As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
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)
-------------------------
MICHAEL S. PATTERSON ALEXANDER M. DONALDSON, ESQ.
PRESIDENT With Copy MOORE & VAN ALLEN, PLLC
TRIANGLE BANCORP, INC. to: SUITE 1700, TWO HANNOVER SQUARE
4300 GLENWOOD AVENUE RALEIGH, NORTH CAROLINA 27611
RALEIGH, NORTH CAROLINA 27612 (919) 821-6242
(919) 881-0455
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. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Title of Each Proposed Maximum
Class of Securities Proposed Maximum Aggregate Amount of
to be Registered Amount to be Offering Price Per Offering Price(2) Registration Fee
Registered(1) Share
- ------------------------------------------------------------------------------------------------------------------------
Common Stock 829,973 Not Applicable $12,042,908 $4,159.49
========================================================================================================================
(1) This Registration Statement covers (i) the maximum number of shares
of common stock of the Registrant which is expected to be issued in connection
with the transaction and (ii) the maximum number of shares of common stock
reserved for issuance under various option plans of Granville United Bank, the
obligations of which will be assumed by the Registrant upon consummation of the
transaction but which may be issued prior to consummation of the transaction.
(2) In accordance with Rule 457(f), the registration fee is based upon
the book value as of May 31, 1996 ($14.74) of a share of the common stock of
Granville United Bank.
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 Granville 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 Granville Stock;
Comparative Per Share Data; Selected Consolidated
Financial Data
4. Terms of the Transaction........................... The Merger; Summary - Granville Stock and Triangle Stock;
Comparison of Granville 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 - 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 Granville 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 and
Triangle Bank
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 Granville; Selected Consolidated
Financial Data; Summary - Granville Stock and Triangle
Stock; Comparison of Granville 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 Granville Shareholders; The
Merger - Interest of Certain Persons in the Merger, -
Appraisal Rights of Dissenting Shareholders; Information
About Triangle; Information about Granville; Appendix II
19. Information if Proxies, Consents or Authorizations are
not to be Solicited or in an Exchange Offer. Not Applicable
[LETTERHEAD OF GRANVILLE UNITED BANK]
____, 1996
To the Shareholders of Granville United Bank:
You are cordially invited to attend a Special Meeting of the Shareholders
("Special Meeting") of Granville United Bank ("Granville") to be held at ____,
Oxford, North Carolina at ___ p.m., local time, on ________, 1996, 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 June 7,
1996 (the "Agreement"), among Granville, Triangle Bank and Triangle Bank's
parent holding company, Triangle Bancorp, Inc. The Agreement provides for the
merger (the "Merger") of Granville with and into Triangle Bank, with Triangle
Bank being the surviving corporation. Upon consummation of the Merger, each
share of Granville common stock issued and outstanding will be exchanged for
1.75 shares of Triangle Bancorp, Inc. common stock, with cash being paid in lieu
of issuing fractional shares. Enclosed are the (i) Notice of Special Meeting of
Shareholders, (ii) Prospectus/Proxy Statement, (iii) proxy card for the Special
Meeting, (iv) Granville's Annual Report to Shareholders for the year ended
December 31, 1995, and (v) Granville's Quarterly Report on Form F-4 for the
three months ended March 31, 1996. The Prospectus/Proxy Statement 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 Granville shareholders. Please read these materials carefully and
consider thoughtfully the information set forth in them.
The Board of Directors of Granville has unanimously approved the Agreement and
consummation of the Merger contemplated thereby, and unanimously recommends that
you vote FOR approval of the Agreement.
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 Granville 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 with Triangle Bank
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.
We look forward to seeing you at the Special Meeting.
Sincerely,
Billy N. Quick, Sr.
President and Chief Executive Officer
GRANVILLE UNITED BANK
109 HILLSBORO STREET
OXFORD, NORTH CAROLINA 27565-3211
TELEPHONE: (919) 693-9000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
__________, 1996
NOTICE is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of Granville United Bank ("Granville") will be held at __.m., local
time, on __________, 1996 at ______, _______, Oxford, 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 June 7, 1996, and the related Plan of Merger
(collectively, the "Agreement"), by and among Triangle Bancorp, Inc.
("Triangle"), Triangle Bank ("Triangle Bank") and Granville and the
transactions contemplated pursuant to the Agreement, which include,
among other matters, (i) at the effective time, Granville will merge
with and into Triangle Bank, the wholly-owned bank subsidiary of
Triangle (the "Merger"), and (ii) each outstanding share of the common
stock, $5.00 par value per share (the "Granville Stock"), of Granville
will be converted into 1.75 shares of the common stock, no par value
per share, of Triangle, all as more fully described in the accompanying
Prospectus/Proxy Statement; 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 Granville 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 Article 13 of the North Carolina Business Corporation Act
("Article 13"). The full text of Article 13 is attached as Appendix III to the
Prospectus/Proxy Statement which accompanies this Notice and is incorporated
herein by reference.
Shareholders of record at the close of business on _________, 1996 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.
Each Granville 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
Billy N. Quick, Sr., President
Dated: _________________, 1996
PROSPECTUS
TRIANGLE BANCORP, INC.
UP TO __________ SHARES
COMMON STOCK, NO PAR VALUE
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
GRANVILLE UNITED BANK
TO BE HELD ON _________, 1996
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 Granville United Bank ("Granville"), 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)
Granville will be merged with and into Triangle Bank, the wholly-owned bank
subsidiary of Triangle (the "Merger"), and (ii) each outstanding share of common
stock, $5.00 par value per share, of Granville ("Granville Stock") will be
converted into 1.75 shares of Triangle Stock pursuant to the terms of an
Agreement and Plan of Reorganization and Merger, dated as of June 7, 1996, and
the related Plan of Merger (collectively, the "Agreement"), by and among
Triangle, Triangle Bank and Granville. A copy of the Agreement is attached
hereto as Appendix I.
Granville 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 Granville 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 Granville Stock
outstanding immediately prior to the consummation of the Merger will cease to be
outstanding and will be converted into 1.75 shares of Triangle Stock. As of
_____, 1996, based on the closing sale price of Triangle Stock of $____ on the
Nasdaq National Market, 1.75 shares 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 Granville and is
being furnished by Granville in connection with the solicitation of proxies to
be used at the special meeting of shareholders of Granville, including any
adjournments thereof (the "Special Meeting"), to be held on _____________, 1996.
At the Special Meeting, shareholders of Granville will be asked to approve the
Agreement.
This Prospectus/Proxy Statement and related materials enclosed herewith
are being mailed to the shareholders of Granville on or about _________, 1996.
The address of Triangle's principal executive office is 4300 Glenwood
Avenue, Raleigh, North Carolina 27612 (telephone number (919) 881-0455). The
address of Granville's principal executive office is 109 Hillsboro Street,
Oxford, North Carolina 27565-3211 (telephone number (919) 693-9000).
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 Prospectus/Proxy Statement is ___________, 1996.
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No person is authorized to give any information or to make any
representation other than those contained in this Prospectus/Proxy Statement,
and, if given or made, such information or representation should not be relied
upon as having been authorized by Triangle or Granville. This Prospectus/Proxy
Statement does not constitute an offer to sell, or a solicitation of an offer to
purchase, the securities offered by this Prospectus/Proxy Statement 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 Prospectus/Proxy Statement
regarding Triangle and Triangle Bank has been furnished by Triangle and the
information contained or incorporated by reference in this Prospectus/Proxy
Statement regarding Granville has been furnished by Granville. Neither the
delivery of this Prospectus/Proxy Statement 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
Granville since the date of this Prospectus/Proxy Statement 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 GRANVILLE'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.
TABLE OF CONTENTS
Page
Available Information.............................................................................................................
Incorporation of Certain Documents by Reference...................................................................................
Summary...........................................................................................................................
Selected Consolidated Financial Data...............................................................................................
Comparative Per Share Data.........................................................................................................
Special Meeting of Granville 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...................................................................................................
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..................................................................................
Recommendation of the Granville Board of Directors........................................................................
Opinion of Financial Advisor..............................................................................................
Comparable Transactions...................................................................................................
History of Stock Trading..................................................................................................
Comparison of Granville and Triangle to the Industry......................................................................
Comparison of Investment and Other Characteristics of Granville and Triangle..............................................
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Pro Forma Transaction Analysis....................................................................................
Relative Contribution ............................................................................................
Control Premiums..................................................................................................
Certain Federal Income Tax Consequences...........................................................................
Accounting Treatment..............................................................................................
Expenses and Fees.................................................................................................
Distribution of Triangle Certificates.............................................................................
Resale of Triangle Stock..........................................................................................
Appraisal Rights of Dissenting Shareholders.......................................................................
Interest of Certain Persons in the Merger.........................................................................
Pro Forma Combined Condensed Financial Information.........................................................................
Capitalization.............................................................................................................
Information about Triangle and Triangle Bank...............................................................................
General...........................................................................................................
Triangle Stock....................................................................................................
Security Ownership of Management..................................................................................
Information about Granville................................................................................................
General...........................................................................................................
Granville Stock...................................................................................................
Security Ownership of Management and Principal Shareholders.....................................................
Comparison of Granville 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...............................................................................................
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.............................................................................
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 - North Carolina Law Regarding Dissenters' Rights.............................................................III-1
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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, N.W., 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, N.W., Washington, D.C. 20549, at prescribed rates.
Triangle has filed with the Commission a Registration Statement on Form
S-4 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 Prospectus/Proxy Statement 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.
Granville 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 Granville 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, 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.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Triangle with the
Commission are incorporated by reference into this Prospectus/Proxy Statement:
(i) Triangle's Annual Report on Form 10-K for the fiscal year ended December 31,
1995; (ii) Triangle's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1996; and (iii) Triangle's Current Reports on Form 8-K dated
January 3, 1996, and January 11, 1996. The following documents previously filed
by Granville with the FDIC (all of which are exhibits to the Registration
Statement) are incorporated by reference into this Prospectus/Proxy Statement:
(i) Granville's Annual Report on Form F-2 for the fiscal year ended December 31,
1995; (ii) Granville's Quarterly Report on Form F-4 for the quarterly period
ended March 31, 1996; and (iii) Granville's Current Report on Form F-3 dated
June 18, 1996.
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 date the Special
Meeting has 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 Prospectus/Proxy Statement 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 PROSPECTUS/PROXY STATEMENT INCORPORATES BY REFERENCE OTHER
DOCUMENTS WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS
RELATED TO TRIANGLE OR GRANVILLE, 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 PROSPECTUS/PROXY
STATEMENT 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 GRANVILLE UPON REQUEST FROM THE
PRESIDENT, GRANVILLE UNITED BANK, 109 HILLSBORO STREET, OXFORD, NORTH CAROLINA
27565-3211, TELEPHONE (919) 693-9000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS BEFORE THE SPECIAL MEETING, ANY SUCH REQUESTS SHOULD BE MADE BY
_____________, 1996.
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.
GRANVILLE'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995 AND QUARTERLY REPORT ON FORM F-4 FOR THE THREE MONTHS ENDED
MARCH 31, 1996 ACCOMPANY THIS PROSPECTUS/PROXY STATEMENT.
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION RELATING TO THE
SPECIAL MEETING, THE AGREEMENT AND THE MERGER DESCRIBED HEREIN AND IS NOT
INTENDED TO BE A SUMMARY OF ALL MATERIAL INFORMATION RELATING TO TRIANGLE,
GRANVILLE, 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 PROSPECTUS/PROXY STATEMENT, INCLUDING THE APPENDICES
HERETO, AND IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. AS USED IN THIS
PROSPECTUS/PROXY STATEMENT, THE TERMS "TRIANGLE" AND "GRANVILLE" REFER TO THE
RESPECTIVE CORPORATIONS AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE
SUBSIDIARIES OF TRIANGLE. SHAREHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE
PROSPECTUS/PROXY STATEMENT, INCLUDING THE APPENDICES.
SPECIAL MEETING OF GRANVILLE SHAREHOLDERS
The Special Meeting will be held on _________, 1996, at _____ p.m.,
local time, at ______________, Oxford, North Carolina. At the Special Meeting,
holders of Granville 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 Granville Stock entitled to vote at the Special Meeting is required for
approval of the Agreement.
On _________, 1996, the record date of shareholders of Granville
entitled to notice of and to vote at the Special Meeting (the "Record Date"),
there were _______ shares of Granville Stock outstanding. Directors and
executive officers of Granville and their affiliates own and are entitled to
vote approximately ____% of the outstanding shares of Granville Stock. The
directors and executive officers of Granville and their affiliates are expected
to vote their shares in favor of the proposal to approve the Agreement. See
"SPECIAL MEETING OF GRANVILLE SHAREHOLDERS."
VOTING OF PROXIES. The persons named to represent Granville's
shareholders as proxies at the Special Meeting are ______, _______, _______, and
_______. Shares of Granville Stock represented by each appointment of proxy
which is properly executed and returned by a Granville shareholder, and not
revoked, will be voted by the proxy 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 Special Meeting, the
proxies will be authorized to vote in accordance with their judgment on such
matters. See "SPECIAL MEETING OF GRANVILLE SHAREHOLDERS-Voting and Revocation of
Proxies."
REVOCATION OF APPOINTMENTS OF PROXY. Any Granville 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 Granville either an instrument
revoking it or a duly executed appointment of proxy bearing a later date, or by
attending the Special Meeting and announcing his or her intention to
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vote in person. See "SPECIAL MEETING OF GRANVILLE SHAREHOLDERS-Voting and
Revocation of Proxies."
PROXY SOLICITATION EXPENSES. Except under certain circumstances
involving a wrongful breach or termination of the Agreement, Granville will pay
the expenses associated with the Special Meeting, including the costs of
preparing, assembling and mailing this Prospectus/Proxy Statement. 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 Granville'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 owns all of the outstanding shares of Triangle Bank.
Triangle Bank is a North Carolina-chartered commercial bank and also is a member
bank of the Federal Reserve. Triangle Bank provides full-service commercial and
consumer banking services from its 38 branches in 31 cities located throughout
eastern North Carolina. As of March 31, 1996, Triangle had consolidated assets
of $837 million, consolidated deposits of $710 million, and consolidated
shareholders' equity of $74 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 and
Triangle Bank."
Granville is a North Carolina-chartered, commercial bank under the
supervision of the North Carolina Commissioner of Banks (the "Commissioner") and
the FDIC. Granville provides full-service commercial and consumer banking
services through three branches in Oxford and Creedmoor, North Carolina, which
are in Granville County. As of March 31, 1996, Granville had assets of $60
million, deposits of $53 million, and shareholders' equity of $6 million. The
executive offices of Granville are located at 109 Hillsboro Street, Oxford,
North Carolina 27565-3211 (telephone number (919) 693-9000). See "THE
MERGER-Parties to the Merger-Granville."
-8-
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND.
Granville. Since its organization in 1990, Granville has operated as a
community-oriented commercial bank serving Granville County, North Carolina. The
community-oriented banking philosophy of Granville generally has allowed it to
compete effectively and profitably with the other banking institutions in its
local market. Since Granville's inception, however, competition has dramatically
increased with other types of financial institutions offering services
traditionally offered only by banks. This increased competition has created an
increase in public demand for a broader range of consumer services from
community banking institutions. Providing such services and products to
customers requires significant amounts of technology, in terms of both equipment
and software. Additionally, since 1991 the federal banking agencies have imposed
many additional regulations on banks. The increased regulatory oversight has
burdened Granville due to its small size relative to many of its competitors.
Given Granville's attractive franchise in Granville County, which is
the northern extension of the greater Raleigh metropolitan area, Triangle became
interested in acquiring Granville to expand its operations into Granville
County. During April 1996, Triangle approached Granville to indicate that, if
Granville chose to consider being acquired, Triangle would be interested in
discussing a possible combination transaction. In early May 1996, Triangle's
President met with Granville's Board of Directors to discuss a possible
combination with Triangle.
During the last week of May 1996 and the first week of June 1996, a
proposed merger agreement among Granville, Triangle and Triangle Bank was
negotiated. During this time, the Board engaged a financial advisor, Equity
Research Services, Inc., Raleigh, North Carolina ("Equity Research"), to provide
it assistance in evaluating and opining, from a financial point of view, as to
the fairness to Granville's shareholders of the final, definitive offer by
Triangle (the "Fairness Opinion"). On June 5, 1996, the Board of Directors
considered the proposed agreement. At this meeting, the Granville Board
considered the terms of the proposed agreement, the strategic and financial
goals of Granville and the likelihood that it would achieve those goals, and the
financial and strategic goals of Triangle, the likelihood it would achieve those
goals and the possible, resulting enhancement of the market value of Triangle
Stock, and the degree of possibility that significantly better proposals could
be obtained from other companies. Based on these considerations and the advice
of legal counsel, the Board concluded that a merger with Triangle upon the terms
of the proposed agreement would be in the best interests of Granville's
shareholders and unanimously approved the adoption of the Agreement. After its
consideration of the Agreement and other matters described below (see "THE
MERGER--Opinion of Financial Advisor"), Equity Research delivered to the Board
the Fairness Opinion dated June 24, 1996. The Fairness Opinion was reissued to
Granville on _____, 1996 for inclusion in this Prospectus/Proxy Statement.
Triangle. As a result of Triangle's acquisitions during the last three
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
-9-
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 Bank
will expand its market area into Granville County, the northern extension of the
greater Raleigh area of North Carolina.
REASONS FOR THE MERGER.
Granville. In reaching its conclusion that the Merger is fair to, and
in the best interests of, Granville's shareholders, the Board of Directors of
Granville consulted with financial, legal, accounting and other advisors, as
well as Granville's management, and considered a number of factors. The Board
did not assign any relative or specific weight to the factors considered. These
factors included, among others: the Board's review of the business, operations,
earnings and financial condition of Granville and Triangle, the enhanced
opportunities for operating efficiencies, expanded customer service,
competitiveness 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
Granville and Triangle; the expectation that the Merger generally will be a
tax-free transaction to Granville and its shareholders and that the Merger will
be accounted for under the pooling-of-interests method of accounting (see "THE
MERGER--Certain Federal Income Tax Consequences" and "-Accounting Treatment");
and the current and prospective economic and competitive environments facing
financial institutions, including Granville.
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 Granville 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 Granville'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."
-10-
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"), Granville will be merged with and
into Triangle Bank. Triangle Bank will be the surviving corporation resulting
from the Merger, operating as a North Carolina commercial bank under Triangle
Bank's articles of incorporation and bylaws existing immediately prior to the
Merger. Following the Merger, Triangle Bank will succeed to all of the rights,
assets, liabilities, and obligations of Granville by operation of law. 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 Granville shareholders,
each issued and outstanding share of Granville Stock will be converted into 1.75
shares of Triangle Stock (the "Exchange Rate"). As of ___________, 1996, based
on the closing sale price of Triangle Stock of $____ on the Nasdaq National
Market, 1.75 shares of Triangle Stock would be worth $____. See "THE
MERGER-Appraisal Rights of Dissenting Shareholders." Each Granville shareholder
will receive a number of shares of Triangle Stock equal to the number of shares
of Granville Stock owned by such shareholder multiplied by the Exchange Rate.
Any fractional shares resulting from the Merger will not be issued and
shareholders of Granville will instead receive cash in lieu of the issuance of
fractional shares. As of _________, 1996, the closing sale price of Triangle
Stock on the Nasdaq National Market was $____. Each share of Granville Stock
automatically will be cancelled by virtue of the Merger. See "THE MERGER - Terms
of the Merger - Exchange Rate."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF GRANVILLE
The Board of Directors of Granville believes that the Merger is in the
best interests of Granville and its shareholders and has unanimously approved
the Agreement. GRANVILLE UNITED BANK DIRECTORS UNANIMOUSLY RECOMMEND THAT
GRANVILLE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AGREEMENT.
OPINION OF FINANCIAL ADVISOR
Granville 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 Granville Stock. After its review
of a variety of relevant factors, Equity Research rendered to Granville's Board
of Directors the Fairness Opinion dated June 24, 1996, which was reissued on
August __, 1996 and a copy of which is attached to this Prospectus/Proxy
Statement 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, Granville agreed to pay Equity
Research a fee of $12,000. Such fee was paid to Equity Research upon the
issuance of the Fairness Opinion. See "THE MERGER - Opinion of Financial
Advisor."
-11-
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 "reorganization" as defined in Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"); (ii)
receipt of the Fairness Opinion and receipt of written confirmation of the
Fairness Opinion immediately prior to the Effective Time; (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 has 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, Granville
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, Granville 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, the Bank and Granville or (ii) by either Triangle or
Granville: (A) if the Effective Time shall not have occurred on or before March
31, 1997; (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) Granville'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 if, after testing, Granville faces environmental
liabilities in excess of $100,000. See "THE MERGER - Terms of the Merger -
Termination of the Agreement." Such
-12-
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 Granville without the
approval of shareholders; provided, however, that the provisions of the
Agreement relating to the manner or basis in which the shares of Granville Stock
will be converted into Triangle Stock may not be amended after the Special
Meeting without the requisite approval of the holders of the issued and
outstanding shares of Granville Stock entitled to vote thereon. See "THE MERGER
- - Terms of Merger - Amendment and Waiver"
INTEREST OF CERTAIN PERSONS IN THE MERGER
In the Merger, one member of the Board of Directors of Granville, as determined
by Triangle in its sole discretion, will be nominated or appointed to the Board
of Directors of Triangle Bank and such person will be paid in accordance with
Triangle's normal practices. The remaining members of the Board of Directors of
Granville, other than those who choose not to serve, will be appointed to the
Granville County advisory board of Triangle Bank and each such director will be
paid in accordance with Triangle Bank's normal practices. In addition,
consistent with Triangle's practices involving other advisory directors of
Triangle Bank, each member of the Board of Directors of Granville who is elected
to the Triangle Bank Board of Directors and who chooses to serve on the
Granville County advisory board of Triangle Bank will be granted at the
Effective Time options to purchase 250 shares of Triangle Stock.
At the Effective Time, Triangle Bank will enter into an employment agreement and
a deferred compensation agreement with Billy N. Quick, Sr., President of
Granville. The employment agreement provides for a term of five years at an
annual base salary of $105,000. The deferred compensation agreement will
commence upon either the end of the five-year term of the employment agreement
or Mr. Quick's retirement from employment with Triangle Bank after the end of
the five-year term of the employment agreement, but prior to Mr. Quick's
attaining age 65. The deferred compensation agreement will have a term of ten
years. Over the term of the deferred compensation agreement, Mr. Quick will be
paid $300,000 in equal monthly installments of $2,500. In addition, consistent
with Triangle's practices involving other advisory directors of Triangle Bank,
Mr. Quick will be granted at the Effective Time options to purchase 7,500 shares
of Triangle Stock.
To assist in the transition after the Merger and to ensure their continued
employment, Triangle Bank shall pay severance compensation to Harriett D.
Watkins, Kristy B. Stainback and Reca L. Callis in the event they are terminated
for other than cause by Triangle Bank within one year after the Effective Time.
In addition, Triangle Bank shall pay compensation for their continued employment
for certain periods of time after the Effective Time to Lionel B. Burnette and
Clarice B. Smiley.
Subject to availability of positions, Triangle will make a good faith effort to
offer employment to employees of Granville in positions with Triangle Bank.
Employees of Granville who are not offered positions with Triangle Bank shall
receive severance compensation.
-13-
The Agreement contains provisions relating to indemnification of the present and
former directors and officers of Granville to the same extent provided to
Triangle's directors and officers. Additionally, options to purchase shares of
Granville Stock held by directors and officers of Granville will be converted
into options to purchase shares of Triangle Stock by multiplying the number of
shares of Granville 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 and
Granville have received the opinion of Coopers & Lybrand L.L.P., tax advisors to
Triangle, concerning the tax consequences of the Merger. Shareholders of
Granville 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
Granville shareholders will generally equal the tax basis of the Granville Stock
surrendered, and the holding period of the Triangle Stock received will
generally include the holding period of the Granville Stock surrendered. See
"THE MERGER - Certain Federal Income Tax Consequences."
IT IS RECOMMENDED THAT EACH GRANVILLE 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, shares of Triangle Stock or
Granville Stock repurchased by Triangle or by Granville, and shares held by
Granville 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 Granville would be entitled
to terminate the Agreement and abandon the Merger. See "THE MERGER - Accounting
Treatment."
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EFFECTS OF THE MERGER ON RIGHTS OF SHAREHOLDERS
Following the Merger, the Articles of Incorporation and Bylaws of
Triangle and Triangle Bank will remain in full force and effect without change.
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 Granville. 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 Granville, see "COMPARISON OF GRANVILLE STOCK AND TRIANGLE STOCK."
RESALES OF TRIANGLE STOCK RECEIVED IN MERGER
The shares of Triangle Stock into which Granville Stock will be
converted in the Merger will be freely transferrable by the holders thereof
except in the case of shares held by persons who may be deemed to be
"affiliates" of Triangle or Granville under applicable federal securities laws.
Generally, Granville's affiliates include its directors, executive officers,
principal shareholders and other persons who may be deemed to "control"
Granville. (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
acquiror 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 acquirors. See
"COMPARISON OF GRANVILLE STOCK AND TRIANGLE STOCK."
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
Granville 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 Granville shareholder has the right
under Article 13 of the NCBCA to "dissent" from the Merger and receive the "fair
value" of the shareholder's shares of Granville Stock in cash ("Dissenters'
Rights"). Any Granville shareholder may give to Granville 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
-15-
deemed to satisfy the notice requirement. Such shareholder must not vote his
or her shares in favor of the Merger. Any holder of Granville 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, Granville must send to such shareholder
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 Granville 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 Granville 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 II to this
Prospectus/Proxy Statement, will be offered the amount Granville estimates to be
the fair value of the shareholder's shares of Granville 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 Granville
shareholder must follow carefully all steps prescribed in Appendix III. See "THE
MERGER Appraisal Rights of Dissenting Shareholders" and Appendix III. A
GRANVILLE SHAREHOLDER WHO RETURNS A SIGNED APPOINTMENT OF 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 AGREEMENT AND WILL NOT BE ENTITLED TO
ASSERT DISSENTERS' RIGHTS.
TRIANGLE STOCK AND GRANVILLE STOCK
Transactions in Triangle Stock are quoted on the Nasdaq National
Market. As of June 30, 1996, there were ______ shares of Triangle Stock
outstanding and held by approximately ______ holders of record.
Granville Stock is not traded on any exchange or in the
over-the-counter market and, accordingly, no established public trading market
exists. As of the Record Date, there were 430,000 shares of Granville Stock
outstanding and held by approximately 1,120 holders of record.
-16-
The following table sets forth quarterly information on the price range
of Triangle Stock and Granville 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 Granville, respectively. The sale
prices shown are without retail markups, markdowns or commissions.
TRIANGLE STOCK GRANVILLE STOCK
HIGH LOW HIGH LOW
1996
1st Quarter.............................. $15.25 $11.75 $15.00 $15.00
2nd Quarter..............................
1995
1st Quarter.............................. $10.75 $ 9.125 $13.00 $13.00
2nd Quarter.............................. 10.75 9.00 13.00 13.00
3rd Quarter.............................. 14.75 10.00 15.00 15.00
4th Quarter.............................. 16.00 13.875 15.00 15.00
1994
1st Quarter (1).......................... $11.00 $ 7.50 $12.00 $12.00
2nd Quarter.............................. 11.00 9.50 12.00 12.00
3rd Quarter.............................. 11.75 9.75 12.00 12.00
4th Quarter.............................. 12.25 9.25 13.00 13.00
- ------------------
(1) Triangle Stock was qualified for quotation on Nasdaq National Market on
February 28, 1994. Prices prior to this date were 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 Triangle Stock and should not be taken to indicate the existence
of any established trading market.
On June 7, 1996, the last full business day preceding the public
announcement of the Merger, the last sale price for a share of Triangle Stock
was $14.00. That last sale price of Granville Stock prior to the announcement of
the Merger and known to management was $16.00 for 500 shares on June 7, 1996. On
__________, 1996, 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 Granville Stock since the announcement of the Merger and
known to management of Granville was $____ for _____ shares on ______ 1996.
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.
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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 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 Granville Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. To date, Granville has not paid any cash dividends. Like Triangle, the
payment of cash dividends by Granville 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 GRANVILLE - Granville Stock."
There can be no assurance that, in the absence of the consummation of the
Merger, dividends would be paid by Granville in the future.
At March 31, 1996, under dividend restrictions imposed by federal and
state laws, and without obtaining regulatory approvals, Triangle Bank could
declare approximately $21 million in cash dividends and Granville could declare
approximately $1.4 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. After giving effect to the Merger, at March 31, 1996,
Triangle Bank could declare approximately $22 million in cash dividends on a pro
forma basis, which amount in turn would be available to Triangle.
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The following table sets forth the cash dividends declared per share
for the indicated periods.
TRIANGLE(1) GRANVILLE
------------ ---------
1996
1st Quarter $ .07 $ - - -
2nd Quarter .08 - - -
1995
1st Quarter .04 - - -
2nd Quarter .04 - - -
3rd Quarter .06 - - -
4th Quarter .06 - - -
1994
1st Quarter - - - - - -
2nd Quarter - - - - - -
3rd Quarter .04 - - -
4th Quarter .04 - - -
(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.
-19-
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical consolidated
financial information for Triangle and Granville. This information has been
derived from the audited and unaudited consolidated financial statements of
Triangle and Granville, including the related notes thereto, incorporated herein
by reference and should be read in conjunction therewith. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
TRIANGLE BANCORP, INC.
SELECTED FINANCIAL DATA
(CONSOLIDATED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------- --------------------------------------------------------------
1996 1995 1995 1994 1993(1) 1992 1991(1)
---- ---- ---- ---- ---- ---- ----
AT PERIOD END (UNAUDITED)
Loans Outstanding - Net $ 563,867 $ 467,662 $ 537,907 $ 451,765 $ 371,421 $ 263,894 $ 243,511
Investment Securities Available for
Sale 114,665 85,574 95,655 96,837 -- -- --
Investment Securities Held to
Maturity 79,374 70,099 75,531 62,781 156,250 111,341 113,999
Total Assets 837,301 699,916 794,697 703,990 645,599 438,298 414,616
Total Deposits 709,760 606,459 662,010 602,062 552,199 379,290 355,010
Advances from FHLB 14,500 5,500 19,500 10,500 5,500 -- --
Subordinated Debentures 2,000 6,720 2,000 2,000
Shareholders' Equity 74,283 65,979 73,112 64,212 61,450 46,989 44,340
SUMMARY OF OPERATIONS
Net Interest Income $ 8,937 $ 8,189 $ 33,309 $ 29,316 $ 19,969 $ 17,944 $ 15,765
Provision for Loan Losses 310 140 275 1,218 2,069 1,841 2,001
Noninterest Income 1,977 1,659 7,650 5,560 6,141 4,442 3,982
Noninterest Expenses 6,810 8,337 29,346 27,760 19,630 17,157 15,463
Net Income 2,384 901 7,388 3,841 3,499 2,940 1,825
PER SHARE DATA
Net Income $ 0.24 $ 0.10 $ 0.77 $ 0.41 $ 0.46 $ 0.39 $ 0.26
Book Value 7.67 6.85 7.57 6.68 6.62 6.29 5.91
Cash Dividends 0.07 0.03 0.18 0.07 0.02 0.02 0.01
SELECTED RATIOS
Net Income to Average Assets 1.19% 0.53% 1.01% 0.58% 0.76% 0.69% 0.47%
Net Income to Average Equity 12.92% 5.60% 10.81% 6.07% 7.07% 6.41% 4.40%
Shareholders' Equity/Assets 8.87% 9.43% 9.20% 9.12% 9.52% 10.72% 10.69%
(1) In June 1991, Triangle Bank merged with Enterprise Bancorp, Inc. This
transaction was accounted for as a purchase and caused the total assets
of Triangle to increase by approximately $34 million. In addition, in
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.
-20-
GRANVILLE UNITED BANK
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
AT PERIOD END (UNAUDITED)
Loan Outstanding -
Net.................... $ 23,508 $ 18,718 $ 21,800 $ 16,077 $ 13,977 $ 11,001 $ 7,926
Investment Securities 29,546 7,223 32,249 5,590 -- -- --
Securities Held to
Maturity............... 754 23,367 754 13,118 16,948 16,610 17,599
Total Assets......... 60,092 55,829 59,410 38,462 35,532 32,317 31,539
Total Deposits....... 53,330 50,046 52,580 34,214 31,372 28,600 27,936
Shareholders' Equity. 6,307 5,530 6,295 4,094 3,854 3,498 3,316
SUMMARY OF OPERATIONS
Net Interest Income.. $ 505 $ 377 $ 1,792 $ 1,285 $ 1,244 $ 1,046 $ 628
Provision for Loan
Losses................. 2 -- 153 32 78 64 58
Noninterest Income... 71 68 442 198 137 116 244
Noninterest Expense.. 335 360 1,400 958 862 878 750
Net Income .......... 163 57 469 341 356 182 65
PER SHARE DATA
Net Income .......... $ 0.38 $ 0.15 $ 1.12 $ 1.03 $ 1.08 $ 0.55 $ 0.20
Book Value........... 14.67 12.86 14.64 12.41 11.68 10.60 10.05
Cash Dividends....... -- -- -- -- -- -- --
SELECTED RATIOS
Net Income to
Average Assets..... 1.10% 0.51% 0.87% 0.91% 1.08% 0.61% 0.25%
Net Income to
Average Equity..... 10.40% 4.80% 8.40% 8.37% 9.60% 5.31% 2.03%
Shareholders'
Equity/Assets...... 10.50% 9.91% 10.60% 10.64% 10.85% 10.82% 10.51%
-21-
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 Granville 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 Granville 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 Granville 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. See "PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
PER COMMON SHARE:
NET INCOME:
Triangle - historical:.................................. .24 .10 .77 .41 .46
Granville - historical.................................. .38 .15 1.12 1.03 1.08
Triangle/Granville pro forma combined:.................. .24 .09 .76 .42 .47
Granville pro forma equivalent.......................... .42 .16 1.32 .74 .83
CASH DIVIDENDS:
Triangle - historical................................... .07 .03 .18 .07 .02
Granville - historical.................................. 0 0 0 0 0
Triangle/Granville pro forma combined................... .06 .03 .17 .07 .02
Granville pro forma equivalent.......................... .11 .05 .30 .12 .04
At 3/31/96 At 12/31/95
---------- -----------
BOOK VALUE:
Triangle - historical................................... $ 7.67 $ 7.57
Granville - historical.................................. 14.67 14.64
Triangle/Granville pro forma combined................... 7.72 7.62
Granville pro forma equivalent.......................... 13.51 13.34
MARKET VALUE PER SHARE(1)(2):
At June 7, 1996
---------------
Triangle Stock.....................................................................................................$14.00
Granville Stock....................................................................................................$16.00
Equivalent pro forma Granville Stock (giving effect to Merger only).................................................$24.50
----------------------
1 The closing price for Triangle Stock is the closing sale price on the
Nasdaq National Market on the indicated dates. The price for Granville Stock is
the last sale price known to management.
2 Equivalent pro forma amounts are calculated by multiplying the
Triangle Stock market value by the Exchange Rate.
-22-
SPECIAL MEETING OF GRANVILLE SHAREHOLDERS
This Prospectus/Proxy Statement is being furnished to shareholders of
record of Granville Stock as of the close of business on _________, 1996, in
connection with the solicitation of proxies by the Board of Directors of
Granville for use at the Special Meeting to be held on ___________, 1996, at
____ p.m., local time, at ____________, _______________, Oxford, 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 Special Meeting. Each copy of this Prospectus/Proxy Statement being
furnished to the holders of record of Granville Stock is accompanied by a form
of proxy for use at the Special Meeting.
HOLDERS OF GRANVILLE 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
Granville United Bank Board of Directors has fixed the close of
business on _________, 1996 (the "Record Date") as the record date for the
determination of shareholders of Granville entitled to receive notice of and to
vote at the Special Meeting. As of the Record Date, there were ______ shares of
Granville Stock issued and outstanding held by approximately _____ holders of
record. Each share of Granville Stock issued and outstanding as of the Record
Date is entitled to one vote on each of the matters to be decided at the Special
Meeting. The affirmative vote of at least two-thirds of the total shares 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 March 31, 1996, the directors and executive officers of Granville
and their affiliates owned and were entitled to vote approximately ____% of the
Granville 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
Prospectus/Proxy Statement entitled "INFORMATION ABOUT GRANVILLE - Security
Ownership of Management and Principal Shareholders."
VOTING AND REVOCATION OF PROXIES
The shares of Granville Stock represented by properly executed proxies
received in time for the Special Meeting will be voted as directed by the
shareholders, unless 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 Special Meeting,
such proxies will be voted in the discretion of a majority of the proxy holders
named in the Granville proxy card. Management is not aware of any other business
to be presented at the Special Meeting.
Any shareholder may revoke a proxy at any time before it is voted by
attending and voting in person at the Special Meeting or by giving a written
notice of revocation to the Secretary of Granville
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provided such notice is actually received prior to the vote of shareholders. A
later dated proxy that is actually voted at the 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 Granville or with any
other person authorized to tabulate votes on behalf of Granville. Whether or not
you plan to attend the 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
Granville by mail, in person or by telephone or telegraph. Such persons will
receive no additional compensation for such services. Granville 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 Granville 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, Granville will pay all expenses of its solicitation of
proxies and of holding the Special Meeting. This Prospectus/Proxy Statement,
Notice of the Special Meeting and form of proxy, are first being mailed to
shareholders of Granville on or about _______________, 1996. (See "THE MERGER -
Terms of the Merger - Termination of the Agreement.")
RECOMMENDATION
The Board of Directors of Granville 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 Granville and its shareholders, and
unanimously recommends that Granville shareholders vote FOR approval of the
proposal to approve the Agreement and the Merger. In making its recommendation,
the Board of Directors of Granville has considered, among other things, the
Fairness Opinion of Equity Research that Triangle's proposal is fair to
Granville 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,
Article 13 and the Fairness Opinion of Equity Research which are attached hereto
as Appendices to this Prospectus/Proxy Statement. Granville shareholders are
urged to read the Agreement in its entirety.
PARTIES TO THE MERGER
TRIANGLE AND TRIANGLE BANK. 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 38
branches in 31 cities located throughout eastern North Carolina. As of March 31,
1996, Triangle had consolidated assets of $837 million, consolidated deposits of
$710 million, and consolidated
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shareholders' equity of $74 million. The executive offices of Triangle and
Triangle Bank are located at 4300 Glenwood Avenue, Raleigh, North Carolina 27612
(telephone number (919) 881-0455).
GRANVILLE. Granville is a North Carolina-chartered commercial bank
under the supervision of the Commissioner and the FDIC. Granville provides
full-service commercial and consumer banking services through three branches in
Oxford and Creedmoor, North Carolina. As of March 31, 1996, Granville had assets
of $60 million, deposits of $53 million, and shareholders' equity of $6 million.
The executive offices of Granville are located at 109 Hillsboro Street, Oxford,
North Carolina 27565-3211 (telephone number (919) 693-9000).
STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Agreement, at the Effective
Time, Granville will be merged with and into Triangle Bank. Triangle Bank will
be the surviving corporation resulting from the Merger, operating as a North
Carolina banking corporation under Triangle Bank's articles of incorporation and
bylaws as existing immediately prior to the Merger. Following the Merger,
Triangle Bank will succeed to all of the rights, assets, liabilities and
obligations of Granville by operation of law. At the Effective Time, the issued
and outstanding shares of Granville Stock will be converted into shares of
Triangle Stock at the Exchange Rate. See "- Terms of the Merger - Exchange
Rate." Each share of Granville Stock issued and outstanding at the Effective
Time will be automatically cancelled 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. Following the Effective Time, Triangle Bank will
continue to be a wholly-owned subsidiary of Triangle. See "- Terms of the
Merger."
Granville maintains a stock option plan for employees and a stock
option plan for directors (the "Granville Option Plans") under which it has
granted options to purchase shares of Granville Stock (the "Granville Options").
At March 31, 1996, Granville Options to purchase a total of 44,270 shares of
Granville Stock were outstanding. All such Granville 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 Granville Stock subject to the
Granville Option immediately prior to the Effective Time multiplied by the
Exchange Rate. 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 Granville
Stock will have voting rights and dividend rights with respect to that number of
shares of Triangle Stock for which the shares of Granville 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 Granville shareholders who
dissent from the Merger and seek appraisal rights, shares of Granville Stock
issued and outstanding immediately prior to the
-25-
Effective Time will be converted into shares of Triangle Stock at the Exchange
Rate as provided in the Agreement. The Exchange Rate is 1.75. As of __________,
1996, based on the closing sale price of Triangle Stock of $____ on the Nasdaq
National Market, 1.75 shares of Triangle Stock would be worth $____. Each
Granville shareholder will receive a number of shares of Triangle Stock equal to
the number of shares of Granville Stock owned by such shareholder multiplied by
the Exchange Rate. No fractional shares will be issued but Granville
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 Granville shareholder
(and each holder of a Granville 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 Granville Stock at the Effective Time (or upon the
exercise of the Granville 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
Granville 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 last trading day preceding the Closing
Date (or, in the case of a Granville Option, the date of exercise). As of
____________, 1996, the closing sale price of Triangle Stock on the Nasdaq
National Market was $_____. No Granville 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 Granville, the 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 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 1996.
Upon consummation of the Merger, Granville will cease to be a separate
entity, its offices will become offices of Triangle Bank, and Triangle Bank will
succeed to all rights, assets, liabilities, and obligations of Granville by
operation of law.
CONDUCT OF BUSINESS PENDING THE MERGER. The Agreement provides that,
during the period from June 7, 1996 (the date the Agreement was executed) to the
Effective Time, except as provided in the Agreement, Granville 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 and
Triangle Bank may enter into agreements to acquire other financial institutions
prior to the Effective Time.
-26-
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,
Granville 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 Granville'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 Triangle Bank 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; (iv)
receipt of the Fairness Opinion and confirmation of the Fairness Opinion
immediately prior to the Effective Time; (v) satisfaction of all requirements
for the shares of Triangle Stock to be issued in connection with the Merger to
be listed on the Nasdaq National Market as of the Effective Time; and (vi)
execution of an employment agreement and a deferred compensation agreement with
Billy N. Quick, Sr., President and Chief Executive Officer of Granville, as of
the Effective Time.
Triangle's and Granville'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 Granville (see " - Resale of Triangle Stock"); (ii)
receipt by Triangle of assurances in form and content satisfactory to Triangle
to the effect that the Merger may be treated as a "pooling-of-interests" for
accounting purposes; and (iii) that the aggregate of certain of Granville's
expenses associated with the Merger not exceed $60,000.
REQUIRED REGULATORY APPROVALS. The Merger and the transactions
contemplated by the Agreement are contingent upon receipt of the following
approvals:
Federal Reserve. Because Triangle Bank is 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
-27-
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 Bank 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 Triangle Bank and
Granville 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 Bank has made application to
the Commissioner and has no reason to believe that the Commissioner will not
approve the Merger.
Other Approvals. Triangle and Granville 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 approval 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, Triangle Bank and
Granville at any time prior to the Effective Time, and whether before or after
approval by Granville'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
Granville's shareholders, no such amendment may change the Exchange Rate without
approval of such change by Granville'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 Granville's shareholders, upon the mutual agreement of
Triangle, Triangle Bank and Granville, and may be terminated by either Triangle
or Granville 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) Granville'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
March 31, 1997 (or such later date as shall be mutually agreeable to Triangle,
Triangle Bank and Granville).
Additionally, Triangle and Triangle Bank may terminate the Agreement
if, based on the advice of their legal counsel or consultants, they believe
Granville or Triangle Bank as the successor to Granville, 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
-28-
any person of any "hazardous substance" (as defined in the Agreement) on, from
or relating to any real property belonging to Granville or serving as collateral
for any of Granville'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).
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.
Granville. Since its organization in 1990, Granville has operated as a
community-oriented commercial bank serving Granville County, North Carolina. The
community-oriented banking philosophy of Granville generally has allowed it to
compete effectively and profitably with the other banking institutions in its
local market. Since Granville's inception, however, competition has dramatically
increased with other types of financial institutions offering services
traditionally offered only by banks. This increased competition has created an
increase in public demand for a broader range of consumer services from
community banking institutions. Providing such services and products to
customers requires significant amounts of technology, in terms of both equipment
and software. Additionally, since 1991 the federal banking agencies have imposed
many additional regulations on banks. The increased regulatory oversight has
burdened Granville due to its small size relative to many of its competitors.
The increase in competition has been accelerated in the last few years
through the consolidation in the banking industry in North Carolina whereby many
smaller financial institutions have been acquired by larger state-wide or
regional banks. Given the rapid increase in technology and the greater size of
many of Granville's competitors, Granville would have to expend significant
amounts of capital to invest in the equipment and software necessary to remain
competitive.
Given Granville's attractive franchise in Granville County, which is
the northern extension of the greater Raleigh metropolitan area, Triangle became
interested in acquiring Granville to expand its operations into Granville
County. During April 1996, Triangle approached Granville to indicate that, if
Granville chose to consider being acquired, Triangle would be interested in
discussing a possible combination transaction. In early May 1996, Triangle's
President met with Granville's Board of Directors to discuss a possible
combination with Triangle.
The Board of Directors of Granville recognized that remaining an
independent institution may not best serve the long-term interests of Granville
and its shareholders. The increased competition to provide cost-effective
services and products is a challenge to Granville which has fewer resources than
many of its competitors in its market area. Further, Granville Stock is very
lightly traded and, therefore, Granville's shareholders have limited ability to
sell their Granville Stock. Granville's Board of Directors believes the Merger
would give shareholders of Granville the opportunity for growth in a
-29-
widely traded stock and ownership in a company with a good history of earnings
and that had recently begun paying cash dividends. Granville has not paid cash
dividends to date. Further, the Board of Directors considered it important to
recognize the contribution of its employees to the profitability of Granville.
As the acquisition would be a new market for Triangle, the Merger would offer
the best alternative to maintaining Granville's existing branch and employee
structure rather than an acquisition by a bank with existing branches and
personnel in Granville's market area.
During the last week of May 1996 and the first week of June 1996, a
proposed merger agreement among Granville, Triangle and Triangle Bank was
negotiated. During this time, the Board engaged a financial advisor, Equity
Research, to provide it assistance in evaluating and opining, from a financial
point of view, as to the fairness to Granville's shareholders of the final,
definitive offer by Triangle. On June 5, 1996, the Board of Directors considered
the proposed agreement. At this meeting, the Granville Board considered the
terms of the proposed agreement, the strategic and financial goals of Granville
and the likelihood that it would achieve those goals, and the financial and
strategic goals of Triangle, the likelihood it would achieve those goals and the
possible, resulting enhancement of the market value of Triangle Stock, and the
degree of possibility that significantly better proposals could be obtained from
other companies. Based on these considerations and the advice of legal counsel,
the Board concluded that a merger with Triangle upon the terms of the proposed
agreement would be in the best interests of Granville's shareholders and
unanimously approved the adoption of the Agreement. After its consideration of
the Agreement and other matters described below, Equity Research delivered to
the Board the Fairness Opinion dated June 24, 1996. The Fairness Opinion was
reissued to Granville on _____, 1996 for inclusion in this Prospectus/Proxy
Statement.
Triangle. As a result of Triangle's acquisitions during the last three
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 Bank will expand its market area
into Granville County, the northern extension of the greater Raleigh area of
North Carolina.
REASONS FOR THE MERGER.
Granville. In reaching its conclusion that the Merger is fair to, and
in the best interests of, Granville's shareholders, the Board of Directors of
Granville consulted with financial, legal, accounting and other advisors, as
well as Granville's management, and considered a number of factors. The Board
did not assign any relative or specific weight to the factors considered. These
factors included:
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(i) the Board's review of the business, operations, earnings and
financial condition of Granville and Triangle, the enhanced
opportunities for operating efficiencies, expanded customer
service, competitiveness and growth that the Merger will make
possible, and the respective contributions the parties would
bring to a combined institution;
(ii) a variety of factors affecting and relating to the overall
strategic focus of Granville and Triangle, including the
similarity in business outlook, approach and corporate
cultures of Granville and Triangle, the business line
diversity that the combination of Granville and Triangle would
allow and the geographic proximity and similarities of
Triangle's existing market areas to Granville's existing
market areas;
(iii) the expectation that the Merger generally will be a tax-free
transaction to Granville and its shareholders (see "-Certain
Federal Income Tax Consequences"); and
(iv) the current and prospective economic and competitive
environments facing financial institutions, including
Granville, and the likelihood of an intensification of the
consolidation trend in the financial institutions industry
resulting from federal "interstate banking" legislation,
near-term economic factors and the impact of a possible
general decline in the securities markets' valuation of
community banks similar to Granville.
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
Granville's geographic market that Triangle considers to be an attractive area
for expansion. Triangle currently operates no branches in Granville County,
North Carolina, the northern extension of the greater Raleigh area. 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 Granville's existing
deposit base, established customer relationships and proven management and
staff.
RECOMMENDATION OF THE GRANVILLE BOARD OF DIRECTORS
FOR THE REASONS DESCRIBED ABOVE, THE GRANVILLE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF GRANVILLE VOTE FOR APPROVAL OF
THE AGREEMENT.
OPINION OF FINANCIAL ADVISOR
Equity Research was retained as financial advisor to Granville in
connection with the Merger and, on June 24, 1996, rendered an opinion to
Granville's Board of Directors that, as of that date, the Exchange Rate was
fair, from a financial point of view, to Granville's shareholders. Equity
Research did not participate in the negotiations between Granville and Triangle.
The full text of Equity Research's Fairness Opinion is included as Appendix II
to this Prospectus/Proxy Statement and should be read in its entirety with
respect to the procedures followed, assumptions made, matters considered
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and the qualifications and limitations on the review undertaken by Equity
Research in connection with the Fairness Opinion.
Equity Research's Fairness Opinion addresses only the fairness, from a
financial point of view, of the Exchange Rate. It does not address Granville's
underlying business decision to effect the Merger, nor does it constitute a
recommendation to any Granville shareholder as to how such shareholder should
vote with respect to the Merger or as to any other matter.
Equity Research's Fairness Opinion was one of many factors taken into
consideration by Granville's Board of Directors in making its determination to
approve the Agreement and the receipt of Equity Research's Fairness Opinion is a
condition precedent to Granville's consummation of the Merger. The Fairness
Opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for Granville or the effect of
any other business combination in which Granville 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
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 which
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"
as well as fielding questions about Triangle as discussed above.
Equity Research was selected by Granville 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 Granville or Triangle for its own account or for its
clients.
In connection with the rendering of the Fairness Opinion, Equity
Research, among other things, (i) reviewed the financial terms of the Agreement;
(ii) reviewed drafts of the Prospectus/Proxy Statement; (iii) reviewed and
analyzed the financial position and performance of Granville and Triangle as
reflected in certain information provided to it for this purpose by their
respective managements; (iv) reviewed historical stock prices of Granville 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
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financial comparison of the two companies to one another, as well as to other
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 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 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 June 24, 1996 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 Granville. 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 Resarch identified 24 transactions which
involved selling companies that it believed had size, financial and other
characteristics that were, on the whole, similar to Granville. 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 those paid
in the Granville acquisition. Equity Research used financial data as of March
31, 1996 for purposes of calculating Granville's respective ratios and a price
of $14.00 per share (the closing price on June 7, 1996) for Triangle Stock for
purposes of calculating the value of the transaction to Granville's
shareholders. The bid and asked prices of Triangle Stock on June 24, 1996 were
$13.50 and $14.25, respectively.
The range of multiples to book value for the 24 above mentioned
transactions was from 111% of book value to 240% of book value. The median price
paid was 177% of book value. The comparable figure for Granville was 167%,
slightly less than the median.
On the basis of tangible book value, the range of multiples was the
same as for the multiples of stated book value - from a low of 111% of tangible
book value to a high of 240% of tangible book value. The fact that the range was
the same as the multiple of book value reflects the fact that neither of the two
banks represented by the end-points of the range had any intangible assets,
resulting in book value and tangible book value being the same amount. The
median multiple of tangible book value for the 24 transactions was 178%. The
comparable figure for Granville was 181%, slightly higher than the median.
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Likewise, the multiple of trailing 12 month earnings was slightly
higher for Granville than for the median of the 24 transactions. While the
median price paid on the 24 acquisitions was 17.5 times trailing 12 month
earnings, it was 17.9 times for Granville. The price to be paid in the Granville
transaction as a percentage of assets and deposits was slightly lower than the
median, while it was higher on the basis of the tangible book premium (excess of
the consideration to be received in the transaction less tangible book value) as
a percentage of core deposits. For the 24 transactions, the median percentage of
deposits was 20.8% versus 19.8% for Granville. The median price paid for the 24
transactions as a percentage of assets was 18.6% versus 17.5% for Granville. The
median tangible book premium as a percentage of core deposits was 10.1% for the
24 transactions, versus 10.5% for Granville. While not all of the multiples in
the Granville 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 June 20, 1996. Granville 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 $15.00 at
March 31, 1996 and $14.25 at June 20, 1996, increases of more than 175% and
161%, respectively. 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 12.0% between September 30,
1991 and June 20, 1996 (versus 22.3% 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 March 31, 1996 (the most recently
published data available), the index increased 106% (versus Triangle's 175%
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 compound growth rate in the index between
September 30, 1991 and June 20, 1996 was 20.9%, slightly less than Triangle's
22.3% annual return over the same period.
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COMPARISON OF GRANVILLE AND TRIANGLE TO THE INDUSTRY
Equity Research also compared Granville 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 a multiple of earnings and book value which is slightly higher than
the median of the group, although the multiples were nearly identical 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 25 banks used in the analysis. Reserve coverage,
as measured by the ratio of the allowance for loan losses to total nonperforming
loans, was significantly higher than the median. Profitability measures such as
return on average assets and return on average equity were marginally below the
medians.
Equity Research also compared Granville to a set of institutions,
although in accordance with Granville's smaller size, these instituions were
generally smaller than those with which Triangle was compared. Granville had a
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 39 institutions included in the sample. Based on a
pre-announcement price for Granville of $16.00 per share, the price to earnings
ratio was lower than the median for the group, as was the price to book value.
Based on the $24.50 per share price offered to Granville's shareholders
(calculated as Triangle's stock price of $14.00 per share at the time of the
announcement times the exchange ratio of 1.75), the multiples of earnings and
book value would exceed the medians for the group.
COMPARISON OF INVESTMENT AND OTHER CHARACTERISTICS OF GRANVILLE AND TRIANGLE
Equity Research also considered as part of its analysis differences in
the operating performance, financial condition and the investment
characteristics of Granville 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 the
banks from 1993 through 1995, as well as for the quarters ended March 31, 1996
and March 31, 1995. Among Equity Research's conclusions were that both banks had
experienced rapid growth in earnings, although Triangle's earnings per share had
had higher sustained growth. Granville's growth in deposits and loans were
higher in the 1993 - 1995 time period, while Triangle's growth rates were higher
in the quarter ended March 31, 1996. Granville generally had a higher percentage
of deposits in its markets than did Triangle; however, most of the demographic
measures Equity Research considered were superior for Triangle's primary
markets. Triangle also had a more liquid stock, as defined by trading volume,
superior historical appreciation and paid a dividend. Granville did not pay a
dividend.
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PRO FORMA TRANSACTION ANALYSIS
Equity Research also considered certain pro forma effects on Triangle
resulting from the merger with Granville. 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 Granville 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, Granville will be merged into
Triangle's subsidiary, Triangle Bank. The transaction will be a tax-free
stock-for-stock exchange which is structured as an exchange of 1.75 shares of
Triangle Stock for each share of Granville Stock. Based on Granville's total
outstanding number of shares as of March 31, 1996 (430,000) and an exchange
ratio of 1.75, the total number of shares anticipated to be issued in the Merger
is 752,500. This number of shares would represent approximately 7.2% of the
total outstanding stock of Triangle.
RELATIVE CONTRIBUTION
Equity Research also analyzed the relative contributions of Granville
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
March 31, 1996 and December 31, 1995. Equity Research also analyzed the
contribution to projected 1996 earnings of the pro forma combined companies.
Granville contributed 6.7% of assets as of March 31, 1996. Granville contributed
7.0% of deposits, 4.0% of net loans and 7.8% of equity. For the three months
ended March 31, 1996, Granville would have contributed 6.4% to earnings.
Granville would contribute 6.3% to projected earnings for fiscal 1996. Equity
Research excluded from these projections any restructuring charges and
transaction costs since these amounts would generally be nonrecurring. While
Granville would be contributing these percentages of assets, equity, deposits
and earnings, it would own approximately 7.2% 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
Granville's stock price. As was stated previously, trading activity in
Granville's stock was quite limited with the exception of approximately 100,000
shares which were sold through a stock offering in 1995 at $13.00 per share.
According to management at Granville, the most recent trade of which it was
aware (which preceded the announcement of the transaction) occurred at $16.00
per share. Based on the price of Triangle Stock on the date of the announcement
($14.00), the value of the consideration offered to Granville's shareholders was
$24.50 per share, which would imply a control premium of 53.1% from the $16.00
price.
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Numerous studies have been performed to quantify the premiums paid in
control transactions involving publicly traded stocks. While Equity Research
believes Granville'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 Granville exceeds 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 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 Granville's and
Triangle's performance, as well as other matters, many of which are beyond
Granville'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 the letter agreement dated June 6, 1996, Granville engaged
Equity Research to render the Fairness Opinion and to pay Equity Research
$12,000 for its services. Granville 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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax consequences of
the Merger generally applicable to Granville and its shareholders under the
Code. It does not include consequences of state, local or other tax laws or
special consequences to particular Granville shareholders having special
situations. Accordingly, each Granville 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 and
Granville have 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 reorganization within the `
meaning of Section 368(a) of the Code;
(ii) The Merger will not give rise to any income to, and no
gain or loss will be recognized by, Triangle or Granville;
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(iii) The conversion of Granville Stock into Triangle Stock
will not give rise to any income to, and no gain or loss will be recognized by,
Granville shareholders except with respect to any cash payments in lieu of
fractional shares or dissenter's rights (see subparagraphs (vi) and (vii)
below);
(iv) The aggregate tax basis of the shares of Triangle Stock
received by a Granville shareholder will be equal to the tax basis of the shares
of Granville Stock converted into such shares of Triangle Stock;
(v) The holding period of the shares of Triangle Stock
received by a Granville shareholder will include the holding period of the
shares of Granville 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;
(vi) The payment of cash to Granville 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"). If the redemption meets one of the four tests set forth in
Section 302, the shareholder will be treated as if he or she sold such
fractional shares of Triangle Stock for the amount of cash received, and such
shareholder will recognize gain (or loss) to the extent that the amount of the
cash received exceeds (or is less than) the tax basis allocable to such
fractional shares. 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. If none of the four tests provided in Section 302
is met, the assumed redemption will be treated as a dividend, and the
shareholder will likely be required to recognize as ordinary income the full
amount of the cash received; and,
(vii) The receipt of cash by a dissenting Granville
shareholder will be treated as received by that shareholder as a distribution by
Granville in redemption of such shareholder's common stock, subject to the
provisions and limitations of Section 302. If the redemption meets one of the
four tests set forth in Section 302, the shareholder will be treated as if he or
she sold his or her shares of Granville Stock for the amount of cash received,
and such shareholder will recognize gain (or loss) to the extent that the amount
of the cash received exceeds (or is less than) the tax basis applicable to his
or her shares of common stock. Any gain or loss recognized will be capital gain
or loss, assuming that the shares of Granville Stock are a capital asset in the
hands of the shareholder. If none of the four tests provided in Section 302 is
met, the assumed redemption will be treated as a dividend, and the Granville
shareholder will likely be required to recognize as ordinary income the full
amount of the cash received.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN OF THE ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. GRANVILLE 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.
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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 Granville 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 Granville 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 Granville 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, shares held by Granville shareholders who
exercise their Dissenters' Rights, and the shares of Triangle Stock or Granville
Stock repurchased by Triangle or Granville 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 their 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, one
member of the Board of Directors of Granville, selected by Triangle in its sole
discretion, will be appointed to the Board of Directors of Triangle Bank. Such
persons shall be compensated in accordance with Triangle's then current policies
and procedures. The remaining members of the Board of Directors of Granville,
other than those who choose not to serve, will be appointed to the Granville
County advisory board of Triangle Bank for a period of one year following the
Effective Time. Each such person shall be compensated in accordance with
Triangle Bank's then current policies and procedures. In addition, consistent
with Triangle's practices involving other advisory directors of Triangle Bank,
the member of the Board of Directors of Granville who is elected to the Triangle
Bank Board of Directors and those Granville directors who choose to serve on the
Granville County advisory board of Triangle Bank will be granted at the
Effective Time options to purchase 250 shares of Triangle Stock at an exercise
price equal to the fair market value of Triangle Stock which, pursuant to
Triangle's Non-Qualified Stock Option Plan, will be equal to the mean of the
asked and bid prices of Triangle Stock as reported on the Nasdaq National Market
at the Effective Time.
OFFICERS. At the Effective Time, Triangle Bank will enter into an
employment agreement and a deferred compensation agreement with Billy N. Quick,
Sr., President of Granville. Pursuant to the employment agreement, Mr. Quick
will serve as an Executive Vice President of Triangle Bank for a term of five
years at an annual base salary of $105,000. At each anniversary date of the
employment agreement, the term automatically shall be extended for an additional
one year unless either party gives written notice to the other of their
intention not to extend the agreement, which notice must be given at least three
months prior to the next anniversary date. During any period in which Mr. Quick
is receiving compensation from Triangle Bank, Mr. Quick will not compete with
Triangle Bank in Granville County, North Carolina or any county contiguous to
Granville County. The deferred
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compensation agreement will commence upon either the end of the five-year term
of the employment agreement or Mr. Quick's retirement from employment with
Triangle Bank after the end of the five-year employment agreement term but prior
to Mr. Quick's obtaining age 65. The deferred compensation agreement will run
for ten years over which time Mr. Quick will be paid an aggregate of $300,000 in
equal monthly installments of $2,500. In addition, consistent with Triangle's
practices involving other officers of Triangle Bank, Mr. Quick will be granted
at the Effective Time options to purchase 7,500 shares of Triangle Stock at an
exercise price equal to the fair market value of Triangle Stock which, pursuant
to Triangle's Employee Stock Option Plan, will be equal to the mean of the ask
and bid prices of Triangle Stock as reported on the Nasdaq National Market at
the Effective Time.
To assist in the transition after the Merger and to ensure their continued
employment with Triangle Bank after the Merger, Triangle has agreed to certain
compensation arrangements with five other officers of Granville. In the event
Harriett D. Watkins, Kristy B. Stainback or Reca L. Callis is terminated by
Triangle Bank for any reason other than "cause" during the first six months
after the Merger, Triangle Bank will pay a severance payment to Ms. Watkins in
the amount of $30,500, and to each of Ms. Stainback and Ms. Callis in the amount
of $11,000. In the event Ms. Watkins, Ms. Stainback or Ms. Callis is terminated
by Triangle Bank for any reason other than "cause" during the second six months
after the Merger, Triangle Bank will pay a severance payment to Ms. Watkins in
the amount of $20,000 and to each of Ms. Stainback and Ms. Callis in the amount
of $8,000. At the Effective Time, Triangle Bank will employ Lionel B. Burnette
for a period of 90 days from the Effective Time for which service Triangle Bank
will pay Mr. Burnette $25,000 at the end of the 90-day period. At the Effective
Time Triangle Bank will employ Clarice B. Smiley for a period of 60 days from
the Effective Time and for such service Triangle Bank shall pay Ms. Smiley
$10,000 at the end of such 60-day period.
EMPLOYEES. Subject to the availability of suitable positions, Triangle
Bank shall make a good faith effort to offer employment with Triangle Bank to
all employees of Granville employed by Granville immediately prior to the
Effective Time. If any employee is not retained by Triangle Bank at the
Effective Time, Triangle Bank will pay to each employee who has been
continuously employed as a full-time employee by Granville for at least one year
prior to the Effective Time a severance payment in an amount equal to one week's
salary or wages for each year of full prior continuous service with Granville,
provided that any severance payment shall consist of the minimum of three weeks'
salary or wages, but in no event shall an employee who is not an officer receive
less than one month's salary or wages and an officer receive less than two
months' salary or wages. Each employee of Granville at the Effective Time who
has not been continuously employed as a full-time employee of Granville for at
least one year prior to the Effective Time and who is not offered employment
with Triangle Bank shall receive a severance payment in an amount equal to two
weeks' salary or wages. No payment of severance compensation shall be made to
any person who does not remain an employee of Granville at the Effective Time.
The Agreement provides that Granville'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
Granville (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 or Triangle Bank, (ii) in the
event a Granville employee benefit plan is terminated, the rights and benefits
of a Granville employee thereunder shall become fully
-40-
vested, with each participating Granville 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
or Triangle Bank employee benefit plan, on the same basis and applying the
eligibility standards as would apply to the employees of Triangle or Triangle
Bank as if such employee's prior service to Granville had been performed on
behalf of Triangle or Triangle Bank for qualification, participation and vesting
(but not for funding purposes), and (iii) in the event a Granville employee
benefit plan is merged into a Triangle or Triangle Bank 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 or Triangle
Bank. Triangle and Triangle Bank have agreed that the overall level of benefits
offered or provided to the employees of Granville under the Triangle or Triangle
Bank benefit plans will be no less than that offered or provided to the present
employees of Triangle or Triangle Bank, and that for purposes of qualification,
participation and vesting, the employees of Granville shall receive credit for
their periods of service to Granville.
GRANVILLE OPTIONS. Under the Agreement at the Effective Time, all
rights with respect to Granville 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 Granville's
obligations with respect to each such Granville Option, in accordance with the
terms of the applicable Granville Option Plan and the related option agreements.
From and after the Effective Time, (i) each Granville Option assumed by Triangle
may be exercised solely for shares of Triangle Stock, (ii) the number of shares
of Triangle Stock subject to each Granville Option will be equal to the number
of shares of Granville Stock subject to such Granville Option immediately prior
to the Effective Time multiplied by the Exchange Rate, and (iii) the per share
exercise price under each such Granville 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 Granville Option and the per share exercise price will, in accordance with
the terms of the Granville 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, Triangle will indemnify the
present and former officers and directors of Granville against liabilities from
actions in their official capacities as directors and officers of Granville to
the same extent Triangle indemnifies its directors and officers.
EXPENSES AND FEES
The Agreement provides that Granville, Triangle and Triangle Bank 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. In addition,
fees paid by Granville to Equity Research, Granville's accountants and
Granville's legal counsel shall not exceed $20,000 for each entity.
-41-
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 Granville 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
GRANVILLE 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 Granville 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 Granville 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 Granville certificates, Granville 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 Granville Stock has been converted; provided,
however, that no such dividends or other distributions will be paid to the
holders of such Granville certificates unless and until their Granville
certificates are surrendered. Upon surrender of each Granville 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 Granville certificates have been lost, stolen or
destroyed will be required to furnish evidence satisfactory to Triangle of
ownership of such Granville 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 Granville of the shares of Granville 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 cancelled and exchanged for a certificate representing
shares of Triangle Stock pursuant to the terms of the Agreement.
-42-
Neither Granville, Triangle, the Exchange Agent nor any other person
will be liable to former holders of Granville 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
Granville prior to the Effective Time. "Affiliates" are generally defined as
persons who control, are controlled by, or are under common control with
Granville and generally include directors, executive officers, and any current
shareholder of Granville who owns an amount of Granville Stock equal or greater
than 10% of the issued and outstanding shares of Granville Stock. Persons deemed
to be affiliates of Granville 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
Granville 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 Granville 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 Prospectus/Proxy Statement 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 Granville
shareholder under Article 13 of the NCBCA. Any Granville 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 III, and
should also consult with his or her attorney. No further notice of the events
giving rise to dissenters' rights or any steps associated therewith will be
furnished to Granville 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 III,
provides in detail the procedure which must be followed by any Granville
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 Granville shareholder may give to Granville 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 Granville
should be mailed to Billy N. Quick, Sr., President, Granville
United Bank, 109 Hillsboro Street, Oxford, North
-43-
Carolina 27565-3211, telephone (919) 693-9000. 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 GRANVILLE 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, Granville
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 Granville 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 sent 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, Granville shall offer to pay each dissenter
who has complied with the requirements of the statute, the
amount Granville 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 Granville'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 Granville'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 Granville is
less than the fair value of his or her shares or the interest
was incorrectly calculated or Granville fails to make payment
within 30 days after the dissenting shareholder accepts its
offer, the dissenting shareholder must notify, in writing,
Granville 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 Granville of its failure to act
promptly. Such notice must be given within 30 days after
Granville 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 Granville's offer or (ii) assume the status of a
nondissenting shareholder.
-44-
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma combined condensed balance sheets as
of March 31, 1996 and the unaudited pro forma combined condensed statements of
income for the three months ended March 31, 1996 and for the years ended
December 31, 1995, 1994 and 1993 combine the historical financial statements of
Triangle and Granville and are presented under the "pooling-of-interests" method
of accounting for business combinations. The pro forma combined condensed
balance sheets give effect to the Merger as if the Merger had occurred on March
31, 1996. The pro forma combined condensed statements of income give effect to
the Merger as if the Merger had occurred at the beginning of each of the periods
presented. The "pooling-of-interests" method of accounting requires all assets
and liabilities to the carried at their book values. The Merger represents a
stock exchange whereby Granville shareholders will receive 1.75 shares of
Triangle Stock for each share of Granville Stock.
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, 1996 or as of the
beginning of 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 Merger. Current estimates of non-recurring expenses for 1996
are $300,000. 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 Granville
and their unaudited interim financial statements incorporated herein by
reference.
-45-
TRIANGLE BANCORP, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEETS
AT MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS)
TRIANGLE GRANVILLE ADJUSTMENTS COMBINED PRO FORMA
Assets
Cash and Due From Banks.......... $ 33,424 $ 2,094 $ -- $ 35,518
Investment Securities............ 194,039 30,300 -- 224,339
Federal Funds Sold............... -- 2,065 -- 2,065
Loans............................ 566,142 23,508 -- 589,650
Premises and Equipment........... 16,135 626 -- 16,761
Intangible Assets................ 11,812 492 -- 12,304
Other Assets..................... 15,749 1,007 -- 16,756
---------- ---------- ----------- ----------
Total Assets..................... $ 837,301 $ 60,092 $ -- $ 897,393
========== ========== =========== ==========
Liabilities
Demand Deposits.................. $ 202,857 $ 5,087 $ -- $ 207,944
Savings Deposits................. 147,343 18,224 -- 165,567
Time Deposits.................... 359,561 30,019 -- 389,580
---------- ---------- ----------- ----------
Total Deposits................... 709,761 53,330 -- 763,091
---------- ---------- ----------- ----------
Borrowed Money................... 43,441 -- -- 43,441
Other Liabilities ............... 9,817 455 -- 10,272
---------- ---------- ----------- ----------
Total Other Liabilities.......... 53,258 455 -- 53,713
---------- ---------- ----------- ----------
Shareholders' Equity
Common Stock................... 56,824 2,150 2,539(1) 61,513
Surplus........................ -- 2,539 (2,539)(1) --
Retained Earnings ............ 17,651 1,439 -- 19,090
Unrealized Loss on
Securities AFS................ (193) 179 -- (14)
---------- ---------- ----------- ----------
Total Stockholders'
Equity......................... 74,282 6,307 -- 80,589
---------- ---------- ----------- ----------
Total Liabilities and
Capital........................ $ 837,301 $ 60,092 $ -- $ 897,393
========= ========= ========== ==========
(1) Adjustment reflects the movement of surplus to common stock as Triangle
Stock has no par value.
-46-
TRIANGLE BANCORP, INC.
PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
TRIANGLE GRANVILLE ADJUSTMENTS COMBINED
Interest Income
Loans........................... $ 13,260 $ 535 $ - $ 13,795
Federal Funds Sold.............. 28 6 - 34
Investment Securities........... 2,631 512 - 3,143
---------- ----------- --------- ----------
Total Interest Income............. 15,919 1,053 - 16,972
Interest Expense
Deposits........................ 6,563 546 - 7,109
Borrowed Funds.................. 419 2 - 421
---------- ----------- --------- ----------
Total Interest Expense............ 6,982 548 - 7,530
---------- ----------- --------- ----------
Net Interest Income before
Provision for Loan Losses......... 8,937 505 - 9,442
Provision for Loan Losses......... 310 2 - 312
---------- ----------- --------- ----------
Net Interest Income after
Provision for Loan Losses......... 8,627 503 - 9,130
Other Operating Income............ 1,977 71 - 2,048
Other Operating Expenses.......... 6,810 335 - 7,145
---------- ----------- --------- ----------
Net Income Before
Income Taxes.................... 3,794 239 - 4,033
Income Taxes...................... 1,410 76 - 1,486
---------- ----------- --------- ----------
Net Income........................ $ 2,384 $ 163 $ - $ 2,547
========== =========== ========= ==========
Earnings Per Share................ $ 0.24 $ 0.38 $ - $ 0.24
========== =========== ========= ==========
-47-
TRIANGLE BANCORP, INC.
PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
TRIANGLE GRANVILLE ADJUSTMENTS COMBINED
Interest Income
Loans........................ $ 48,215 $ 1,911 $ - $ 50,126
Federal Funds Sold........... 383 88 - 471
Investment Securities........ 9,729 1,915 - 11,644
----------- ------------ -------- ------------
Total Interest Income.......... 58,327 3,914 - 62,241
----------- ------------ -------- ------------
Interest Expense
Deposits..................... 23,546 2,122 - 25,668
Borrowed Funds............... 1,472 - - 1,472
----------- ------------ -------- ------------
Total Interest Expense......... 25,018 2,122 - 27,140
----------- ------------ -------- ------------
Net Interest Income
before Provision
for Loan Losses............... 33,309 1,792 - 35,101
Provision for
Loan Losses................... 275 153 - 428
----------- ------------ -------- ------------
Net Interest Income
after Provision for
Loan Losses.................. 33,034 1,639 - 34,673
Other Operating Income......... 7,650 442 - 8,092
Other Operating Expenses....... 29,346 1,400 - 30,746
----------- ------------ -------- ------------
Net Income Before
Income Taxes................. 11,338 681 - 12,019
Income Taxes................... 3,950 212 - 4,162
----------- ------------ -------- ------------
Net Income .................... $ 7,388 $ 469 $ - $ 7,857
========== ============ ======== ==========
Earnings Per Share............. $ 0.77 $ 1.12 - $ 0.76
========== ============ ======== ==========
-48-
TRIANGLE BANCORP, INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
TRIANGLE GRANVILLE ADJUSTMENTS COMBINED
Interest Income
Loans.................................. $ 38,707 $ 1,312 $ - $ 40,019
Federal Funds Sold..................... 466 43 - 509
Investment Securities.................. 8,735 1,202 - 9,937
-------- --------- -------- --------
Total Interest Income.................... 47,908 2,557 - 50,465
-------- --------- -------- --------
Interest Expense
Deposits............................... 16,986 1,271 - 18,257
Borrowed Funds......................... 1,606 1 - 1,607
-------- --------- -------- --------
Total Interest Expense................... 18,592 1,272 - 19,864
-------- --------- -------- --------
Net Interest Income
before Provision
for Loan Losses......................... 29,316 1,285 - 30,601
Provision for
Loan Losses............................. 1,218 32 - 1,250
-------- --------- -------- --------
Net Interest Income
after Provision for
Loan Losses............................ 28,098 1,253 - 29,351
Other Operating Income................... 5,560 198 - 5,758
Other Operating Expenses................. 27,760 958 - 28,718
-------- --------- -------- --------
Net Income Before
Income Taxes........................... 5,898 493 - 6,391
Income Taxes............................. 2,057 152 - 2,209
-------- --------- -------- --------
Net Income .............................. $ 3,841 $ 341 $ - $ 4,182
======== ========= ======= ========
Earnings Per Share....................... $ 0.41 $ 1.03 $ - $ 0.42
======== ========= ======= ========
-49-
TRIANGLE BANCORP, INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA TRIANGLE GRANVILLE ADJUSTMENTS COMBINED
Interest Income
Loans.................................. $ 25,676 $ 1,165 $ - $ 26,841
Federal Funds Sold..................... 234 44 - 278
Investment Securities.................. 6,944 1,213 - 8,157
-------- -------- -------- ---------
Total Interest Income.................... 32,854 2,422 - 35,276
-------- -------- -------- ---------
Interest Expense
Deposits............................... 12,159 1,176 - 13,335
Borrowed Funds......................... 726 2 - 728
-------- -------- -------- ---------
Total Interest Expense................... 12,885 1,178 - 14,063
-------- -------- -------- ---------
Net Interest Income
before Provision
for Loan Losses......................... 19,969 1,244 - 21,213
Provision for
Loan Losses............................. 2,069 78 - 2,147
-------- -------- -------- ---------
Net Interest Income
after Provision for
Loan Losses............................ 17,900 1,166 - 19,066
Other Operating Income................... 6,141 137 - 6,278
Other Operating Expenses................. 19,630 862 - 20,492
-------- -------- -------- ---------
Net Income Before
Income Taxes........................... 4,411 441 - 4,852
Income Taxes............................. 912 85 - 997
-------- -------- -------- ---------
Net Income............................... $ 3,499 $ 356 $ - $ 3,855
======== ======== ======== =========
Earnings Per Share....................... $ 0.46 $ 1.08 $ - $ 0.47
======== ======== ======== =========
-50-
CAPITALIZATION
The following table sets forth: (i) the unaudited historical
capitalization of Triangle as of March 31, 1996; (ii) the unaudited historical
capitalization of Granville of March 31, 1996; and (iii) the unaudited pro forma
capitalization of Triangle and Granville assuming the Merger had been
consummated on March 31, 1996. This information has been based on, and should be
read in conjunction with, Triangle's and Granville's interim unaudited financial
statements, including the related notes thereto, which are incorporated by
reference in this Prospectus/Proxy Statement. (See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.")
Pro Forma
Triangle Granville Adjustments Combined1
(In thousands)
Shareholders' Equity
Capital stock $ 56,824 $ 2,150 $ 2,539 $ 61,513
Additional paid-in capital 0 2,539 (2,539) 0
Retained earnings 17,651 1,439 - 19,090
Unrealized loss on securities AFS (193) 179 - (14)
---------- -------- ------- --------
Total shareholders' equity $74,282 $6,307 - $ 80,589
======= ====== ======= ========
- --------------------------------
1 Assumes that the Merger became effective March 31, 1996 and that all
430,000 currently outstanding shares of Granville Stock were converted into
752,500 shares of Triangle Stock at the Exchange Rate. A total of 9,685,291
shares of Triangle Stock were outstanding at March 31, 1996.
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 Bank is Triangle's only
subsidiary and Triangle holds all of the outstanding stock of Triangle Bank. To
date, Triangle has not engaged in any material activities independent of the
activities of Triangle Bank.
-51-
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 FDIC. The sole
business of Triangle Bank is to provide banking services to businesses and
individuals through its 38 offices in 31 cities located in the Triangle area and
throughout the 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.
TRIANGLE STOCK
For information regarding Triangle Stock, the market therefor and other
matters, see "SUMMARY - Triangle Stock and Granville 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 oustanding 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, 1996, Triangle had repurchased 15,000 shares pursuant to
this authorization. The repurchase is expected to be effected in small
amounts by June 1999.
SECURITY OWNERSHIP OF MANAGEMENT
Information regarding the ownership of Triangle Stock by management of
Triangle is incorporated herein by reference to Triangle's Annual Report on Form
10-K for the year ended December 31, 1995.
-52-
INFORMATION ABOUT GRANVILLE
GENERAL
Granville is a North Carolina-chartered, commercial bank under the supervision
of the Commissioner and the FDIC. Granville was incorporated on July 2, 1990 and
commenced operations on July 5, 1990. Granville conducts business from its main
office located at 109 Hillsboro Street, Oxford, North Carolina with additional
full service branches located at 703 Linden Avenue in Oxford and 608 North Main
in Creedmoor, all in Granville County, North Carolina. Granville's primary
market area is Granville County, North Carolina. Granville provides full service
commercial and consumer banking services.
GRANVILLE STOCK
Granville Stock is not traded on any exchange or in the
over-the-counter market and, accordingly, no established public trading market
exists. To date, Granville has not paid any cash dividends. See, "SUMMARY -
Triangle Stock and Granville Stock."
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
As of March 31, 1996, the following shareholder identified in the
following table beneficially owned more than 5% of Granville Stock.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS (2)
----------------------- ------------------------ --------------------
Billy N. Quick, Sr. (3) 24,076 5.48%
Oxford, NC
Harold L. Sherman (3) 31,666 7.33%
Oxford, NC
- -------------
(1) To the best knowledge of management of Granville the above individuals
exercise sole voting and investment power with respect to all shares shown as
beneficially owned. The description of the amount and nature of such
individuals' beneficial ownership is based on information provided to Granville
by the individuals.
(2) The calculation of the percentage of class beneficially owned by each
individual is based on a number of total outstanding shares equal to 430,000
shares currently outstanding plus the number of shares capable of being issued
to that individual within 60 days of March 31, 1996, upon the exercise of stock
options held by the individual.
(3) See footnote 1 to the following table for information regarding more
detailed ownership of Granville Stock by Mr. Quick and Mr. Sherman.
As of March 31, 1996, the beneficial ownership of Granville Stock by
current directors individually, and by current directors and executive officers
as a group, was as follows:
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AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
----------------------- ------------ ----------
Joseph K. Bryan, Jr. 11,169 2.58%
Johnsie C. Cunningham 1,916 .44
Nancy W. Darden 3,766 .87
Ronnie S. Elliott 4,416 1.02
Joseph C. Hamme 12,366 2.86
William L. Hopper 2,766 .64
William Bobbitt Jenkins 2,266 .52
Billy N. Quick, Sr. 24,076 5.48
Harold L. Sherman 31,666 7.33
F. Wayne Yancey 8,692 2.01
All current directors
and executive officers
as a group (10 persons) 103,099 22.72%
- ---------------
(1) Except as otherwise noted, to the best knowledge of Granville's
management the above individuals and group exercise sole voting and
investment power with respect to all shares shown as beneficially owned
other than the following shares as to which such powers are shared and
as to which such shares are disclaimed: Mr. Bryan - 7,453 shares; Mr.
Elliott -1,500 shares; Mr. Hamme - 4,100 shares; Mr. Jenkins - 100
shares; Mr. Quick - 1,165 shares; Mr. Yancey - 2,122 shares; all
current directors and executive officers as a group -16,440 shares. The
shares shown as beneficially owned also include 1,666 shares which
could be purchased under currently exercisable stock options held by
each current director (and as to which each individual has investment
power only) except Mr. Quick who holds 8,712 currently exercisable
options; and all current directors and executive officers as a group -
23,706 shares.
(2) The calculation of the percentage of class beneficially owned by each
individual and by the group is based, in each case, on a number of
total outstanding shares equal to the 430,000 shares currently
outstanding plus the number of shares capable of being issued to that
individual or to individuals included in the group within 60 days of
March 31, 1996, upon the exercise of stock options held by each of them
and by the group.
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COMPARISON OF GRANVILLE STOCK
AND TRIANGLE STOCK
Upon consummation of the Merger, the shareholders of Granville (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 Granville'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 Granville that would occur as a result of the Merger.
The following discussion is qualified in its entirety by reference to
Granville's Articles of Incorporation and Bylaws and Triangle's Articles of
Incorporation and Bylaws and the North Carolina General Statutes. SHARES OF
TRIANGLE STOCK ARE NOT, AND CANNOT BE, INSURED BY THE FDIC.
CAPITAL STRUCTURE
The authorized capital stock of Granville consists of 2,000,000 shares
of common stock, par value $5.00 per share, of which 430,000 shares were
outstanding as of March 31, 1996. The authorized capital stock of Triangle
consists of 20,000,000 shares of common stock, no par value per share, of which
9,685,291 shares were outstanding as of March 31, 1996 and of which it is
anticipated approximately 10,437,791 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. Granville, 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
Granville and the Articles of Incorporation and Bylaws of Triangle.
VOTING
The holders of Granville 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 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. Shareholders of Granville do have the right to vote cumulatively in
the election of directors. In the election of directors, every Granville
shareholder entitled to vote at such election has the right to vote, in person
or by proxy, the number of shares held of record in his or her name for as many
persons as there are directors to be elected or for whose election he or she has
the right to vote, or to cumulate his or her votes by giving one candidate a
number of votes equal to the number of such directors to be elected multiplied
by the number of his or her shares, or by distributing such votes on the same
principal among any number of such candidates. The right to cumulative voting
affords an opportunity to Granville shareholders who hold a minority of
outstanding shares of Granville Stock to more easily elect representatives of
their choice.
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PREEMPTIVE RIGHTS
The holders of Granville 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. Granville 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. Granville is subject to the
provisions of the Control Act but the Merger is not subject to the provisions of
the Control Act. 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
Chapter 53 requires a vote of two-thirds of the shareholders of
Granville to approve a merger.
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
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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.
AMENDMENT OF ARTICLES OF INCORPORATION
Granville 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 Granville to amend its
Articles of Incorporation.
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.
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AMENDMENT OF BYLAWS
Granville'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
Granville 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 Granville 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 Granville
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. Granville'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; or (2) providing for the
management of Granville otherwise than by the Board of Directors or its
Executive Committee.
The bylaws of Triangle provide that the number of directors shall be at
least 10 but no more than 24. 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 the outstanding shares of Triangle 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 offeror 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.
SHARE PURCHASE AND OPTION PLANS FOR AFFILIATES
The affirmative vote of two-thirds of the issued and outstanding shares
of Granville and the approval of the Commissioner pursuant to Chapter 53 is
required for Granville to issue rights, options, or warrants for the purchase of
shares of its capital stock, with the Board of Directors of Granville
determining the terms upon which the rights, options or warrants are issued and
their form and content. Shares of capital stock of Granville 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 Granville may generally be issued to or for the
benefit of officers, directors, and employees of Granville free of restrictions,
except as noted above or, as required under the Securities Act. See "THE MERGER
- - Resale of Triangle Stock."
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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, Granville 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 Granville Stock. Additionally, the prior approval of
the Commissioner and the FDIC is required for the redemption or retirement of
any shares of Granville Stock.
TRANSFERABILITY BY CERTAIN PERSONS
Granville 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 Granville and its
shareholders to sell shares of Granville 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.
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ASSESSMENTS; IMPAIRMENT OF CAPITAL
Under Chapter 53, holders of Granville Stock may be assessed for the
amount of any impairment in the capital stock of Granville due to losses or any
other cause when the surplus and undivided profits of Granville 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 Granville 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.
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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.
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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 GRANVILLE. The Bylaws of Granville
provide for indemnification of directors and officers of Granville. 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
Granville 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
Granville 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.
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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 the 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 Granville Stock are entitled to receive dividends when
and if declared by its Board of Directors out of funds legally available
therefor. To date, Granville has not paid any cash dividends. Like Triangle, the
payment of cash dividends by Granville is limited by certain regulatory
restrictions and is dependent upon business conditions, operating results,
capital and reserve requirements, and its Board of Directors' 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 Granville. 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 Granville. Supervision, regulation, and examination
of financial institutions by the regulatory agencies are intended primarily for
the protection of depositors rather than the holders of Granville 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.
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BANK REGULATION
As banks, Triangle Bank and Granville 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.
Granville is supervised and examined by the FDIC. In addition, Triangle Bank and
Granville 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 Granville 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, 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 Granville 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.
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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, 1996, 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, 1996
PRO FORMA MINIMUM
TRIANGLE (1) GRANVILLE RESULTANT BANK REGULATORY RATIOS
------------ --------- -------------- -----------------
Tier 1 capital to
risk weighted assets 9.91% 23.53% 10.45% 4.0%
Total capital to risk
weighted assets 11.13% 24.67% 11.67% 8.0%
Leverage ratio(2) 7.52% 9.87% 7.68% 4.0%
(1) Capital ratios for parent and banking subsidiary vary not more than
0.20%.
(2) 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 Granville.
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In September 1994, Congress passed the Interstate Banking and Branching
Efficiency 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. Beginning June 1, 1997, banks may merge under the Interstate Act
with other banks across state lines. States may opt-in to such interstate
branching earlier or may opt-out of interstate branching by June 1, 1997. 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 whether or in what form proposed legislation may be enacted by North Carolina
in reaction to the Interstate Act or what impact such legislation or the
Interstate Act might have upon Triangle and its subsidiaries.
MONETARY POLICY AND ECONOMIC CONTROLS
Triangle, Triangle Bank and Granville 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 Granville.
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LEGAL AND TAX MATTERS
Moore & Van Allen, PLLC, counsel to Triangle, will deliver an opinion
at the Effective Time to the effect that Triangle Stock to be issued to the
shareholders of Granville 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 Granville 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 Moore & Van Allen, PLLC, Raleigh, North Carolina,
and for Granville by Hopper & Hicks, Oxford, North Carolina.
EXPERTS
The consolidated balance sheets of Triangle Bancorp, Inc. as of
December 31, 1995 and 1994, 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, 1995, 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 Granville United Bank as of December 31, 1995 and
1994, and the statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995, have been
incorporated by reference herein and in the registration statement in reliance
on the report of Langdon & Company, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
Representatives of Langdon & Company are expected to be present at the
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 Prospectus/Proxy Statement, the Board of
Directors of Granville did not know of any matters that will be presented for
consideration at the Special Meeting other than as described in this
Prospectus/Proxy Statement. However, if any other matters shall come before the
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.
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SHAREHOLDER PROPOSALS
If the Merger is not consummated for any reason, Granville expects to
hold its 1997 annual meeting of shareholders in April 1997. In such event, any
proposal of a shareholder that is intended to be presented at the 1997 annual
meeting of shareholders must be received by Granville at its main office in
Oxford, North Carolina no later than January __, 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.
If the Merger is consummated, Triangle expects to hold its 1997 annual
meeting of shareholders in April 1997. Any proposal of a shareholder of Triangle
which is intended to be presented at the 1997 annual meeting, must be received
by Triangle at its principal executive office in Raleigh, North Carolina not
later than January __, 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
By and Among
GRANVILLE UNITED BANK
and
TRIANGLE BANK
and
TRIANGLE BANCORP, INC.
June 7, 1996
TABLE OF CONTENTS
ARTICLE I. AGREEMENT TO MERGE.......................................................................... 2
1.01. Names of Merging Corporations................................................ 2
1.02. Nature of Transaction........................................................ 2
1.03. Effect of Merger; Surviving Corporation...................................... 2
1.04. Assets and Liabilities of Granville.......................................... 2
1.05. Conversion and Exchange of Stock............................................. 2
a. Conversion of Granville Stock................................................ 2
b. Exchange Procedures.......................................................... 3
c. Treatment of Fractional Shares............................................... 3
d. Surrender of Certificates.................................................... 4
e. Antidilutive Adjustments..................................................... 4
f. Dissenters................................................................... 5
g. Lost Certificates............................................................ 5
h. Treatment of Granville's Stock Options....................................... 5
i. Outstanding Triangle Stock and Bank Stock.................................... 6
1.06. Articles, By-Laws and Management............................................. 6
1.07. Closing; Plan of Merger; Effective Time...................................... 7
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF GRANVILLE............................................... 7
2.01. Organization; Standing; Power............................................... 7
2.02. Capital Stock................................................................ 8
2.03. Principal Shareholders....................................................... 8
2.04. Subsidiaries................................................................ 8
2.05. Convertible Securities, Options, Etc......................................... 8
2.06. Authorization and Validity of Agreement...................................... 8
2.07. Validity of Transactions; Absence of Required
Consents or Waivers..................................................... 9
2.08. Granville Books and Records................................................. 9
2.09. Granville Reports........................................................... 10
2.10. Granville Financial Statements.............................................. 10
2.11. Tax Returns and Other Tax Matters........................................... 11
2.12. Absence of Material Adverse Changes or
Certain Other Events.....................................................11
2.13. Absence of Undisclosed Liabilities.......................................... 12
2.14. Compliance with Existing Obligations........................................ 12
2.15. Litigation and Compliance with Law...........................................12
2.16. Real Properties............................................................. 13
2.17. Loans, Accounts, Notes and Other Receivables................................ 14
2.18. Securities Portfolio and Investments........................................ 15
2.19. Personal Property and Other Assets.......................................... 15
2.20. Patents and Trademarks...................................................... 16
2.21. Environmental Matters....................................................... 16
2.22. Absence of Brokerage or Finders Commissions................................. 18
2.23. Material Contracts.......................................................... 18
2.24. Employment Matters; Employee Relations...................................... 18
2.25. Employee Agreements; Employee Benefit Plans................................. 19
2.26. Insurance................................................................... 20
2.27. Insurance of Deposits....................................................... 21
2.28. Affiliates.................................................................. 21
2.29. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment............................................. 21
2.30. Disclosure.................................................................. 22
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TRIANGLE AND
THE HOLDING COMPANY............................................................... 22
3.01. Organization; Standing; Power............................................... 22
3.02. Capital Stock............................................................... 22
3.03. Authorization and Validity of Agreement..................................... 23
3.04. Validity of Transactions; Absence of Required
Consents or Waivers..................................................... 23
3.05 Holding Company Books and Records........................................... 24
3.06. Holding Company Reports..................................................... 24
3.07. Holding Company Financial Statements........................................ 24
3.08. Absence of Material Adverse Changes......................................... 25
3.09. Litigation and Compliance with Law.......................................... 25
3.10 Absence of Brokerage or Finders Commissions................................. 26
3.11. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment............................................... 27
3.12. Disclosure.................................................................. 27
ARTICLE IV. COVENANTS OF GRANVILLE.................................................................... 27
4.01. Affirmative Covenants of Granville.......................................... 27
a. "Affiliates" of Granville................................................... 27
b. Conduct of Business Prior to Effective Time................................. 28
c. Periodic Information Regarding Loans........................................ 28
d. Notice of Certain Changes or Events......................................... 29
e. Consents to Assignment of Leases............................................ 30
f. Further Action; Instruments of Transfer, etc................................ 30
4.02. Negative Covenants of Granville............................................. 30
a. Amendments to Articles of Incorporation or
Bylaws................................................................... 30
b. Change in Capital Stock..................................................... 30
c. Options, Warrants and Rights................................................ 30
d. Dividends................................................................... 30
e. Employment, Benefit or Retirement Agreements
or Plans................................................................. 31
f. Increase in Compensation;
Additional Compensation.................................................. 31
g. Accounting Practices........................................................ 31
h. Acquisitions; Additional Branch Offices..................................... 31
i. Changes in Business Practices............................................... 31
j. Exclusive Merger Agreement.................................................. 32
k. Acquisition or Disposition of Assets........................................ 32
l. Debt; Liabilities........................................................... 33
m. Liens; Encumbrances......................................................... 33
n. Waiver of Rights............................................................ 33
o. Other Contracts............................................................. 33
ARTICLE V. COVENANTS OF TRIANGLE AND THE HOLDING COMPANY.............................................. 34
5.01. Board of Directors.......................................................... 34
a. Appointment of Director..................................................... 34
b. Local Advisory Board ....................................................... 34
5.02. NASDAQ National Market System Notification
of Listing of Additional Shares of
Triangle Stock........................................................... 34
5.03 Notice of Certain Changes or Events......................................... 35
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ARTICLE VI. MUTUAL AGREEMENTS.................................................................................. 35
6.01. Shareholders' Meeting; Registration
Statement; Proxy Statement/Prospectus...................................... 35
a. Meeting of Shareholders..................................................... 35
b. Preparation and Distribution of Proxy
Statement/Prospectus..................................................... 35
c. Registration Statement and "Blue Sky"
Approvals................................................................ 36
d. Recommendation of Granville's Board of
Directors................................................................ 36
e. Information for Proxy Statement/Prospectus and
Registration Statement................................................... 36
6.02. Regulatory Approvals........................................................ 37
6.03. Access...................................................................... 37
6.04. Costs....................................................................... 38
6.05. Announcements............................................................... 38
6.06. Environmental Studies....................................................... 38
6.07. Employees; Severance Payments; Employee
Benefits................................................................. 39
a. Employment Agreements....................................................... 39
b. Employment of Other Granville Employees..................................... 39
c. Severance Payment........................................................... 40
d. Employee Benefits........................................................... 40
6.08. Confidentiality............................................................. 41
6.09. Reorganization for Tax Purposes............................................. 41
6.10. Accounting Treatment........................................................ 42
6.11. Other Permissible Transactions.............................................. 42
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER........................................................... 42
7.01. Conditions to all Parties' Obligations...................................... 42
a. Approval by Governmental or Regulatory
Authorities; No Disadvantageous Conditions............................... 42
b. Adverse Proceedings, Injunction, Etc........................................ 42
c. Approval by Boards of Directors and
Shareholders............................................................. 43
d. Fairness Opinion............................................................ 43
e. Tax Opinion................................................................. 43
f. No Termination or Abandonment............................................... 44
g. NASDAQ National Market System Listing....................................... 44
7.02. Additional Conditions to Granville's
Obligations.............................................................. 44
a. Material Adverse Change..................................................... 44
b. Compliance with Laws........................................................ 44
c. The Holding Company's and Triangle's
Representations and Warranties and
Performance of Agreements; Officers'
Certificate.............................................................. 44
d. Legal Opinion of the Holding Company's and
Triangle's Counsel........................................................ 45
e. Other Documents and Information from
the Holding Company and Triangle.......................................... 45
f. Articles of Merger; Other Actions........................................... 45
g. Acceptance by Granville's Counsel........................................... 45
7.03. Additional Conditions to the Holding
Company's and Triangle's Obligations...................................... 45
a. Material Adverse Change..................................................... 45
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b. Compliance with Laws; Adverse Proceedings,
Injunction, Etc........................................................... 46
c. Granville's Representations and Warranties
and Performance of Agreements; Officers'
Certificate............................................................... 46
d. Effectiveness of Registration Statement;
Compliance with Securities and Other "Blue
Sky" Requirements......................................................... 46
e. Agreements from Granville Affiliates........................................ 46
f. Accounting Treatment........................................................ 47
g. Legal Opinion of Granville Counsel.......................................... 47
h. Other Documents and Information from
Granville................................................................. 47
i. Consents to Assignment of Real Property
Leases.................................................................... 47
j. Acceptance by the Holding Company's and
Triangle's Counsel........................................................ 47
ARTICLE VIII. TERMINATION; BREACH; REMEDIES........................................................... 47
8.01. Mutual Termination.......................................................... 47
8.02. Unilateral Termination...................................................... 48
a. Termination by the Holding Company or
Triangle................................................................. 48
b. Termination by Granville.................................................... 49
8.03. Breach; Remedies............................................................ 49
ARTICLE IX. INDEMNIFICATION........................................................................... 50
9.01. Indemnification Following Effective Time.................................... 50
9.02 Procedure for Claiming Indemnification...................................... 50
ARTICLE X. MISCELLANEOUS PROVISIONS................................................................... 50
10.01 "Previously Disclosed" Information; "Material
Adverse Effect".......................................................... 50
10.02. Survival of Representations, Warranties,
Indemnification and Other Agreements..................................... 51
a. Representations, Warranties and Other
Agreements............................................................... 51
b. Indemnification............................................................. 51
10.03. Waiver...................................................................... 51
10.04. Amendment................................................................... 52
10.05. Notices..................................................................... 52
10.06. Further Assurance........................................................... 53
10.07. Headings and Captions....................................................... 53
10.08. Entire Agreement............................................................ 53
10.09. Severability of Provisions.................................................. 53
10.10. Assignment.................................................................. 53
10.11. Counterparts................................................................ 53
10.12. Governing Law............................................................... 53
10.13. Inspection.................................................................. 53
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
By and Among
GRANVILLE UNITED BANK
and
TRIANGLE BANK
and
TRIANGLE BANCORP, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
(hereinafter called "Agreement") entered into as of the 7th day of June, 1996,
by and among GRANVILLE UNITED BANK ("Granville"), TRIANGLE BANK ("Triangle") and
TRIANGLE BANCORP, INC. (the "Holding Company").
WHEREAS, Granville is a North Carolina banking corporation
with its principal office and place of business located in Oxford, North
Carolina; and,
WHEREAS, Triangle is a North Carolina banking corporation with
its principal office and place of business located in Raleigh, 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 is the parent company of Triangle; and,
WHEREAS, the Holding Company, Triangle and Granville have
agreed that it is in their mutual best interests and in the best interests of
their respective shareholders for Granville to be merged into Triangle with the
effect that each of the outstanding shares of Granville'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 effectuate the foregoing, the Holding Company,
Triangle and Granville 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 Granville's Board of Directors has approved
this Agreement, Granville 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 and Triangle's Boards of
Directors have approved this Agreement and the transactions described herein,
including the issuance by the Holding Company of shares of its common stock to
Granville's shareholders to effectuate such transactions.
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, Triangle and Granville
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 GRANVILLE UNITED BANK ("Granville") and TRIANGLE BANK
("Triangle").
1.02. Nature of Transaction. Subject to the provisions of this
Agreement, at the "Effective Time" (as defined in Paragraph 1.07. below),
Granville shall be merged into and with Triangle pursuant to N.C. GEN. STAT. ss.
53-12 (the "Merger").
1.03. Effect of Merger; Surviving Corporation. At the Effective Time
and as provided in N.C. GEN. STAT. ss. 53-13, by reason of the Merger the
separate corporate existence of Granville shall cease while the corporate
existence of Triangle 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, Triangle shall continue to 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 Triangle and Granville. The duration of the corporate
existence of Triangle, as the surviving corporation, shall be perpetual and
unlimited.
1.04. Assets and Liabilities of Granville. At the Effective Time and by
reason of the Merger, and in accordance with N.C. GEN. STAT. ss.ss. 53-13, 53-17
and 55-11-06, all of Granville'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 Granville, whether tangible or
intangible) shall be transferred to and vest in Triangle, and Triangle 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 Granville, all without any conveyance,
assignment or further act or deed; and Triangle shall become responsible for all
of the liabilities, duties and obligations of every kind, nature and description
(including duties as trustee or fiduciary) of Granville as of the Effective
Time.
1.05. Conversion and Exchange of Stock.
a. Conversion of Granville Stock. At the Effective Time, all
rights of Granville's shareholders with respect to all then outstanding shares
of Granville's common stock ($5.00 par
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value) ("Granville 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 Granville Stock (other than any shares held by Granville 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, Triangle or Granville, into 1.75 (the "Exchange Rate") newly
issued shares of the Holding Company's no par value common stock (the "Triangle
Stock").
At the Effective Time, and without any action by Granville,
Triangle, the Holding Company or any holder thereof, Granville's stock transfer
books shall be closed as to holders of Granville Stock immediately prior to the
Effective Time and, thereafter, no transfer of Granville Stock by any such
holder may be made or registered; and the holders of shares of Granville Stock
shall cease to be, and shall have no further rights as, stockholders of
Granville other than as provided herein. Following the Effective Time,
certificates representing shares of Granville 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, (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 Granville 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 Granville 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.
c. Treatment of Fractional Shares. No scrip or certificates
representing fractional shares of the Triangle Stock will be issued to any
former shareholder of Granville, 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
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of shares would result in the creation of fractional shares, then, in lieu of
the issuance of fractional shares of the 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
Granville 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 priceof 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 the
Triangle Stock shall be delivered to any former shareholder of Granville unless
and until such shareholder shall have properly surrendered to the Exchange Agent
the Old Certificate(s) formerly representing his or her shares of Granville
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 the 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 the
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, Triangle, Granville, 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, Triangle, Granville, nor the Exchange Agent shall be liable to a former
holder of Granville 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 will be made to
increase or decrease the number of shares of Triangle Stock to be issued in
exchange for each of the shares of Granville Stock.
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f. Dissenters. Any shareholder of Granville 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 Granville Stock in the manner and pursuant to the
procedures provided therein. Shares of Granville 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 Granville
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 Granville 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 Granville whose
certificate evidencing shares of Granville 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. ss.
25- 8-405 and N.C. GEN. STAT. ss. 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 Granville's Stock Options. (i) At the
Effective Time, each option or other right to purchase shares of Granville Stock
pursuant to stock options ("Granville Options") granted by Granville under the
Granville United Bank Incentive Stock Option Plan for Employees and the
Granville United Bank Stock Option Plan for Directors (collectively, the
"Granville 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 Triangle shall assume each Granville Option, in accordance
with the terms of the Granville Stock Plans and stock option agreement by which
it is evidenced, except that from after the Effective Time (A) Triangle and its
Compensation Committee shall be substituted for Granville and the Committee of
Granville's Board of Directors (including, if applicable, the entire Board of
Directors of Granville) administering the Granville Stock Plans, (B) each
Granville Option assumed by Triangle may be exercised solely for shares of
Triangle Stock, (C) the number of shares of Triangle Stock subject to such
Granville Option shall be equal to the number of shares of Granville Stock
subject to such Granville Option immediately prior to the Effective Time
multiplied by the Exchange Rate, and (D) the per share exercise price under each
such Granville Option shall be adjusted by dividing the per share exercise price
under each such Granville Option by the Exchange Rate and rounding up to the
nearest cent. Notwithstanding the provisions of clause (C) of the preceding
sentence, Triangle shall not be obligated to issue any fraction of a share of
Triangle
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Stock upon exercise of Granville Options and any fraction of a share of Triangle
Stock that otherwise would be subject to a converted Granville Option shall
represent the right to receive a cash payment upon exercise of such converted
Granville Option equal to the product of such fraction and the difference
between the market value of one share of Triangle Stock at the time of exercise
of such Option and the per share exercise price of such Option. The market value
of one share of Triangle Stock at the time of exercise of an Option shall be the
closing sales price of Triangle Stock on the Nasdaq National Market System on
the last trading day preceding the date of exercise.
(ii) As soon as practicable after the Effective Time, Triangle shall
deliver to the participants in the Granville Stock Plans an appropriate notice
setting forth such participant's rights pursuant thereto and the grants pursuant
to the Granville Stock Plans shall continue in effect on the same terms and
conditions (subject to the adjustments required by 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 Granville
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
Granville Stock awarded under the Granville Stock Plans or any other plan,
program, or arrangement of Granville, 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 44,270 shares of
Granville Stock be converted into options to purchase Triangle Stock in
connection with the transactions contemplated by this Agreement. Granville
agrees to cooperate with Triangle to insure the implementation of this Paragraph
1.05.h.
i. Outstanding Triangle Stock and Bank Stock. The status of
the shares of Triangle Stock and the shares of the capital stock of Triangle
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 Triangle in effect at the Effective Time shall be the Articles of
Incorporation and By-Laws of Triangle
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as the surviving corporation. The officers and directors of Triangle 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 Moore & Van Allen, PLLC 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 following the expiration of all such required waiting periods).
At the Closing, the Holding Company, Triangle and Granville 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 government 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 GRANVILLE
Except as otherwise specifically provided herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to Triangle, Granville hereby
makes the following representations and warranties to Triangle and the Holding
Company:
2.01. Organization; Standing; Power. Granville (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 Granville; and
(iv) is not
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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
Granville.
2.02. Capital Stock. Granville's authorized capital stock
consists of 2,000,000 shares of common stock, $5.00 par value per share. As of
March 31, 1996, 430,000 shares of Granville Stock were issued and outstanding,
which constitute Granville's only issued and outstanding securities. Granville
has 7,030 shares of Granville Stock available for issuance under the Granville
Stock Plans and options to purchase 44,270 shares of Granville Stock are
outstanding.
Each outstanding share of Granville 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
the requirement of an applicable exemption from registration requirements under
the Securities Act of 1933, as amended (the "1933 Act").
The Granville Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"); Granville is subject to the periodic
reporting requirements of the Exchange Act.
2.03. Principal Shareholders. No person or entity is known to
Granville to beneficially own, directly or indirectly, more than 5% of the
outstanding shares of Granville Stock.
2.04. Subsidiaries. Granville does not have any active
subsidiary (direct or indirect), and does not own any stock or other equity
interest in any corporation, service corporation, joint venture, partnership or
other entity.
2.05. Convertible Securities, Options, Etc.. With the
exception of options to purchase an aggregate of 44,270 shares of Granville
Stock which have been issued and are outstanding under the Granville Stock
Plans, Granville does not have any outstanding (i) securities or other
obligations (including debentures or other debt instruments) which are
convertible into shares of Granville Stock or any other securities of Granville,
(ii) options, warrants, rights, calls or other commitments of any nature which
entitle any person to receive or acquire any shares of Granville Stock or any
other securities of Granville, or (iii) plan, agreement or other arrangement
pursuant to which shares of Granville Stock or any other securities of
Granville, 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 Granville's Board of Directors and
executed and delivered on Granville's behalf. Subject only to approval of this
Agreement by the shareholders of
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Granville in the manner required by law (as contemplated by Paragraph 6.01.a.
below), (i) Granville 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 Granville to enter into this Agreement and to
perform its obligations and agreements and carry out the transactions described
herein have been duly and properly completed or obtained, and (iii) this
Agreement has been executed on behalf of Granville and constitutes a valid and
binding agreement of Granville 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
Granville, neither the execution and delivery of this Agreement, nor the
consummation of the transactions described herein, nor compliance by Granville
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, Granville'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 Granville 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 Granville'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
Granville; or (v) interfere with or otherwise adversely affect Granville'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 Granville'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 Granville's shareholders as described in Paragraph 7.01.c. below and of
governmental or regulatory authorities as described in Paragraph 7.01.a. below.
2.08. Granville Books and Records. Granville'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
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records are complete and reflect accurately in all material respects Granville's
items of income and expense and all of its assets, liabilities and stockholders'
equity. The minute books of Granville 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. Granville Reports. Since January 1, 1991, and where the
failure to file has had or could have a material and adverse effect on
Granville, Granville has filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed with (i) the Federal Deposit Insurance Corporation (the
"FDIC"), (ii) the North Carolina Commissioner of Banks (the "Commissioner"), or
(iii) any other governmental or regulatory authorities having jurisdiction over
Granville. All such reports, registrations and statements filed by Granville
with the FDIC, the Commissioner or other such regulatory authority are
collectively referred to herein as the "Granville Reports." As of their
respective dates, each Granville 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 Granville has not
been notified that any such Granville Report was deficient in any material
respect as to form or content. Following the date of this Agreement, Granville
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. Granville Financial Statements. Granville has delivered
to Triangle a copy (i) of its balance sheets as of December 31, 1994 and
December 31, 1995, and its statements of operations, changes in stockholders'
equity and cash flows for the years ended December 31, 1993, December 31, 1994
and December 31, 1995, together with notes thereto (the "Granville Financial
Statements"), and (ii) a copy of its balance sheet as of March 31, 1996 and its
statement of operations for the three months ended March 31, 1996 (the
"Granville Interim Financial Statements"); and, following the date of this
Agreement, Granville promptly will deliver to Triangle all other annual or
interim financial statements prepared by or for Granville. The Granville
Financial Statements and the Granville Interim Financial Statements (including
any related notes and schedules thereto) (i) are in accordance with Granville'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 Granville's
financial condition, assets and liabilities, results of operations, changes in
stockholders' equity and changes in cash
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flows as of the dates indicated and for the periods specified therein. The
Granville Financial Statements have been audited and certified by Granville's
independent certified public accountants, Langdon and Company.
2.11. Tax Returns and Other Tax Matters. (i) Granville 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 Granville, 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 Granville or its property have been become fully paid, and,
with respect to any such taxes to become due from Granville for any period or
periods through and including March 31, 1996, adequate provision has been made
for the payment of all such taxes and such provision is reflected in the
Granville Financial Statements; (iii) Granville's tax returns and reports have
been examined or closed by applicable statutes of limitations through the tax
year ended December 31, 1991, and Granville 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) Granville 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 Granville have
been provided for in the Granville Financial Statements in all material
respects.
2.12. Absence of Material Adverse Changes or Certain Other
Events.
(i) Since December 31, 1995, Granville 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 Granville, there currently exists no
condition or circumstance which, with the lapse of time or otherwise, may or
could cause, create or result in a material adverse change, in or affecting the
financial condition of Granville or in its results of operations, prospects,
business, assets, loan portfolio, investments, properties or operations.
(ii) Since December 31, 1995, and other than
in the ordinary course of its business, including its normal salary review for
1996, Granville 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.
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2.13. Absence of Undisclosed Liabilities. Granville 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
Granville Financial Statements and the Granville Interim Financial Statements,
or (ii) obligations or liabilities incurred in the ordinary course of its
business since March 31, 1996, and which are not, individually or in the
aggregate, material to Granville.
2.14. Compliance with Existing Obligations. Granville has
performed in all material respects all obligations required to be performed by
it under, and it is not in default in any respect under, or in violation in any
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 Granville 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.
(i) There are no actions, suits, arbitrations,
controversies or other proceedings or investigations (or, to the best knowledge
and belief of management of Granville, 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 Granville
threatened, contemplated or probable of assertion, against, relating to or
otherwise affecting Granville or any of its properties or assets which, if
determined adversely, could result in liability on the part of Granville for, or
subject it to, monetary damages, fines or penalties, or an injunction, and which
could have a material adverse effect on Granville's financial condition, results
of operations, prospects, business, assets, loan portfolio, investments,
properties or operations or on the ability of Granville to consummate the
Merger;
(ii) Granville 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 Granville, threatened or probable of assertion
to suspend, cancel, revoke or limit any Permit;
(iii) Granville is not subject to any
supervisory agreement, enforcement order, writ, injunction, capital directive,
supervisory directive, memorandum of understanding or
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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 Granville which in any manner limit, restrict, regulate, enjoin or
prohibit any present or past business or practice of Granville; and Granville
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) Granville is not 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 Granville) 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 Granville.
2.16. Real Properties. Granville has Previously Disclosed to
Triangle a listing of all real property owned or leased by Granville (including
Granville's banking facilities and all other real estate or foreclosed
properties owned by Granville) (the "Real Property") and all leases, if any,
pertaining to any such Real Property to which Granville is a party (the "Real
Property Leases"). With respect to all Real Property owned by Granville,
Granville 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 Granville 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 Granville's
lessor, each such Real Property Lease may be assigned to Triangle and the
execution and delivery of this Agreement does not constitute an event of default
thereunder.
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To the best of the knowledge and belief of management
of Granville, 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 under Paragraph 2.21 below,
there does not exist any condition which interferes with Granville'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 Granville's books and records (A) have resulted from bona
fide business transactions in the ordinary course of Granville's operations, (B)
in all material respects were made in accordance with Granville's standard loan
policies and procedures, and (C) are owned by Granville 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 Granville 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
Granville's loan documentation indicates is secured by any real or personal
property or property rights ("Loan Collateral"), such loan is secured by valid,
perfected and enforceable liens on all such Loan Collateral having the priority
described in Granville's records of such loan.
(iii) To the best knowledge of management of Granville,
each loan reflected as an asset on Granville'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) Granville has Previously Disclosed to Triangle a
listing of (A) each loan, extension of credit or other asset of Granville which,
as of March 31, 1996, is classified by the FDIC, the Commissioner or by
Granville as "Loss", "Doubtful", "Substandard" or "Special Mention" (or
otherwise by words of similar import), or which Granville 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 Granville which, as of March 31, 1996, was past due
thirty (30) days or more as to the
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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 Granville's
management, each of Granville'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 Granville's business in an amount which is not less than the amount at
which it is carried on Granville's books and records.
(vi) Granville's reserve for possible loan losses (the
"Loan Loss Reserve") shown in the Granville 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 Granville's management, is reasonable in view of
the size and character of Granville'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 Granville's loan portfolio and other
real estate owned.
2.18. Securities Portfolio and Investments. All securities
owned by Granville (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 Granville 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 Granville's
business to secure public funds deposits and in connection with repurchase
agreements with customers). There are no voting trusts or other agreements or
undertakings to which Granville is a party with respect to the voting of any
such securities. With respect to all "repurchase agreements" to which Granville
has "purchased" securities under agreement to resell (if any), Granville 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 Granville 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, 1996, there has been no
significant deterioration or material adverse change in the quality, or any
material decrease in the value, of Granville's securities portfolio.
2.19. Personal Property and Other Assets. All assets of
Granville (including without limitation all banking equipment,
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data processing equipment, vehicles, and all other personal property located in
or used in the operation of each office of Granville or otherwise used by
Granville in the operation of its business) are owned by Granville free and
clear of all liens, leases, encumbrances, title defects or exceptions to title.
All of Granville's banking equipment is in good operating condition and repair,
ordinary wear and tear excepted.
2.20. Patents and Trademarks. Granville 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 Granville 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. Granville has Previously
Disclosed and provided to Triangle 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 Granville.
To the best of the knowledge and belief of management of Granville:
(i) there has been no presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, 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) Granville 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,
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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 Granville is or may be responsible
or liable;
(iii) Granville 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 Granville 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 Granville 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,
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
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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 Granville directly with Triangle and 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, Granville 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) Granville 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 Granville's
branch offices, Granville 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 $50,000 (i)
which is not to be performed in full prior to December 31, 1996, (ii) which
calls for the provision of goods or services to Granville and cannot be
terminated without material penalty upon written notice to the other party
thereto, (iii) which is material to Granville and has 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
Granville 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
Granville's business), (vi) which involves the purchase or sale of any assets of
Granville, or the purchase, sale, issuance, redemption or transfer of any
capital stock or other securities of Granville, or (vii) with any director,
officer or principal shareholder of Granville (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
Granville's business and on substantially the same terms and conditions as were
prevailing at that time for similar agreements with unrelated persons).
Granville 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 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
Granville.
2.24. Employment Matters; Employee Relations. Granville (i)
has paid in full to or accrued on behalf of all its
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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 Granville 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 Granville, asserted that Granville
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 Granville, threatened,
against Granville (or any of its employees), involving employment
discrimination, sexual harassment, wrongful discharge or similar claims.
Granville 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 Granville and any of
its employees, or any pending or threatened proceeding in which it is asserted
that Granville has committed an unfair labor practice; and Granville 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) Granville is not a party to or bound by any
employment agreements with any of its directors, officers or employees.
(ii) Granville has Previously Disclosed and has
delivered or made available to Triangle 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 Granville for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Granville Benefit Plans"). Any of the Granville 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 "Granville ERISA Plan." No
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Granville 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 Granville nor any
affiliate of Granville has ever been required to contribute to a multi-employer
plan, as defined in Section 3(37) of ERISA.
(iii) All Granville 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
Granville. Each Granville 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 Granville is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. To the knowledge of Granville, Granville has not engaged
in a transaction with respect to any Granville Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
Granville 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 Granville.
(iv) Granville has no liability for retiree health and life
benefits under any of the Granville Benefit Plans and there are no restrictions
on the rights of Granville to amend or terminate any such Plan without incurring
any liability thereunder, which liability is reasonably likely to have a
material adverse effect on Granville.
(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 Granville from
Granville under any Granville Benefit Plan or otherwise, (B) increase any
benefits otherwise payable under any Granville 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 Granville.
(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 Granville and their respective beneficiaries have been fully
reflected on the Granville Financial Statements to the extent required by and in
accordance with GAAP.
2.26. Insurance. Granville has in effect a "banker's
blanket bond" and such other policies of general liability, casualty, directors
and officers liability, employee fidelity,
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errors and omissions and other property and liability insurance as have been
Previously Disclosed to Triangle (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 Granville's business or as is
required by applicable law or regulation; and, in the reasonable opinion of
management of Granville, the insurance coverage provided under the Policies is
considered reasonable and adequate in all respects for Granville. 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 Granville 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. Granville is not in default under the provisions of, has
not received notice of cancellation or nonrenewal of or any 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 Granville is not aware of any facts which would form the basis of
any such claim), and Granville 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 Granville are
insured by the Bank Insurance Fund of the FDIC to the maximum extent permitted
by law, all deposit insurance premiums due from Granville to the FDIC have been
paid in full in a timely fashion, and, to the best of the knowledge and belief
of Granville's executive officers, no proceedings have been commenced or are
contemplated by the FDIC or otherwise to terminate such insurance.
2.28. Affiliates. Granville has Previously Disclosed to
Triangle a listing of those persons deemed by Granville and its counsel as of
the date of this Agreement to be "Affiliates" of Granville (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 Granville.
2.29. Obstacles to Regulatory Approval, Accounting Treatment
or Tax Treatment. To the best of the knowledge and belief of management of
Granville, there exists no fact or condition (including Granville's record of
compliance with the Community Reinvestment Act) relating to Granville that may
reasonably be expected to (i) prevent or materially impede or delay the Holding
Company, Triangle or Granville 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
Granville, Granville shall promptly (and in any event
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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
Granville, no written statement, certificate, schedule, list or other written
information furnished by or on behalf of Granville at any time to the Holding
Company or Triangle in connection with this Agreement (including without
limitation information "Previously Disclosed" by Granville), 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
Granville to the Holding Company or Triangle is or will be a true and complete
copy of such document, unmodified except by another document delivered by
Granville.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TRIANGLE
AND THE HOLDING COMPANY
Except as otherwise specifically described herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to Granville, Triangle and the
Holding Company each hereby makes the following representations and warranties
to Granville.
3.01. Organization; Standing; Power. Triangle and the Holding
Company each (i) is duly organized and incorporated, validly existing and in
good standing (as a banking corporation and a business corporation,
respectively) 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, 1996, an
aggregate of 9,685,291 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 Granville's shareholders pursuant to this Agreement, when issued as
described herein, will be duly authorized, validly issued, fully paid and
nonassessable.
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All outstanding shares of Triangle's common stock ("Bank
Stock") have been validly issued and are owned by the Holding Company.
3.03. Authorization and Validity of Agreement. This Agreement
has been duly and validly approved by the Holding Company's and Triangle's
Boards of Directors and executed and delivered on the Holding Company's and
Triangle's behalf. (i) The Holding Company and Triangle each 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
and Triangle 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 and Triangle 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).
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 or Triangle
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 or Triangle'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 or Triangle 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 or Triangle'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
Triangle; or (v) interfere with or otherwise adversely affect the Holding
Company's or Triangle'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 or Triangle's
execution and delivery of this Agreement, or the performance of its obligations
or agreements or the
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consummation of the transactions described herein, except for the required
approvals of governmental or regulatory authorities described in Paragraph
7.01.a. below.
3.05. Holding Company Books and Records. The Holding Company's
and Triangle'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
and Triangle's respective items of income and expense and all of their
respective assets, liabilities and stockholders' equity. The minute books of the
Holding Company and Triangle accurately reflect in all material respects the
corporate actions which their respective 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
Granville and its representatives.
3.06. Holding Company Reports. Since January 1, 1991, 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 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 such 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 Granville upon its request a copy of any report, registration, statement or
other regulatory filing made by the Holding Company or Triangle 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 Granville (i) a copy of the Holding Company's
consolidated balance sheets as of December 31, 1994 and December 31, 1995, and
its consolidated statements of income, changes in shareholders' equity, and cash
flows for the years ended December 31, 1993, December 31, 1994 and December 31,
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1995 (the "Holding Company Financial Statements"), and 1995 (the "Holding
Company Financial Statements") and (ii) a copy of the Holding Company's balance
sheet as of March 31, 1996 and its statement of operations for the three months
ended March 31, 1996 (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 have been audited and certified by the
Holding Company's independent accountants, KPMG Peat Marwick LLP, and the
Holding Company Financial Statements present fairly in all material respects the
Holding Company's consolidated financial condition, assets and liabilities,
results of operations, changes in stockholders' equity and changes in cash flows
as of the dates and for the periods specified therein.
3.08. Absence of Material Adverse Changes. Since March 31,
1996 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
or Triangle, there currently exists no condition or circumstance which, with the
lapse of time or otherwise, may or could 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 prospects, business, assets, loan
portfolio, investments, properties or operations.
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 or Triangle, 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 or Triangle, threatened, contemplated or
probable of assertion, against, relating to or otherwise affecting the Holding
Company or Triangle or any of their properties or assets which, if determined
adversely, could result in liability on the part of the Holding Company or
Triangle for, or subject it to, monetary damages, fines or penalties, 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 prospects, business, assets, loan portfolio, investments, properties or
operations or on the ability of the Holding Company or Triangle to consummate
the Merger;
(ii) the Holding Company and Triangle 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
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proceeding is pending or, to the best knowledge of management of the Holding
Company or Triangle, threatened or probable of assertion to suspend, cancel,
revoke or limit any Permit;
(iii) neither the Holding Company nor Triangle
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 Triangle which in any manner limit, restrict,
regulate, enjoin or prohibit any present or past business or practice of the
Holding Company or Triangle; and, neither the Holding Company nor Triangle 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 Triangle
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 Triangle) 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 and Triangle directly with
Granville; (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 Triangle or their respective Boards 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)
neither the Holding Company nor Triangle has agreed to pay any brokerage fee or
other commission to any person or entity in connection with the transactions
described herein.
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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 and Triangle, no fact or condition (including
Triangle's record of compliance with the Community Reinvestment Act) relating to
the Holding Company or Triangle exists that may reasonably be expected to (i)
prevent or materially impede or delay the Holding Company, Triangle or Granville
from obtaining the 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 or Triangle, it promptly (and in any event within three days
after obtaining such knowledge) shall communicate such fact or condition to the
President of Granville.
3.12. Disclosure. To the best of the knowledge and belief of
the Holding Company and Triangle, no written statement, certificate, schedule,
list or other written information furnished by or on behalf of the Holding
Company or Triangle at any time to Granville in connection with this Agreement
(including without limitation information "Previously Disclosed" by the Holding
Company and Triangle), 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 or Triangle to Granville is
or will be a true and complete copy of such document, unmodified except by
another document delivered by the Holding Company or Triangle.
ARTICLE IV. COVENANTS OF GRANVILLE
4.01. Affirmative Covenants of Granville. Granville hereby covenants
and agrees as follows with the Holding Company and Triangle.
a. "Affiliates" of Granville. Granville 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 Granville (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 Granville 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.
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b. Conduct of Business Prior to Effective Time. While the
parties recognize that the operation of Granville until the Effective Time is
the responsibility of Granville and its Board of Directors and officers,
Granville agrees that, between the date of this Agreement and the Effective
Time, Granville 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, Granville 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; will 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 will 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; and,
(vi) promptly provide to the Holding Company and
Triangle such information about Granville and its financial condition, results
of operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations, as they reasonably shall request.
c. Periodic Information Regarding Loans. All new extensions of
credit in excess of $250,000 will be submitted by Granville to Triangle on an
after-the-fact basis for Triangle's review within ten (10) business days of the
date of the extension of credit.
Additionally, Granville agrees to make available and
provide to the Holding Company and Triangle the following information with
respect to Granville's loans and other extensions of credit (such assets herein
referred to as "Loans") as of March 31, 1996, and each month thereafter until
the Effective Time, such information for each month to be in form and substance
as is usual
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and customary in the conduct of Granville's business and to be furnished within
twenty (20) 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;
(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 Granville
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.
d. Notice of Certain Changes or Events. Following the
execution of this Agreement and up to the Effective Time, Granville promptly
will notify Triangle in writing of and provide to it such information as it
shall request regarding (i) any material adverse change 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,
may or could 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 Granville herein, or any information
that has been Previously Disclosed by Granville to Triangle, to be or become
materially inaccurate, misleading or incomplete, or which has resulted or may or
could cause, create or
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result in the material breach or violation of any of Granville'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. Granville will obtain all
required consents of its landlords to the assignment to Triangle of Granville's
rights and obligations under the Real Property Leases, each of which consents
shall be in such form as shall be specified by Triangle.
f. Further Action; Instruments of Transfer, etc. Granville
covenants and agrees with the Holding Company and Triangle that it (i) will use
its 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 and Triangle 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 and Triangle in
every way in carrying out, and will pursue diligently the expeditious completion
of, such transactions.
4.02. Negative Covenants of Granville. Granville hereby covenants and
agrees that, between the date hereof and the Effective Time, Granville 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.
Granville will not amend its Articles of Incorporation or Bylaws.
b. Change in Capital Stock. Except for Granville Stock to be
issued under the Granville Stock Plans, Granville 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, 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. Granville 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. Granville 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.
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e. Employment, Benefit or Retirement Agreements or Plans.
Except as required by law and except as may occur under the Granville Stock
Plans, Granville 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 Granville 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, Granville will not increase the compensation or
benefits of, or pay any bonus or other special or additional compensation to,
any of Granville'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 Granville'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 and provided that if the Merger occurs prior to such
compensation or benefit plans' normal anniversary date, payments made pursuant
to those compensation or benefit plans shall be made on a pro rata basis for the
appropriate portion of the fiscal year prior to the Merger.
g. Accounting Practices. Granville will not make any changes
in its accounting methods, practices or procedures or in depreciation or
amortization policies, schedules or rates heretofore applied (except as required
by generally accepted accounting principles or governmental regulations).
h. Acquisitions; Additional Branch Offices. Granville 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,
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regulation or this Agreement, Granville 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. Granville 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 or Triangle) relating to a merger or other
acquisition of Granville, or the purchase or acquisition of any Granville Stock,
any branch office of Granville or all or any significant part of Granville's
assets; or provide assistance to any person in connection with any such offer;
(ii) disclose to any person or entity any information not customarily disclosed
to the public concerning Granville or its business, or afford to any other
person or entity access to its properties, facilities, books or records; (iii)
sell or transfer any branch office of Granville or all or any significant part
of its assets to any other person or entity, or (iv) 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. Granville will not,
without the prior written consent of Triangle, 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 (other than real estate) having a
value on Granville's books or a fair market value, whichever is greater, of more
than $50,000 for any individual item or asset, or more than $100,000 in the
aggregate for all such items or assets;
(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 (other than real
estate) having a purchase price, or involving aggregate lease payments, in
excess of $50,000 for any individual item or asset, or more than $100,000 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
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which obligates Granville for a period longer than twelve (12) months;
(iv) 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 (with the exception of investment securities and residential
mortgage loans sold in the ordinary course of Granville's business); or
(v) 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 Granville (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
Granville'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), Granville 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. Granville 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. Granville 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 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. Granville 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; (ii) with any governmental or regulatory agency or
authority; (iii) pursuant to which Granville would assume,
- 33 -
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 Granville to make expenditures of more
than $50,000 (other than contracts, agreements, commitments or understandings
entered into in the ordinary course of Granville's lending operations).
ARTICLE V. COVENANTS OF TRIANGLE AND THE HOLDING COMPANY
Triangle and the Holding Company each hereby covenants and agrees as
follows with Granville.
5.01. Board of Directors.
a. Appointment of Director. Subject to any necessary
regulatory and shareholder approval, as soon as practicable following the
Effective Time, the Holding Company and Triangle shall take such steps as shall
be necessary to appoint one individual, selected in Triangle's sole discretion,
who serves as a member of Granville's Board of Directors as of the date of this
Agreement and at the Effective Time, or to cause such individual to be elected,
as a member of Triangle's Board of Directors. Such individual's continued
service as a director of Triangle shall be subject to Triangle's Board service
policies and to nomination (in conformity with Triangle's bylaws) and
re-election by Triangle's shareholders, and, for such service, such individual
shall be compensated in accordance with Triangle's standard arrangements for the
compensation of its directors (except that such individual shall not receive any
compensation for his services as a director of Triangle if and during the time
he serves as an employee of Triangle).
b. Local Advisory Board. Each of the members of Granville's
Board of Directors at the Effective Time (other than directors who also are
employees of Granville or who do not desire to serve as such) shall be appointed
to serve at Triangle's pleasure as members of Triangle's Granville County
advisory board for a period of two (2) years after the Effective Time. Each such
director's service as an advisory director shall be at the pleasure of Triangle
and shall be subject to Triangle's corporate policies relating to the
appointment, compensation and service of such directors. Notwithstanding the
foregoing, Granville directors who accept appointment as Triangle advisory
directors will receive $100.00 per meeting attended during the two (2) years
after the Effective Time, subject to a maximum of one meeting per month.
5.02. 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
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System of the shares of Triangle Stock to be issued to Granville's shareholders
at the Effective Time.
5.03 Notice of Certain Changes or Events. Following the execution of
this Agreement and up to the Effective Time, the Holding Company and Triangle
promptly will notify Granville in writing of and provide to it such information
as it shall request regarding (i) any material adverse change 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,
may or could 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 or Triangle herein,
or any information that has been Previously Disclosed by the Holding Company or
Triangle to Granville, 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 or Triangle's
covenants or agreements contained herein or in the failure of any of the
conditions described in Paragraphs 7.01. or 7.02. below.
ARTICLE VI. MUTUAL AGREEMENTS
6.01. Shareholders' Meeting; Registration Statement; Proxy
Statement/Prospectus.
a. Meeting of Shareholders. Granville shall cause a meeting of
its shareholders (the "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 Granville's
shareholders of the "Proxy Statement/Prospectus" described below) for the
purpose of Granville's shareholders voting on the approval of the Agreement and
the Merger. In connection with the call and conduct of and all other matters
relating to the Shareholder Meeting (including the solicitation of proxies),
Granville shall fully comply with all provisions of applicable law and
regulations and with Granville's Articles of Incorporation and By-laws.
b. Preparation and Distribution of Proxy Statement/Prospectus.
The Holding Company and Granville jointly will prepare a "Proxy
Statement/Prospectus" for distribution to Granville's shareholders as
Granville's proxy statement relating to Granville's solicitation of proxies for
use at the Shareholder Meeting and as the Holding Company's prospectus relating
to the offer and distribution of Triangle Stock as described herein. The Proxy
Statement/ Prospectus shall be in such form and shall contain or be accompanied
by such information regarding the 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
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Company and Granville. The Holding Company shall include the Proxy
Statement/Prospectus as the prospectus in its "Registration Statement" described
below, and Granville shall cause the 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 Proxy
Statement/Prospectus to comply with any comments of the SEC and the FDIC
thereon.
The Holding Company and Granville will mail the Proxy
Statement/Prospectus to Granville's shareholders not less than twenty (20) days
prior to the scheduled date of the Shareholder Meeting; provided, however, that
no such materials shall be mailed to Granville'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 Granville pursuant to this Agreement. 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 Granville's Board of Directors. Unless,
due to a material change in circumstances or for any other reason Granville's
Board of Directors reasonably believes that such a recommendation would violate
the directors' duties or obligations as such to Granville or to its
shareholders, Granville's Board of Directors will recommend to and actively
encourage Granville's shareholders that they vote their shares of Granville
Stock at the Shareholder Meeting to ratify and approve this Agreement and the
Merger, and the Proxy Statement/Prospectus mailed to Granville's shareholders
will so indicate and state that Granville's Board of Directors considers the
Merger to be advisable and in the best interests of Granville and its
shareholders.
e. Information for Proxy Statement/Prospectus and Registration
Statement. The Holding Company, Triangle and Granville each agrees to respond
promptly, and to use its 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 Proxy Statement/Prospectus. The Holding
Company, Triangle and Granville each hereby covenants with the others that none
of the information
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provided by it for inclusion in the Proxy Statement/Prospectus will, at the time
of its mailing to Granville'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 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, Triangle, the Holding Company and Granville each shall use their
respective 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 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, Granville shall provide the Holding Company and Triangle and
their 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 and Triangle shall be performed in such a manner as will not
interfere unreasonably with Granville's normal operations, or with Granville'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.
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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, Granville, the Holding Company and Triangle 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 Granville, all fees owed to Equity Research
Services, Inc. ("Equity Research") for the cost of Granville's "Fairness
Opinion" described in Paragraph 7.01.d. below, and, in the case of the Holding
Company and Triangle, the cost of the "Environmental Survey" described in
Paragraph 6.06. below). However, subject to the provisions of Paragraph 8.03.
below, all costs incurred in connection with the printing and mailing of the
Proxy Statement/Prospectus shall be deemed to be incurred and shall be paid
fifty percent (50%) by Granville and fifty percent (50%) by the Holding Company.
Granville agrees that the fees paid by it to Equity Research for the Fairness
Opinion and to Langdon and Company and to Hopper & Hicks for accounting and
legal services, respectively, shall not exceed $20,000 for each entity.
6.05. Announcements. Granville, the Holding Company and Triangle each
agrees that no person other than the parties to this Agreement is authorized to
make any public announcements or statements 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 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 any such disclosure by the
Holding Company or Triangle is required by law or otherwise is prudent.
6.06. Environmental Studies. At its option Triangle 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 or Triangle shall deem necessary or
desirable (collectively, the "Environmental Survey"). Triangle 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 and Triangle. If (i) the final
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results of any Environmental Survey (or any related analytical data) reflect
that there likely has been any discharge, disposal, release or emission by any
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 their legal counsel or
other consultants, the Holding Company or Triangle believes that Granville could
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 Granville could 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, Granville could incur any
such liability if it acquired title to such Loan Collateral), and if, (iii)
based on the advice of their legal counsel or other consultants, the Holding
Company or Triangle believes the amount of expenses or liability which Granville
could incur or for which Granville 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 or Triangle shall give Granville 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 or Triangle's sole option and discretion, at any time
thereafter and up to the Effective Time, the Holding Company or Triangle may
terminate this Agreement without further obligation or liability to Granville or
its shareholders.
6.07. Employees; Severance Payments; Employee Benefits.
a. Employment Agreements. Provided he remains employed by
Granville at the Effective Time in his current position, Triangle shall enter
into an employment agreement and a deferred compensation agreement with Billy N.
Quick, Sr. as of the Effective Time which shall contain substantially the same
terms and conditions and be in substantially the same forms as are attached as
Schedule C to this Agreement.
b. Employment of Other Granville Employees. Provided they
remain employed by Granville at the Effective Time, Triangle will attempt in
good faith, but shall have no obligation, to locate suitable positions for and
to offer employment to, all other employees of Granville. Any employment so
offered by Triangle to an employee of Granville shall be in such a position, at
such location within Triangle's branch system, and for such rate of compensation
as Triangle shall determine in its sole discretion. Each such person's
employment with Triangle 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
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obligate Triangle to employ any such person for any specific period of time or
in any specific position or to restrict Triangle's right to terminate the
employment of any such person at any time and for any reason satisfactory to it.
c. Severance Payment. At the Effective Time, Triangle will pay
to each individual employed by Granville at the Effective Time who has been
continuously employed as a full-time employee by Granville for at least one (1)
year prior to the Effective Time, but who is not offered employment with
Triangle following the Effective Time, a severance payment in an amount equal to
one week's salary or wages for each year of full prior continuous service with
Granville, provided that any severance payment shall consist of a minimum of
three (3) weeks' salary or wages, but in no event shall (i) an employee who is
not an officer receive less than one (1) month's salary or wages and (ii) an
officer receive less than two (2) months' salary or wages. Each individual
employed by Granville at the Effective Time who has not been continuously
employed as a full-time employee by Granville for at least one (1) year prior to
the Effective Time and who is not offered employment with Triangle following the
Effective Time shall receive a severance payment in an amount equal to two
week's salary or wages. Notwithstanding anything contained herein to the
contrary, no payment of severance compensation shall be made to any person who
does not remain an employee of Granville at the Effective Time. To the extent
Granville 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.
d. Employee Benefits. Except as otherwise provided in this
Paragraph 6.07, the benefit plans of Granville ("Granville 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 Granville (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, (ii) in the event a
Granville Benefit Plan is terminated, the rights and benefits of Granville's
employees thereunder shall become fully vested, with each participating
Granville 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 benefit plan ("Triangle Benefit
Plan"), on the same basis and applying the eligibility standards as would apply
to the employees of Triangle as if such employee's prior service to Granville
had been performed on behalf of Triangle for qualification, participation and
vesting, but not for funding, purposes, and (iii) in the event a Granville
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 Triangle. Granville
and Triangle agree that the overall level of benefits offered or provided to the
employees of Granville under the Triangle Benefit Plans will be no less than
that offered or
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provided to the present employees of Triangle, and that for purposes of
qualification, participation and vesting, the employees of Granville shall
receive credit for their periods of service to Granville.
6.08. Confidentiality. The Holding Company, Triangle and Granville 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 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 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, Triangle
and Granville each undertakes and agrees to use its 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
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not intentionally take any action that would cause the Merger to fail to so
qualify.
6.10. Accounting Treatment. The Holding Company, Triangle and Granville
each undertakes and agrees to use its 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, Triangle and
Granville agree that the Holding Company and Triangle may offer to acquire,
enter into agreements to acquire and acquire financial institution holding
companies and their subsidiaries, financial institutions and their subsidiaries,
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.
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
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 Triangle to be materially disadvantageous or
burdensome or to impact so adversely the economic or business benefits of this
Agreement to the Holding Company and Triangle as to render it inadvisable for
them 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, 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. 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
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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 Granville, the Holding Company or Triangle 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 Granville,
the Holding Company or Triangle or any of their officers or directors which
shall reasonably be considered by Granville, the Holding Company or Triangle 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 dismissed, terminated or resolved to the satisfaction of all
parties hereto within ninety (90) days of the institution or threat thereof.
c. Approval by Boards of Directors and Shareholders. The
Boards of Directors of Granville, the Holding Company and Triangle shall have
duly approved and adopted this Agreement by appropriate resolutions, and the
shareholders of Granville and Triangle 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 ByLaws.
d. Fairness Opinion. Granville shall have received from Equity
Research a written opinion (the "Fairness Opinion"), dated as of a date
preceding the mailing of the Proxy Statement/Prospectus to Granville's
shareholders in connection with the Shareholder Meeting, to the effect that the
terms of the Merger are fair, from a financial point of view, to Granville and
its shareholders; and Equity Research shall have delivered a letter to
Granville, dated as of a date within five (5) days preceding the Closing Date,
to the effect that it remains its opinion that the terms of the Merger are fair,
from a financial point of view, to Granville and its shareholders.
e. Tax Opinion. The Holding Company and Granville shall have
received, in form and substance satisfactory to them, an opinion of Coopers &
Lybrand, LLP substantially to the effect that: (i) for federal income tax
purposes, consummation of the Merger will constitute a "reorganization" as
defined in ss. 368(a)(1)(A) of the Code; (ii) that no taxable gain will be
recognized by a shareholder of Granville upon such shareholder's receipt of
Triangle Stock in exchange for his or her Granville Stock; (iii) that the basis
of the Triangle Stock received by the shareholder in the Merger will be the same
as his or her Granville Stock surrendered in exchange therefor; (iv) that, if
Granville 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
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Granville 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, LLP may rely on representations contained in certificates of
officers of the Holding Company, Triangle and Granville.
f. No Termination or Abandonment. This Agreement shall not
have been terminated by any party hereto.
g. NASDAQ Natonal Market System Listing. The Holding Company
shall have satisfied all requirements for the shares of Triangle Stock to be
issued to the shareholders of Granville in connection with the Merger to be
listed on the NASDAQ National Market System as of the Effective Time.
7.02. Additional Conditions to Granville's Obligations. Notwithstanding
any other provision of this Agreement to the contrary, Granville's separate
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 been any
material adverse change 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, may or could cause, create or result in any such material
adverse change.
b. Compliance with Laws. The Holding Company and Triangle
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 could or may
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 and Triangle's Representations and
Warranties and Performance of Agreements; Officers' Certificate. Unless waived
in writing by Granville as provided in Paragraph 10.03. below, each of the
respective representations and warranties of the Holding Company and Triangle
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) for
changes which are not, in the aggregate, material and adverse to the financial
condition, results of
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operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of the Holding Company and its consolidated
subsidiaries considered as one enterprise, and (ii) 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.
Granville shall have received a certificate dated as
of the Closing Date and executed by the Holding Company and Triangle and their
respective Presidents and Chief Financial Officers to the foregoing effect.
d. Legal Opinion of the Holding Company and Triangle Counsel.
Granville shall have received from Moore & Van Allen, PLLC, counsel to the
Holding Company and Triangle, 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 Granville.
e. Other Documents and Information from the Holding Company
and Triangle. The Holding Company and Triangle shall have provided to Granville
correct and complete copies of their respective Bylaws, Articles of
Incorporation and board resolutions (all certified by their respective
Secretaries), together with certificates of the incumbency of their respective
officers and such other closing documents and information as may be reasonably
requested by Granville or its counsel.
f. Articles of Merger; Other Actions. Articles of Merger in
the form described in Paragraph 1.07. above shall have been duly executed and
delivered by Triangle as provided in that Paragraph.
g. Acceptance by Granville's Counsel. The form and substance
of all legal matters described herein or related to the transactions
contemplated herein shall be reasonably acceptable to Granville's legal counsel.
7.03. Additional Conditions to the Holding Company's and Triangle's
Obligations. Notwithstanding any other provision of this Agreement to the
contrary, the Holding Company's and Triangle's separate obligations 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 in the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of Granville, 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, may or could cause, create or result in any such
material adverse change.
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b. Compliance with Laws; Adverse Proceedings, Injunction, Etc.
Granville 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
could or may have a material adverse effect on the financial condition, results
of operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of Granville.
c. Granville's Representations and Warranties and Performance
of Agreements; Officers' Certificate. Unless waived in writing by the Holding
Company or Triangle as provided in Paragraph 10.03. below, each of the
representations and warranties of Granville 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) 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 Granville, and (ii) as otherwise contemplated by
this Agreement; and Granville 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.
The Holding Company and Triangle shall have received
a certificate dated as of the Closing Date and executed by Granville and its
President and Chief Financial Officer to the foregoing effect and as to such
other matters as may be reasonably requested by the Holding Company and
Triangle.
d. Effectiveness 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 other actions, if any, as it shall consider to be
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.
e. Agreements from Granville 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 Granville as provided in
Paragraph 4.01.a. above.
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f. Accounting Treatment. (i) The Holding Company shall have
received assurances from Coopers & Lybrand, LLP, 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, Granville'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.
g. Legal Opinion of Granville Counsel. The Holding Company and
Triangle shall have received from Granville's counsel, Hopper & Hicks, a written
opinion, dated as of the Closing Date and substantially in the form of Schedule
E attached hereto or otherwise in form and substance reasonably satisfactory to
the Holding Company and Triangle.
h. Other Documents and Information from Granville. Granville
shall have provided to the Holding Company and Triangle correct and complete
copies of Granville's Articles of Incorporation, Bylaws and board and
shareholder resolutions (all certified by Granville's Secretary), together with
certificates of the incumbency of Granville's officers and such other closing
documents and information as may be reasonably requested by the Holding Company
or Triangle or its counsel.
i. Consents to Assignment of Real Property Leases. Granville
shall have obtained all required consents to the assignment to Triangle of its
rights and obligations under the Real Property Leases, under the terms, rates
and conditions of such Real Property 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 Triangle; and, each of Granville's
lessors shall have confirmed in writing that Granville is not in default under
the terms and conditions of the Real Property Lease between such lessor and
Granville.
j. Acceptance by the Holding Company's and Triangle'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 and Triangle's legal counsel.
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 Granville), this
Agreement may be terminated by the mutual agreement of the Holding Company,
Triangle and Granville. Upon any such mutual termination, all obligations of
Granville, the Holding Company and Triangle hereunder shall terminate and each
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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, Triangle or Granville (whether before or after
approval hereof by Granville's shareholders) upon written notice to the other
parties and under the circumstances described below.
a. Termination by the Holding Company or Triangle. This
Agreement may be terminated by the Holding Company or Triangle by action of its
respective Board of Directors or Executive Committee:
(i) if Granville 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 or Triangle
determines at any time that any of Granville'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
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, may or could 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, Granville's shareholders do not ratify and approve this Agreement
and approve the Merger at the Shareholder Meeting;
(iv) under the circumstances described in
Paragraph 6.06. above; or,
(v) if any of the conditions of the
obligations of the Holding Company or Triangle (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 and Triangle, or if the Merger shall not have become
effective, on or before March 31, 1997, unless such date is extended as
evidenced by the written mutual agreement of the parties hereto.
However, before the Holding Company or Triangle 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 Granville 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 or Triangle shall not become
effective if, within thirty (30) days following the giving of such notice,
Granville shall cure such breach, default or violation or
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satisfy such condition to the reasonable satisfaction of the Holding Company and
Triangle.
b. Termination by Granville. This Agreement may be terminated
by Granville by action of its Board of Directors:
(i) if the Holding Company or Triangle shall
have violated or failed to fully perform any of their respective obligations,
covenants or agreements contained in Article V or VI herein in any material
respect;
(ii) if Granville determines that any of the
Holding Company's or Triangle's respective 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, may or could cause any such representations or warranties
to become false or misleading in any material respect;
(iii) if, subject to Granville'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 Shareholder Meeting; or,
(iv) if any of the conditions of the
obligations of Granville (as set forth in Paragraph 7.01. or 7.02. above) shall
not have been satisfied or effectively waived in writing by Granville, or if the
Merger shall not have become effective, on or before March 31, 1997, unless such
date is extended as evidenced by the written mutual agreement of the parties
hereto.
However, before Granville 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 and
Triangle 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 Granville shall not become
effective if, within thirty (30) days following the giving of such notice, the
Holding Company or Triangle shall cure such breach, default or violation or
satisfy such condition the reasonable satisfaction of Granville.
8.03. Breach; Remedies.
a. In the event of a breach by Granville 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 and Triangle's sole right and remedy shall be to terminate
this
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Agreement prior to the Effective Time as provided in Paragraph 8.02. above, or,
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 or
Triangle 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 Granville's sole right and remedy shall be to terminate this
Agreement prior to the Effective Time as provided in Paragraph 8.02. above, or,
in the case of a failure to perform or violation of any obligations, agreements
or covenants, to seek specific performance thereof.
b. Notwithstanding anything contained herein to the contrary,
if any party to this Agreement breaches this Agreement by wilfully or
intentionally failing to perform or violating any of its obligations, agreements
or covenants contained in Articles IV, V or VI of this Agreement, such party
shall be obligated to pay all expenses of the other party(ies) described in
Paragraph 6.04., together with other damages recoverable at law or in equity.
ARTICLE IX. INDEMNIFICATION
9.01. Indemnification Following Effective Time. Following the Effective
Time, without releasing any insurance carrier and after exhaustion of all
applicable director and officer liability insurance coverage for Granville and
its directors or officers, Triangle agrees that it will indemnify Granville's
former officers and directors to the same extent it indemnifies Triangle's
directors and officers against liabilities arising from actions in their
official capacities as officers and directors of Granville.
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 Granville
or as to the Holding Company and Triangle, the disclosure of
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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.
(b) Where used in this Agreement, the terms "material adverse
event" 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, (b) in GAAP, or
(c) in interest rates) 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) $500,000 of
assets and $35,000 of projected 1996 earnings, in the case of Granville or (b)
$7,250,000 of assets and $1,000,000 of projected 1996 earnings, in the case of
the Holding Company and Triangle, 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 above, and the Holding
Company's representations and warranties contained in Paragraph 3.02. above,
shall survive the effectiveness of the Merger.
b. Indemnification. Triangle's indemnification agreements and
obligations pursuant to Paragraph 9.01. above shall become effective only at the
Effective Time, and Triangle 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.
- 51 -
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 shareholders of Granville, by an
agreement in writing approved by a majority of the Board of Directors of the
Holding Company, Triangle and Granville executed in the same manner as this
Agreement; provided however, that, except with the further approval of
Granville's shareholders of that change or as otherwise provided herein,
following approval of this Agreement by the shareholders of Granville no change
may be made in the number of shares of Triangle Stock into which each share of
Granville 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 Granville, to:
Granville United Bank
109 Hillsboro Street
Oxford, North Carolina 27565-3211
Attention: Billy N. Quick, Sr., President and
Chief Executive Officer
With copy to: William L. Hopper
Hopper & Hicks
111 Gilliam Street
Oxford, NC 27565
b. If to either the Holding Company or Triangle, to:
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27605
- 52 -
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. Granville, the Holding Company and Triangle
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.
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, Triangle or
Granville 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, Triangle or Granville should have conducted any
investigation or that such right has been exercised by the Holding Company,
- 53 -
Triangle, Granville, their respective agents, representatives or others. Any
investigations or inspections that have been made by the Holding Company,
Triangle or Granville 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, Triangle or Granville in this Agreement.
IN WITNESS WHEREOF, Granville, the Holding Company and Triangle each
has caused this Agreement to be executed in its name by its duly authorized
officers as of the date first above written.
- 54 -
TRIANGLE BANK
By: /s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
ATTEST:
/s/ Susan C. Gilbert
Secretary
TRIANGLE BANCORP, INC.
By: /s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
ATTEST:
/s/ Susan C. Gilbert
Secretary
GRANVILLE UNITED BANK
By: /s/ Billy N. Quick, Sr.
Billy N. Quick, Sr.
President and Chief Executive Officer
ATTEST:
/s/ Lionel B. Burnette
Secretary
- 55 -
SCHEDULE A
to Agreement and Plan of Reorganization and Merger
dated June 7, 1996
Plan of Merger
PLAN OF MERGER
OF
GRANVILLE UNITED BANK
WITH AND INTO
TRIANGLE BANK
A. Names of Merging Corporations. The names of the corporations
proposed to be merged are GRANVILLE UNITED BANK, a North Carolina banking
corporation ("Granville") and TRIANGLE BANK, a North Carolina banking
corporation ("Triangle").
B. Nature of Transaction. Subject to the provisions of this Plan of
Merger, Granville shall be merged into and with Triangle pursuant to N.C. GEN.
STAT. ss. 53-12 (the "Merger") and with the effect provided under N.C. GEN.
STAT. ss.ss. 55-11-06 and 53-13.
C. Name of Surviving Corporation. Triangle shall be the surviving
corporation in the Merger and shall exist under the name
"Triangle Bank."
D. Terms and Conditions of the Merger.
1. The Merger shall be effected pursuant to the terms and
conditions of this Plan of Merger and of the Agreement and Plan of
Reorganization and Merger dated as of June 7, 1996, by and among Triangle
Bancorp, Inc. (the "Holding Company"), Granville and Triangle (the "Agreement").
As provided herein and in the Agreement, except insofar as the same may be
continued by law and except as continued in and merged into Triangle, at the
effective time of the Merger (the "Effective Time") the separate corporate
existence of Granville shall cease and the corporate existence of Triangle shall
continue with all of its purposes, objects, rights, privileges, powers and
franchises, all of which shall be unaffected and unimpaired by the Merger.
2. At the Effective Time and by reason of the Merger, all of
Granville'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 Granville, whether tangible or intangible) shall be
transferred to and vest in Triangle, and Triangle 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 Granville, all without any conveyance, assignment or further act or deed;
and, Triangle shall become responsible for all of the liabilities, duties and
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obligations of every kind, nature and description (including duties as trustee
or fiduciary) of Granville as of the Effective Time.
3. The Articles of Incorporation and Bylaws of Triangle in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of Triangle as the surviving corporation in the Merger
and shall continue in full force and effect following the Effective Time until
amended in accordance with applicable laws. The officers and directors of
Triangle in office at the Effective Time shall continue to hold such offices as
the officers and directors of Triangle as the surviving corporation until
removed as provided by law or until their respective successors have been
elected or appointed.
E. Conversion and Exchange of Shares.
1. At the Effective Time, all rights of Granville's
shareholders with respect to all then outstanding shares of Granville's common
stock ($5.00 par value) ("Granville 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 Granville Stock (other than any shares
held by Granville 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, Triangle or Granville, into 1.75 (the "Exchange
Rate") newly issued shares of the Holding Company's no par value common stock
("Triangle Stock").
2. At the Effective Time, and without any action by Granville,
Triangle, the Holding Company or any holder thereof, Granville's stock transfer
books shall be closed as to holders of Granville Stock immediately prior to the
Effective Time and, thereafter, no transfer of Granville Stock by any such
holder may be made or registered; and the holders of shares of Granville Stock
shall cease to be, and shall have no further rights as, stockholders of
Granville other than as provided herein. Following the Effective Time,
certificates representing shares of Granville 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,
(a) certificates for the number of whole shares of 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, (b) 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.
3. 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 Granville of record immediately prior to the Effective Time
written instructions and transmittal materials (a "Transmittal Letter") for use
in
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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 Granville
of his or her Old Certificates, the Exchange Agent shall register in the name of
such shareholder the shares of 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.
4. (i) At the Effective Time, each option or other right to
purchase shares of Granville Stock pursuant to stock options ("Granville
Options") granted by Granville under the Granville United Bank Incentive Stock
Option Plan for Employees and the Granville United Bank Stock Option Plan for
Directors (collectively, the "Granville 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 Triangle shall assume each
Granville Option, in accordance with the terms of the Granville Stock Plans and
stock option agreement by which it is evidenced, except that from after the
Effective Time (A) Triangle and its Compensation Committee shall be substituted
for Granville and the Committee of Granville's Board of Directors (including, if
applicable, the entire Board of Directors of Granville) administering the
Granville Stock Plans, (B) each Granville Option assumed by Triangle may be
exercised solely for shares of Triangle Stock, (C) the number of shares of
Triangle Stock subject to such Granville Option shall be equal to the number of
shares of Granville Stock subject to such Granville Option immediately prior to
the Effective Time multiplied by the Exchange Rate, and (D) the per share
exercise price under each such Granville Option shall be adjusted by dividing
the per share exercise price under each such Granville Option by the Exchange
Rate and rounding up to the nearest cent. Notwithstanding the provisions of
clause (C) of the preceding sentence, Triangle shall not be obligated to issue
any fraction of a share of Triangle Stock upon exercise of Granville Options and
any fraction of a share of Triangle Common Stock that otherwise would be subject
to a converted Granville Option shall represent the right to receive a cash
payment upon exercise of such converted Granville Option equal to the product of
such fraction and the difference between the market value of one share of
Triangle Stock at the time of exercise of such Option and the per share exercise
price of such Option. The market value of one share of Triangle Stock at the
time of exercise of an Option shall be the closing sales price of Triangle Stock
on the NASDAQ National Market System on the last trading day preceding the date
of exercise.
(ii) All restrictions or limitations on transfer with respect to
Granville Stock awarded under the Granville Stock Plans or any other plan,
program, or arrangement of Granville, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with
A-3
respect to shares of Triangle Stock into which such restricted stock is
converted pursuant to the Merger.
(iii) Notwithstanding the foregoing provisions of this Paragraph E.4,
in no event shall options to purchase more than 44,270 shares of Granville Stock
be converted into options to purchase Triangle Stock in connection with the
Merger.
5. No scrip or certificates representing fractional shares of
Triangle Stock will be issued to any former shareholder of Granville, and,
except as provided herein, 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 Triangle Stock resulting from the above exchange.
In lieu of the issuance of fractional shares of Triangle Stock, at the Effective
Time 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,
following the Effective Time, the Exchange Agent shall divide such cash among
and remit it (without interest) to the former shareholders of Granville in
accordance with their respective interests therein. The "aggregate market value"
of all fractional shares of Triangle Stock shall be equal to the total of such
fractional shares multiplied by $ .
6. No certificate for any shares, or cash for any fractional
share, of Triangle Stock shall be delivered to any former shareholder of
Granville unless and until such shareholder shall have properly surrendered to
the Exchange Agent the Old Certificate(s) formerly representing his or her
shares of Granville Stock, together with properly completed transmittal
materials 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, Triangle, Granville, 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.
7. Any shareholder of Granville who 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 Granville
Stock in the manner and pursuant to the procedures provided therein. Shares of
Granville Stock held by persons who exercise Dissenters Rights shall not be
converted into Triangle Stock. However, if any shareholder of Granville 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
A-4
shares of Granville 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 above.
8. Any shareholder of Granville whose certificate evidencing
shares of Granville 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. ss. 25-8-405 and N.C. GEN. STAT.
ss. 25-8-104.
9. The status of the shares of Triangle Stock and the shares
of the capital stock of Triangle which are outstanding immediately prior to the
Effective Time shall not be affected by the Merger.
F. Abandonment. This Plan of Merger may be terminated and the Merger
may be abandoned at any time prior to the Effective Time upon termination of the
Agreement as provided therein.
A-5
SCHEDULE B
to Agreement and Plan of Reorganization and Merger
dated June 7, 1996
Affiliate's Letter
_________________, 1996
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27605
Dear Sirs:
Pursuant to the terms of that certain Agreement and Plan of Reorganization and
Merger dated June 7, 1996 (the "Agreement") by and among Triangle Bancorp, Inc.
(the "Holding Company"), Triangle Bank ("Triangle") and Granville United Bank
("Granville"), (i) Granville will be merged into and with Triangle (the
"Merger"), and (ii) each outstanding share of Granville's common stock ("Bank
Stock") (other than shares held by shareholders who exercise their right of
dissent and appraisal under North Carolina law) will be converted into and
exchanged for a fraction (determined as provided in the Agreement) of a newly
issued share of the Holding Company's no par value common stock ("Triangle
Stock").
Based upon the list of persons submitted by Granville and approved by the
Holding Company, the undersigned "Affiliate" is considered an "affiliate" of
Granville as that term is defined and used for purposes of Rule 145 promulgated
by the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). As required by the Agreement,
this Affiliates' Agreement is being delivered to the Holding Company in
connection with and as a condition of its execution and delivery of the
Agreement.
The undersigned (jointly and severally if more than one) hereby represents and
warrants to the Holding Company as follows:
A. The names of all "Persons", if any, having a relationship to
the Affiliate as described under the definition of "Person"
attached as Exhibit A hereto and who may receive shares of the
Triangle Stock in connection with the Merger (the Affiliate's
"Related Persons") are listed on the signature page hereto and
also have signed this letter agreement;
B-1
B. The Affiliate and each of the Related Persons, if any, have
carefully read this letter and have discussed its requirements
and other applicable limitations upon the sale, transfer or
other disposition of Triangle Stock to be received by them in
connection with the Merger, to the extent they deem necessary,
with their own legal counsel;
As an inducement for Triangle and the Holding Company to enter into the
Agreement and to consummate the Merger and for the Holding Company to issue the
Triangle Stock as provided in the Agreement, the undersigned (jointly and
severally if more than one) hereby covenants and agrees with Triangle and the
Holding Company as follows:
A. The Affiliate and each of the Related Persons, if any,
has been informed that, since at the time the Merger is
to be submitted to a vote of Granville's shareholders the
Affiliate and each such Related Person will be considered
to be an "affiliate" of Granville, any resale by the
Affiliate or a Related Person of any such Triangle Stock
would require either (i) the registration under the Act
of the Triangle Stock to be sold, (ii) compliance by the
Affiliate or such Related Person with the requirements of
Rule 145(d) promulgated under the Act, or (iii) the
availability of another exemption from the registration
requirements of the Act;
B. Neither the Affiliate nor any of the Related Persons, if
any, (i) will make any sale, transfer or other
disposition of Triangle Stock during the 30 days prior to
the date of the Merger, or, (ii) following the date of
the Merger, will make any sale, transfer or other
disposition of Triangle Stock acquired by them in
connection with the Merger except in compliance with the
requirements of the Act and the rules and regulations of
the Commission (including Rule 145) promulgated
thereunder;
C. Notwithstanding compliance with the requirements of the
Act, neither the Affiliate nor any of the Related
Persons, if any, shall make any sale, transfer or other
disposition of the Triangle Stock acquired by them in
connection with the Merger until such time as
consolidated financial statements covering the Holding
Company's operations for a period of at least thirty (30)
days following the Merger either have been (i) filed with
the Commission in a Quarterly Report on Form 10-Q,
(ii) sent to the shareholders of the Holding Company, or
(iii) published in newspapers of general circulation in
accordance with the Holding Company's normal practices
for releasing financial information to the general
public;
D. The Affiliate and each of the Related Persons, if any,
understands and agrees that the Holding Company is under
no obligation to register the sale, transfer or other
B-2
disposition of the Triangle Stock for them or on their behalf
or to take any other action necessary in order to render
available an exemption from the registration requirements of
the Act. Therefore, they may be compelled to hold such shares
for a period of at least three years after which such shares
may be sold, transferred, or otherwise disposed of without
restriction, provided that at the time of any such sale,
transfer or other disposition they are not considered to be
"affiliates" of the Holding Company. However, for the period
that the sale, transfer or other disposition of such shares is
so restricted, it is understood and agreed that the Holding
Company will file on a timely basis with the Commission all
reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Commission thereunder; and,
E. The Holding Company may place stock transfer restrictions on
the shares of Triangle Stock held by the Affiliate and each of
the Related Persons, if any, which are subject to this
Agreement, and there will be placed on the certificates
evidencing such shares, and any substitutions therefor, a
legend stating in substance as follows:
"The shares represented by this certificate were
issued pursuant to a business combination which was
accounted for as a "pooling-of-interests" and may not
be sold, nor may the owner hereof reduce the owner's
risk relative hereto in any way, until Triangle
Bancorp, Inc. ("Triangle") has published financial
results covering at least thirty (30) days of
combined operations after ___________, 1996. In
addition, the shares represented by this certificate
may not be sold, transferred, or otherwise disposed
of except or unless (1) covered by an effective
registration statement under the Securities Act of
1933, as amended, (2) in accordance with (i) Rule
145(d) (in the case of shares issued to an individual
who is not an affiliate of Triangle) or (ii) Rule 144
(in the case of shares issued to an individual who is
an affiliate of Triangle) of the Rules and
Regulations of such Act, or (3) in accordance with a
legal opinion satisfactory to counsel for Triangle
that such sale or transfer is otherwise exempt from
the
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registration requirements of such
Act."
The legend may be removed from the certificates evidencing the
Triangle Stock to which this letter agreement applies by the
delivery of new certificates without such legend in
substitution therefor if the holder thereof delivers to the
Holding Company an opinion of legal counsel acceptable to the
Holding Company, and in form and substance acceptable to the
Holding Company, to the effect that the restrictions described
above are no longer applicable to such person and that such
legend is not or is no longer required for purposes of the
Act.
Yours very truly,
By:
"Related Persons", if any:
(Seal)
(Seal)
(Seal)
(Seal)
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EXHIBIT A
Rule 145 of the Securities Act of 1933, as amended, incorporates by reference
the definition of "person" set forth under Paragraph (a)(2) of Rule 144, as
follows:
"(2) The term "person" when used with reference to a person for whose
account securities are to be sold in reliance upon this rule includes,
in addition to such person, all of the following persons:
(A) Any relative or spouse of such person, or any
relative of such spouse, any of whom has the same
home as such person;
(B) Any trust or estate in which such person or any
of the persons specified in (A) collectively own ten
percent (10%) or more of the total beneficial
interest or of which any of such persons serve as
trustee, executor or in any similar capacity; and,
(C) Any corporation or other organization (other than
the issuer) in which such person or any of the
persons specified in (A) are the beneficial owners
collectively of ten percent (10%) or more of any
class of equity securities or ten percent (10%) or
more of the equity interest."
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SCHEDULE C
to Agreement and Plan of Reorganization and Merger
dated June 7, 1996
Form of Employment Agreements with Billy N. Quick, Sr.
STATE OF NORTH CAROLINA
COUNTY OF WAKE
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of __________, 1996, by
and between TRIANGLE BANK (hereinafter referred to as "Triangle")
and BILLY N. QUICK, SR. (hereinafter referred to as "Quick")
W I T N E S S E T H:
WHEREAS, Quick heretofore has been employed as the President
and Chief Executive Officer of Granville United Bank (the "Bank") and in such
position has provided continued leadership and guidance in the Bank's growth and
development; and,
WHEREAS, as of the date hereof, the Bank has been
acquired by and merged into Triangle; and,
WHEREAS, Triangle desires to retain the advantage of Quick's
knowledge of the Bank's operations and affairs, and his knowledge of and
experience, standing and reputation in Triangle's market area formerly served by
the Bank; and,
WHEREAS, for the reasons described above, Triangle desires to
retain Quick's services as an employee of Triangle for the period specified
herein, and Quick is willing to serve as an employee of Triangle for such
period; and the parties desire to enter into this Agreement to set forth the
terms and conditions of Quick's employment with Triangle.
NOW, THEREFORE, for and in consideration of the premises and
mutual promises, covenants and conditions hereinafter set forth, and other good
and valuable considerations, the receipt and sufficiency of which hereby are
acknowledged, Triangle and Quick hereby agree as follows:
1. Employment. Triangle hereby agrees to employ Quick, and
Quick hereby agrees to serve as an employee of Triangle, all upon the terms and
conditions stated herein. As an employee of Triangle, Quick will (i) serve as an
Executive Vice President of Triangle, (ii) provide such assistance to Triangle
as it may reasonably request from time to time regarding matters involving the
former customers and employees of the Bank, loan
quality control and review, product conversion and other tasks relating to the
former operations of the Bank, (iii) promote the business of Triangle, and
advise Triangle on strategic direction, local board cultivation and business
development activities in the Bank's former market area, and (iv) have such
other duties and responsibilities, and render to Triangle such other management
services, as are customary for persons in Quick's position with Triangle or as
shall otherwise be reasonably assigned to him from time to time by Triangle.
Quick shall faithfully and diligently discharge his duties and
responsibilities under this Agreement and shall use his best efforts to
implement the policies established by Triangle.
Quick hereby agrees to devote such number of hours of his
working time and endeavors to the employment granted hereunder as Quick and
Triangle shall deem to be necessary to discharge his duties hereunder, and, for
so long as employment hereunder shall exist, Quick shall not engage in any other
occupation which requires a significant amount of Quick's personal attention
during Triangle's regular business hours or which otherwise interferes with
Quick's attention to or performance of his duties and responsibilities as an
employee of Triangle hereunder except with the prior written consent of
Triangle. However, subject to Paragraph 5(a) below, nothing herein contained
shall restrict or prevent Quick from personally, and for Quick's own account,
trading in stocks, bonds, securities, real estate or other forms of investment
for Quick's own benefit so long as said activities do not interfere with Quick's
attention to or performance of his duties and responsibilities as an employee of
Triangle hereunder.
During the term of this Agreement, Quick shall be allowed, in
his sole discretion, to maintain his primary work location as Granville County,
North Carolina.
2. Compensation. For all services rendered by Quick to
Triangle under this Agreement, Triangle shall pay Quick a base salary at a rate
of One Hundred Five Thousand and No/100 Dollars ($105,000.00) per annum. Salary
paid under this Agreement shall
- 2 -
be payable in cash not less frequently than monthly. All compensation hereunder
shall be subject to customary withholding taxes and such other employment taxes
as are required by law.
3. Participation in Retirement and Employee Benefit Plans;
Fringe Benefits. Subject to the terms and conditions of this Agreement and of
that certain Agreement and Plan of Reorganization and Merger dated June __, 1996
among the Bank, Triangle Bancorp, Inc. and Triangle, Quick shall be entitled to
participate in any and all employee benefit programs and compensation plans from
time to time maintained by Triangle and available to all employees of Triangle,
all in accordance with the terms and conditions (including eligibility
requirements) of such programs and plans of Triangle, resolutions of Triangle's
Board of Directors establishing such programs and plans, and Triangle's normal
practices and established policies regarding such programs and plans. Quick
shall be entitled to paid vacation leave in accordance with the policy of
Triangle for similarly positioned employees now or hereafter in effect. During
the Employment Term, Quick also shall be entitled to participate in Triangle's
Management Incentive Compensation Plan which provides for an annual incentive
opportunity of 15% of base salary.
In addition to the other compensation and benefits described
in this Agreement, Triangle shall promptly reimburse Quick for all reasonable
expenses incurred by him in the performance of his duties under this Agreement
and documented to the reasonable satisfaction of Triangle or appropriate
officers of Triangle pursuant to established procedures. Triangle shall provide
Quick an automobile for use by Quick on business of Triangle. Quick may use the
automobile for personal reasons provided Quick prepares and provides to Triangle
the appropriate documentation so that the personal use can be reported for state
and federal income tax purposes.
4. Term. Unless extended or sooner terminated as provided in
this Agreement and subject to the right of either Quick or Triangle to terminate
Quick's employment at any time as provided herein, the term of this Agreement
and Quick's
- 3 -
employment with Triangle hereunder shall be for a period commencing on the date
hereof and continuing for a period of five (5) years. At each anniversary date
of this Agreement (i.e., ____ of each year, beginning ____, 2001), the term
automatically shall be extended for an additional one (1) year on the same terms
and conditions set forth herein, unless either party hereto shall give written
notice to the other of their intention not to extend this Agreement for an
additional one (1) year, which notice shall be given at least three (3) months
prior to the next anniversary date. For example, if neither party has given
notice of its intention not to extend by ____, 2001, then the term of this
Agreement would automatically be extended by one (1) year to _____, 2002. Such
extension shall not exceed a total of five (5) years.
5. Noncompetition; Confidentiality. Quick hereby acknowledges
and agrees that (i) the Bank has made a significant investment in the
development of its business in the geographic area identified below as the
"Relevant Market" and that, by virtue of Triangle's acquisition of the Bank,
Triangle has a valuable economic interest in its and the Bank's business in the
Relevant Market which it is entitled to protect; (ii) in the course of his
service as an officer of the Bank and Triangle, he has gained and will gain
substantial knowledge of and familiarity with the Bank's and Triangle's
customers and their dealings with them, and other information concerning the
Bank's and Triangle's business, all of which constitutes valuable assets and
privileged information that is particularly sensitive due to the fiduciary
responsibilities inherent in the banking business; and (iii) in order to protect
Triangle's interest in and to assure it the benefit of its succession to the
Bank's business, it is reasonable and necessary to place certain restrictions on
Quick's ability to compete against Triangle and on his disclosure of information
about Triangle's and the Bank's business and customers. For that purpose, and in
consideration of Triangle's agreements contained herein, Quick covenants and
agrees as provided below.
- 4 -
(a) Covenant Not to Compete. During any period
during which Quick is receiving any compensation from Triangle, whether pursuant
to this Agreement or any other agreement, plan or other arrangement, Quick will
not "Compete" (as defined below), directly or indirectly, with Triangle in the
geographic area consisting of (i) Granville County, North Carolina, and (ii) any
county contiguous to Granville County, North Carolina (the "Relevant Market").
Quick acknowledges and agrees that the Relevant
Market and Restriction Period are limited in scope to the geographic territory
and period of time reasonably necessary to protect Triangle's economic interest.
For the purposes of this Paragraph 5(a), the
following terms shall have the meanings set forth below:
Compete. The term "Compete" means: (i)
soliciting or securing deposits from any Person residing in the Relevant Market
for any Financial Institution; (ii) soliciting any Person residing in the
Relevant Market to become a borrower from any Financial Institution, or
assisting (other than through the performance of ministerial or clerical duties)
any Financial Institution in making loans to any such Person; (iii) inducing or
attempting to induce any Person who was a Customer of the Bank on the date of
its acquisition by Triangle, or who was a Customer of Triangle on the date of
termination of this Agreement or Quick's employment with Triangle, to change
such Customer's depository, loan and/or other banking relationship from the Bank
or Triangle to another Financial Institution; (iv) acting as a consultant,
officer, director, independent contractor, or employee of any Financial
Institution that has its main or principal office in the Relevant Market, or, in
acting in any such capacity with any other Financial Institution, to maintain an
office or be employed at or assigned to or to have any direct involvement in the
management, business or operation of any office of such Financial Institution
located in the Relevant Market; or (v) communicating to any Financial
Institution the names or addresses or any financial information concerning any
Person who was a Customer of the Bank at the date of its merger with Triangle,
or who was a
- 5 -
Customer of Triangle at the date of the termination of this Agreement or Quick's
employment with Triangle for any reason except as required by law or any
regulatory agency or in the performance of his duties or responsibilities of
employment.
Customer. The term "Customer" means any
Person with whom, as of the effective date of termination of this Agreement or
Quick's employment with Triangle for any reason, Triangle has or has had a
depository, loan and/or other banking relationship.
Financial Institution. The term "Financial
Institution" means any federal or state chartered bank, savings bank, savings
and loan association or credit union, or any holding company for or corporation
that owns or controls any such entity, or any other Person engaged in the
business of making loans of any type or receiving deposits, other than Triangle.
Person. The term "Person" means any natural
person or any corporation, partnership, proprietorship, joint venture, limited
liability company, trust, estate, governmental agency or instrumentality,
fiduciary, unincorporated association or other entity.
(b) Confidentiality Covenant. Quick covenants
and agrees that any and all data, figures, projections, estimates, lists, files,
records, documents, manuals or other such materials or information (financial or
otherwise) relating to Bank or Triangle and their respective banking businesses,
regulatory examinations, financial results and condition, lending and deposit
operations, customers (including lists of Bank's customers and information
regarding their accounts and business dealings with Bank), policies and
procedures, computer systems and software, shareholders, employees, officers and
directors (herein referred to as "Confidential Information") are proprietary to
Triangle and are valuable, special and unique assets of Triangle's business to
which Quick has had access as an officer of the Bank and will have access during
his employment with Triangle. Quick agrees that (i) all such Confidential
Information shall be considered and kept as the confidential, private and
privileged records and information of Triangle, and
- 6 -
(ii) at all times during the term of his employment with Triangle and following
the termination of this Agreement or his employment with Triangle for any
reason, and except as shall be required in the course of the performance by
Quick of his duties on behalf of Triangle or otherwise pursuant to the direct,
written authorization of Triangle, Quick will not: divulge any such Confidential
Information to any other Person or Financial Institution; remove any such
Confidential Information in written or other recorded form from Triangle's
premises; or make any use of any Confidential Information for his own purposes
or for the benefit of any Person or Financial Institution other than Triangle.
However, following the termination of this Agreement or Quick's employment with
Triangle, this subparagraph (b) shall not apply to any Confidential Information
which then is in the public domain (provided that Quick was not responsible,
directly or indirectly, for permitting such Confidential Information to enter
the public domain without Triangle's consent), or which is obtained by Quick
from a third party which or who is not obligated under an agreement of
confidentiality with respect to such information.
(c) Remedies for Breach. Quick understands and
agrees that a breach or violation by him of the covenants contained in
Paragraphs 5(a) and 5(b) of this Agreement will be deemed a material breach of
this Agreement and will cause irreparable injury to Triangle, and that it would
be difficult to ascertain the amount of monetary damages that would result from
any such violation. In the event of Quick's actual or threatened breach or
violation of the covenants contained in either such Paragraph, Triangle shall be
entitled to bring a civil action seeking an injunction restraining Quick from
violating or continuing to violate those covenants or from any threatened
violation thereof, or for any other legal or equitable relief relating to the
breach or violation of such covenant. Quick agrees that, if Triangle institutes
any action or proceeding against Quick seeking to enforce any of such covenants
or to recover other relief relating to an actual or threatened breach or
violation of any of such covenants, Quick shall be deemed to
- 7 -
have waived the claim or defense that Triangle has an adequate remedy at law and
shall not urge in any such action or proceeding the claim or defense that such a
remedy at law exists. However, the exercise by Triangle of any such right,
remedy, power or privilege shall not preclude Triangle or its successors or
assigns from pursuing any other remedy or exercising any other right, power or
privilege available to it for any such breach or violation, whether at law or in
equity, including the recovery of damages, all of which shall be cumulative and
in addition to all other rights, remedies, powers or privileges of Triangle.
Notwithstanding anything contained herein to the
contrary, Quick agrees that the provisions of Paragraph 5(b) above and the
remedies provided in this Paragraph 5(c) for a breach by Quick shall be in
addition to, and shall not be deemed to supersede or to otherwise restrict,
limit or impair the rights of Triangle under the Trade Secrets Protection Act
contained in Article 24, Chapter 66 of the North Carolina General Statutes, or
any other state or federal law or regulation dealing with or providing a remedy
for the wrongful disclosure, misuse or misappropriation of trade secrets or
other proprietary or confidential information.
(d) Survival of Covenants. Quick's covenants and
agreements and Triangle's rights and remedies provided for in this Paragraph 5
shall survive any termination of this Agreement or Quick's employment with
Triangle.
6. Standards. Quick, in the execution of his duties under this
Agreement, shall at all times and in all respects comply with the Triangle Bank
Code of Business Conduct (the "Code of Conduct") and the Triangle Bank Code of
Ethics (the "Code of Ethics"), as each of the same is in effect as of the date
hereof and as each shall be amended or supplemented subsequent hereto), and with
all applicable statutes, rules, regulations, administrative orders, statements
of policy and other pronouncements or standards promulgated thereunder.
7. Termination and Termination Pay.
(a) Quick's employment under this Agreement may
be terminated at any time by Quick upon sixty (60) days' written
- 8 -
notice to Triangle. Upon such termination, Quick shall be entitled to receive
compensation through the effective date of such termination; provided, however,
that Triangle, in its sole discretion, may elect for Quick not to serve out part
or all of said notice period.
(b) Quick's employment under this Agreement shall
be terminated upon the death of Quick during the term of this Agreement. If
Quick's death occurs between _____, 1996 and _____, 1997, Triangle shall pay to
Quick's estate an amount equal to Seventy-One Thousand Three Hundred and no/100
Dollars ($71,300.00). If Quick's death occurs between ______, 1997 and ______,
1998, Triangle shall pay to Quick's estate an amount equal to Thirty-Five
Thousand Seven Hundred and no/100 dollars ($35,700.00). If Quick's death occurs
after ____, 1998, Quick's estate shall be entitled to receive any compensation
that Quick shall have earned prior to the date of his death but which remains
unpaid.
(c) In the event Quick becomes disabled during
the term of his employment hereunder and it is determined by Triangle that Quick
is permanently unable to perform his duties under this Agreement, Triangle shall
continue to compensate Quick at the level of compensation described in Paragraph
2 above, and shall continue to provide Quick each of the other benefits set
forth or described in this Agreement, for the remaining term of this Agreement,
less any other payments provided under any disability income plan of Triangle
which is applicable to Quick. In the event of any disagreement between Quick and
Triangle as to whether Quick is physically or mentally incapacitated such as
will result in the termination of Quick's employment pursuant to this Paragraph
7(c), the question of such incapacity shall be submitted to an impartial and
reputable physician for determination, selected by mutual agreement of Quick and
Triangle or, failing such agreement, by two (2) physicians (one (1) of whom
shall be selected by Triangle and the other by Quick), and such determination of
the question of such incapacity by such physician or physicians shall be final
and binding on Quick and Triangle. Triangle shall pay the reasonable fees and
expenses of
- 9 -
such physician or physicians in making any determination required under this
Paragraph 7(c).
(d) Triangle may terminate Quick's employment at
any time for any reason with or without "Cause" (as defined below), but any
termination by Triangle other than termination for "Cause" (as defined below)
shall not prejudice Quick's right to compensation or other benefits under this
Agreement for its remaining term. Following any termination of Quick's
employment by Triangle for "Cause", Quick shall have no further rights under
this Agreement (including any right to receive compensation or other benefits
for any period after such termination).
For purposes of this Paragraph 7(d), Triangle shall have
"Cause" to terminate Quick's employment upon:
(i) A determination by Triangle's
Board of Directors or its Executive Committee, in good faith, that Quick (A) has
breached in any material respect any of the terms or conditions of this
Agreement or of the Code of Conduct or the Code of Ethics, or (B) is engaging or
has engaged in willful misconduct or conduct which is detrimental to the
business prospects of Triangle or which has had or likely will have a material
adverse effect on Triangle's business or reputation. Prior to any termination by
Triangle of Quick's employment for a breach, failure to perform or conduct
described in this subparagraph (i), Triangle shall give Quick written notice
which describes such breach, failure to perform or conduct and if during a
period of five (5) days following such notice Quick cures or corrects the same
to the reasonable satisfaction of Triangle, then this Agreement shall remain in
full force and effect. However, notwithstanding the above, if Triangle has given
written notice to Quick on a previous occasion of the same or a substantially
similar breach, failure to perform or conduct, or of a breach, failure to
perform or conduct which Triangle's Board of Directors or its Executive
Committee determines in good faith to be of substantially similar import, or if
Triangle's Board of Directors or its Executive Committee determines in good
faith that the then current breach, failure to perform or conduct is not
reasonably curable, then termination under this
- 10 -
subparagraph (i) shall be effective immediately and Quick shall have no right to
cure such breach, failure to perform or conduct.
(ii) The violation by Quick of any
applicable federal or state law, or any applicable rule, regulation, order or
statement of policy promulgated by any governmental agency or authority having
jurisdiction over Triangle or any of its affiliates or subsidiaries (a
"Regulatory Authority", including without limitation the Federal Deposit
Insurance Corporation, the North Carolina Commissioner of Banks, the Federal
Reserve Board or any other banking regulator), which results from Quick's gross
negligence, willful misconduct or intentional disregard of such law, rule,
regulation, order or policy statement and results in any substantial damage,
monetary or otherwise, to Triangle or any of its affiliates or subsidiaries or
to Triangle's reputation;
(iii) The commission in the course of
Quick's employment with Triangle of an act of fraud, embezzlement, theft or
proven personal dishonesty (whether or not resulting in criminal prosecution or
conviction);
(iv) The conviction of Quick of any
felony or any criminal offense involving dishonesty or breach of trust, or the
occurrence of any event described in Section 19 of the Federal Deposit Insurance
Act or any other event or circumstance which disqualifies Quick from serving as
an employee or executive officer of, or a party affiliated with, Triangle or its
bank holding company;
(v) Quick becomes unacceptable to, or
is removed, suspended or prohibited from participating in the conduct of
Triangle's affairs (or if proceedings for that purpose are commenced) by, any
Regulatory Authority; and,
(vi) The occurrence of any event
believed by Triangle, in good faith, to have resulted in Quick being excluded
from coverage, or having coverage limited as to Quick as compared to other
covered officers or employees, under Triangle's then current "blanket bond" or
other fidelity bond or insurance policy covering its directors, officers or
employees.
- 11 -
8. Additional Regulatory Requirements. Notwithstanding
anything contained in this Agreement to the contrary, it is understood and
agreed that Bank (or its successors in interest) shall not be required to make
any payment or take any action under this Agreement if (a) Triangle is declared
by any Regulatory Authority to be insolvent, in default or operating in an
unsafe or unsound manner, or if (b) in the opinion of counsel to Triangle such
payment or action (i) would be prohibited by or would violate any provision of
state or federal law applicable to Triangle, including without limitation the
Federal Deposit Insurance Act and Chapter 53 of the North Carolina General
Statutes as now in effect or hereafter amended, (ii) would be prohibited by or
would violate any applicable rules, regulations, orders or statements of policy,
whether now existing or hereafter promulgated, of any Regulatory Authority, or
(iii) otherwise would be prohibited by any Regulatory Authority.
9. Successors and Assigns.
(a) This Agreement shall inure to the benefit of
and be binding upon any corporate or other successor of Triangle which shall
acquire, directly or indirectly, by conversion, merger, consolidation, purchase
or otherwise, all or substantially all of the assets of Triangle.
(b) Triangle is contracting for the unique and
personal skills of Quick. Therefore, Quick shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of Triangle.
10. Modification; Waiver; Amendments. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the parties hereto. No waiver
by either party hereto, at any time, of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No amendments or
additions to this
- 12 -
Agreement shall be binding unless in writing and signed by both parties, except
as herein otherwise provided.
11. Applicable Law. This Agreement shall be governed in all
respects whether as to validity, construction, capacity, performance or
otherwise, by the laws of North Carolina, except to the extent that federal law
shall be deemed to apply.
12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement 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.
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal and in such form as to be binding as of the day and year first
hereinabove written.
TRIANGLE BANK
By:
Michael S. Patterson, President
ATTEST:
Secretary
[Corporate Seal]
(SEAL)
Billy N. Quick, Sr.
- 13 -
STATE OF NORTH CAROLINA
COUNTY OF WAKE
DEFERRED COMPENSATION AGREEMENT
THIS DEFERRED COMPENSATION AGREEMENT is made and entered into as of
the ____ day of ___________, 1996 by and between TRIANGLE BANK, Raleigh, North
Carolina (hereinafter referred to as "Triangle") and BILLY N. QUICK, a resident
of Granville County, North Carolina (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employee has served as President and Chief Executive Officer
of Granville United Bank, Oxford, North Carolina (the "Bank") which, on the date
hereof, was merged with and into Triangle pursuant to the terms of an Agreement
and Plan of Reorganization and Merger dated June __, 1996, (the "Merger
Agreement"); and
WHEREAS, pursuant to the terms of the Merger Agreement, Employee has
entered into a certain Employment Agreement dated as of the date hereof (the
"Employment Agreement") whereby Employee will serve as an Executive Vice
President of Triangle for a term of five (5) years; and
WHEREAS, Triangle desires to enter into this Agreement in
consideration of the Employee's willingness to serve as an employee of Triangle
and in recognition of Employee's knowledge of and experience, standing and
reputation in Triangle's market area formerly served by the Bank.
NOW, THEREFORE, for and in consideration of the premises and mutual
promises, covenants, and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employee and Triangle have executed the Employment Agreement
whereby Employee will serve as an Executive Vice President or in some employment
capacity as an employee of Triangle for a term of five (5) years.
2. Beginning on either (a) the end of the five (5) year term of the
Employment Agreement, or (b) Employee's retirement from employment with Triangle
after the end of the five (5) year term of the Employment Agreement, but prior
to Employee's attaining sixty-five (65) years of age, as elected in Employee's
sole discretion, Triangle agrees and promises to pay the sum of Three Hundred
Thousand and No/100 Dollars ($300,000.00) at the time and in the manner set
forth below in one hundred twenty (120) equal monthly installments of Two
Thousand Five Hundred and No/100 Dollars ($2,500.00) to Employee, if living. The
initial payment hereunder shall be made within thirty (30) days following such
event and shall be made on the same date of each successive month thereafter
until paid in full or until the death of the Employee.
3. Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
of any kind or a fiduciary relationship between Triangle and the Employee or any
other person.
4. The amounts subject to the terms of this Agreement shall constitute
an unsecured promise of Triangle to be paid to the Employee pursuant to the
terms of this Agreement. Such rights shall be no greater than the rights of any
unsecured general creditor of Triangle.
5. The rights of the Employee pursuant to the terms of this Agreement
shall not be assigned, transferred, pledged, or encumbered in any manner.
6. Pursuant to Paragraph 5 of the Employment Agreement, the Employee
has agreed not to engage in competition with Triangle and to maintain the
confidentiality of Triangle's business. In the event the Employee violates
Paragraph 5 of the Employment Agreement, the Employee shall forfeit all right to
any and all amounts of deferred compensation remaining unpaid to Employee
pursuant to the terms of this Agreement on the date of any such breach.
7. This Agreement shall be construed in accordance with and governed
by the laws of the State of North Carolina.
- 2 -
8. This Agreement shall be binding upon the parties hereto, their
heirs, executors, administrators, successors, and assigns and the masculine
gender where used herein shall equally include the feminine.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first hereinabove written.
TRIANGLE BANK
BY:_______________________________
Michael S. Patterson
President
ATTEST:
- -----------------------
_____________ Secretary
[Corporate Seal]
____________________________(SEAL)
Billy N. Quick
- 3 -
SCHEDULE D
to Agreement and Plan of Reorganization and Merger
dated June 7, 1996
Form of Legal Opinion of Counsel for the
Holding Company and Triangle
, 1996
Granville United Bank
109 Hillsboro Street
Oxford, North Carolina 27565-3211
Gentlemen:
We have acted as counsel to Triangle Bancorp, Inc. (the "Holding
Company") and its bank subsidiary, Triangle Bank ("Triangle") and, in such
capacity, we have reviewed that certain Agreement and Plan of Reorganization and
Merger dated June 7, 1996, by and among Granville United Bank ("Granville"),
Triangle and the Holding Company (the "Agreement", including the Plan of Merger
referenced therein). Pursuant to and in accordance with the terms and conditions
of the Agreement, Granville is proposed to be merged into and with Triangle (the
"Merger") and the outstanding shares of Granville's common stock will be
converted into shares of the Holding Company's common stock. This letter is
delivered in connection with the consummation and closing of the Merger and
other transactions described in the Agreement (the "Closing"). Capitalized terms
appearing herein and not otherwise defined are used as defined in the Agreement.
As counsel to Triangle and the Holding Company, we have examined originals or
copies of their Articles of Incorporation, By-Laws and corporate minute books,
the Agreement, the Registration Statement (No. ) on Form S-4 (the "Registration
Statement") filed by the Holding Company with the Securities and Exchange
Commission (the "Commission") and containing the Prospectus/Proxy Statement,
dated , 1996, the corporate minute books of the Holding Company and
Triangle, certificates and written statements of officers and agents of Triangle
and the Holding Company, certificates of public officials, and such other
documents and records of the Holding Company and Triangle as we have deemed
necessary for the purpose of giving the opinions hereinafter expressed.
In giving certain of the opinions set forth below, we have relied solely upon
certifications and letters provided to me by public officials. As to matters of
fact set forth below, and matters of fact which form the basis for any opinion
set forth below, we have
D-1
relied solely upon (i) certificates and statements of officers, employees and
accountants of the Holding Company and Triangle, (ii) the representations and
warranties of the Holding Company and Triangle set forth in the Agreement, and
(iii) a letter dated , 1996, from the NASDAQ National Market System
("NASDAQ") with respect to approval of the Holding Company's Notification to the
NASDAQ with respect to the listing of shares of Triangle Stock to be issued in
connection with the Merger. Except as expressly stated herein, we have not
independently verified any factual matters in connection with the giving of the
opinions set forth below.
Based upon and subject to the foregoing and the qualifications set forth below,
it is our opinion that, except as described in the Registration Statement or the
Agreement or as Previously Disclosed by the Holding Company or Triangle to
Granville:
1. Triangle and the Holding Company each (i) is duly organized
and incorporated and validly existing (as a banking corporation and a business
corporation, respectively) 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) to our Actual Knowledge, 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.
2. The Holding Company's authorized capital stock consists of
20,000,000 shares of Triangle Stock. The Holding Company's Board of Directors
has reserved and authorized the issuance of the shares of Triangle Stock into
which the outstanding shares of Granville Stock will be converted in connection
with the Merger and which may be purchased upon the exercise of outstanding
options which are converted into rights to purchase Triangle Stock as provided
in the Agreement, and such shares (i) have been approved for listing on the
NASDAQ and, (ii) when issued as described in the Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
3. (i) The Holding Company and Triangle each has the corporate
power and authority to execute and deliver the Agreement and to perform its
obligations and agreements and carry out the transactions described therein,
(ii) all corporate proceedings required to be taken to authorize the Holding
Company and Triangle to enter into the Agreement and to perform its obligations
and agreements and carry out the transactions described therein have been duly
and properly taken, and (iii) the Agreement constitutes
D-2
the valid and binding agreement of the Holding Company and Triangle enforceable
in accordance with its terms.
4. 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 the Agreement, nor the consummation of the
transactions described therein, nor compliance by the Holding Company or
Triangle with any of its obligations or agreements contained therein, 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
or Triangle's Articles of Incorporation or Bylaws, or, to our Actual Knowledge,
any contract, agreement, lease, mortgage, note, bond, indenture, license, or
obligation or understanding (oral or written) to which the Holding Company or
Triangle is bound or by which it, its business, capital stock or any of its
properties or assets may be affected; (ii) to our Actual Knowledge, result in
the creation or imposition of any lien, claim, interest, charge, restriction or
encumbrance upon any of the Holding Company's or Triangle'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; or (iv) to our Actual
Knowledge, result in the acceleration of any obligation or indebtedness of the
Holding Company or Triangle.
5. No consents, approvals or waivers are required to be
obtained from any person or entity in connection with the Holding Company's or
Triangle's execution and delivery of the Agreement, or the performance of their
respective obligations or agreements or the consummation of the transactions
described therein, except for required approvals of governmental or regulatory
authorities ("Regulatory Approvals").
6. All Regulatory Approvals required to be obtained by the
Holding Company or Triangle for the consummation of the transactions
contemplated by the Agreement (other than the filing of Articles of Merger) have
been obtained, all conditions imposed on the Holding Company or Triangle in
connection therewith that are required to be satisfied prior to consummation of
such transactions have been satisfied or waived, and, to our Actual Knowledge,
all such regulatory approvals are in full force and effect; and, no other
consents, approvals, authorizations or other orders of any court or any
governmental agency are required to be obtained by the Holding Company or
Triangle for the consummation of the transactions contemplated by the Agreement
(other than the filing of Articles of Merger with respect to the Merger);
7. (i) There are no actions, suits, arbitrations,
controversies or other proceedings or investigations (or, to our Actual
Knowledge, 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 our Actual
Knowledge, threatened, contemplated or probable of assertion, against, relating
to or otherwise affecting the Holding Company or Triangle or any of their
D-3
properties or assets which, if determined adversely, could result in liability
on the part of the Holding Company or Triangle for, or subject it to, monetary
damages, fines or penalties, an injunction, or which could have a material
adverse effect on the Holding Company's or Triangle's financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations or on the ability of the Holding Company
or Triangle to consummate the Merger; and
(ii) neither the Holding Company nor Triangle 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
FRB, 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 the Holding Company or Triangle which in any manner limit, restrict,
regulate, enjoin or prohibit any present or past business or practice of the
Holding Company or Triangle; and, to our Actual Knowledge, neither the Holding
Company nor Triangle 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.
8. When Articles of Merger have been duly executed by
Granville and Triangle and have been filed with the Secretary of State of North
Carolina in accordance with law, the Merger will become effective at the time of
such filing or, if later, at the time specified in such Articles of Merger.
Additionally, we have reviewed the Registration Statement and the Proxy
Statement and have considered the matters required to be stated therein and the
statements contained therein and, based on the foregoing (and, in certain
circumstances relying as to materiality on the opinions of officers and
representatives of the Holding Company and Triangle) nothing has come to our
attention which would lead me to believe that the Registration Statement at the
time it became effective, or the Proxy Statement at the time it was distributed
to Granville's shareholders, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (except that we make no statement
regarding any information included in the Registration Statement regarding
Granville or regarding any of the Holding Company's or Triangle's financial
statements or other financial, accounting or statistical data).
In giving the opinions set forth above, we have assumed, without independent
verification, that:
a. Granville is duly organized, validly existing and in good
standing as a commercial bank under the laws of North
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Carolina and all other applicable laws to which it is subject.
Granville has the full power and authority (corporate and
otherwise) to enter into and perform its obligations under the
Agreement and to consummate the transactions described
therein. The Agreement and all other documents and instruments
executed by Granville in connection therewith have been duly
and validly executed and delivered on behalf of and are
enforceable in accordance with their terms against Granville;
b. Other than persons executing documents on behalf of the
Holding Company or Triangle, the signatures of all persons
signing any document or instrument delivered in connection
with the Agreement or the consummation of the transactions
described therein are genuine, and all such persons executing
such documents have been duly authorized to execute and
deliver such documents and instruments;
c. All natural persons executing any document or instrument
delivered in connection with the Agreement or the consummation
of the transactions described therein, or on whose behalf any
such documents were executed, had and continue to have legal
competency to do so and to become legally bound thereby;
d. All documents submitted to us as originals are authentic, and
all documents submitted to us as certified or photostatic
copies conform to the original documents, which are themselves
authentic;
e. No event will take place subsequent to the date hereof that
would cause any action taken in connection with the Agreement
or the transactions described therein to fail to comply with
any law, rule, regulation, order, judgment, decree or duty, or
that would permit any party to cancel, rescind or otherwise
avoid any act;
f. Granville has complied or will comply with all conditions of
all required approvals of regulatory authorities having
jurisdiction over Granville, the Holding Company, Triangle and
the transactions described in the Agreement.
g. All certificates of public officials have been properly given
and are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or
undue influence in connection with the Agreement or the
transactions described therein, and the conduct of the parties
to the Agreement has complied with any requirement of good
faith, fair dealing and conscionability. Each party to the
Agreement has acted without notice of any defense against the
enforcement of any rights created thereby; and there are no
agreements or understandings, or any usage of trade or course
of
D-5
dealing, among the parties that, in either case, would define,
supplement or qualify the terms of the Agreement.
In addition, all opinions and statements set forth in this letter are expressly
limited and qualified as follows:
a. The opinions expressed herein are limited to matters of North
Carolina law and the federal laws of the United States of
America, and no opinion is expressed as to any matter that is
governed by the laws of any other jurisdiction or to the
effect of any such laws on the matters dealt with herein.
b. As used in any paragraph of this letter, the phrase "Actual
Knowledge" means that, in giving the opinion contain in such
paragraph, we have relied with your consent exclusively on
certificates of officers of Triangle and the Holding Company,
certificates of others as to the existence or non-existence of
the circumstances upon which this opinion is predicated, or
various representations and warranties contained in the
Agreement (and we have not conducted any independent
investigation in this regard), and that we have no actual
conscious awareness of any information to the contrary.
c. Our opinions are limited to the matters expressly stated
herein, and no opinion may be inferred or implied beyond the
matters expressly stated.
d. The enforceability of all or various provisions of the
Agreement may be limited by (A) the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect relating to or limiting the
enforcement of creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, (C)
general principles of equity and applicable laws or court
decisions limiting the availability of specific performance,
injunctive relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and (D) federal and/or state bank holding
company, commercial bank, savings bank and deposit insurance
laws and regulations and the application of principles of
public policy underlying such laws and regulation
e. we express no opinion with respect to compliance by the
Holding Company or Triangle with any federal, state or local
law, rule, regulation, ordinance, order or decree relating to
hazardous substances, hazardous wastes, hazardous materials or
the protection of the environment, or with respect to any
Environmental Law.
D-6
f. These opinions are delivered to you pursuant to Section
7.02.d. of the Agreement and in connection with consummation
of the transactions described therein and are solely for your
benefit. No other person shall be entitled to rely on our
opinions herein, and you are not entitled to rely on such
opinions in any other context or for any other purpose. No
copy of this letter or any portion thereof may be delivered to
any other person, or quoted, published or otherwise
disseminated, without our prior written consent.
g. Except as otherwise expressly specified herein, the opinions
herein are limited to matters in existence as of the date
hereof, and we undertake no responsibility to revise or
supplement this letter or the opinions herein to reflect any
change in the law or facts.
Yours truly,
D-7
SCHEDULE E
to Agreement and Plan of Reorganization and Merger
dated June 7, 1996
Form of Legal Opinion of Counsel for Granville
, 1996
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27605
Gentlemen:
We have acted as special counsel to Granville United Bank
("Granville"), a North Carolina banking corporation, in connection with the
transactions described in that certain Agreement and Plan of Reorganization and
Merger dated June 7, 1996, by and among Granville, Triangle Bank ("Triangle")
and Triangle Bancorp, Inc. (the "Holding Company") (the "Agreement", including
the Plan of Merger referenced therein). Pursuant to and in accordance with the
terms and conditions of the Agreement, Granville is proposed to be merged into
and with Triangle (the "Merger") and the outstanding shares of Granville's
common stock will be converted into shares of the Holding Company's common
stock. This letter is delivered in connection with the consummation and closing
of the Merger and other transactions described in the Agreement (the "Closing").
Capitalized terms appearing herein and not otherwise defined are used as defined
in the Agreement.
As counsel to Granville, we have examined originals or copies of
Granville's Articles of Incorporation, By-Laws and corporate minute books, the
Agreement, the Registration Statement (No. ) on Form S-4 (the "Registration
Statement") filed by the Holding Company with the Securities and Exchange
Commission (the "Commission") and containing the Prospectus/Proxy Statement,
dated , 1996, certificates and written statements of officers and agents of
Granville, certificates of public officials, and such other documents and
records of Granville as we have deemed necessary for the purpose of giving the
opinions hereinafter expressed.
In giving certain of the opinions set forth below, we have relied
solely upon certifications and letters provided to us by public officials. As to
matters of fact set forth below, and matters of fact which form the basis for
any opinion set forth below, we have relied solely upon (i) certificates and
statements
E-1
of officers, employees and accountants of Granville, and (ii) the
representations and warranties of Granville set forth in the Agreement. Except
as expressly stated herein, we have not independently verified any factual
matters in connection with the giving of the opinions set forth below.
Subject to the qualifications and limitations set forth herein, and
except as set forth in the Registration Statement or the Agreement or as
Previously Disclosed by Granville to Triangle and the Holding Company in
connection therewith, we are of the opinion that:
1. Granville (i) is duly organized and incorporated and
validly existing as a commercial bank 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 conduct 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 respective businesses makes
such qualification necessary, except where failure so to qualify would not have
a material adverse effect on Granville; and (iv) to our Actual Knowledge, 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
Granville.
2. Granville's authorized capital stock consists of 2,000,000
shares of common stock, $5.00 par value per share ("Granville Stock").
Each outstanding share of Granville Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent Granville's stock is assessable under 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 the requirement of an applicable exemption from registration
requirements under the Securities Act of 1933, as amended (the "1933 Act").
3. Granville has no subsidiary (direct or indirect).
4. Except for options to purchase shares of Granville Stock
issued and outstanding under the Granville Stock Plans, Granville has no
outstanding (i) securities or other obligations (including debentures or other
debt instruments) which are convertible into shares of Granville Stock or any
other securities of Granville, (ii) options, warrants, rights, calls or other
commitments of any nature which entitle any person to receive or acquire any
shares of Granville Stock or any other securities of Granville, or (iii) plan,
agreement or other arrangement pursuant to which shares of Granville Stock or
any other securities of
E-2
Granville, or options, warrants, rights, calls or other commitments of any
nature pertaining thereto, have been or may be issued.
5. (i) Granville has the corporate power and authority to
execute and deliver the Agreement and to perform its obligations and agreements
and carry out the transactions described therein, (ii) all corporate proceedings
and approvals required to authorize Granville to enter into the Agreement and to
perform its obligations and agreements and carry out the transactions described
therein have been duly and properly completed or obtained, and (iii) the
Agreement constitutes the valid and binding agreement of Granville enforceable
in accordance with its terms.
6. Except where the same would not have a material adverse
effect on Granville, neither the execution and delivery of the Agreement, nor
the consummation of the transactions described therein, nor compliance by
Granville with any of its obligations or agreements contained therein, 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, Granville's Articles
of Incorporation or Bylaws, or, to our Actual Knowledge, any contract,
agreement, lease, mortgage, note, bond, indenture, license, or obligation or
understanding (oral or written) to which Granville is bound or by which it, its
business, capital stock or any of its properties or assets may be affected; (ii)
to our Actual Knowledge, result in the creation or imposition of any lien,
claim, interest, charge, restriction or encumbrance upon any of Granville'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; or (iv) to
our Actual Knowledge, result in the acceleration of any obligation or
indebtedness of Granville.
7. No consents, approvals or waivers are required to be
obtained from any person or entity in connection with Granville's execution and
delivery of the Agreement, or the performance of its obligations or agreements
or the consummation of the transactions described therein, except for approvals
of Granville's Board of Directors and shareholders and required approvals of
governmental or regulatory authorities ("Regulatory Approvals").
8. The Agreement has been duly and validly approved by
Granville's Board of Directors and shareholders to the extent and in the manner
required by applicable law, and the Agreement has been executed and delivered on
Granville's behalf.
9. All Regulatory Approvals required to be obtained by
Granville for the consummation of the transactions contemplated by the Agreement
(other than the filing of Articles of Merger) have been obtained, all conditions
imposed on Granville in connection therewith that are required to be satisfied
prior to consummation of such transactions have been satisfied or waived, and,
to our Actual Knowledge, all such regulatory approvals are in full force and
effect; and, no other consents, approvals, authorizations or
E-3
other orders of any court or any governmental agency are required to be obtained
by Granville for the consummation of the transactions contemplated by the
Agreement (other than the filing of Articles of Merger with respect to the
Merger);
10. (i) To our Actual Knowledge, there are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or 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 threatened, contemplated or probable
of assertion, against, relating to or otherwise affecting Granville or any of
its properties or assets which, if determined adversely, could result in
liability on the part of Granville for, or subject it to, monetary damages,
fines or penalties, an injunction, or which could have a material adverse effect
on Granville's financial condition, results of operations, prospects,
businesses, assets, loan portfolio, investments, properties or operations or on
the ability of Granville to consummate the Merger; and
(ii) Granville 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 Granville which in
any manner limit, restrict, regulate, enjoin or prohibit any present or past
business or practice of Granville; and, to our Actual Knowledge, Granville has
not 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.
Additionally, we have reviewed the Registration Statement and the Proxy
Statement and have considered the matters required to be stated therein and the
statements contained therein and, based on the foregoing (and, in certain
circumstances relying as to materiality on the opinions of officers and
representatives of Granville) nothing has come to our attention which would lead
us to believe that the Registration Statement at the time it became effective,
or the Proxy Statement at the time it was distributed to Granville's
shareholders, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except that we make no statement regarding
any information included in the Registration Statement regarding the Holding
Company or Triangle or regarding any of Granville's financial statements or
other financial, accounting or statistical data).
E-4
In giving the opinions set forth above, we have assumed, without
independent verification, that the following is true:
a. Triangle and the Holding Company each is duly organized,
validly existing and in good standing as a corporation under
the laws of North Carolina and all other applicable laws to
which it is subject. Triangle and the Holding Company each has
the full power and authority to enter into and perform its
obligations under the Agreement and to consummate the
transactions described therein. The Agreement and all other
documents and instruments executed by Triangle and the Holding
Company in connection therewith have been duly and validly
executed and delivered on behalf of and are enforceable in
accordance with their terms against Triangle and the Holding
Company;
b. Other than persons executing documents on behalf of Granville,
the signatures of all persons signing any document or
instrument delivered in connection with the Agreement or the
consummation of the transactions described therein are
genuine, and all such persons executing such documents have
been duly authorized to execute and deliver such documents and
instruments;
c. All natural persons executing any document or instrument
delivered in connection with the Agreement or the consummation
of the transactions described therein, or on whose behalf any
such documents were executed, had and continue to have legal
competency to do so and to become legally bound thereby;
d. All documents submitted to us as originals are authentic, and
all documents submitted to us as certified or photostatic
copies conform to the original documents, which are themselves
authentic;
e. No event will take place subsequent to the date hereof that
would cause any action taken in connection with the Agreement
or the transactions described therein to fail to comply with
any law, rule, regulation, order, judgment, decree or duty, or
that would permit any party to cancel, rescind or otherwise
avoid any act;
f. The Holding Company and Triangle have complied or will comply
with all conditions of all required approvals of regulatory
authorities having jurisdiction over Granville, the Holding
Company, Triangle and the transactions described in the
Agreement;
g. All certificates of public officials have been properly given
and are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or
undue influence in connection with the Agreement or
E-5
the transactions described therein, and the conduct of the
parties to the Agreement has complied with any requirement of
good faith, fair dealing and conscionability. Each party to
the Agreement has acted without notice of any defense against
the enforcement of any rights created thereby; and there are
no agreements or understandings, or any usage of trade or
course of dealing, among the parties that, in either case,
would define, supplement or qualify the terms of the
Agreement.
In addition, all opinions and statements set forth in this letter are
expressly limited and qualified as follows:
a. The opinions expressed herein are limited to matters of North
Carolina law and the federal laws of the United States of
America, and no opinion is expressed as to any matter that is
governed by the laws of any other jurisdiction or to the
effect of any such laws on the matters dealt with herein.
b. As used in any paragraph of this letter, the phrase "Actual
Knowledge" means that, in giving the opinion contain in such
paragraph, we have relied with your consent exclusively on
certificates of officers of Granville as to the existence or
non-existence of the circumstances upon which this opinion is
predicated, or various representations and warranties
contained in the Agreement (and we have not conducted any
independent investigation in this regard), and that we have no
actual conscious awareness of any information to the contrary.
c. Our opinions are limited to the matters expressly stated
herein, and no opinion may be inferred or implied beyond the
matters expressly stated.
d. The enforceability of all or various provisions of the
Agreement may be limited by (A) the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect relating to or limiting the
enforcement of creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, (C)
general principles of equity and applicable laws or court
decisions limiting the availability of specific performance,
injunctive relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and (D) federal and/or state bank holding
company, commercial bank, savings bank and deposit insurance
laws and regulations and the application of principles of
public policy underlying such laws and regulation
E-6
e. We express no opinion with respect to compliance by Granville
with any federal, state or local law, rule, regulation,
ordinance, order or decree relating to hazardous substances,
hazardous wastes, hazardous materials or the protection of the
environment, or with respect to any Environmental Law.
f. These opinions are delivered to you pursuant to Section
7.03.f. of the Agreement and in connection with consummation
of the transactions described therein and are solely for your
benefit. No other person shall be entitled to rely on our
opinions herein, and you are not entitled to rely on such
opinions in any other context or for any other purpose. No
copy of this letter or any portion thereof may be delivered to
any other person, or quoted, published or otherwise
disseminated, without our prior written consent.
h. Except as otherwise expressly specified herein, the opinions
herein are limited to matters in existence as of the date
hereof, and we undertake no responsibility to revise or
supplement this letter or the opinions herein to reflect any
change in the law or facts.
Yours truly,
E-7
APPENDIX II
Equity Research Services, Inc.
June 24, 1996
Board of Directors
Granville United Bank
109 Hillsborough Street
P.O. Box 528
Oxford, NC 27575
Gentlemen:
We were retained by you to provide an opinion as to the fairness, from a
financial point of view, of the merger of Granville United Bank ("Granville")
with and into Triangle Bank ("Triangle Bank"), the wholly owned subsidiary
of Triangle Bancorp, Inc. ("Triangle"). The terms of the merger are set
forth in the Agreement and Plan of Reorganization and Merger By and Among
Granville United Bank and Triangle Bank and Triangle Bancorp, Inc. ("Granville
Agreement") dated as of June 7, 1996. Under the terms of the agreement,
Granville will merge with and into Triangle and its shares of common stock
outstanding immediately prior to the effective date will be converted into
Triangle common stock at an exchange ratio of 1.75 ("Granville Exchange
Ratio"). Each Granville shareholder will receive a number of Triangle common
shares equal to the number of shares of Granville common stock owned by such
shareholder multiplied by the Granville exchange ratio. No fractional shares
will be issued but Granville shareholders, in lieu of the issuance of
fractional shares, will receive cash as determined in the Granville Agreement.
The foregoing summary is qualified in its entirety by reference to the
Granville 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.
FINANCIAL ADVISORY, VALUATION AND INVESTOR RELATIONS SERVICES
EQUITY RESEARCH SERVICES, INC.
P.O. BOX 2942, RALEIGH, NC 27602-2942
(919) 876-8868
II-1
Board of Directors
June 24, 1996
Equity Research was selected by Granville 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 Granville or Triangle for its own account
or for its clients.
In connection with rendering its opinion to Granville's Board of Directors,
Equity Research, among other things, (i) reviewed the financial terms of the
Agreement; (ii) reviewed drafts of the Joint Proxy-Prospectus; (iii) reviewed
and analyzed the financial position and performance of Granville and Triangle
as reflected in certain information provided for this purpose by the
respective managements; (iv) reviewed historical stock prices of Granville
and Triangle as well as, to the extent possible, trading activity in their
common stocks; (v) 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, Call Reports and conducted
a general and financial comparison of the two companies to one another, as
well as to other 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, 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 have not independently verified
such information. We have not performed or considered any independent
appraisal or evaluation of the assets of Granville or Triangle. Additionally,
Equity Research made numerous assumptions with respect to business conditions,
economic conditions, projections of Granville's and Triangle's performance,
as well as other matters, many of which are beyond Granville's and Triangle's
control. Any estimates contained in Equity Research's analysis are not
necessarily indicative of future results or values, nor do they purport
to be appraisals or reflect prices at which securities could actually
be bought or sold.
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
Granville United Bank.
Sincerely,
(Signature of Equity Research Services, Inc.)
Equity Research Services, Inc.
II-2
APPENDIX III
EXCERPT FROM NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13.
Dissenters' Rights.
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
SS. 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.
III-1
SS. 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.
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SS. 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.
SS. 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.
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SS. 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.
SS. 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 cancelled 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.
SS. 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
cancelled or modified by the taking of the proposed corporate action.
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SS. 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.
SS. 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.
SS. 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 under 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
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(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.
SS. 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.
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SS. 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 benefitted.
III-7
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
II-1
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 THE REGISTRANT. The Bylaws of the Registrant provide for
indemnification of its directors, officers, employees and agents, 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 among Granville United Bank, Triangle
Bancorp, Inc. and Triangle Bank dated June 7, 1996 (included as and incorporated by
reference from Appendix I to the Prospectus/Proxy Statement filed as a part of the
Registration Statement)
5 Opinion of Moore & Van Allen, PLLC 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)
10(b) Triangle Bancorp, Inc. 1988 Non-Qualified Stock Option Plan, as amended on December 16,
1993 (incorporated by reference to Exhibit 10(e) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1993 as filed with the Commission on March 31, 1994)
II-2
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 John B. Harris (incorporated by reference to
Exhibit 10(b) to Registrant's Form 10-K for the fiscal year ended December 31, 1993 filed
with the Commission on March 31, 1994)
10(f) 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(g) 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(h) Deferred Compensation Agreement between Triangle Bank and John B. Harris (incorporated by
reference from Exhibit 10(h) of Registrant's Registration Statement on Form S-4
(Registration No. 33-86226))
10(i) 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(j) Change of Control Agreement dated June 18, 1996 between Triangle Bank and Steven R. Ogburn
10(k) Change of Control Agreement dated June 18, 1996 between Triangle Bank and Debra L. Lee
13(a) Granville United Bank Annual Report on Form F-2 for fiscal year ended December 31, 1995
13(b) Granville United Bank Quarterly Report on Form F-4 for quarter ended
March 31, 1996
13(c) Granville United Bank Current Report on Form F-3 dated June 18, 1996
23(a) Consent of Moore & Van Allen,PLLC (contained in its opinion submitted as Exhibit 5 hereto)
23(b) Consent of Coopers & Lybrand L.L.P.
23(c) Consent of Langdon & Company
23(d) Consent of Equity Research Services, Inc.
II-3
23(e) Consent of Coopers & Lybrand L.L.P. regarding tax opinion (contained in its opinion
submitted as Exhibit 8 hereto)
24 Power of Attorney
99 Form of proxy to be used in connection with the Special Meeting of Shareholders of
Granville United Bank
(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.
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.
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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.
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SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Raleigh, State of North
Carolina, on June 27, 1996.
TRIANGLE BANCORP, INC.
BY: /s/ Michael S. Patterson
Michael S. Patterson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its 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
------------------------------------------------
(Michael S. Patterson) President, Chief Executive June 27, 1996
Officer and Director
(Principal Executive
Officer)
/s/ Debra L. Lee June 27, 1996
------------------------------------------------ Chief Financial Officer
(Debra L. Lee) (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Charles H. Ashford, Jr. Chairman and Director June 27, 1996
------------------------------------------------
(Charles H. Ashford, Jr.)
/s/ H. Leigh Ballance, Jr. Director June 27, 1996
------------------------------------------------
(H. Leigh Ballance, Jr.)
/s/ Edwin B. Borden Director June 27, 1996
------------------------------------------------
(Edwin B. Borden)
/s/ Robert E. Bryan, Jr. Director June 27, 1996
------------------------------------------------
(Robert E. Bryan, Jr.)
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SIGNATURE TITLE DATE
Director June __, 1996
------------------------------------------------
(William C. Burkhardt)
Director June __, 1996
------------------------------------------------
(David T. Clancy)
/s/ N. Leo Daughtry Director June 27, 1996
------------------------------------------------
(N. Leo Daughtry)
/s/ Syd W. Dunn, Jr. Director June 27, 1996
------------------------------------------------
(Syd W. Dunn, Jr.)
/s/ Willie S. Edwards Director June 27, 1996
------------------------------------------------
(Willie S. Edwards)
Director June __, 1996
------------------------------------------------
(James P. Godwin, Sr.)
/s/ Robert L. Guthrie Director June 27, 1996
------------------------------------------------
(Robert L. Guthrie)
Director June __, 1996
------------------------------------------------
(John B. Harris, Jr.)
/s/ George W. Holt Director June 27, 1996
(George W. Holt)
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SIGNATURE TITLE DATE
/s/ Earl Johnson, Jr. Director June 27, 1996
------------------------------------------------
(Earl Johnson, Jr.)
/s/ O. A. Keller, III Director June 27, 1996
------------------------------------------------
(O. A. Keller, III)
/s/ Edythe P. Lumsden Director June 27, 1996
-------------------------------------------
(Edythe P. Lumsden)
/s/ J. L. Maxwell, Jr. Director June 27, 1996
----------------------------------------------
(J. L. Maxwell, Jr.)
/s/ Wendell H. Murphy Director June 27, 1996
------------------------------------------
(Wendell H. Murphy)
/s/ N. Johnson Tilghman Director June 27, 1996
-----------------------------------------
(N. Johnson Tilghman)
/s/ Sydnor M. White, Jr. Director June 27, 1996
-------------------------------------------
(Sydnor M. White, Jr.)
/s/ J. Blount Williams Director June 27, 1996
----------------------------------------------
(J. Blount Williams)
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EXHIBITS
EXHIBIT INDEX
Exhibit Number
Pursuant to
Item 601 of
Regulation S-K Description Page No.
2 Agreement and Plan of Reorganization and Merger among Granville United Bank,
Triangle Bancorp, Inc. and Triangle Bank dated June 7, 1996 (included as and
incorporated by reference from Appendix I to the Prospectus/Proxy Statement
filed as part of the Registration Statement)
5 Opinion of Moore & Van Allen, PLLC 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
December 16, 1993 (incorporated by reference to Exhibit 10(e) 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(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 John B. Harris (incorporated by
reference to Exhibit 10(b) to Registrant's Form 10-K for the fiscal year ended
December 31, 1993 filed with the Commission on March 31, 1994)
10(f) 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(g) 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))
Exhibit Number
Pursuant to
Item 601 of
Regulation S-K Description Page No.
10(h) Deferred Compensation Agreement between Triangle Bank and John B. Harris
(incorporated by reference from Exhibit 10(h) of Registrant's Registration
Statement on Form S-4 (Registration No. 33-86226))
10(i) 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(j) Change of Control Agreement dated June 18, 1996 between Triangle Bank and
Steven R. Ogburn
10(k) Change of Control Agreement dated June 18, 1996 between Triangle Bank and
Debra L. Lee
13(a) Granville United Bank Annual Report on Form F-2 for fiscal year ended December
31, 1995
13(b) Granville United Bank Quarterly Report on Form F-4 for quarter ended March 31,
1996
13(c) Granville United Bank Current Report on Form F-3 dated June 18, 1996
23(a) Consent of Moore & Van Allen,PLLC (contained in its opinion submitted as
Exhibit 5 hereto)
23(b) Consent of Coopers & Lybrand L.L.P.
23(c) Consent of Langdon & Company
23(d) Consent of Equity Research Services, Inc.
23(e) Consent of Coopers & Lybrand L.L.P. regarding tax opinion (contained in
its opinion submitted as Exhibit 8 hereto)
24 Power of Attorney
99 Form of proxy to be used in connection with the Special Meeting of Shareholders of
Granville United Bank
(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.