June 15, 1998
Triangle Bancorp, Inc.
c/o Mr. Michael S. Patterson
4300 Glenwood Avenue
Raleigh, North Carolina 27612
Re: Agreement and Plan of Reorganization and Merger By and Among United
Federal Savings Bank, Triangle Bank and Triangle Bancorp, Inc.
Dear Mr. Patterson:
Pursuant to your request and as required by Article VII, Section 7.01(f) of the
Agreement and Plan of Reorganization and Merger dated as of March 4, 1998 by and
among United Federal Savings Bank, Triangle Bank and Triangle Bancorp, Inc. (the
"Agreement"), we are providing you our opinion of certain federal income tax
consequences of the transaction described herein. Unless otherwise noted, all
section references herein shall be to the Internal Revenue Code of 1986, as
amended, (the "Code") and the regulations thereunder.
Facts
A. Parties to the Proposed Transaction
1. Triangle Bancorp, Inc. ("Holding Company")
------------------------------------------
Holding Company is a North Carolina business corporation with
its principal office and place of business located at 4300
Glenwood Avenue, Raleigh, North Carolina. Holding Company is
authorized by its Articles of Incorporation to issue
50,000,000 shares of voting common stock, each of no par value
(the "Holding Company Stock"), of which there were 12,980,925
shares issued and outstanding as of December 31, 1997.
2. Triangle Bank ("Triangle")
--------------------------
Triangle is a North Carolina banking corporation with its
principal office and place of business located at 4300
Glenwood Avenue, Raleigh, North Carolina and is a wholly-owned
subsidiary of Holding Company. Triangle is authorized by its
Articles of Incorporation to issue 6,000,000 shares of voting
common stock, each
Mr. Michael S. Patterson Page 2 June 15, 1998
of $4.00 par value ("Triangle Stock"), of which there
were 2,433,667 shares issued and outstanding as of
December 31, 1997.
3. United Federal Savings Bank ("United")
--------------------------------------
United is a federally-chartered savings bank with its
principal office and place of business located at 116 South
Franklin Street, Rocky Mount, North Carolina. United is
authorized by its Articles of Incorporation to issue
10,000,000 shares of common stock, each of $0.01 par value
("United Stock"), of which there were 3,201,314 shares issued
and outstanding as of February 12, 1998.
4. Shareholders of United ("United Shareholders")
----------------------------------------------
United is a publicly owned company, whose stock is traded on
NASDAQ.
B. Proposed Transaction Between the Parties
Pursuant to the Agreement and in accordance with North Carolina merger
law, United shall be merged with and into Triangle (the "Merger") with
Triangle surviving the Merger. At this time, the separate corporate
existence of United shall cease while the corporate existence of
Triangle as the surviving corporation shall continue unaffected and
unimpaired by the Merger.
Upon consummation of the Merger, United's business shall become and
operate under the name "Triangle Bank" and will continue to conduct the
business of a North Carolina bank corporation at the then legally
established branches and main offices of Triangle. The duration of the
corporate existence of Triangle, as the surviving corporation, shall be
perpetual and unlimited.
The Merger is expected to provide Triangle with certain business
advantages in comparison to Triangle's current structure, including
increased ability to expand the business and economies of scale.
Pursuant to the Agreement, the United Shareholders will receive
(through a designated transfer agent) 0.945 shares of Holding Company
Stock for each share of United Stock held immediately prior to the
Effective Time (as defined below) of the Merger. In the event the
exchange of shares results in the creation of fractional shares,
Holding Company will deliver cash to the designated transfer agent in
an amount equal to the Aggregate Market Value (as defined in the
Agreement) of all such fractional shares, which shall be remitted to
the former United Shareholders in lieu of their fractional shares in
accordance with their respective interests. The consideration for
fractional shares is solely for the purpose of avoiding the
inconvenience and expense of Holding Company issuing fractional shares
and does not represent separately bargained for consideration.
Likewise, any warrants and options granted by United to purchase shares
of United Stock
Mr. Michael S. Patterson Page 3 June 15, 1998
will be converted into warrants and options to purchase the same number
of shares of Holding Company Stock multiplied by the Exchange Rate (as
defined by the Agreement) on the same terms and conditions as currently
in effect.
The "Effective Time" of the Merger is defined in Article I, Section
1.07 of the Agreement as the date and time when the Merger becomes
effective as set forth in the Articles of Merger filed with the North
Carolina Secretary of State in accordance with North Carolina law. The
Articles of Merger will be filed once the Agreement has been approved
by the required governmental and regulatory authorities.
Opinion
- --------
In rendering our opinion, we have relied upon (i) the Agreement; (ii) the
representations given by the parties, which are annexed hereto; and (iii) such
other documents as we have deemed necessary or appropriate. We have assumed the
genuiness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, conformed or
photostatic copies, and the authenticity of the originals of such copies. We
have also assumed that the Agreement reflects all the material facts relating to
Holding Company, United, and Triangle. Our opinion is expressly conditioned on,
among other things, the accuracy as of the date hereof, and the continuing
accuracy, of all such facts and representations. If any of the representations
annexed hereto are incorrect in whole or in part, or if the terms of the
Agreement are altered before consummation of the Merger, such inaccuracies or
alterations may have a material effect upon our opinion expressed in this
letter.
Based upon the foregoing, and taking into consideration the statements contained
in the Section marked "Caveat" below, it is our opinion that:
1. The Merger will qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code;
2. Except with respect to any cash payments to the United
Shareholders in lieu of fractional shares, no gain or loss
will be recognized to the United Shareholders upon receipt of
Holding Company Stock (including any fractional share
interests to which they may be entitled) solely in exchange
for shares of United Stock;
3. The aggregate federal income tax basis of Holding Company
Stock (including fractional share interests to which the
United Shareholders may be entitled) received by the United
Shareholders will be the same as the aggregate federal income
tax basis of the United Stock surrendered in exchange
therefor;
4. The holding period of Holding Company Stock received by the
United Shareholders will include the period for which the
exchanged United Stock was held, provided the exchanged United
Stock was held as a capital asset by United Shareholders on
the date of the exchange; and
Mr. Michael S. Patterson Page 4 June 15, 1998
5. The payment of cash in lieu of fractional share interests
of Holding Company Stock will be treated as if fractional
shares were distributed as part of the Merger in payment of
and in exchange for the United Shareholders' United Stock
and then redeemed by Holding Company for cash as provided for
in Sections 302 or 301, depending on the attribution rules of
Section 318. Assuming a shareholder's stock is a capital
asset and that Section 302 applies to the shareholder,
a shareholder receiving such cash will recognize capital gain
or loss equal to the difference between the amount of cash
received and the shareholder's adjusted basis in the
fractional share interest.
Caveat
- ------
The foregoing opinion addresses only the five items set forth herein and
therefore, no tax opinion is hereby expressed regarding any other federal,
state, local, or other tax issues or about any other matter not specifically
mentioned herein.
No opinion is expressed regarding the tax consequences of the conversion of
outstanding warrants and options to purchase common stock of United into Holding
Company warrants and options. Holders of United's outstanding warrants and
options should consult their own tax advisors regarding the effect of the
proposed Merger.
No opinion is expressed regarding any tax consequences affecting recapture of
loan loss reserves and the related bad debt reserves for any of the parties to
the Merger which may arise from the application of Section 585 of the Code.
Our opinion is based on the relevant provisions of the Internal Revenue Code of
1986, as amended, the regulations thereunder, and the judicial and
administrative interpretations thereof. There are no assurances that the
conclusions reached herein will be accepted by the Internal Revenue Service or
judicial authorities if challenged. Any legislative, regulatory, administrative,
or judicial decisions subsequent to the date of this opinion may have an impact
on the validity of our conclusions. Unless you specifically request otherwise,
we will not update our opinion for changes to the law, regulations, or the
judicial and administrative interpretations thereof.
This opinion is being furnished in connection with the Registration Statement on
Form S-4 to be filed by Holding Company. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement. This opinion may not be
used or relied on for any other purpose and may not be circulated, quoted, or
otherwise referred to for any other purpose without our express written consent.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
June 3, 1998
Coopers & Lybrand L.L.P.
150 Fayetteville Street Mall
Suite 2300
Raleigh, NC 27601
Re: Agreement and Plan of Reorganization and Merger
by and among United Federal Savings Bank, Triangle Bank
and Triangle Bancorp, Inc.
Dear Sirs:
In connection with the proposed merger (the "Merger") of United Federal
Savings Bank ("United"), a federally-chartered savings bank with and into
Triangle Bank ("Triangle"), a North Carolina banking corporation, pursuant to
the terms of the Agreement and Plan of Reorganization and Merger dated as of
March 4, 1998 (the "Agreement") by and among United, Triangle, and Triangle
Bancorp, Inc. ("Holding Company"), a North Carolina business corporation, and
each as described in the Registration Statement on Form S-4 to be filed by
Holding Company with the Securities and Exchange Commission in June of 1998 (the
"Registration Statement"), you have rendered opinions pursuant to the
requirements of Item 21(a) of Form S-4 under the Securities Act of 1933, as
amended, and pursuant to our request.
In connection with such opinions, and recognizing that you will rely on
this letter in rendering said opinions, the undersigned, a duly authorized
officer of the Holding Company and acting as such, hereby certifies, that, to
the best knowledge of the management of Holding Company, the facts relating to
the Merger as described in the prospectus included as part of the Registration
Statement ("Prospectus"), including attachments thereto, are true, correct and
complete in all material respects and hereby certifies, to the best knowledge of
the management of Holding Company, to the following as of the date hereof.
Insofar as such certification pertains to any person (including United or any of
its subsidiaries) other than Holding Company and any of its subsidiaries, such
certification is only as to the knowledge of the undersigned without specific
inquiry. Unless otherwise noted, all section references herein shall be to the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations (the
"Regulations") thereunder.
Coopers & Lybrand L.L.P Page 2 June 3, 1998
1. The Merger will be consummated in compliance with the material terms of
the Agreement and none of the material terms and conditions therein
have been waived or modified and Holding Company has no plan or
intention to waive or modify any such material condition.
2. The ratio for the conversion of shares of United stock for common stock
of Holding Company and options of United for options of Holding Company
in the Merger was negotiated through arm's length bargaining.
Accordingly, the fair market value of Holding Company common stock to
be received by United shareholders in the Merger will be approximately
equal to the fair market value of the United stock surrendered by such
shareholders in the conversion.
3. Triangle will acquire at least 90 percent of the fair market value of
United's net assets and at least 70 percent of the fair market value of
United's gross assets held immediately prior to the Merger. For this
purpose, amounts used to pay reorganization expenses and all
redemptions and distributions (except for regular, normal dividends)
made immediately prior to the Merger will be included as assets of
United held immediately prior to the Merger.
4. Prior to the transaction, Holding Company will be in control of
Triangle within the meaning of Section 368(c) of the Code.
5. Triangle will not issue additional shares of its stock following the
transaction that would result in Holding Company losing control of
Triangle within the meaning of Section 368(c) of the Code.
6. There is no plan or intention by Holding Company, or any party related
(as defined in ss.1.368-1(e)(3) of the Regulations) to Holding Company,
to acquire United stock prior to the Merger.
7. Holding Company is not currently negotiating with another party
regarding the sale of Holding Company.
8. The management of Holding Company is not aware of any person related
(as defined in ss.1.368-1(e)(3) of the Regulations) to United having
acquired any of the United stock in connection with the Merger.
9. The management of Holding Company is not aware of any redemptions of
United stock made by United in connection with the Merger.
10. The management of Holding Company is not aware of any distributions to
United shareholders made by United (except for regular, normal
distributions) in connection with the Merger.
Cooper & Lybrand L.L.P Page 3 June 3, 1998
11. Except for fractional share interests, there is no plan or intention by
Holding Company, or any party related (as defined in ss.1.368-1(e)(3)
of the Regulations) to Holding Company, to reacquire any of its stock
issued in the Merger. However, such stock could be reacquired from a
former United shareholder by Holding Company through stock purchases by
Holding Company in the open market of Holding Company's widely held
stock, pursuant to Holding Company's regular stock purchase program
conducted for a good business purpose independent of the Merger. Under
this program the aggregate amount of stock purchases will not equal or
exceed ten percent of the outstanding stock of Holding Company. Holding
Company knows of no intent of United shareholders to sell shares in the
repurchase program; even if all shares to be purchased in the
repurchase program were purchased from United shareholders of stock
received in the Merger, such sales would not cause over half of the
consideration provided by Holding Company to United shareholders in the
Merger to be cash (including the cash received in the repurchases).
12. Holding Company has no plan or intention to liquidate Triangle or to
merge Triangle with and into another corporation. Additionally, Holding
Company has no plan or intention to sell or otherwise dispose of the
stock of Triangle; or to cause Triangle to sell or otherwise dispose of
the assets of United acquired in the Merger, except for dispositions
made in the ordinary course of business or transfers (or successive
transfers) described in Section 368(a)(2)(C) of the Code.
13. To the knowledge of Holding Company, the liabilities of United assumed
by Triangle and the liabilities to which the transferred assets of
United are subject were incurred by United in the ordinary course of
its business. No liabilities of any person other than United will by
assumed by Triangle in the Merger.
14. Following the Merger, Triangle will, directly or through a member of
its "qualified group" (as defined in ss.1.368-1(d)(4)(ii) of the
Regulations),continue United's historic business or use a significant
portion of United's historic business assets in a business.
15. Holding Company, Triangle, United, and United shareholders will pay
their respective expenses, if any, incurred in connection with the
Merger.
16. There is no intercorporate indebtedness existing between Holding
Company and United or between United and Triangle that was issued,
acquired, or will be settled at a discount.
17. Neither Holding Company nor Triangle are investment companies as
defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
18. To the knowledge of Holding Company, United is not under the
jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
Cooper & Lybrand L.L.P. Page 4 June 3, 1998
19. At the effective time of the Merger, the fair market value of the
assets of United transferred to Triangle will exceed the sum of its
liabilities assumed by Triangle (including liabilities, if any, to
which its assets are subject).
20. No stock of Triangle will be issued to United shareholders in the
Merger.
21. The payment of cash in lieu of fractional shares of Holding Company
stock was not separately bargained for consideration and is being made
solely for the purpose of saving Holding Company the expense and
inconvenience of issuing fractional shares.
22. The assumption by Triangle of the liabilities of United pursuant to the
Merger is for a bona fide business purpose and the principal purpose of
such assumption is not the avoidance of federal income tax on the
transfer of assets of United to Triangle.
23. None of the compensation received by any shareholder-employee of United
pursuant to any employment, consulting, or similar arrangement is or
will be separate consideration for, or allocable to, any of his/her
shares of United. None of the shares of common stock received by any
shareholder-employee of United pursuant to the Merger is or will be
separate consideration for, or allocable to, any such employment,
consulting, or similar arrangement. The compensation paid to any
shareholder-employee of United pursuant to any such employment,
consulting, or similar arrangement is or will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
24. It is anticipated that less than one percent of United stock
outstanding will be surrendered in lieu of fractional shares.
This letter is being furnished to you solely for your benefit and for
use in rendering your opinions and is not to be used, circulated, quoted, or
otherwise referred to for any other purpose (other than inclusion in your
opinion) without the express written consent of Holding Company. All of the
foregoing certifications are true to the best knowledge of the management of
Holding Company.
Very truly yours,
/s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
Triangle Bancorp, Inc.
Exhibit 8
June 3, 1998
Coopers & Lybrand L.L.P.
150 Fayetteville Street Mall
Suite 2300
Raleigh, NC 27601
Re: Agreement and Plan of Reorganization and
Merger by and among United Federal Savings
Bank, Triangle Bank and Triangle Bancorp, Inc.
Dear Sirs:
In connection with the proposed merger (the "Merger") of United Federal
Savings Bank ("United"), a federally-chartered savings bank with and into
Triangle Bank ("Triangle"), a North Carolina banking corporation, pursuant to
the terms of the Agreement and Plan of Reorganization and Merger dated as of
March 4, 1998 (the "Agreement") by and among United, Triangle, and Triangle
Bancorp, Inc. ("Holding Company"), a North Carolina business corporation, and
each as described in the Registration Statement on Form S-4 to be filed by
Holding Company with the Securities and Exchange COmmission in June of 1998
(the "Registration Statement"), you have rendered opinions pursuant to the
requirements of Item 21(a) of Form S-4 under the Securities Act of 1933,
as amended, and pursuant to our request.
In connection with such opinions, and recognizing that you will rely on
this letter in rendering said opinions, the undersigned, a duly authorized
officer of United and acting as such, hereby certifies that, to the best
knowledge of the management of United, the facts relating to the Merger as
described in the prospectus included as part of the Registration Statement
("Prospectus"), including attachments thereto, are true, correct and complete in
all material respects and hereby certifies, to the best knowledge of the
management of United, to the following as of the date hereof. Insofar as such
certification pertains to any person (including Holding Company or any of its
subsidiaries) other than United and any of its subsidiaries, such certification
is only as to the knowledge of the undersigned without specific inquiry. Unless
otherwise noted, all section references herein shall be to the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations (the "Regulations")
thereunder.
1. The Merger will be consummated in compliance with the material terms of the
Agreement and none of the material terms and conditions therein have been
waived or modified and United has no plan or intention to waive or modify
any such material condition.
Coopers & Lybrand L.L.P. Page 2 June 3, 1998
2. The ratio for the conversion of shares of United stock for common stock of
Holding Company and options of United for options of Holding Company in
the Merger was negotiated through arm's length bargaining. Accordingly,
the fair market value of Holding Company common stock to be received by
United shareholders in the Merger will be approximately equal to the fair
market value of the United stock surrendered by such shareholders in the
conversion.
3. Triangle will acquire at least 90 percent of the fair market value of
United's net assets and at least 70 percent of the fair market value of
United's gross assets held immediately prior to the Merger. For this
purpose, amounts used to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends) made immediately
prior to the Merger will be included as assets of United held immediately
prior to the Merger.
4. United has not redeemed any of the United stock, has not made any
distribution with respect to any of the United stock (except for regular,
normal distributions), or disposed of any of its assets in anticipation
of or as a part of a plan for the acquisition of United by Triangle.
5. United is not aware of any person related (defined in SS1.368-1(e)(3) of
the Regulations) to United having acquired any of the United stock in
connection with the Merger.
6. The assumption by Triangle of the liabilities of United pursuant to the
Merger is for a bona fide business purpose and the principal purpose of
such assumption is not the avoidance of federal income tax on the transfer
of assets of United to Triangle pursuant to the Merger.
7. Holding Company, Triangle, United, and United shareholders will pay their
respective expenses, if any, incurred in connection with the Merger.
8. There is no intercorporate indebtedness existing between United and Holding
Company or between United and Triangle that was issued, acquired, or will
be settled at a discount.
9. United is not an investment company as defined in Sections
368(a)(s)(F)(iii) and (iv) of the Code.
10. United is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
11. On the date of the Merger, the fair market value of the assets of United
will exceed the sum of its liabilities (including liabilities, if any,
to which its assets are subject).
12. Any options to acquire stock in United issued by United that are to be
converted into options to acquire Holding Company stock pursuant to the
terms of the Merger were issued by United for bona fide business purposes.
Coopers & Lybrand L.L.P. Page 3 June 3, 1998
13. The liabilities of United assumed by Triangle and the liabilities to which
the transferred assets of United are subject were incurred by United in the
ordinary course of its business. No liabilities of any person other than
United will be assumed by Triangle in the Merger.
14. None of the compensation received by any shareholder-employee of United
pursuant to any employment, consulting, or similar arrangement is or will
be separate consideration for, or allocable to, any of his/her shares of
United. None of the shares of common stock received by any shareholder-
employee of United pursuant to the Merger is or will be separate
consideration for, or allocable to, any such employment, consulting, or
similar arrangement. The compensation paid to any shareholder-employee
of United pursuant to any such employment, consulting, or similar
arrangement is or will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's
length for similar services.
15. It is anticipated that less than one percent of United stock outstanding
will be surrendered in lieu of fractional shares.
16. The payment of cash in lieu of fractional shares of Holding Company stock
was not separately bargaining for consideration and is being made solely
for the purpose of saving Holding Company the expense and inconvenience
of issuing fractional shares.
This letter is being furnished to you solely for your benefit and for use
in rendering your opinions and is not to be used, circulated, quoted, or
otherwise referred to for any other purpose (other than inclusion in your
opinion) without the express written consent of United. All of the foregoing
certifications are true to the best knowledge of the management of United.
Very truly yours,
/s/ John A. Barker
John A. Barker
President and Chief Executive Officer
United Federal Savings Bank