June 21, 1996
Triangle Bancorp, Inc.
c/o Mr. Michael S. Patterson
4300 Glenwood Avenue
Raleigh, North Carolina 27605
Re: Agreement and Plan of Reorganization and Merger by and
among Granville United Bank and Triangle Bank and Triangle
Bancorp, Inc.
Dear Mr. Patterson:
Pursuant to your request and as required by Article VII, Section 7.01(e) of the
Agreement and Plan of Reorganization and Merger dated as of June 7, 1996 (the
"Agreement") by and among Granville United Bank and Triangle Bank and Triangle
Bancorp, Inc., we are providing you our opinion of certain federal income tax
consequences of the transaction described herein. Unless otherwise noted, all
section references herein shall be to the Internal Revenue Code of 1986, as
amended (the "Code") and the regulations thereunder.
Additionally, we hereby consent to the filing of this opinion as an exhibit to
the Registration Statement on Form S-4 filed by Triangle Bancorp, Inc. relating
to its shares of common stock to be issued to the shareholders of Granville
United Bank and to the reference made in the Registration Statement to this
opinion and to our firm.
Facts
A. Parties to the Proposed Transaction
1. Triangle Bancorp, Inc. ("Triangle")
Triangle is a North Carolina business corporation with its
principal office and place of business located at 4300
Glenwood Avenue, Raleigh, North Carolina. Triangle is
authorized by its Articles of Incorporation to issue
20,000,000 shares of common stock, each of no par value (the
"Triangle Stock"), of which there were 9,685,291 shares issued
and outstanding as of March 31, 1996.
Mr. Michael Patterson Page 2 June 21, 1996
2. Triangle Bank ("Triangle Bank")
Triangle Bank is a North Carolina banking corporation with its
principal office and place of business located at 4300
Glenwood Avenue, Raleigh, North Carolina and is a wholly owned
subsidiary of Triangle. Triangle Bank is authorized by its
Articles of Incorporation to issue 6,000,000 shares of common
stock, each of $4.00 par value (the "Triangle Bank Stock"), of
which there were 2,433,665 shares issued and outstanding as of
March 31, 1996.
3. Granville United Bank
Granville United Bank is a North Carolina banking corporation
with its principal office and place of business located at 109
Hillsboro Street, Oxford, North Carolina. Granville United
Bank is authorized by its Articles of Incorporation to issue
2,000,000 shares of common stock, each of $5.00 par value
("Granville United Bank Stock"), of which there were, as of
March 31, 1996, 430,000 shares issued and outstanding.
4. Shareholders of Granville Bank ("Shareholders")
Granville United Bank is a publicly owned company. The
Granville United Bank Stock is reported over-the-counter in
the "pink sheets" by the National Daily Quotation System
published by the National Quotation Bureau, Inc.
B. Proposed Transaction Between the Parties
Pursuant to the Agreement and in accordance with North
Carolina Law, Granville United Bank shall be merged with and
into Triangle Bank (the "Merger") with Triangle Bank surviving
the Merger. At this time, the corporate existence of Granville
United Bank shall cease, while the corporate existence of
Triangle Bank shall continue unaffected and unimpaired by the
Merger.
Upon consummation of the Merger, Granville United Bank shall
become and operate under the name "Triangle Bank" and will
continue to conduct the business of a North Carolina banking
corporation at the then legally established branch and main
offices of Triangle Bank. The duration of the corporate
existence of Triangle Bank, as the surviving corporation,
shall be perpetual and unlimited.
The business purpose for the parties entering into the Merger
is to provide Triangle Bank with certain business advantages
in comparison to Triangle Bank's current structure, including
increased ability to expand the business, and economies of
scale.
Mr. Michael Patterson Page 3 June 21, 1996
Pursuant to the Agreement, each Shareholder of Granville
United Bank will receive (through a designated Transfer Agent)
one and three-quarter shares of Triangle Stock for each share
of Granville United Bank Stock held immediately prior to the
Effective Time. In the event the exchange of shares results in
the creation of fractional shares, Triangle will deliver cash
to the designated Transfer Agent in an amount equal to the
aggregate Market Value (as defined in the Agreement) of all
such fractional shares, which shall be remitted to the former
Shareholders of Granville United Bank in accordance with their
respective interests.
Likewise, any warrants and options granted by Granville United
Bank to purchase shares of Granville United Bank Stock will be
converted into warrants and options to purchase the same
number of shares of Triangle Stock multiplied by the Exchange
Ratio (as defined by the Agreement) on the same terms and
conditions as currently are in effect.
The "Effective Time" of the Merger is defined in Article I,
Section 1.07 of the Agreement as the date and time when the
Merger becomes effective as set forth in the Articles of
Merger filed with the North Carolina Secretary of State in
accordance with North Carolina law. The Articles of Merger
will be filed once the Agreement has been approved by the
required governmental and regulatory authorities.
C. Additional Representations
In addition to the foregoing, the following pertinent
representations have been made by the parties to the proposed
transaction:
1. The Merger will be consummated in compliance with the
material terms of the Agreement and none of the material terms
and conditions therein have been waived or modified and the
parties to the transaction have no plan or intention to waive
or modify further any such material condition.
2. The ratio for the conversion of shares of Granville United
Bank Stock for stock of Triangle and options for Granville
United Bank for options of Triangle in the Merger was
negotiated through arm's length bargaining. Accordingly, the
fair market value of the Triangle common stock and its related
options to be received by Granville United Bank shareholders
and in the Merger will be approximately equal to the fair
market value of the Granville United Bank stock and options
surrendered by such shareholders in the conversion.
3. The management of Granville United Bank represents that there
is no plan or intention by any 1% or greater stockholder of
Granville United Bank to sell, exchange, transfer by gift or
otherwise dispose of any of the shares of common stock of
Triangle to be received by them in the Merger, other than
shares of stock surrendered by dissenters for cash or
surrendered for cash in lieu of fractional
Mr. Michael Patterson Page 4 June 21, 1996
shares of Triangle. Additionally, the management of Granville
United Bank knows of no plan or intention by any stockholders
of Granville United Bank to sell, exchange, transfer by gift
or otherwise dispose of any other of the shares of common
stock of Triangle to be received by them in the Merger. The
management of Triangle is not aware of any transfers of
Granville United Bank Stock by any holders thereof prior to
the Effective Time which were made in contemplation of the
Merger.
4. Following the Merger, Triangle Bank will hold at least 90
percent of the fair market value of Granville United Bank's
net assets and at least 70 percent of the fair market value of
Granville United Bank's gross assets held immediately prior to
the proposed transaction. For this purpose, amounts used to
pay dissenters or to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal
dividends) made by Granville United Bank immediately prior to
the Merger will be considered as assets held by Granville
United Bank immediately prior to the Merger. Granville United
Bank has not redeemed any of the Granville United Bank Stock,
made any distribution with respect to any of the Granville
United Bank Stock, or disposed of any of its assets in
anticipation of or as a part of a plan for the acquisition of
Granville United Bank by Triangle Bank.
5. Prior to the transaction, Triangle will be in control of
Triangle Bank within the meaning of Section 368(c) of the
Code.
6. Following the transaction, Triangle Bank will not issue
additional shares of its stock that would result in Triangle
losing control of Triangle Bank within the meaning of Section
368(c) of the Code.
7. Triangle has no plan or intention to reacquire any of its
stock issued in the Merger.
8. Triangle has no plan or intention to liquidate Triangle Bank;
to merge Triangle Bank with or into another corporation other
than Granville United Bank; to sell or otherwise dispose of
stock of Triangle Bank; or to cause Triangle Bank to sell or
otherwise dispose of any of its assets or any of the assets
acquired from Granville United Bank in the Merger, except for
dispositions made in the ordinary course of its business or
transfers described in Section 368(a)(2)(C) of the Code.
9. Following the Merger, Triangle Bank will continue Granville
United Bank's historic business or use a significant
portion of its historic business assets in a business.
10. The assumption by Triangle Bank of the liabilities of
Granville United Bank pursuant to the Merger is for a bona
fide business purpose and the principal purpose of such
assumption is not the avoidance of federal income tax on the
transfer of assets of Granville United Bank to Triangle Bank
pursuant to the Merger.
Mr. Michael Patterson Page 5 June 21, 1996
11. The liabilities of Granville United Bank assumed by Triangle
Bank and the liabilities to which the transferred assets of
Granville United Bank are subject were incurred by Granville
United Bank in the ordinary course of its business. No
liabilities of any person, including Granville United Bank,
will be assumed by Triangle in the Merger. No liabilities of
any person other than Granville United Bank will be assumed by
Triangle Bank in the Merger, and none of the shares of
Granville United Bank to be converted into Triangle common
stock in the Merger will be subject to any liabilities.
12. Triangle, Triangle Bank, and Granville United Bank will pay
their respective expenses, if any, incurred in connection with
the Merger.
13. There is no intercorporate indebtedness existing between
Triangle and Granville United Bank or between Triangle Bank
and Granville United Bank that was issued, acquired, or will
be settled at a discount.
14. Neither Triangle, Triangle Bank or Granville United Bank are
investment companies as defined in Sections 368(a)(2)(F)(iii)
and (iv) of the Code.
15. Granville United Bank is not under the jurisdiction of a
court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
16. On the date of the Merger, the fair market value of the
assets of Granville United Bank will exceed the sum of its
liabilities (including liabilities, if any, to which its
assets are subject).
17. No stock of Triangle Bank will be issued in the Merger;
however, stock of Triangle Bank may be issued to Triangle, its
parent, in order to satisfy regulatory capital requirements.
18. The payment of cash in lieu of fractional shares of Triangle
Stock was not separately bargained for consideration and is
being made solely for the purpose of saving Triangle the
expense and inconvenience of issuing fractional shares.
19. None of the compensation received by any
stockholder-employee of Granville United Bank pursuant to any
employment, consulting, or similar arrangement is or will be
separate consideration for, or allocable to, any of his shares
of the Granville United Bank Stock. None of the shares of
common stock received by any stockholder-employee of Granville
United Bank pursuant to the Merger is or will be separate
consideration for, or allocable to, any such employment,
consulting, or similar arrangement. The compensation paid to
any stockholder-employee of Granville United Bank pursuant to
any such employment, consulting, or similar arrangement is or
will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's length for similar services.
Mr. Michael Patterson Page 6 June 21, 1996
20. Neither Triangle nor Triangle Bank own, nor have they owned
during the past five years, any shares of the stock of
Granville United Bank.
21. It is anticipated that less than 10% of the Granville United
Bank Stock outstanding will be surrendered for cash either by
dissenters or for fractional shares.
The facts, assumptions, and representations set forth above have been reviewed
by the management of the aforementioned corporations involved in the Merger.
Letters verifying these facts, assumptions, and representations have been
received from management of the corporations involved in this transaction. These
facts, assumptions, and representations are a material basis for the opinions
contained herein. We have been instructed to rely on them in preparing this
opinion letter. We have not independently investigated the validity of the
facts, assumptions, or representations set forth above.
Issues
I. Will the Merger of Granville United Bank into Triangle Bank with
Triangle Bank surviving and the simultaneous cancellation of Granville
United Bank Stock with the Shareholders being entitled to receive one
and three-quarter shares of Triangle Stock for each Granville United
Bank share constitute a tax-free reorganization within the meaning of
Section 368(a)(1)(A) of the Code?
II. Will any taxable gain be recognized by a Shareholder of Granville
United Bank upon such Shareholder's receipt of Triangle Stock solely in
exchange for his or her Granville United Bank Stock?
III.Will the Merger result in a substitution of basis of Granville United
Bank Stock to Triangle Stock received by the Shareholders?
IV. Will the holding period of the Triangle Stock received by the
Shareholders include the holding period of the Granville United Bank
Stock surrendered in exchange therefor, if Granville United Bank Stock
is a capital asset in the hands of such Shareholders at the Effective
Time of the Merger?
V. Will the payment of cash in lieu of fractional share interests of
Triangle Stock be treated as if fractional shares were distributed as
part of the Merger and then redeemed by Triangle in payment of and in
exchange for the Shareholders' Triangle Stock as provided for in
Section 302 of the Code?
Mr. Michael Patterson Page 7 June 21, 1996
VI. Will the payment of cash to dissenting Shareholders of Granville
United Bank in perfection of their dissenters' rights be treated by
such Shareholders as distributions in redemption of Triangle Stock, as
provided in Section 302 of the Code?
Conclusions
For federal income tax purposes, the following conclusions with respect to the
above issues will occur:
I. Tax-Free Reorganization Status
Except with respect to the impact of Section 585(c)(2) of the
Code and any related recapture of loan loss reserves which may
arise from the application of Section 585 of the Code, the
transaction will constitute a tax-free reorganization within
the meaning of Section 368(a)(1)(A).
II. Gain/Loss to Shareholders
Except as provided in Section V below, under Section 354(a)(1)
of the Code, no gain or loss will be recognized to
Shareholders upon receipt of Triangle Stock (including any
fractional share interests to which they may be entitled)
solely in exchange for shares of the Granville United Bank
Stock.
III. Substitution of Basis of Granville United Bank Stock Surrendered
The basis of Triangle Stock (including fractional share
interests to which the Shareholders may be entitled) to be
received by the Shareholders will be the same as the aggregate
federal income tax basis of the Granville United Bank Stock
surrendered in exchange therefor pursuant to Section
358(a)(1). The basis allocated to fractional shares of
Triangle Stock will reduce the amount realized from the deemed
redemption of the fractional shares. No opinion is expressed
herein as to what Triangle's basis will be in the stock of
Triangle Bank subsequent to the transaction.
IV. Carryover of Holding Period of Granville United Bank Stock
Surrendered
The holding period of the Triangle Stock received by
Shareholders (including fractional share interests to which
the Shareholders may be entitled) will include the period
during which Shareholders held the shares of the Granville
United Bank Stock surrendered in exchange therefor, provided
that the Granville United Bank Stock was held as a capital
asset on the date of the exchange. This is pursuant to Section
1223(1) of the Code.
Mr. Michael Patterson Page 8 June 21, 1996
V. Treatment of Receipt of Cash in Lieu of Fractional Shares
The payment of cash in lieu of fractional share interests of
Triangle Stock will be treated as if fractional shares were
distributed as part of the Merger and then redeemed by
Triangle as provided for in Section 302 of the Code.
VI. Treatment of Receipt of Cash by Dissenting Shareholders
The receipt of cash by a dissenting Shareholder of Granville
United Bank in perfection of his or her dissenter's rights
will be treated as received by that Shareholder as a
distribution in redemption of his or her Granville United Bank
Stock subject to the provisions of Section 302.
Discussion
I. Tax-Free Reorganization Status
A. Statement of Law
Tax-free reorganizations are governed by Section 368 of the
Code. The purpose of the reorganization provisions of the Code
is to exempt from taxation specifically described exchanges
incident to readjustments of corporate structures which are
required by business exigencies, and which effect a
readjustment of a continuing interest in property under a
different corporate form. Requisite to a reorganization being
considered as such under the Code are the following:
1. Continuity of the business enterprise;
2. Continuity of interest by the persons who
were the owners prior to the
reorganization;
3. A business purpose;
4. A plan of reorganization; and
5. A lack of an overall plan of tax
avoidance wherein such overall plan uses
a corporate reorganization to disguise
the real character of the transaction.
Mr. Michael Patterson Page 9 June 21, 1996
Other pertinent reorganization provisions of the Code
are as follows:
Section 368(b) states that the term "[a] party to a
reorganization" includes both corporations in the
case of a reorganization resulting from the
acquisition by one corporation of stock or properties
of another corporation, as well as the corporation in
control of the acquiring corporation. Section
368(a)(1)(A) provides that the term "reorganization"
means "a statutory merger or consolidation." Section
368(a)(2)(D), entitled "Use of Stock of Controlling
Corporation in Paragraph (1)(A) and (1)(G) Cases"
provides "[t]he acquisition by one corporation, in
exchange for stock of a corporation (referred to in
this subparagraph as 'controlling corporation') which
is in control of the acquiring corporation, of
substantially all of the properties of another
corporation shall not disqualify a transaction under
paragraph (1)(A) or (1)(G) if -
(i) nostock of the acquiring corporation is used in
the transaction, and
(ii) in the case of a transaction under paragraph
(1)(A), such transaction would have qualified
under paragraph (1)(A) had the merger been into
the controlling corporation."
B. Application of Law
The requirement of continuity of business enterprise will be
met since Triangle Bank will continue the existing business of
Granville United Bank utilizing substantially all of Granville
United Bank's assets. The requirement of continuity of
Shareholder (i.e. proprietary) interest will be met since no
Shareholder will sell, exchange, or otherwise dispose of a
number of shares of Triangle Stock received in the Merger that
would reduce the Shareholders' aggregate ownership of Triangle
Stock to a number of shares having a value, at the time of
consummation of the proposed transaction, of less than 50
percent of the total fair market value of the Granville United
Bank Stock outstanding immediately prior to the Effective Time
of the Merger. In measuring continuity of interest, shares of
Granville United Bank Stock surrendered by dissenters or
exchanged for cash in lieu of fractional shares of Triangle
Stock are treated as outstanding Granville United Bank Stock
on the date of the Merger.
Further, because the Merger will provide the parties to the
transaction with certain business advantages in comparison to
the current structures of the parties, including an increased
ability to expand the surviving corporation's business, which
would help achieve economies of scale, a valid business
purpose exists for the parties entering into the Merger. The
Agreement and related documents constitute a plan or
reorganization. Finally, there appears to be no overall plan
of tax avoidance wherein a corporate reorganization is being
used to disguise the real character of the transaction. This
requirement is satisfied because the Merger is
Mr. Michael Patterson Page 10 June 21, 1996
not one of a series of planned transactions which would, if
collapsed into a single transaction, in substance be a taxable
transaction.
In addition, the Merger will be effected in accordance with
North Carolina law. The acquisition by Triangle Bank of
substantially all of the assets of Granville United Bank in
exchange for shares of Triangle Stock literally satisfies the
statutory requirements constituting a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code.
II. Gain/Loss to Shareholders
A. Statement of Law
Section 354(a)(1) provides, "[n]o gain or loss shall be
recognized if stock or securities in a corporation a party to
a reorganization are, in pursuance of the plan of
reorganization, exchanged solely for stock or securities in
such corporation or in another corporation a party to the
reorganization."
B. Application of Law
Based on the foregoing statement of law, the application of
said statement to the facts and representations set forth
herein will be as follows:
1. Under Section 354(a)(1) of the Code and, except to
the extent set forth below, Shareholders will not
recognize any gain or loss upon the receipt of
Triangle voting common stock (including any
fractional share interests to which they may be
entitled) solely in exchange for their shares of
Granville United Bank voting common stock.
2. Any payments of cash to Shareholders in lieu of
Triangle issuing fractional shares to such
Shareholders will be treated as a distribution of
Triangle Stock followed by a redemption of such
fractional shares of Triangle Stock. The cash
payment should be treated as a distribution in full
payment in exchange for the stock redeemed as
provided for in Section 302 of the Code. (For a more
detailed discussion of the federal income tax
treatment of cash payments made to Shareholders in
lieu of Triangle issuing fractional shares to such
Shareholders, see Section V. below.)
III. Substitution of Basis of Granville United Bank Stock Surrendered
A. Statement of Law
In general, Section 358(a)(1) of the Code provides that in the
case of an exchange to which Section 361 or Section 354
applies, "[t]he basis of the property permitted to be received
under such section without the recognition of gain or loss
shall be the same as that of the property exchanged . . . ."
B. Application of Law
Because the proposed exchange of stock meets the requirements
of Sections 368(a)(1)(A) and 368(a)(2)(D) and is a transaction
to which Section 354 applies, applying Section 358 to the
Shareholders will result in the aggregate basis of Triangle
Stock (including fractional share interests to which the
Shareholders may be entitled) to be received by the
Shareholders being the same as the aggregate federal income
tax basis of the Granville United Bank Stock surrendered in
exchange therefor.
IV. Carryover of Holding Period of Granville United Bank Stock Surrendered
A. Statement of Law
Section 1223 of the Code provides, in pertinent
part, that:
(1) In determining the period for which the taxpayer has held
Mr. Michael Patterson Page 11 June 21, 1996
property received in an exchange, there shall be
included the period for which he held the property
exchanged. Therefore, under this chapter, the
property has, for the purpose of determining gain or
loss from a sale or exchange, the same basis in whole
or in part in his hands as the property exchanged and
at the time of such exchange was a capital asset as
defined in Section 1221 of the Code or property
described in Section 1231 of the Code.
B. Application of Law
Because the proposed exchange of stock meets the requirements
of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code and is a
transaction to which Section 354 applies, applying Section
1223 to the Shareholders results in the holding period of
Triangle Stock to be received by Shareholders (including
fractional share interests to which they may be entitled)
including the period during which Shareholders held the shares
of Granville United Bank Stock surrendered in exchange
therefor, provided that the Granville United Bank Stock was
held as a capital asset on the date of the exchange pursuant
to Section 1223(1) of the Code.
V. Treatment of Receipt of Cash in Lieu of Fractional Shares
A. Statement of Law
In Rev. Rul. 66-365, 1966-2 C.B. 116, the Internal Revenue
Service (the "Service") concluded that where shareholders of
the acquired corporation who are entitled to a fractional
interest in the acquiring corporation's common stock pursuant
to the terms of a reorganization agreement will be paid cash
in lieu of the fractional share interests to which they are
entitled, any such payment shall be treated as a distribution
in full payment in exchange for the fractional share interest
of such shareholder in accordance with Section 302 of the
Code.
In Rev. Proc. 77-41, 1977-2 C.B. 574, the Internal Revenue
Service further provided that where the payment of cash in
lieu of fractional share interests will be solely for the
purpose of avoiding the expense and inconvenience of the
acquiring corporation issuing fractional shares and does not
represent separately bargained for consideration and is not
essentially equivalent to a dividend, such cash payments
should be treated as distributions in full payment or exchange
for the stock redeemed as provided for in Section 302(a). See
also Mills v. Commissioner, 39 T.C. 393 (1962), rev'd, 331
F.2d 321 (5th Cir. 1964).
Mr. Michael Patterson Page 12 June 21, 1996
B. Application of Law
Any payment of cash to Shareholders in lieu of Triangle
issuing fractional shares to such Shareholders should be
treated as a distribution of fractional shares of Triangle
Stock followed by a redemption of such fractional shares as
provided for in Section 302. See Rev. Rul. 66-365, 1966-2 C.B.
116; Rev. Proc. 77-41, 1977-2 C.B. 574. See also Mills v.
Commissioner, 39 T.C. 393 (1962), rev'd, 331 F.2d 321 (5th
Cir. 1964).
VI. Treatment of Receipt of Cash by Dissenting Shareholders
A. Statement of Law
In Rev. Ruling 68-285, 1968-1 C.B. 147, the Internal Revenue
Service concluded that where shareholders of the acquired
corporation who are entitled to certain rights of dissension
with regard to a proposed reorganization and are paid cash by
the target corporation in exchange for their interests in the
target, then the receipt of such cash payments is treated as a
distribution in redemption of their target stock. This
redemption will be taxed either as a distribution under
Section 301 or an exchange under Section 302.
Where only cash was received by preferred shareholders in a
reorganization, the cash was held a distribution in exchange
for stock under Section 302. Rev. Rul. 74-515, 1974-2 C.B.
118. See also Regs. Sec. 1.354-1(d), Example 3, which
concludes that other property, e.g. cash, received by
shareholders in exchange for their stock is governed by
Section 302. Payments subject to the provisions of Section 302
are either taxed as a distribution under Section 301 or an
exchange under Section 302.
B. Application of Law
Mr. Michael Patterson Page 13 June 21, 1996
A payment of cash to a Shareholder who is perfecting his or
her right of dissension in exchange for shares of Granville
United Bank Stock should be treated as a redemption of such
shares regardless of whether payment is made from funds of
Granville United Bank or Triangle. Such payment will be
subject to the provisions of Section 302 or Section 301 of the
Code.
Opinion
Based upon the foregoing and taking into consideration the statement contained
in the Section marked "Caveat" below, it is our opinion that the Merger will
produce the following federal income tax consequences:
1. A tax-free reorganization under Section 368(a)(1)(A);
2. Except with respect to any cash payments to Shareholders in lieu of
fractional shares or dissenter's rights, no gain or loss will be
recognized to Shareholders upon receipt of Triangle Stock (including
any fractional share interests to which they may be entitled) solely in
exchange for shares of the Granville United Bank Stock;
3. The aggregate federal income tax basis of the Triangle Stock
(including fractional share interests to which the Shareholders may be
entitled) received by the Shareholders will be the same as the
aggregate federal income tax basis of the Granville United Bank Stock
surrendered in exchange therefor;
4. The holding period of the Triangle Stock received by Shareholders
will include the period for which the exchanged Granville United Bank
Stock was held, provided the exchanged Granville United Bank Stock was
held as a capital asset by said Shareholders on the date of the
exchange;
5. The payment of cash in lieu of fractional share interests of
Triangle Stock will be treated as if fractional shares were distributed
as part of the Merger and then redeemed by Triangle in payment of and
in exchange for the Shareholders' Triangle Stock as provided for in
Section 302. A Shareholder receiving such cash will recognize capital
gain or loss equal to the difference between the amount of cash
received and the Shareholder's adjusted basis in the fractional share
interest.
6. The receipt of cash by a dissenting Shareholder of Granville United
Bank in perfection of his or her dissenter's rights will be treated as
received by that Shareholder as a distribution in redemption of his or
her Granville United Bank Stock subject to the
provisions of Section 302 of the Code. However, if Section 302(a) does
not apply, the assumed redemption will be treated as a dividend, and
the Granville United Bank shareholder will likely be required to
recognize as ordinary income the full amount of the cash received.
Caveat
The foregoing opinion addresses only those items set forth in that section of
this opinion letter labeled "Issues" and therefore, no tax opinion is hereby
expressed regarding any other federal, state, local, or other tax issues or
about any other matter not specifically mentioned herein.
No opinion is expressed regarding the tax consequences of the conversion of
outstanding warrants and options to purchase common stock of Granville United
Bank into Triangle warrants and Triangle options. Holders of Granville United
Bank's outstanding warrants and options should consult their own tax advisors
regarding the effect of the proposed Merger.
No opinion is expressed regarding any tax consequences affecting recapture of
loan loss reserves and the related bad debt reserves for any of the parties to
the Merger which may arise from the application of Section 585 of the Code.
If any of the statements of facts, assumptions, or representations contained
herein is substantially determined to be incorrect in whole or in part such that
it would have a material effect upon the tax treatment of the issues addressed
herein, then no opinion is expressed as to the tax treatment of the proposed
transaction.
Very truly yours,
(Signature of Coopers & Lybrand L.L.P.
appears here)