting from
changes affecting the banking industry generally, but excluding movements in
interest rates in the economy) in the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of the Holding Company and its consolidated
subsidiaries considered as one enterprise, and there shall not have occurred any
event or development and there shall not exist any condition or circumstance
which, with the lapse of time or otherwise, is reasonably likely to cause,
create or result in any such material adverse change (other than changes
relating to or resulting from changes affecting the banking industry generally,
but excluding movements in interest rates in the economy).
B. COMPLIANCE WITH LAWS. The Holding Company shall have
complied in all material respects with all federal and state laws and
regulations applicable to the transactions described herein and where the
violation of or failure to comply with any such law or regulation is reasonably
likely to have a material adverse effect on the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of the Holding Company and its consolidated
subsidiaries considered as one enterprise.
C. THE HOLDING COMPANY'S REPRESENTATIONS AND WARRANTIES AND
PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in writing by
Mecklenburg as provided in Paragraph 10.03. below, each of the representations
and warranties of the Holding Company contained in this Agreement shall have
been true and correct as of the date hereof and shall remain true and correct in
all material respects on and as of the Effective Time with the same force and
effect as though made on and as of such date, except (I) representations and
warranties that speak as of a specific date, (II) for changes which are not, in
the aggregate, material and adverse to the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of the Holding Company and its consolidated
subsidiaries considered as one enterprise, and (III) as otherwise contemplated
by this Agreement; and the Holding Company and Triangle each shall have
performed in all material respects all its respective obligations, covenants and
agreements hereunder to be performed by it on or before the Closing Date.
Mecklenburg shall have received a certificate dated as of the
Closing Date and executed by the Holding Company's President and Chief Financial
Officer to the foregoing effect.
D. LEGAL OPINION OF THE HOLDING COMPANY COUNSEL. Mecklenburg
shall have received from Moore & Van Allen, PLLC, counsel to the Holding
Company, a written opinion dated as of the Closing Date and substantially in the
form of Schedule C attached hereto or otherwise in form and substance reasonably
satisfactory to Mecklenburg.
42
E. OTHER DOCUMENTS AND INFORMATION FROM THE HOLDING COMPANY.
The Holding Company shall have provided to Mecklenburg correct and complete
copies of its Bylaws, Articles of Incorporation and board resolutions (all
certified by its Secretary), together with a certificate of the incumbency of
its officers and such other closing documents and information as may be
reasonably requested by Mecklenburg or its counsel.
F. ACCEPTANCE BY MECKLENBURG'S COUNSEL. The form and
substance of all legal matters described herein or related to the transactions
contemplated herein shall be reasonably acceptable to Mecklenburg's legal
counsel.
7.03. ADDITIONAL CONDITIONS TO THE HOLDING COMPANY'S OBLIGATION.
Notwithstanding any other provision of this Agreement to the contrary, the
Holding Company's obligation to consummate the transactions described herein
shall be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
A. MATERIAL ADVERSE CHANGE. There shall not have occurred any
material adverse change (other than changes relating to or resulting from
changes affecting the banking industry generally, but excluding movements in
interest rates in the economy) in the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of Mecklenburg, and there shall not have occurred any
event or development and there shall not exist any condition or circumstance
which, with the lapse of time or otherwise, is reasonably likely to cause,
create or result in any such material adverse change (other than changes
relating to or resulting from changes affecting the banking industry generally,
but excluding movements in interest rates in the economy).
B. COMPLIANCE WITH LAWS; ADVERSE PROCEEDINGS, INJUNCTION, ETC.
Mecklenburg shall have complied in all material respects with all federal and
state laws and regulations applicable to the transactions described herein and
where the violation of or failure to comply with any such law or regulation is
reasonably likely to have a material adverse effect on the financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of Mecklenburg.
C. MECKLENBURG'S REPRESENTATIONS AND WARRANTIES AND
PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in writing by
the Holding Company as provided in Paragraph 10.03. below, each of the
representations and warranties of Mecklenburg contained in this Agreement shall
have been true and correct as of the date hereof and shall remain true and
correct on and as of the Effective Time with the same force and effect as though
made on and as of such date, except (I) representations and warranties that
speak as of a specific date, (II) for changes which are not, in the aggregate,
material and adverse to the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of Mecklenburg, and (III) as otherwise contemplated by this
Agreement; and Mecklenburg shall have performed in all material respects all its
obligations, covenants and agreements hereunder to be performed by it on or
before the Closing Date.
43
The Holding Company shall have received a certificate dated
as of the Closing Date and executed by Mecklenburg's President and Chief
Financial Officer to the foregoing effect and as to such other matters as may be
reasonably requested by the Holding Company.
D. AGREEMENTS FROM MECKLENBURG AFFILIATES. The Holding
Company shall have received the written Affiliates' Agreements in form and
content satisfactory to the Holding Company and signed by all persons who are
deemed by the Holding Company or its counsel to be Affiliates of Mecklenburg as
provided in Paragraph 4.01.a. above.
E. ACCOUNTING TREATMENT. (I) The Holding Company shall have
received assurances from Coopers & Lybrand L.L.P., in form and content
satisfactory to it, to the effect that the Merger will qualify to be treated as
a "pooling-of-interests" for accounting purposes; (II) if requested by the
Holding Company, Mecklenburg's independent public accountants shall have
delivered to the Holding Company a letter in form and content satisfactory to it
to the effect that such accountants are not aware of any fact or circumstance
that might cause the Merger not to qualify for such treatment; and (III) it
shall not have come to the attention of management of the Holding Company that
any event has occurred or that any condition or circumstance exists that makes
it likely that the Merger may not so qualify.
F. LEGAL OPINION OF MECKLENBURG'S COUNSEL. The Holding Company
shall have received from Mecklenburg's counsel, Robinson, Bradshaw & Hinson,
P.A., a written opinion, dated as of the Closing Date and substantially in the
form of Schedule D attached hereto or otherwise in form and substance reasonably
satisfactory to the Holding Company.
G. OTHER DOCUMENTS AND INFORMATION FROM MECKLENBURG.
Mecklenburg shall have provided to the Holding Company correct and complete
copies of Mecklenburg's Articles of Incorporation, Bylaws and board and
shareholder resolutions (all certified by Mecklenburg's Secretary), together
with certificates of the incumbency of Mecklenburg's officers and such other
closing documents and information as may be reasonably requested by the Holding
Company or its counsel.
H. CONSENTS TO ASSIGNMENT OF LEASES. Mecklenburg shall have
obtained all required consents to the acquisition of Mecklenburg by the Holding
Company as may be required under the Real Property Leases and all other leases,
under the same terms, rates and conditions of such Real Property Leases and all
other leases in effect as of the date of this Agreement, and such consents shall
be in such form and substance as shall be satisfactory to the Holding Company;
and each of Mecklenburg's lessors shall have confirmed in writing that
Mecklenburg is not in material default under the terms and conditions of the
Real Property Lease or any other lease between such lessor and Mecklenburg.
I. ACCEPTANCE BY THE HOLDING COMPANY'S COUNSEL. The form and
substance of all legal matters described herein or related to the transactions
contemplated herein shall be reasonably acceptable to the Holding Company's
legal counsel.
44
J. MECKLENBURG BOARD OF DIRECTORS. Mecklenburg shall have
taken such action as may be necessary to elect Michael S. Patterson and Debra L.
Lee, the Holding Company's President and Chief Financial Officer, respectively,
to the Board of Directors of Mecklenburg, effective immediately after the
Effective Time.
K. MECKLENBURG SECURITIES PORTFOLIO. Notwithstanding the
provisions of Paragraph 7.03.a. hereof, five (5) days prior to the Effective
Time the Holding Company shall cause a valuation of Mecklenburg's securities and
derivatives portfolio to be made by Wheat, First Securities, Inc. (the cost of
such valuation to be borne solely by the Holding Company) and if the Holding
Company were to sell the securities and derivatives portfolio on that date the
sale would not result in a loss on Mecklenburg's income statement in excess of
$250,000.
L. EXERCISE OF DISSENTERS RIGHTS. The aggregate number of
shares of Mecklenburg Stock as to which cash is proposed to be paid as the
result either of the distribution of cash in lieu of fractional shares (as
described in Paragraph 1.5.c. above) or the exercise of Dissenters Rights (as
described in Paragraph 1.5.f. above), when coupled with any other shares of
Mecklenburg Stock deemed tainted for "pooling-of-interest" purposes, shall not
exceed 10% of the total number of shares of Mecklenburg Stock outstanding at the
date of this Agreement or at the Effective Time.
ARTICLE VIII. TERMINATION; BREACH; REMEDIES
8.01. MUTUAL TERMINATION. At any time prior to the Effective Time (and
whether before or after approval hereof by the shareholders of Mecklenburg or
the Holding Company), this Agreement may be terminated by the mutual agreement
of the Holding Company and Mecklenburg. Upon any such mutual termination, all
obligations of Mecklenburg and the Holding Company hereunder shall terminate and
each party shall pay costs and expenses as provided in Paragraph 6.04. above.
8.02. UNILATERAL TERMINATION. This Agreement may be terminated by
either the Holding Company or Mecklenburg (whether before or after approval
hereof by Mecklenburg's or the Holding Company's shareholders) upon written
notice to the other parties and under the circumstances described below.
A. TERMINATION BY THE HOLDING COMPANY. This Agreement may be
terminated by the Holding Company by action of its Board of Directors or
Executive Committee:
(I) if Mecklenburg shall have violated or
failed to fully perform any of its obligations, covenants or agreements
contained in Article IV or Article VI herein in any material respect;
(II) if the Holding Company determines at any
time that any of Mecklenburg's representations or warranties contained in
Article II or in any other certificate or writing delivered pursuant to this
Agreement shall have been false or misleading in any material
45
respect when made, or that there has occurred any event or development or that
there exists any condition or circumstance which has caused or, with the lapse
of time or otherwise, is reasonably likely to cause any such representations or
warranties to become false or misleading in any material respect;
(III) if, notwithstanding the Holding
Company's satisfaction of its obligations under Paragraphs 6.01.b., 6.01.c. and
6.01.e. above, Mecklenburg's shareholders do not ratify and approve this
Agreement and approve the Merger at the Mecklenburg Shareholder Meeting or the
Holding Company's shareholders do not ratify and approve this Agreement and the
Acquisition at the Triangle Shareholder Meeting;
(IV) under the circumstances described in
Paragraph 1.05.a. or 6.06. above; or,
(V) if any of the conditions of the
obligations of the Holding Company (as set forth in Paragraph 7.01. or 7.03.
above) shall not have been satisfied or effectively waived in writing by the
Holding Company, or if the Merger shall not have become effective, on or before
January 31, 1998, unless such date is extended as evidenced by the written
mutual agreement of the parties hereto.
However, before the Holding Company may terminate this
Agreement for any of the reasons specified above in (i) or (ii) of this
Paragraph 8.02.a., it shall give written notice to Mecklenburg as provided
herein stating its intent to terminate and a description of the specific breach,
default, violation or other condition giving rise to its right to so terminate,
and, such termination by the Holding Company shall not become effective if,
within thirty (30) days following the giving of such notice, Mecklenburg shall
cure such breach, default or violation or satisfy such condition to the
reasonable satisfaction of the Holding Company.
B. TERMINATION BY MECKLENBURG. This Agreement may be
terminated by Mecklenburg by action of its Board of Directors:
(I) if the Holding Company shall have violated
or failed to fully perform any of its obligations, covenants or agreements
contained in Article V or VI herein in any material respect;
(II) if Mecklenburg determines that any of the
Holding Company's representations and warranties contained in Article III herein
or in any other certificate or writing delivered pursuant to this Agreement
shall have been false or misleading in any material respect when made, or that
there has occurred any event or development or that there exists any condition
or circumstance which has caused or, with the lapse of time or otherwise, is
reasonably likely to cause any such representations or warranties to become
false or misleading in any material respect;
46
(III) if, subject to Mecklenburg's
satisfaction of its obligations contained in Paragraphs 6.01.a., 6.01.b.,
6.01.d. and 6.01.e above, its shareholders do not ratify and approve this
Agreement and approve the Merger at the Mecklenburg Shareholder Meeting or the
Holding Company's shareholders do not ratify and approve this Agreement and
approve the Acquisition at the Triangle Shareholder Meeting;
(IV) under the circumstances described in
Paragraph 1.05.a. above; or,
(V)if any of the conditions of the obligations
of Mecklenburg (as set forth in Paragraph 7.01. or 7.02. above) shall not have
been satisfied or effectively waived in writing by Mecklenburg, or if the Merger
shall not have become effective, on or before January 31, 1998, unless such date
is extended as evidenced by the written mutual agreement of the parties hereto.
However, before Mecklenburg may terminate this
Agreement for any of the reasons specified above in clause (i) or (ii) of this
Paragraph 8.02.b., it shall give written notice to the Holding Company as
provided herein stating its intent to terminate and a description of the
specific breach, default, violation or other condition giving rise to its right
to so terminate, and, such termination by Mecklenburg shall not become effective
if, within thirty (30) days following the giving of such notice, the Holding
Company shall cure such breach, default or violation or satisfy such condition
to the reasonable satisfaction of Mecklenburg.
8.03. BREACH; REMEDIES.
A. BREACH OF AGREEMENT. In the event of a breach by
Mecklenburg of any of its representations or warranties contained in Article II
of this Agreement, or in the event of its failure to perform or violation of any
of its obligations, agreements or covenants contained in Articles IV or VI of
this Agreement, then the Holding Company's sole right and remedy shall be to
terminate this Agreement prior to the Effective Time as provided in Paragraph
8.02. above, or, after approval of the Merger by Mecklenburg's shareholders, in
the case of a failure to perform or violation of any obligations, agreements or
covenants, to seek specific performance thereof.
Likewise, in the event of a breach by the Holding Company of
any of its representations or warranties contained in Article III of this
Agreement, or in the event of its failure to perform or violation of any of its
obligations, agreements or covenants contained in Articles V or VI of this
Agreement, then Mecklenburg's sole right and remedy shall be to terminate this
Agreement prior to the Effective Time as provided in Paragraph 8.02. above, or,
after approval of the Acquisition by the Holding Company's shareholders, in the
case of a failure to perform or violation of any obligations, agreements or
covenants, to seek specific performance thereof.
B. TERMINATION FEE. Notwithstanding anything contained herein
to the contrary, if any party to this Agreement terminates this Agreement
because, prior to the date of this Agreement or prior to the termination of this
Agreement, it has entered into a letter of intent or other written or verbal
agreement with any person or entity which calls for the acquisition of the
47
breaching party by another person or entity or for the acquisition by the
breaching party of another entity, or prior to termination of this Agreement any
party to this Agreement engages in negotiations relating to any such transaction
and a letter of intent or other written or verbal agreement is entered into
within nine (9) months following the termination of this Agreement, then the
breaching party shall pay to the other party Five Hundred Thousand and No/100
Dollars ($500,000), provided, however, that such payment shall not be required
if the termination is the result of the good faith determination by the
terminating party that the conditions precedent to the Merger set forth in
Article VII hereof cannot be met.
ARTICLE IX. INDEMNIFICATION
9.01. INDEMNIFICATION FOLLOWING EFFECTIVE TIME. Following the Effective
Time, if Mecklenburg is merged into another subsidiary of the Holding Company
and Mecklenburg is not the surviving entity, without releasing any insurance
carrier and after exhaustion of all applicable director and officer liability
insurance coverage for Mecklenburg and its directors or officers, the Holding
Company agrees that it will indemnify Mecklenburg's officers and directors to
the same extent Mecklenburg indemnifies its directors and officers against
liabilities arising from actions in their official capacities as officers and
directors of Mecklenburg.
9.02. PROCEDURE FOR CLAIMING INDEMNIFICATION. Any party seeking to be
indemnified hereunder promptly shall give written notice and furnish adequate
documentation to the other party of any claims in respect of which indemnity is
sought. The indemnifying party, through its own counsel and at its own expense,
shall defend any such claim and shall have exclusive control over the
investigation, preparation, and defense of such claim and all negotiations
relating to its settlement or compromise. The obligations of either party to
indemnify the other hereunder apply only if the party seeking to be indemnified
cooperates with and assists the indemnifying party in all reasonably necessary
respects in the conduct of the suit.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.01. "PREVIOUSLY DISCLOSED" INFORMATION; "MATERIAL ADVERSE EFFECT".
(A) "Previously Disclosed" shall mean, as to Mecklenburg or as
to the Holding Company, the disclosure of information in a letter delivered by
such party to the other prior to the date of this Agreement and which
specifically refers to this Agreement and is arranged in paragraphs
corresponding to the Paragraphs, subparagraphs and items of this Agreement
applicable thereto, all of which documents are incorporated herein by reference.
Information disclosed in either party's letter described above
shall be deemed to have been Previously Disclosed by such party for the purpose
of any given Paragraph, subparagraph or item of this Agreement only to the
extent that information is expressly set forth in such party's letter described
above and that, in connection with such disclosure, a specific reference is made
in the letter to that Paragraph, subparagraph or item.
48
(B) Where used in this Agreement, the terms "material adverse
effect" and "material adverse change" shall mean any event, matter, item or
circumstance (other than as a result of changes (a) in banking or other
financial institution laws or regulations of general applicability or
interpretations thereof by the courts or governmental entities, or (b) in GAAP)
that in and of itself, or when combined with all similar events, matters, items
or circumstances, reasonably would be expected to have, now or in the future, a
negative impact in an amount equal to (a) $3,000,000 of assets or $250,000 of
total revenue, in the case of Mecklenburg, on a consolidated basis or (b)
$7,250,000 of assets or $1,000,000 of total revenue, in the case of the Holding
Company, on a consolidated basis.
10.02. SURVIVAL OF REPRESENTATIONS, WARRANTIES, INDEMNIFICATION AND
OTHER AGREEMENTS.
A. REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. None of
the representations, warranties or agreements herein shall survive the
effectiveness of the Merger, and no party shall have any right after the
Effective Time to recover damages or any other relief from any other party to
this Agreement by reason of any breach of representation or warranty, any
nonfulfillment or nonperformance of any agreement contained herein, or
otherwise; provided, however, that the parties' agreements contained in
Paragraphs 6.07. and 6.08. and Articles VIII and IX hereof, and the Holding
Company's representations and warranties contained in Paragraph 3.02. and the
Holding Company's covenant contained in Paragraph 5.06 hereof, shall survive the
effectiveness of the Merger.
B. INDEMNIFICATION. The Holding Company's indemnification
agreements and obligations pursuant to Paragraph 9.01. above shall become
effective only at the Effective Time, and the Holding Company shall not have any
obligation under that Paragraph prior to the Effective Time or in the event of
or following termination of this Agreement prior to the Effective Time.
10.03. WAIVER. Any term or condition of this Agreement may be
waived (except as to matters of regulatory approvals and approvals required by
law), either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof; provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors) that such waiver would not adversely
affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party
shall be effective unless such waiver is in writing and signed by the waiving
party, or be construed to be a waiver of any succeeding breach of the same term
or condition. No failure or delay of any party to exercise any power, or to
insist upon a strict compliance by any other party of any obligation, and no
custom or practice at variance with any terms hereof, shall constitute a waiver
of the right of any party to demand a full and complete compliance with such
terms.
10.04. AMENDMENT. This Agreement may be amended, modified or
supplemented at any time or from time to time prior to the Effective Time, and
either before or after its approval by the
49
shareholders of Mecklenburg, by an agreement in writing approved by a majority
of the Board of Directors of the Holding Company and Mecklenburg executed in the
same manner as this Agreement; provided however, that, except with the further
approval of Mecklenburg's shareholders of that change or as otherwise provided
herein, following approval of this Agreement by the shareholders of Mecklenburg
no change may be made in the number of shares of Triangle Stock into which each
share of Mecklenburg Stock will be converted.
10.05. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or by courier, or mailed by certified mail, postage prepaid, as
follows:
A. If to Mecklenburg, to:
Bank of Mecklenburg
2000 Randolph Road
Charlotte, NC 28207
Attention: John H. Ketner, Jr.
President and Chief Executive Officer
With copy to: Henry H. Ralston, Esq.
Robinson Bradshaw & Hinson, P.A.
101 North Tryon Street
Charlotte, NC 28246-1900
B. If to the Holding Company, to:
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
Attention: Michael S. Patterson, President and
Chief Executive Officer
With copy to: Alexander M. Donaldson, Esq.
Moore & Van Allen, PLLC
One Hannover Square, Suite 1700
Raleigh, NC 27601
10.06. FURTHER ASSURANCE. Mecklenburg and the Holding Company each
agree to furnish to the others such further assurances with respect to the
matters contemplated herein and their respective agreements, covenants,
representations and warranties contained herein, including the opinion of
legal counsel, as such other parties may reasonably request. 50
10.07. HEADINGS AND CAPTIONS. Headings and captions of the sections and
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part hereof.
10.08. ENTIRE AGREEMENT. This Agreement (including all schedules and
exhibits attached hereto and all documents incorporated herein by reference)
contains the entire agreement of the parties with respect to the transactions
described herein and supersedes any and all other oral or written agreement(s)
heretofore made, and there are no representations or inducements by or to, or
and agreements between, any of the parties hereto other than those contained
herein in writing.
10.09. SEVERABILITY OF PROVISIONS. The invalidity or unenforceability
of any term, phrase, clause, paragraph, restriction, covenant, agreement or
other provision hereof shall in no way affect the validity or enforceability of
any other provision or part hereof.
10.10. ASSIGNMENT. This Agreement may not be assigned by any party
hereto except with the prior written consent of the other parties hereto.
10.11. COUNTERPARTS. Any number of counterparts of this Agreement may be
signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
10.12. GOVERNING LAW. This Agreement is made in and shall be construed
and enforced in accordance with the laws of North Carolina.
10.13. INSPECTION. Any right of the Holding Company or Mecklenburg
hereunder to investigate or inspect the assets, books, records, files and other
information of the other in no way shall establish any presumption that the
Holding Company or Mecklenburg should have conducted any investigation or that
such right has been exercised by the Holding Company, Mecklenburg, their
respective agents, representatives or others. Any investigations or inspections
that have been made by the Holding Company, or Mecklenburg or their respective
agents, representatives or others prior to the Closing Date shall not be deemed
in any way in derogation or limitation of the covenants, representations and
warranties made by or on behalf of the Holding Company, or Mecklenburg in this
Agreement.
51
IN WITNESS WHEREOF, Mecklenburg and the Holding Company each has caused
this Agreement to be executed in its name by its duly authorized officers as of
the date first above written.
TRIANGLE BANCORP, INC.
By: /s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
ATTEST:
/s/ Susan C. Gilbert
Secretary
Secretary
BANK OF MECKLENBURG
By: /s/ John H. Ketner, Jr.
John H. Ketner, Jr.
President and Chief Executive
Officer
By: /s/ Cy N. Bahakel
Cy N. Bahakel
Chairman of the Board of Directors
ATTEST:
/s/ Judith G. Arey
Secretary
APPENDIX II
FAIRNESS OPINION OF EQUITY RESEARCH SERVICES, INC.
DATED AUGUST, 1997
EQUITY RESEARCH SERVICES, INC.
August , 1997
Board of Directors
Bank of Mecklenburg
2000 Randolph Road
Charlotte, NC 28207
Gentlemen:
We were retained by you to provide an opinion as to the fairness, from a
financial point of view, of the merger of Bank of Mecklenburg ("Bank
of Mecklenburg," or the "Company") with Triangle Bancorp,
Inc. ("Triangle") or a subsidiary thereof. The terms of the
merger are set forth in the Agreement and Plan of Reorganization and Merger
By and Between Bank of Mecklenburg and Triangle Bancorp, Inc.
("Agreement") dated as of April 25, 1997. Under the terms of
the Agreement, Bank of Mecklenburg will merge with a subsidiary of Triangle
and its shares of common stock outstanding immediately prior to the
effective date will be converted into Triangle common stock at an
exchange rate of 1.00 ("Exchange Rate"), subject to adjustment
as provided in the Agreement. Each Bank of Mecklenburg shareholder will
receive a number of Triangle common shares equal to the number of
shares of Bank of Mecklenburg common stock owned by such shareholder
multiplied by the Exchange Rate. No fractional shares will be issued but
Bank of Mecklenburg shareholders, in lieu of the issuance of fractional
shares, will receive cash as determined in the Agreement. The foregoing
summary is qualified in its entirety by reference to the Agreement.
Equity Research Services, Inc. ("Equity Research") is a North Carolina-based
corporation primarily engaged in: (i) performing valuations of, and
valuations related to, closely held and publicly traded companies and
(ii) conducting research on the performance and investment characteristics
of publicly-traded companies and publishing such analyses in the form of
reports which are made available to the respective companies and the
investment community. All reports generated by Equity Research for the
purpose of investor relations are designated "Investor Relations Report"
and Equity Research receives a fee (from the company whose securities are
described) for producing such reports. The reports do not contain a
purchase or investment rating but do consider certain investment
characteristics of the respective company's securities. In addition,
Equity Research regularly responds to inquiries from brokers, shareholders
and others who have questions about the respective company.
In connection with the services including and related to the "Investor
Relations Reports", the majority of Equity Research's clients are banks
which are located in North Carolina. Until September 30, 1995, one
of Equity Research's such clients was Triangle. Equity Research's
engagement by Triangle began on January 17, 1993 and involved the production
of the above mentioned "Investor Relations Reports" as well as responding
to questions about the Company as discussed above.
Equity Research was selected by Bank of Mecklenburg as its financial advisor
because of its knowledge of and experience in valuations and capital markets and
expertise in the commercial banking industry. Equity Research does not trade in
the securities of either Bank of Mecklenburg or Triangle for its own account or
for its clients.
In connection with rendering its opinion to Bank of Mecklenburg's Board of
Directors, Equity Research, among other things, (i) reviewed the financial terms
of the Agreement; (ii) reviewed and analyzed the financial position and
performance of Bank of Mecklenburg and Triangle as reflected in certain
information provided for this purpose by the respective managements;
(iii) reviewed historical stock prices of Bank of Mecklenburg and Triangle as
well as, to the extent possible, trading activity in their common stocks;
(iv) reviewed information including, but not limited to, Annual Reports to
shareholders, Annual Reports on Form 10-K and Form F-2, Quarterly Reports to
shareholders, Quarterly Reports on Form 10-Q and Form F-4, proxy statements,
Uniform Bank Performance Reports and Call Reports, and conducted a general and
financial comparison of the two companies to one another, as well as to other
comparable institutions; and (v) analyzed the terms of other control
transactions involving whole bank mergers of commercial banks in the southeast.
Equity Research also analyzed overall market, economic, financial and other
considerations as well.
In providing its opinion, Equity Research, without independent verification,
relied on the accuracy and completeness of financial and other information
provided to us or publicly available, and we have not independently verified
such information. We have not performed or considered any independent appraisal
or evaluation of the assets of Bank of Mecklenburg or Triangle. Additionally,
Equity Research made numerous assumptions with respect to business conditions,
economic conditions, projections of Bank of Mecklenburg's and Triangle's
performance, as well as other matters, many of which are beyond Bank of
Mecklenburg's and Triangle's control. Any earnings or other estimates contained
in Equity Research's analysis are not necessarily indicative of future results.
Based on the foregoing, it is our opinion that the Merger is fair, from a
financial point of view and as of the date hereof, to the shareholders of Bank
of Mecklenburg.
Sincerely,
/s/ Equity Research Services, Inc.
Equity Research Services, Inc.
APPENDIX III
FAIRNESS OPINION OF WHEAT, FIRST SECURITIES, INC.
DATED AUGUST, 1997
August ______, 1997
Board of Directors
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
Members of the Board:
Triangle Bancorp, Inc. ("Triangle") and Bank of Mecklenburg
("Mecklenburg") have entered into an Agreement and a Plan of Reorganization and
Merger, dated as of April 25,1997 (the "Agreement"), pursuant to which
Mecklenburg will combine with Triangle by means of the merger (the "Merger") of
an interim North Carolina bank corporation subsidiary of Triangle with
Mecklenburg. Upon consummation of the Merger, each of the outstanding shares of
the $2.00 par value common stock of Mecklenburg ("Mecklenburg Stock") will be
converted into 1.0 share of no par value common stock of Triangle ("Triangle
Stock"), as adjusted in accordance with the terms of the Agreement (the
"Exchange Rate"). The terms of the Merger are more fully set forth in the
Agreement.
Wheat, First 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 Mecklenburg for our own account or for the
accounts of our customers. Wheat First is acting as Triangle's exclusive
financial advisor in this transaction and will receive a fee from Triangle for
its services, which include the rendering of this opinion.
You have asked us whether, in our opinion, the Exchange Rate is fair,
from a financial point of view, to the holders of Triangle's Stock. We
understand that the Merger is conditioned upon the occurrence of a number of
contingencies as set forth in the Agreement.
In arriving at the opinion set forth below, we have conducted
discussions with members of senior management of Triangle and Mecklenburg
concerning their businesses and prospects and have reviewed and relied upon
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, 1996;
(2) Triangle's Quarterly Report on Form 10-Q and related
financial information for the quarter ended March 31, 1997;
(3) Triangle's Proxy Statement dated March 21, 1997;
(4) Mecklenburg's Annual Reports to Stockholders, Annual Reports
on Form F-2 and related financial information for the three
fiscal years ended December 31, 1996;
(5) Mecklenburg's Quarterly Report on Form F-4 for the quarter
ended March 31, 1997;
(6) Mecklenburg's Proxy Statement dated March 24, 1997;
(7) Certain publicly available information with respect to
historical market prices and trading activities for the
Triangle Stock and the Mecklenburg Stock and for certain
publicly traded financial institutions which Wheat First
deemed relevant;
(8) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and
acquisitions which Wheat First deemed relevant;
(9) The Agreement;
(10) Certain estimates of the cost savings and revenue enhancements
projected by Triangle and Mecklenburg for the combined
company;
(11) Other financial information concerning the businesses and
operations of Triangle and Mecklenburg, and certain internal
financial analyses and forecasts for Triangle and Mecklenburg
prepared by the senior management of these companies; and
(12) Such financial studies, analyses, inquiries and other matters
as we deemed necessary.
In preparing our opinion, as contemplated under the terms of our
engagement, 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 Mecklenburg included in the Agreement, and we
have not assumed any responsibility for the accuracy, completeness or
reasonableness of, or any obligation to verify, the same or to conduct any
appraisal of assets or liabilities. We have relied upon the managements of
Triangle and Mecklenburg as to the reasonableness and achievability of their
financial and operational forecasts and projections, including the estimates of
cost savings and revenue enhancements expected to result from the Merger, 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 Mecklenburg are adequate to cover such losses.
Wheat First did not review any individual credit files of Triangle and
Mecklenburg, nor did it make an independent evaluation or appraisal of the
assets or liabilities of Triangle and Mecklenburg. 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 Triangle.
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 only to the fairness, from a financial point of view, of the
Exchange Ratio to the holders of Triangle Stock and does not address any other
aspect of the Merger nor does it constitute a recommendation to any shareholder
of Triangle as to how such shareholder should vote with respect to the Merger
and it is understood that this letter is solely for the information of the Board
of Directors of Triangle. 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 Joint 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 Rate is fair, from a financial point of
view, to the holders of Triangle Stock.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
APPENDIX IV
EXCERPT FROM NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13.
Dissenters' Rights.
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
(Section Mark) 55-13-01. DEFINITIONS.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and in
the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under all
the circumstances, giving due consideration to the rate currently paid by the
corporation on its principal bank loans, if any, but not less than the rate
provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
{Section Mark} 55-13-02. RIGHT TO DISSENT.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other
than a parent corporation in a merger under G.S. 55-11-04) is a party unless (i)
approval by the shareholders of that corporation is not required under G.S.
55-11-03(g) or (ii) 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 all, or substantially all, of
the property of the corporation other than as permitted by G.S. 55-12-01,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed in cash to the shareholders within one
year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (i)
alters or abolishes a preferential right of the shares; (ii) creates, alters, or
abolishes a right in respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (iii) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (iv) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes; (v) reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional share so created is to be
acquired for cash under G.S. 55-6-04; or (vi) changes the corporation into a
nonprofit corporation or cooperative organization;
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this Article may not challenge the corporate action creating his entitlement,
including without limitation a merger solely or partly in exchange for cash or
other property, unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
{Section Mark} 55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the
beneficial shareholder.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
SS. 55-13-20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-13-02
is submitted to a vote at a shareholders' meeting, the meeting notice must state
that shareholders are or may be entitled to assert dissenters' rights under this
Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is taken
without a vote of shareholders, the corporation shall no later than 10 days
thereafter notify in writing all shareholders entitled to assert dissenters'
rights that the action was taken and send them the dissenters' notice described
in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this section, such
failure shall not invalidate any corporate action taken; but any shareholder may
recover from the corporation any damage which he suffered from such failure in a
civil action brought in his own name within three years after the taking of the
corporate action creating dissenters' rights under G.S. 55-13-02 unless he voted
for such corporate action.
(Section Mark) 55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
G.S. 55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder
who wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to demand payment
for his
shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his shares under this Article.
(Section Mark} 55-13-22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-13-02
is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after
the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the date
the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
(Section Mark) 55-13-23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22
must demand payment and deposit his share certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share certificates
where required, each by the date set in the dissenters' notice, is not entitled
to payment for his shares under this Article.
(Section Mark) 55-13-24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
(Section Mark) 55-13-25. OFFER OF PAYMENT.
(a) As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with G.S. 55-13-23 the amount the corporation estimates to be the fair value of
his shares, plus interest accrued to the date of payment, and shall pay this
amount to each dissenter who agrees in writing to accept it in full satisfaction
of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet as of the
end of a fiscal year ending not more than 16 months before the date of offer of
payment, an income statement for that year, a statement of cash flows for that
year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
(Section Mark) 55-13-26. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days after
the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must sent a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
(Section Mark) 55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
CORPORATION'S OFFER OR FAILURE TO PERFORM.
(a) A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of his
estimate or reject the corporation's offer under G.S. 55-13-25 and demand
payment of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered unde
G.S. 55-13-25 is less than the fair value of his shares or that the
interest due is incorrectly calculated;
(2) The corporation fails to make payment to a dissenter who accepts
the corporation's offer under G.S. 55-13-25 within 30 days after the dissenter's
acceptance; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for demanding
payment.
(b) A dissenter waives his right to demand payment under this section unless he
notifies the corporation of his demand in writing (i) under subdivision (a)(1)
within 30 days after the corporation offered payment for his shares or (ii)
under subdivisions (a)(2) and (a)(3) within 30 days after the corporation has
failed to perform timely. A dissenter who fails to notify the corporation of his
demand under subsection (a) within such 30-day period shall be deemed to have
withdrawn his dissent and demand for payment.
PART 3. JUDICIAL APPRAISAL OF SHARES.
(Section Mark) 55-13-30. COURT ACTION.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the dissenter
may commence a proceeding within 60 days after the date of his payment demand
under G.S. 55-13-28 and petition the court to determine the fair value of the
shares and accrued interest. Upon service upon it of the petition filed with the
court, the corporation shall pay to the dissenter the amount offered by the
corporation under G.S. 55-13-25.
(a) (1) If the dissenter does not commence the proceeding within the 60-day
period, the dissenter shall have an additional 30 days to either (i) accept in
writing the amount offered by the corporation under G.S. 55-13-25, upon which
the corporation shall pay such amount to the dissenter in full satisfaction of
his demand, or (ii) withdraw his demand for payment and resume the status of a
nondissenting shareholder. A dissenter who takes no action within such 30-day
period shall be deemed to have withdrawn his dissent and demand for payment.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether or not
residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The parties are entitled to the same discovery
rights as parties in other civil proceedings. However, in a proceeding by a
dissenter in a public corporation, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
(Section Mark) 55-13-31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court, and shall assess the costs as it
finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either
or any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
===============================================================================
===============================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The NCBCA provides for indemnification by a corporation of its officers,
directors, employees and agents, and any person who is or was serving at the
corporation's request as a director, officer, employee or agent of another
entity or enterprise or as a trustee or administrator under an employee benefit
plan, against liability and expenses, including reasonable attorneys' fees, 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.
PERMISSIBLE INDEMNIFICATION. Under the NCBCA, a corporation may, but is not
required to, indemnify any such person against liability and expenses incurred
in any such proceeding, provided such person conducted himself or herself in
good faith and (i) in the case of conduct in his or her official corporate
capacity, reasonably believed that his or her conduct was in the corporation's
best interests, and (ii) in all other cases, reasonably believed that his or her
conduct was at least not opposed to the corporation's best interests, and, in
the case of a criminal proceeding, where he or she had no reasonable cause to
believe his or her conduct was unlawful. However, a corporation may not
indemnify such person either in connection with a proceeding by or in the right
of the corporation in which such person was adjudged liable to the corporation,
or in connection with any other proceeding charging improper personal benefit to
such person (whether or not involving action in an official capacity) in which
such person was adjudged liable on the basis that personal benefit was
improperly received.
MANDATORY INDEMNIFICATION. Unless limited by the corporation's charter, the
NCBCA requires a corporation to indemnify a director or officer of the
corporation who is wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such person was a party because he or she is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding.
ADVANCE FOR EXPENSES. Expenses incurred by a director, officer, employee or
agent of the corporation in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding as authorized
by the board of directors in the specific case, or as authorized by the charter
or bylaws or by any applicable resolution or contract, upon receipt of an
undertaking by or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified by the
corporation against such expenses.
VOLUNTARY INDEMNIFICATION. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, 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 any 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. However, the corporation
may not indemnify or agree to indemnify a person against liability or expenses
he may incur on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws or in a contract
or resolution may include provisions for recovery from the corporation of
reasonable costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and enforcing such
rights.
COURT-ORDERED INDEMNIFICATION. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court deems necessary, may
order indemnification if it determines either (i) that the director or officer
is entitled to mandatory indemnification as described above, in which case the
court also will order the corporation to pay the reasonable expenses incurred to
obtain the court-ordered indemnification, or (ii) that the director or officer
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such person met the requisite
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standard of conduct or was adjudged liable to the corporation in connection with
a proceeding by or in the right of the corporation or on the basis that personal
benefit was improperly received in connection with any other proceeding so
charging (but if adjudged so liable, indemnification is limited to reasonable
expenses incurred).
PARTIES ENTITLED TO INDEMNIFICATION. The NCBCA defines "director" to
include ex-directors and the estate or personal representative of a director.
Unless its charter provides otherwise, a corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with public
policy, as may be provided in its charter or bylaws, by general or specific
action of its board of directors, or by contract.
INDEMNIFICATION BY THE REGISTRANT. The Bylaws of the Registrant provide for
indemnification of its directors, officers, employees and agents to the fullest
extent of the law, and require its Board of Directors to take all actions
necessary and appropriate to authorize such indemnification.
Under the NCBCA, 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. The Registrant currently maintains a directors' and
officers' liability insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits and financial statement schedules are filed as part
of this Registration Statement.
(a) Exhibits
Exhibit No.
pursuant to
Item 601 of
Regulation S-K Description of Exhibit
2 Agreement and Plan of Reorganization and Merger between Bank of
Mecklenburg and Triangle Bancorp, Inc. dated April 25, 1997
(included as and incorporated by reference from Appendix I to the
Joint Proxy Statement/Prospectus filed as a part of the
Registration Statement)
3(a) Articles of Incorporation of Triangle Bancorp, Inc., amended as of
May 26, 1995 (incorporated by reference from Exhibit 3(a) of
Registrant's Form 10-K for the fiscal year ended December 31, 1996,
filed with the Commission on March 25, 1997)
3(b) Bylaws of Triangle Bancorp, Inc., amended as of April 28, 1997*
4 Agreement of Triangle Bancorp, Inc. to furnish a copy of the Junior
Subordinated Indenture between Triangle Bancorp, Inc. and Bankers
Trust Company (as Trustee) dated as of June 3, 1997*
5 Opinion of Alexander M. Donaldson, Senior Vice President and
General Counsel of Triangle Bancorp, Inc., as to the legality of
the securities to be registered*
8 Opinion of Coopers & Lybrand L.L.P. as to tax matters*
10(a) Triangle Bancorp, Inc. 1988 Incentive Stock Option Plan, as amended
on December 16, 1993 and May 23, 1995 (incorporated by reference
from Exhibit 10(a) of Registrant's Registration Statement on Form
S-4 (Registration No. 33-93918) II-2 10(b) Triangle Bancorp, Inc.
1988 Non-Qualified Stock Option Plan, as amended on November 15,
1994 (incorporated by reference to Exhibit 10(b) to the
Registrant's Form 10-K for the fiscal year ended December 31, 1994
as filed with the Commission on March 31, 1995)
10(c) Triangle Bank Deferred Compensation Plan for Outside Directors
(incorporated by reference to Exhibit 10(c) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1993 as filed with
the Commission on March 31, 1994)
10(d) Employment Agreement between Triangle Bank and Michael S. Patterson
(incorporated by reference to Exhibit 10(a) to Registrant's Form
10-K for the fiscal year ended December 31, 1993 filed with the
Commission on March 31, 1994)
10(e) Employment Agreement between Triangle Bank and H. Leigh Ballance,
Jr. (incorporated by reference to Exhibit 10(j) to the Registrant's
Form 10-K for the year ended December 31, 1994, as filed with the
Commission on March 31, 1995)
10(f) Deferred Compensation Agreement between Triangle Bank and Michael
S. Patterson (incorporated by reference from Exhibit 10(g) of
Registrant's Registration Statement on Form S-4 (Registration No.
33-86226))
10(g) Deferred Compensation Agreement between Triangle Bank and Debra L.
Lee (incorporated by reference from Exhibit 10(i) of Registrant's
Registration Statement on Form S-4 (Registration No. 33-86226))
10(h) Change of Control Agreement dated June 18, 1996 between Triangle
Bank and Steven R. Ogburn (incorporated by reference from Exhibit
(k) of Registrant's Form 10-K for the fiscal year ended December
31, 1996, as filed with the Commission on March 25, 1997)
10(i) Change of Control Agreement dated June 18, 1996 between Triangle
Bank and Debra L. Lee (incorporated by reference from Exhibit (l)
of Registrant's Form 10-K for the fiscal year ended December 31,
1996, as filed with the Commission on March 25, 1997)
13(a) Bank of Mecklenburg Annual Report on Form F-2 for fiscal year ended
December 31, 1996*
13(b) Bank of Mecklenburg Quarterly Report on Form F-4 for quarter ended
March 31, 1997*
13(c) Bank of Mecklenburg Current Report on Form F-3 dated April 1, 1997*
23(a) Consent of Alexander M. Donaldson (contained in the opinion
submitted as Exhibit 5 hereto)
23(b) Consent of Coopers & Lybrand L.L.P.*
23(c) Consent of KPMG Peat Marwick LLP*
23(d) Consent of Equity Research Services, Inc.*
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23(e) Consent of Wheat, First Securities, Inc.*
23(f) Consent of Coopers & Lybrand L.L.P. regarding tax opinion
(contained in its opinion submitted as Exhibit 8 hereto)
24 Power of Attorney (included on signature page)
99(a) Form of proxy to be used in connection with the Special Meeting of
Shareholders of Bank of Mecklenburg*
99(b) Form of proxy to be used in connection with the Special Meeting of
Shareholders of Triangle Bancorp, Inc.*
(b) Financial Statement Schedules
All financial statement schedules are omitted as substantially all
required information is contained in the Registrant's consolidated
financial statements which are incorporated herein by reference or
is not applicable.
* Filed previously.
ITEM 22. UNDERTAKINGS
(A) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement;
(2) that, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) to remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(b) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable.
II-4
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction, the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
(D) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration
Statement through the date of responding to the request.
(E) The registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the Registration Statement when it
became effective.
II-5
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the registrant
has duly caused this pre-effective amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Raleigh, State of North Carolina, on July 25, 1997.
TRIANGLE BANCORP, INC.
BY:/s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael
S. Patterson his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he or she might, or could,
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Michael S. Patterson President, Chief Executive July 25, 1997
- ------------------------------------
(Michael S. Patterson) Officer, Chairman and Director
(Principal Executive Officer)
/s/ Debra L. Lee Chief Financial Officer July 25, 1997
- ---------------------------------------
(Debra L. Lee) (Principal Financial Officer
and Principal Accounting Officer)
/s/ Carole S. Anders Director July 25, 1997
- -------------------------------------
(Carole S. Anders)
/s/ Charles H. Ashford, Jr. Director July 25, 1997
- ----------------------------------
(Charles H. Ashford, Jr.)
/s/ H. Leigh Ballance, Jr. Director July 25, 1997
- -----------------------------------
(H. Leigh Ballance, Jr.)
Director July , 1997
- -----------------------------------
(Edwin B. Borden)
/s/ Robert E. Bryan, Jr. Director July 25, 1997
- -----------------------------------
(Robert E. Bryan, Jr.)
/s/ David T. Clancy Director July 25, 1997
- -----------------------------------
(David T. Clancy)
Director July , 1997
- ----------------------------------
(N. Leo Daughtry)
II-6
Director July , 1997
- ----------------------------------
(Syd W. Dunn, Jr.)
Director July , 1997
- ----------------------------------
(Willie S. Edwards)
Director July , 1997
- ----------------------------------
(James P. Godwin, Sr.)
Director July , 1997
- -----------------------------------
(Robert L. Guthrie)
/s/ John B. Harris, Jr. Director July 25, 1997
- -----------------------------------
(John B. Harris, Jr.)
Director July , 1997
- -----------------------------------
(George W. Holt)
/s/ Earl Johnson, Jr. Director July 25, 1997
- ------------------------------------
(Earl Johnson, Jr.)
/s/ Edythe P. Lumsden Director July 25, 1997
- ------------------------------------
(Edythe P. Lumsden)
Director July , 1997
- ------------------------------------
(J.L. Maxwell, Jr.)
/s/ Michael A. Maxwell Director July 25, 1997
- ------------------------------------
(Michael A. Maxwell
/s/ Wendell H. Murphy Director July 25, 1997
- ------------------------------------
(Wendell H. Murphy)
Director July , 1997
- ------------------------------------
(Patrick Pope)
/s/ William R. Pope Director July 25, 1997
- ------------------------------------
(William R. Pope)
/s/ Billy N. Quick, Sr. Director July 25, 1997
- ------------------------------------
(Billy N. Quick, Sr.)
/s/ J. Dal Snipes Director July 25, 1997
- --------------------------------------
(J. Dal Snipes)
/s/ N. Johnson Tilghman Director July 25, 1997
- --------------------------------
(N. Johnson Tilghman)
/s/ Sydnor M. White, Jr. Director July 25, 1997
- ---------------------------------
(Sydnor M. White, Jr.)
II-7
Director July , 1997
- ----------------------------------
(J. Blount Williams)
II-8
EXHIBITS
EXHIBIT INDEX
Exhibit Number
Pursuant to
Item 601 of
Regulation S-K Description Page No.
2 Agreement and Plan of Reorganization and Merger between Bank of
Mecklenburg and Triangle Bancorp, Inc. dated April 25, 1997
(included as and incorporated by reference from Appendix I to the
Joint Proxy Statement/Prospectus filed as part of the Registration
Statement)
3(a) Articles of Incorporation of Triangle Bancorp, Inc., amended as of
May 26, 1995 (incorporated by reference from Exhibit 3(a) of
Registrant's Form 10-K for the fiscal year ended December 31, 1996,
filed with the Commission on March 25, 1997)
3(b) Bylaws of Triangle Bancorp, Inc., amended as of April 28, 1997*
4 Agreement of Triangle Bancorp, Inc. to furnish a copy of the Junior
Subordinated Indenture between Triangle Bancorp, Inc. and Bankers
Trust Company (as Trustee) dated as of June 3, 1997*
5 Opinion of Alexander M. Donaldson, Senior Vice President and
General Counsel of Triangle Bancorp, Inc. as to the legality of the
securities to be registered*
8 Opinion of Coopers & Lybrand L.L.P. as to income tax matters*
10(a) Triangle Bancorp, Inc. 1988 Incentive Stock Option Plan, as amended
on December 16, 1993 and May 23, 1995 (incorporated by reference
from Exhibit 10(a) to the Registrant's Registration Statement on
Form S-4 (Registration No. 33-93918)
10(b) Triangle Bancorp, Inc. 1988 Non-Qualified Stock Option Plan, as
amended on November 15, 1994 (incorporated by reference to Exhibit
10(b) to the Registrant's Form 10-K for the fiscal year ended
December 31, 1994 as filed with the Commission on March 31, 1995)
10(c) Triangle Bank Deferred Compensation Plan for Outside Directors
(incorporated by reference to Exhibit 10(c) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1993 as filed with
the Commission on March 31, 1994)
10(d) Employment Agreement between Triangle Bank and Michael S. Patterson
(incorporated by reference to Exhibit 10(a) to Registrant's Form
10-K for the fiscal year ended December 31, 1993 filed with the
Commission on March 31, 1994)
II-12
Exhibit Number
Pursuant to
Item 601 of
Regulation S-K Description Page No.
10(e) Employment Agreement between Triangle Bank and H. Leigh Ballance,
Jr. (incorporated by reference to Exhibit 10(j) to the Registrant's
Form 10-K for the year ended December 31, 1994, filed with the
Commission on March 31, 1995)
10(f) Deferred Compensation Agreement between Triangle Bank and Michael
S. Patterson (incorporated by reference from Exhibit 10(g) of
Registrant's Registration Statement on Form S-4 (Registration No.
33-86226))
10g) Deferred Compensation Agreement between Triangle Bank and Debra L.
Lee (incorporated by reference from Exhibit 10(i) of Registrant's
Registration Statement on Form S-4 (Registration No. 33-86226))
10(h) Change of Control Agreement dated June 18, 1996 between Triangle
Bank and Steven R. Ogburn (incorporated by reference from Exhibit
(k) of Registrant's Form 10-K for the fiscal year ended December
31, 1996, filed with the Commission on March 25, 1997)
10(i) Change of Control Agreement dated June 18, 1996 between Triangle
Bank and Debra L. Lee (incorporated by reference from Exhibit (l)
of Registrant's Form 10-K for the fiscal year ended December 31,
1996, filed with the Commission on March 25, 1997)
13(a) Bank of Mecklenburg Annual Report on Form F-2 for fiscal year ended
December 31, 1996*
13(b) Bank of Mecklenburg Quarterly Report on Form F-4 for quarter ended
March 31, 1997*
13(c) Bank of Mecklenburg Current Report on Form F-3 dated April 1, 1997*
23(a) Consent of Alexander M. Donaldson (contained in its opinion
submitted as Exhibit 5 hereto)
23(b) Consent of Coopers & Lybrand L.L.P.*
23(c) Consent of KPMG Peat Marwick LLP*
23(d) Consent of Equity Research Services, Inc.*
23(e) Consent of Wheat, First Securities, Inc.*
23(f) Consent of Coopers & Lybrand L.L.P. regarding tax opinion
(contained in its opinion submitted as Exhibit 8 hereto)
24 Power of Attorney (included on signature page)
II-13
99(a) Form of proxy to be used in connection with the Special Meeting of
Shareholders of Bank of Mecklenburg*
99(b) Form of proxy to be used in connection with the Special Meeting of
Shareholders of Triangle Bancorp, Inc.*
(b) Financial Statement Schedules
All financial statement schedules are omitted as substantially all
required information is contained in the Registrants consolidated
financial statements which are incorporated herein by reference or
is not applicable.
* Filed previously.
II-14