AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
By and Among
UNITED FEDERAL SAVINGS BANK,
TRIANGLE BANK
and
TRIANGLE BANCORP, INC.
March 4, 1998
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 United Federal..................... 2
1.05. Conversion and Exchange of Stock............................. 2
a. Conversion of United Federal Stock........................... 2
b. Exchange Procedures.......................................... 4
c. Treatment of Fractional Shares.............................. 4
d. Surrender of Certificates.................................... 4
e. Antidilutive Adjustments..................................... 5
f. Lost Certificates ........................................... 5
g. Treatment of United Federal's Stock Options.................. 5
h. Outstanding Triangle Stock................................... 6
1.06. Articles, Bylaws and Management.............................. 6
1.07. Closing; Articles of Merger; Effective Time.................. 6
ARTICLE II. REPRESENTATIVES AND WARRANTIES
OF UNITED FEDERAL........................................................ 7
2.01. Organization; Standing; Power................................ 7
2.02 Capital Stock................................................ 7
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 United Federal Books and Records............................. 9
2.09 United Federal Reports....................................... 9
2.10 United Federal Financial Statements.......................... 10
2.11 Tax Returns and Other Tax Matters............................ 10
2.12 Adverse of Material Changes or Certain Other Events.......... 11
2.13 Absence of Undisclosed Liabilities........................... 11
2.14 Compliance with Existing Obligations......................... 11
2.15 Litigation and Compliance with Law........................... 11
2.16 Real Properties.. ........................................... 12
2.17 Loans, Accounts, Notes and Other Receivables................. 13
2.18 Securities Portfolio and Investments......................... 14
2.19 Personal Property and Other Assets........................... 14
2.20 Patents, Trademarks and Licenses............................. 14
2.21 Environmental Matters........................................ 14
2.22 Absence of Brokerage or Finders Commissions.................. 16
i
2.23 Material Contracts........................................... 16
2.24 Employment Matters; Employee Relations....................... 17
2.25 Employee Agreements; Employee Benefit Plans.................. 17
2.26 Insurance.................................................... 18
2.27 Insurance of Deposits........................................ 19
2.28 Affiliates................................................... 19
2.29 Obstacles to Regulatory Approval, Accounting Treatment or
Tax Treatment ............................................... 19
2.30 Disclosure................................................... 19
2.31 Dissenter's Rights........................................... 19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE HOLDING
COMPANY AND TRIANGLE ..................................................... 20
3.01 Organization; Standing; Power ............................... 20
3.02 Capital Stock................................................ 20
3.03 Authorization and Validity of Agreement...................... 20
3.04 Validity of Transactions; Absence of Required Consents
or Waivers................................................. 20
3.05 Holding Company Books and Records............................ 21
3.06 Holding Company Reports...................................... 21
3.07 Holding Company Financial Statements......................... 22
3.08 Absence of Material Adverse Changes.......................... 22
3.09 Litigation and Compliance with Law........................... 22
3.10 Absence of Brokerage or Finders Commission................... 23
3.11 Obstacles to Regulatory Approval, Accounting Treatment
or Tax Treatment........................................... 23
3.12 Disclosure................................................... ▇▇
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ .................................... 24
4.01 Affirmative Covenants of United Federal...................... 24
a. "Affiliates" of United Federal............................... 24
b. Conduct of Business Prior to Effective Time.................. 24
c. Periodic Information Regarding Loans and Other Information... 25
d. Notice of Certain Changes or Events.......................... 26
e. Consents to Assignment of Leases............................. 26
f. Further Action; Instruments of Transfer, etc................. 26
g. Loan Loss Reserve............................................ 26
h. Incentive Compensation....................................... 26
4.02 Negative Covenants of United Federal......................... 27
a. Amendments to Charter or Bylaws.............................. 27
b. Change in Capital Stock...................................... 27
c. Options, Warrants and Rights................................. 27
d. Dividend .................................................... 27
e. Employment, Benefit or Retirement Agreement.................. 27
ii
f. Increase in Compensation; Additional Compensation............ 27
g. Accounting Practices......................................... 28
h. Acquisitions; Additional Branch Offices...................... 28
i. Changes in Business Practices................................ 28
j. Exclusive Merger Agreement................................... 28
k. Acquisition or Disposition of Assets......................... 28
l. Debt; Liabilities ........................................... 29
m. Liens; Encumbrances.......................................... 29
n. Waiver of Rights ............................................ 29
o. Other Contacts .............................................. 30
ARTICLE V. COVENANTS OF THE HOLDING COMPANY AND TRIANGLE.................... 30
5.01. Advisory Board of Directors................................. 30
5.02. NYSE Notification of Listing of Additional Shares
of Triangle Stock......................................... 30
5.03. Notice of Certain Changes of Events......................... 30
5.04 The Holding Company to Provide Necessary Information........ 30
ARTICLE VI. MUTUAL AGREEMENTS .............................................. 31
6.01. Shareholders' Meeting; Registration Statement;
Proxy Statement/Prospectus................................ 31
a. Meeting of Shareholders...................................... 31
b. Preparation and Distribution of Proxy Statement/Prospectus... 31
c. Registration Statement and "Blue Sky" Approvals.............. 31
d. Recommendation of United Federal's Board of Directors........ 32
e. Information for Proxy Statement/Prospectus and
Registration Statement..................................... 32
6.02. Regulatory Approvals......................................... 32
6.03. Access....................................................... 32
6.04. Costs........................................................ 33
6.05 Announcements................................................ 33
6.06. Environmental Studies........................................ 33
6.07. Employees, Severance Payments, Employee Benefits............. 34
a. Consulting and Employment Agreements......................... 34
b. Employment of United Federal Employees....................... 34
▇. ▇▇▇▇▇▇▇▇▇ Payment............................................ 35
d. Employee Benefits............................................ 35
6.08. Confidentiality.............................................. 36
6.09. Reorganization for Tax Purposes.............................. 36
6.10. Accounting Treatment......................................... 37
6.11. Other Permissible Transactions............................... 37
6.12. Dividend Coordination........................................ 37
iii
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER................................. 37
7.01 Conditions to all Parties' Obligations....................... 37
a. Approval by Governmental or Regulatory Authorities; No
Disadvantageous Conditions................................. 37
b. Effectiveness of Registration Statement; Compliance with
Securities and Other "Blue Sky" Requirements............... 38
c. Adverse Proceedings, Injunction, Etc......................... 38
d. Approval by Boards of Directors and Shareholders............. 38
e. Fairness Opinions............................................ 38
f. Tax Opinion.................................................. 39
g. No Termination or Abandonment................................ 39
7.02 Additional Conditions to United Federal's Obligations........ 39
a. Material Adverse Change...................................... 39
b. Compliance with Laws......................................... 39
c. The Holding Company's and Triangle's Representations and
Warranties and Performance of Agreements;
Officers' certificate..................................... 39
d. Legal Opinion of the Holding Company's Counsel............... 40
e. Other Documents and Information from the Holding Company..... 40
and Triangle............................................... 40
f. Acceptance by United Federal's Counsel....................... 40
7.03 Additional Conditions to the Holding Company's and
Triangle's Obligations...................................... 40
a. Material Adverse Change...................................... 40
b. Compliance with Laws; Adverse Proceedings; Injunction, Etc... 40
c. United Federal's Representations and Warranties
and Performance of Agreements; Officers' Certificates...... 40
d. Agreements from United Federal Affiliates.................... 41
e. Accounting Treatment......................................... 41
f. Legal Opinion of United Federal's Counsel.................... 41
g. Other Documents and Information from United Federal.......... 41
h. Consents to Assignment of Real Property Leases............... 41
i Acceptance by the Holding Company's Counsel.................. 41
j. Expenses..................................................... 41
k. Tainted Shares............................................... 41
l. Mortgage Loan Portfolio...................................... 42
ARTICLE VIII. TERMINATION; BREACH; REMEDIES................................ 42
8.01 Mutual Termination........................................... 42
8.02 Unilateral Termination....................................... 42
a. Termination by the Holding Company........................... 42
b. Termination by United Federal................................ 43
8.03 Breach; Remedies............................................. 44
a. Breach of Agreement.......................................... 44
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b. Payment of Expenses.......................................... 44
ARTICLE IX. INDEMNIFICATION................................................ 44
9.01 Indemnification Following Effective Time..................... 44
9.02 Procedure for Claiming Indemnification....................... 44
ARTICLE X. MISCELLANEOUS PROVISIONS........................................ 45
10.01 "Previously Disclosed" Information:
"Material Adverse Effect" ................................. 45
10.02 Survival of Representations, Warranties, Indemnification and
Other Agreements........................................... 45
a. Representatives, Warranties and Other Agreements............. 45
b. Indemnification.............................................. 46
10.03 Waiver....................................................... 46
10.04 Amendment.................................................... 46
10.05 Notice....................................................... 46
10.06 Further Assurance............................................ 47
10.07 Headings and Captions........................................ 47
10.08 Entire Agreement............................................. 47
10.09 Severability of Provisions................................... 47
10.10 Assignment................................................... 47
10.11 Counterparts................................................. 47
10.12 Governing Law................................................ 47
10.13 Inspection................................................... 48
v
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
By and Among
UNITED FEDERAL SAVINGS BANK,
TRIANGLE BANK
and
TRIANGLE BANCORP, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (hereinafter called
"Agreement") entered into as of the 4th day of March, 1998, by and among UNITED
FEDERAL SAVINGS BANK ("United Federal"), TRIANGLE BANK ("Triangle") and TRIANGLE
BANCORP, INC. (the "Holding Company").
WHEREAS, United Federal is a federally-chartered savings bank with its
principal office and place of business located in Rocky Mount, 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
also is the wholly-owned subsidiary of the Holding Company, a North Carolina
business corporation with its principal office and place of business located in
Raleigh, North Carolina; and,
WHEREAS, the Holding Company and United Federal have agreed that it is in
their mutual best interests and in the best interests of their respective
shareholders for United Federal to merge with and into Triangle (the "Merger")
with the effect that each of the outstanding shares of United Federal's common
stock will be converted into newly issued shares of the Holding Company's 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
United Federal 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 United Federal's Board of Directors has approved this
Agreement, United Federal 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 United
Federal'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 United Federal hereby adopt and make
this Agreement and mutually agree as follows:
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ARTICLE I. AGREEMENT TO MERGE
1.01. Names of Merging Corporations. The names of the corporations proposed
to be merged are UNITED FEDERAL SAVINGS BANK ("United Federal") 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), United Federal
shall be merged into and with Triangle (the "Merger").
1.03. Effect of Merger; Surviving Corporation. At the Effective Time, by
reason of the Merger the separate corporate existence of United Federal 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 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 United Federal. The duration of the corporate
existence of Triangle, as the surviving corporation, shall be perpetual and
unlimited.
1.04. Assets and Liabilities of United Federal. At the Effective Time and
by reason of the Merger, all of United Federal'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 including the liquidation
account established by United Federal in connection with its conversion to the
stock form of organization, all other choses in action and all and every other
interest of or belonging to or due to United Federal, 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 United Federal, 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 United Federal as of the Effective
Time.
1.05. Conversion and Exchange of Stock.
a. Conversion of United Federal Stock. At the Effective Time, all rights of
United Federal's shareholders with respect to all then outstanding shares of
United Federal's common stock ($0.01 par value) ("United Federal 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 United
Federal Stock (other than any shares held by the Holding Company) shall be
converted, without any action on the part of the holder of such share, the
Holding Company, Triangle or United Federal, into 0.63 (the "Exchange Rate")
newly issued shares of the Holding Company's no par value common stock
("Triangle Stock"), provided, however, that in the event the average closing
sales price of Triangle Stock for the twenty (20) trading days preceding a date
three (3) business days before the Effective Time (the "Average Closing Price")
is between $28.00 and $31.75, the Exchange Rate shall be increased to provide a
per share value of not less than $20.00 for each share of United Federal Stock,
and in the event the Average Closing Price of Triangle Stock is between $38.27
and $42.00, the Exchange Rate shall be decreased to provide a per share value of
not more than $24.11, and provided
2
further that in the event the Average Closing Price of Triangle Stock is less
than $28.00 or is greater than $42.00, either party, at its option and without
penalty, may terminate this Agreement (except the Holding Company in the event
provided below), provided that in the event either party does not so terminate
this Agreement, the Agreement shall remain in effect; and provided further that,
after determining the Exchange Rate required by the Average Closing Price of
Triangle Stock, the Exchange Rate shall be adjusted in the following manner: (i)
if between January 1, 1998 and a date five (5) business days prior to the
Closing charge-offs by United Federal (net of recoveries) for all loans
(excluding any charge-offs for Pea Island) exceed $500,000 the Exchange Rate
shall be reduced by .0010 for each $100,000 in charge-offs in excess of
$500,000, (ii) if at month-end preceding the Closing non-performing assets of
United Federal exceed $2,000,000, the Exchange Rate shall be reduced by .0025
for every $1,000,000 in excess of $2,000,000, on an interpolated
dollar-for-dollar basis (for purposes of this clause non-performing assets are
defined as all loans (excluding mortgage loans originated by United Federal for
sale in the secondary market and mortgage loans which are guaranteed by the FHA
or VA) which are over ninety (90) days delinquent, on non-accrual status, or for
which the borrower has filed a petition for relief under the United States
Bankruptcy Code, and all other collateral property received under loan
arrangements currently held for resale), or (iii) if on a date five (5) business
days prior to the Closing the loan loss reserve of United Federal is less than
the sum of $2,900,000 plus one and one-half percent (1.5%) for every dollar in
total loan growth over the December 31, 1997 level of $254,000,000, the Exchange
Rate shall be reduced by .0025 for every $250,000 shortfall in the loan loss
reserve (excluding any write-off of Pea Island loans) on an interpolated
dollar-for-dollar basis; then if the aggregate reduction caused by clauses (i),
(ii) and (iii) above is less than or equal to .0025, the Exchange Rate shall not
be adjusted, but if the aggregate reduction is greater than .0025 the Exchange
Rate shall be adjusted, provided that in the event the adjustment provided for
herein causes the Exchange Rate (i) to decrease by more than one (1) basis
point, either party hereto at its option and without penalty may terminate this
Agreement, provided that in the event that either party does not so terminate
this Agreement, this Agreement shall remain in effect, or (ii) to yield a per
share dollar value to a holder of United Federal Stock of less than $20.00,
United Federal may terminate this Agreement at its option and without penalty,
provided that in the event that United Federal does not so terminate this
Agreement, this Agreement shall remain in effect.
In the event the Holding Company enters into a binding written agreement to
be acquired by a third party which causes the Average Closing Price of Triangle
Stock to exceed $42.00, the Holding Company shall not have the right to
terminate this Agreement based on the Average Closing Price as provided above.
Further, in such event, the Exchange Rate shall be adjusted to yield a per share
dollar value to a holder of United Federal Stock of not more than $24.11. In
such event, United Federal may still exercise its right to terminate this
Agreement as provided in this Paragraph 1.05.a.
At the Effective Time, and without any action by United Federal, Triangle,
the Holding Company or any holder thereof, United Federal's stock transfer books
shall be closed as to holders of United Federal Stock immediately prior to the
Effective Time and, thereafter, no transfer of United Federal Stock by any such
holder may be made or registered; and the holders of shares of United Federal
Stock shall cease to be, and shall have no further rights as, shareholders of
United Federal other than as provided herein. Following the Effective Time,
certificates representing shares of United Federal 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,
3
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.
b. Exchange Procedures. As promptly as practicable following the Effective
Time, the Holding Company shall cause Registrar and Transfer Company, the
transfer agent for Triangle Stock (the "Exchange Agent"), to mail to each former
shareholder of United Federal 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 United Federal 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 Triangle Stock will be issued to any former shareholder of
United Federal, and, except as provided below, no such shareholder will have any
right to vote or receive any dividend or other distribution on, or any other
right with respect to, any fraction of a share of the Triangle Stock resulting
from the above exchange. In the event the exchange of shares would result in the
creation of fractional shares, then, in lieu of the issuance of fractional
shares of Triangle Stock, the Holding Company shall deliver cash to the Exchange
Agent in an amount equal to the aggregate market value of all such fractional
shares, and the Exchange Agent shall divide such cash among and remit it
(without interest) to the former shareholders of United Federal in accordance
with their respective interests. For purposes of this Paragraph 1.05.c., the
"aggregate market value" of all fractional shares of the Triangle Stock shall be
equal to the total of such fractional shares multiplied by the closing sales
price of Triangle Stock as quoted on the New York Stock Exchange ("NYSE") (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the third to last trading day preceding the Effective
Time (as defined in Paragraph 1.07 below).
d. Surrender of Certificates. No certificate for any shares, or cash for
any fractional share, of Triangle Stock shall be delivered to any former
shareholder of United Federal unless and until such shareholder shall have
properly surrendered to the Exchange Agent the Old Certificate(s) formerly
representing his or her shares of United Federal Stock, together with a properly
completed Transmittal Letter in such form as shall be provided to the
shareholder by the Holding Company for that purpose. Further, until such Old
Certificate(s) are so surrendered, no dividend or other distribution payable to
holders of record of Triangle Stock as of any date subsequent to the Effective
Time shall be delivered to the holder of such Old Certificate(s). However, upon
the proper surrender of such Old Certificate(s) the Exchange Agent shall pay to
the registered holder of the shares of Triangle Stock represented by such Old
Certificate(s) the amount of any such cash, dividends or distributions which
have accrued but remain unpaid with respect to such shares. Neither the Holding
Company, Triangle, United Federal 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, United
Federal nor the Exchange Agent shall be liable to a former holder of United
Federal Stock for any
4
amount paid or property delivered in good faith to a public official pursuant to
any applicable abandoned property, escheat, or similar law.
e. Antidilutive Adjustments. If, following the date of this Agreement, the
Holding Company shall change the number of outstanding shares of Triangle Stock
as a result of a dividend payable in shares of Triangle Stock, a stock split, a
reclassification or other subdivision or combination of outstanding shares, and
if the record date of such event occurs prior to the Effective Time, then an
appropriate and proportionate adjustment shall be made to the Exchange Rate so
as to appropriately and proportionately increase or decrease the number of
shares of Triangle Stock to be issued in exchange for each of the shares of
United Federal Stock.
f. Lost Certificates. Any shareholder of United Federal whose certificate
evidencing shares of United Federal 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 (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).
g. Treatment of United Federal's Stock Options.
(i) At the Effective Time, each option or other right to purchase
shares of United Federal Stock pursuant to stock options ("United Federal
Options") granted by United Federal under the United Federal Savings Bank
1993 Incentive Stock Option Plan and the United Federal Savings Bank 1993
Stock Option Plan for outside Directors (collectively, the "United Federal
Stock Plans"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to
Triangle Stock, and the Holding Company shall assume each United Federal
Option, in accordance with the terms of the United Federal Stock Plans and
stock option agreement by which it is evidenced, except that from and after
the Effective Time (A) the Holding Company and its Compensation Committee
shall be substituted for United Federal and the Committee of United
Federal's Board of Directors (including, if applicable, the entire Board of
Directors of United Federal) administering the United Federal Stock Plans,
(B) each United Federal Option assumed by the Holding Company may be
exercised solely for shares of Triangle Stock, (C) the number of shares of
Triangle Stock subject to such United Federal Option shall be equal to the
number of shares of United Federal Stock subject to such United Federal
Option immediately prior to the Effective Time multiplied by the Exchange
Rate and rounding down to the nearest whole share, and (D) the per share
exercise price under each such United Federal Option shall be adjusted by
dividing the per share exercise price under each such United Federal Option
by the Exchange Rate and rounding up to the nearest cent
(ii) As soon as practicable after the Effective Time, the Holding
Company shall deliver to the participants in the United Federal Stock Plans
an appropriate notice setting forth such participant's rights pursuant
thereto and the grants pursuant to the United Federal 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
5
Stock for delivery upon exercise of United Federal 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
United Federal Stock awarded under the United Federal Stock Plans or any
other plan, program, or arrangement of United Federal, 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.g., in no event shall options to purchase more than 125,500 shares of
United Federal Stock be converted into options to purchase Triangle Stock
in connection with the transactions contemplated by this Agreement. United
Federal agrees to cooperate with the Holding Company to insure the
implementation of this Paragraph 1.05.g.
h. Outstanding Triangle Stock. The status of the shares of Triangle Stock
and of shares of common stock of Triangle which are outstanding immediately
prior to the Effective Time shall not be affected by the Merger.
1.06. Articles, Bylaws and Management. The Articles of Incorporation and
Bylaws of Triangle in effect at the Effective Time shall be the Articles of
Incorporation and Bylaws of Triangle 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 the Holding Company in Raleigh, North Carolina, or at such other
place as the Holding Company shall designate, on a date specified by the Holding
Company (the "Closing Date") after the expiration of any and all required
waiting periods following the effective date of required approvals of the Merger
by governmental or regulatory authorities (but in no event later than December
31, 1998). At the Closing, the Holding Company, Triangle and United Federal
shall take such actions (including without limitation the delivery of certain
closing documents) as are required herein and as shall otherwise be required by
law to consummate the Merger and cause it to become effective, and shall execute
Articles of Merger under North Carolina law which shall contain a "Plan of
Merger" substantially in the form attached as Schedule A hereto.
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of governmental and regulatory
authorities), the Merger shall be effective on the date and at the time (the
"Effective Time") designated in the Articles of Merger executed at the Closing
6
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 later than December 31, 1998. 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.
At the Holding Company's option, it may elect to have United Federal become
a wholly-owned subsidiary whereby United Federal would convert to a North
Carolina chartered commercial bank (the "Bank Conversion") and immediately
thereafter merge with an interim commercial bank subsidiary to be established by
the Holding Company (the "Interim Merger"), with United Federal being the
surviving corporation. Thereafter, the merger of United Federal and Triangle
Bank would be effected at a date selected by the Holding Company. If the Holding
Company elects such option, the effectiveness of the Bank Conversion would
immediately precede the Interim Merger which, when effective, would be the
Effective Time. The Interim Merger would be effected pursuant to Plan of Merger
substantially in the form of Schedule A. Further, in such event, the provisions
of this Article I which require amendment to provide for the Interim Merger
shall be deemed to be so amended.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF UNITED FEDERAL
Except as otherwise specifically provided herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to the Holding Company, United
Federal hereby makes the following representations and warranties to the Holding
Company:
2.01. Organization; Standing; Power. United Federal (i) is duly organized
and incorporated, validly existing and in good standing as a savings bank under
the laws of the United States; (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 United Federal; 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
United Federal.
2.02. Capital Stock. United Federal's authorized capital stock consists of
10,000,000 shares of common stock, $0.01 par value per share. As of February 12,
1998, 3,201,314 shares of United Federal Stock were issued and outstanding,
which constitute United Federal's only issued and outstanding securities.
Options to purchase 125,500 shares of United Federal Stock are outstanding under
the United Federal Stock Plans.
Each outstanding share of United Federal Stock (i) has been duly authorized
and is validly issued and outstanding, and is fully paid and non-assessable,
(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
requirements of an applicable exemption from the registration requirements under
the Securities Act of 1933, as amended (the "1933 Act").
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The United Federal Stock is registered with the Office of Thrift
Supervision ("OTS") under the Securities Exchange Act of 1934 (the "Exchange
Act"); United Federal is subject to the periodic reporting requirements of the
Exchange Act as administered by the OTS.
2.03 Principal Shareholders. No person or entity is known to United Federal
to beneficially own, directly or indirectly, more than 5% of the outstanding
shares of United Federal Stock.
2.04 Subsidiaries. United Federal's only subsidiary is First Service
Corporation of NC ("First Service"). First Service has one subsidiary, The
Eagles Nest Bay Company ("Eagles Nest"), and, other than the ownership of First
Service and Eagles Nest, neither United Federal nor First Service owns any stock
or other equity interest in any corporation, service corporation, joint venture,
partnership or other entity. First Service's authorized capital stock consists
of 3,000 shares of common stock, $100.00 par value per share ("First Service
Stock"), of which 2,250 shares are issued and outstanding and constitute the
only securities issued by First Service. Eagles Nest's authorized capital stock
consists of 100,000 shares of common stock, $1.00 par value per share ("Eagles
Nest Stock"), of which 10,000 shares are issued and outstanding and constitute
the only securities issued by Eagles Nest. All outstanding shares of First
Service Stock are owned of record and beneficially by United Federal and all
outstanding shares of Eagles Nest Stock are owned of record and beneficially by
First Service. Each outstanding share of First Service Stock and Eagles Nest
Stock (i) has been duly authorized, is validly issued and outstanding, and is
fully paid and non-assessable, (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 requirements of an applicable exemption from registration
requirements under the 1933 Act.
2.05. Convertible Securities, Options, Etc. With the exception of options
to purchase an aggregate of 125,500 shares of United Federal Stock which have
been issued and are outstanding under the United Federal Stock Plans, neither
United Federal, First Service nor Eagles Nest has any outstanding (i) securities
or other obligations (including debentures or other debt instruments) which are
convertible into shares of United Federal Stock, First Service Stock or Eagles
Nest Stock or any other securities of United Federal, First Service or Eagles
Nest, (ii) options, warrants, rights, calls or other commitments of any nature
which entitle any person to receive or acquire any shares of United Federal
Stock, First Service Stock or Eagles Nest Stock or any other securities of
United Federal, First Service or Eagles Nest, or (iii) plan, agreement or other
arrangement pursuant to which shares of United Federal Stock, First Service
Stock or Eagles Nest Stock or any other securities of United Federal, First
Service or Eagles Nest, 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 United Federal's Board of Directors and executed and
delivered on United Federal's behalf. Subject only to approval of this Agreement
by the shareholders of United Federal in the manner required by law (as
contemplated by Paragraph 6.01.a. below), (i) United Federal 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 United Federal to
enter into this Agreement and to perform its obligations and agreements and
carry out the transactions described herein have been duly and properly
8
completed or obtained, and (iii) this Agreement has been executed on behalf of
United Federal and constitutes a valid and binding agreement of United Federal
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 United
Federal, neither the execution and delivery of this Agreement, nor the
consummation of the transactions described herein, nor compliance by United
Federal 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, United Federal's
Charter or Bylaws, or any contract, agreement, lease, mortgage, note, bond,
indenture, license, or obligation or understanding (oral or written) to which
United Federal 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 United Federal'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 United Federal; or (v) interfere with or otherwise adversely
affect United Federal'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 United Federal'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 United Federal's shareholders as described in Paragraph 7.01.c. below and of
governmental or regulatory authorities as described in Paragraph 7.01.a. below
and other consents or approvals, the failure of which to obtain would not have a
Material Adverse Effect on United Federal or its ability to consummate the
Merger.
2.08. United Federal Books and Records. United Federal's books of account
and business records have been maintained in material compliance with all
applicable legal and accounting requirements and in accordance with good
business practices, and such books and records are complete and reflect
accurately in all material respects United Federal's items of income and expense
and all of its assets, liabilities and stockholders' equity. The minute books of
United Federal 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. United Federal Reports. Since January 1, 1992, and where the failure
to file has had or could have a Material Adverse Effect on United Federal,
United Federal 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 OTS, (ii) the Federal Deposit Insurance Corporation
(the "FDIC"), or (iii) any other governmental or regulatory authorities having
jurisdiction over United Federal. All such reports, registrations and statements
filed by United Federal with the OTS, FDIC, or
9
other such regulatory authority are collectively referred to herein as the
"United Federal Reports." As of their respective dates, each United Federal
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 United Federal has not been notified that any such United
Federal Report was deficient in any material respect as to form or content.
Following the date of this Agreement, United Federal shall deliver to Triangle,
simultaneous with the filing thereof, a copy of each report, registration,
statement or other regulatory filing made by United Federal with the OTS, the
FDIC or any other such regulatory authority.
2.10. United Federal Financial Statements. United Federal has delivered to
Triangle a copy (i) of its balance sheets as of December 31, 1995 and December
31, 1996, and its statements of operations, changes in stockholders' equity and
cash flows for the years ended December 31, 1994, December 31, 1995 and December
31, 1996, together with notes thereto (the "United Federal Financial
Statements"), and (ii) a copy of its balance sheet as of September 30, 1997 and
its statement of operations for the nine months ended September 30, 1997 (the
"United Federal Interim Financial Statements"); and, following the date of this
Agreement, United Federal promptly will deliver to Triangle all other annual or
interim financial statements prepared by or for United Federal. The United
Federal Financial Statements and the United Federal Interim Financial Statements
(including any related notes and schedules thereto) (i) are in accordance with
United Federal'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
United Federal's consolidated financial condition, assets and liabilities,
results of operations, changes in stockholders' equity and changes in cash flows
as of the dates indicated and for the periods specified therein. The United
Federal Financial Statements have been audited and certified by United Federal's
independent certified public accountants, McGladrey & ▇▇▇▇▇▇ LLP.
2.11. Tax Returns and Other Tax Matters. (i) United Federal 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 knowledge of
management of United Federal, 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 United Federal or its property have been fully paid, and, with
respect to any such taxes to become due from United Federal for any period or
periods through and including September 30, 1997, adequate provision has been
made for the payment of all such taxes and such provision is reflected in the
United Federal Financial Statements; (iii) United Federal's tax returns and
reports have been examined or closed by applicable statutes of limitations
through the tax year ended December 31, 1993, and United Federal 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) United Federal 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 United Federal have been provided for in the
United Federal Financial Statements in all material respects.
10
2.12. Absence of Material Adverse Changes or Certain Other Events
(i) Since December 31, 1996, United Federal has conducted its business
only in the ordinary course, and there has been no Material Adverse Change
in United Federal, and there has occurred no event or development and, to
the knowledge of management of United Federal, there currently exists no
condition or circumstance which, with the lapse of time or otherwise, is
reasonably likely to cause, create or result in a Material Adverse Change,
in United Federal.
(ii) Since December 31, 1996, and other than in the ordinary course of
its business, including its normal salary review for 1997 and 1998, United
Federal has not incurred any material liability or engaged in any material
transaction or entered into any material agreement, increased the salaries,
compensation or general benefits payable to its employees, suffered any
loss, destruction or damage to any of its properties or assets, or made a
material acquisition or disposition of any assets or entered into any
material contract or lease.
2.13. Absence of Undisclosed Liabilities. United Federal 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 United
Federal Financial Statements and the United Federal Interim Financial
Statements, or (ii) obligations or liabilities incurred in the ordinary course
of its business since September 30, 1997, and which are not reasonably likely
to, individually or in the aggregate, cause a Material Adverse Change in United
Federal.
2.14. Compliance with Existing Obligations. United Federal has performed in
all material respects all obligations required to be performed by it under, and
it is not in default in any material respect under, or in violation in any
material respect of, the terms and conditions of its Charter or Bylaws, and any
contract, agreement, lease, mortgage, note, bond, indenture, license,
obligation, understanding or other undertaking (whether oral or written) to
which it 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, to the knowledge of management of United Federal, any
facts or circumstances which reasonably could result in such), including
without limitation any action by any governmental or regulatory authority,
which currently exists or is ongoing, pending or, to the knowledge of
management of United Federal threatened, contemplated or probable of
assertion, against, relating to or otherwise affecting United Federal or
any of its properties or assets which, if determined adversely, could
result in liability on the part of United Federal for, or subject it to,
monetary damages, fines or penalties, or an injunction, and which could
have a Material Adverse Effect on United Federal or on the ability of
United Federal to consummate the Merger;
(ii) United Federal 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
11
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
knowledge of management of United Federal, threatened or probable of
assertion to suspend, cancel, revoke or limit any Permit;
(iii) United Federal 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 OTS or the
FDIC) 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
United Federal which in any manner limit, restrict, regulate, enjoin or
prohibit any present or past business or practice of United Federal; and
United Federal 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) United Federal is not in violation or default in any material
respect under, and has complied in all material respects with, all laws,
statutes, ordinances, rules, regulations, orders, writs, injunctions or
decrees of any court or federal, state, municipal or other governmental or
regulatory authority having jurisdiction or authority over it or its
business operations, properties or assets (including without limitation all
provisions of North Carolina law relating to usury, the Consumer Credit
Protection Act, and all other laws and regulations applicable to extensions
of credit by United Federal) 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 a Material
Adverse Effect on United Federal.
2.16. Real Properties. United Federal has Previously Disclosed to the
Holding Company a listing of all real property owned or leased by United Federal
(including United Federal's banking facilities and all other real estate or
foreclosed properties owned by United Federal) (the "Real Property") and all
leases, if any, pertaining to any such Real Property to which United Federal is
a party (the "Real Property Leases"). With respect to all Real Property owned by
United Federal, United Federal 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 United Federal 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 the
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.
To the knowledge of management of United Federal, the Real Property
complies in all material respects with all applicable federal, state and local
laws, regulations, ordinances or orders of any
12
governmental authority, including those relating to zoning, building and use
permits, and the Real Property may be used under applicable zoning ordinances
for commercial banking facilities as a matter of right rather than as a
conditional or nonconforming use.
All improvements and fixtures included in or on the Real Property are in
good condition and repair, ordinary wear and tear excepted, and, except as may
have been Previously Disclosed pursuant to Paragraph 2.21 below, there does not
exist any condition which interferes with United Federal'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 United Federal's books and records (A) have resulted from bona
fide business transactions in the ordinary course of United Federal's
operations, (B) were made in accordance with United Federal's customary
loan policies and procedures, and (C) are owned by United Federal 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 United Federal 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
United Federal'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 United Federal's records of
such loan.
(iii) Each loan reflected as an asset on United Federal'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.
(iv) United Federal has Previously Disclosed to the Holding Company a
listing of (A) each loan, extension of credit or other asset of United
Federal which, as of September 30, 1997, is classified by the OTS, the FDIC
or by United Federal as "Loss", "Doubtful", "Substandard" or "Special
Mention" (or otherwise by words of similar import), or which United Federal
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 United Federal which,
as of September 30, 1997, was past due thirty (30) days or more as to the
payment of principal and/or interest, or as to which any obligor thereon
(including the borrower or any guarantor) otherwise was in default, is the
subject of a proceeding in bankruptcy or otherwise has indicated any
inability or intention not to repay such loan or extension of credit. Each
such listing is accurate and complete as of the date indicated.
(v) To the knowledge of management of United Federal, each of United
Federal'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 United
Federal's business in an amount which is not less than the amount at which
it is carried on United Federal's books and records.
13
(vi) United Federal's reserve for possible loan losses (the "Loan Loss
Reserve") shown in the United Federal Interim Financial Statements has been
established in conformity with GAAP, sound banking practices and all
applicable requirements of the OTS and rules and policies of the OTS and
the FDIC and, in the best judgment of United Federal's management, is
reasonable in view of the size and character of United Federal'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
United Federal's loan portfolio and other real estate owned.
2.18 Securities Portfolio and Investments. All securities owned by United
Federal (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 United Federal 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 United
Federal's business to secure public funds deposits and in connection with
repurchase agreements with customers and Federal Home Loan Bank borrowings).
There are no voting trusts or other agreements or undertakings to which United
Federal is a party with respect to the voting of any such securities. With
respect to all "repurchase agreements" to which United Federal has "purchased"
securities under agreement to resell (if any), United Federal 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 United Federal which is secured by such collateral.
Since September 30, 1997, there has been no significant deterioration or
Material Adverse Change in the quality, or any material decrease in the value,
of United Federal's securities portfolio.
2.19. Personal Property and Other Asset. All assets of United Federal
(including without limitation all banking equipment, data processing equipment,
vehicles, and all other personal property located in or used in the operation of
each office of United Federal or otherwise used by United Federal in the
operation of its business) are owned by United Federal free and clear of all
liens, leases, encumbrances, title defects or exceptions to title. All of United
Federal's banking equipment is in good operating condition and repair, ordinary
wear and tear excepted.
2.20. Patents, Trademarks and Licenses. United Federal owns, possesses or
has the right to use any and all patents, licenses, trademarks, trade names,
copyrights, trade secrets and proprietary and other confidential information
necessary to conduct its business as now conducted; and, to the knowledge of
management of United Federal, United Federal has not violated, or is currently
in conflict with, any patent, license, trademark, trade name, copyright or
proprietary right of any other person or entity.
2.21. Environmental Matters. United Federal has Previously Disclosed and
provided to the Holding Company copies of all written reports, correspondence,
notices or other materials, if any, in its possession pertaining to
environmental reports, surveys, assessments, notices of violation, notices of
regulatory requirements, penalty assessments, claims, actions or proceedings,
past or pending, of the Real Property or any of its Loan Collateral and any
improvements thereon, or to any violation of Environmental Laws (as defined
below) on, affecting or otherwise involving the Real Property, any Loan
Collateral or otherwise involving United Federal.
14
To the knowledge of management of United Federal:
(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) United Federal has not violated any federal, state or local law,
rule, regulation, order, permit or other requirement relating to health,
safety or the environment or imposing liability, responsibility or
standards of conduct applicable to environmental conditions (all such laws,
rules, regulations, orders and other requirements being herein collectively
referred to as "Environmental Laws"), and there has been no violation of
any Environmental Laws (including any violation with respect to or relating
to any Loan Collateral) by any other person or entity for whose liability
or obligation with respect to any particular matter or violation United
Federal is or may be responsible or liable; (iii) United Federal 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 United Federal 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 United Federal 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,
15
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all standards of
conduct and bases of obligations relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, discharge, release,
threatened release, control or clean-up of any Hazardous Substances (including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act, the Superfund Amendment and Reauthorization Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the Clean Water
Act, the Clean Air Act, the Toxic Substances Control Act, the Oil Pollutant Act,
the Coastal Zone Management Act, any "Superfund" or "Superlien" law, the North
Carolina Oil Pollution and Hazardous Substances Control Act, the North Carolina
Water and Air Resources Act, and the North Carolina Occupational Safety and
Health Act, including any amendments thereto from time to time) as such may now
or hereafter (through the Effective Time) be defined or in effect.
2.22. Absence of Brokerage or Finders Commissions. (i) All negotiations
relative to this Agreement and the transactions described herein have been
carried on by United Federal directly with the Holding Company; (ii) no person
or firm has been retained by or has acted on behalf of, pursuant to any
agreement, arrangement or understanding with, or under the authority of, United
Federal's 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 (ii) United Federal 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 United Federal's branch
offices, United Federal 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 $25,000 (i)
which is not to be performed in full prior to December 31, 1998, (ii) which
calls for the provision of goods or services to United Federal and cannot be
terminated without material penalty upon written notice to the other party
thereto, (iii) which is material to United Federal and was not entered into in
the ordinary course of business, (iv) which involves hedging, options or any
similar trading activity, or interest rate exchanges or swaps, (v) which commits
United Federal 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
United Federal's business), (vi) which involves the purchase or sale of any
assets of United Federal, or the purchase, sale, issuance, redemption or
transfer of any capital stock or other securities issued by United Federal, or
(vii) with any director, officer or principal shareholder of United Federal
(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 United Federal's business and on substantially
the same terms and conditions as were prevailing at that time for similar
agreements with unrelated persons).
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United Federal 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 United Federal.
2.24. Employment Matters; Employee Relations. United Federal (i) has paid
in full to or accrued on behalf of all its directors, officers and employees all
wages, salaries, commissions, bonuses, fees, sick pay, severance pay, all other
amounts promised to the extent required by law or when United Federal 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 United Federal, asserted that United Federal 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
knowledge of management of United Federal, threatened, against United Federal
(or any of its employees), involving employment discrimination, sexual
harassment, wrongful discharge or similar claims.
United Federal 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 United Federal and any of its
employees, or any pending or threatened proceeding in which it is asserted that
United Federal has committed an unfair labor practice; and management of United
Federal is not aware of any activity involving United Federal 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) United Federal is not a party to or bound by any employment
agreements with any of its directors, officers or employees.
(ii) United Federal has Previously Disclosed and has delivered or made
available to the Holding Company prior to the execution of this Agreement
copies, in each case, of all pension, stock ownership, severance pay,
vacation, bonus, or other incentive plan, all other written employee
programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans"
as that term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), currently adopted, maintained
by, sponsored in whole or in part by, or contributed to by United Federal
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 "United
Federal Benefit Plans"). Any of the United Federal 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 "United Federal ERISA Plan." No United
Federal 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 United Federal
nor any affiliate of United Federal has ever been required to contribute to
a multi-employer plan, as defined in Section 3(37) of ERISA.
17
(iii) All United Federal 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 United Federal. Each United Federal 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 management of United Federal is not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
To the knowledge of management of United Federal, United Federal has not
engaged in a transaction with respect to any United Federal Benefit Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, would subject United Federal 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 United Federal.
(iv) United Federal has no liability for retiree health and life
benefits under any of the United Federal Benefit Plans and there are no
restrictions on the rights of United Federal to amend or terminate any
United Federal Benefit Plan without incurring any liability thereunder,
which liability is reasonably likely to have a Material Adverse Effect on
United Federal.
(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 United
Federal from United Federal under any United Federal Benefit Plan or
otherwise, (B) increase any benefits otherwise payable under any United
Federal 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 United Federal.
(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 United Federal and their respective beneficiaries have been
fully reflected on the United Federal Financial Statements to the extent
required by and in accordance with GAAP.
2.26. Insurance. United Federal has in effect a "blanket bond" and such
other policies of general liability, casualty, directors and officers liability,
employee fidelity, errors and omissions and other property and liability
insurance as have been Previously Disclosed to the Holding Company (the
"Policies"). The Policies provide coverage in such amounts and against such
liabilities, casualties, losses or risks as is customary or reasonable for
entities engaged in United Federal's business or as is required by applicable
law or regulation; and, in the reasonable opinion of management of United
Federal, the insurance coverage provided under the Policies is considered
reasonable and adequate in all respects for United Federal. 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 United
Federal 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. United Federal is not in default under the provisions
of, has not received notice of cancellation or nonrenewal of or any material
premium
18
increase on, and has no 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 management of United Federal is not aware of any
facts which would form the basis of any such claim), and management of United
Federal 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 United Federal are insured by
the Savings Association Bank Insurance Fund of the FDIC to the maximum extent
permitted by law, all deposit insurance premiums and assessments due from United
Federal to the FDIC have been paid in full in a timely fashion, and, to the
knowledge of management of United Federal, no proceedings have been commenced or
are contemplated by the FDIC or otherwise to terminate such insurance.
2.28. Affiliates. United Federal has Previously Disclosed to the Holding
Company a listing of those persons deemed by United Federal as of the date of
this Agreement to be "Affiliates" of United Federal (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 United Federal.
2.29. Obstacles to Regulatory Approval, Accounting Treatment or Tax
Treatment. To the knowledge of management of United Federal, there exists no
fact or condition (including United Federal's record of compliance with the
Community Reinvestment Act) relating to United Federal that may reasonably be
expected to (i) prevent or materially impede or delay the Holding Company or
Triangle 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 United Federal, United
Federal shall promptly (and in any event within three days after obtaining such
knowledge) communicate such fact or condition to the President of the Holding
Company.
2.30. Disclosure. To the knowledge of management of United Federal, no
written statement, certificate, schedule, list or other written information
furnished by or on behalf of United Federal at any time to the Holding Company
or Triangle in connection with this Agreement (including without limitation
information "Previously Disclosed" by United Federal), 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 United Federal to the
Holding Company or Triangle will be a true and complete copy of such document,
unmodified except by another document delivered by United Federal.
2.31. Dissenters' Rights. Holders of United Federal Stock do not have any
dissenters rights.
19
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF THE HOLDING COMPANY AND TRIANGLE
Except as otherwise specifically described herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to United Federal, the Holding
Company and Triangle each hereby makes the following representations and
warranties to United Federal.
3.01. Organization; Standing; Power. The Holding Company and Triangle each
(i) is duly organized and incorporated, validly existing and in good standing
under the laws of North Carolina, (ii) has all requisite power and authority
(corporate and other) to own its respective properties and conduct its
respective businesses as now being conducted, (iii) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its respective businesses makes such qualification necessary,
except where failure so to qualify would not have a Material Adverse Effect on
the Holding Company, and (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.
3.02. Capital Stock. The Holding Company's authorized capital stock
consists of 20,000,000 shares of Triangle Stock. As of December 31, 1997, an
aggregate of 12,980,925 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 United Federal's shareholders pursuant to this Agreement, when
issued as described herein, will be duly authorized, validly issued, fully paid,
nonassessable and freely tradable by all holders other than Affiliates.
3.03. Authorization and Validity of Agreement. This Agreement has been duly
and validly approved by the Holding Company's 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 their 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, 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
20
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 consummation of the transactions described herein, except
for the approval of Triangle's sole shareholder as described in Paragraph
7.01.d. below and of governmental or regulatory authorities described in
Paragraph 7.01.a. below.
3.05. Holding Company Books and Records. The Holding Company's 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 items of income and expense and all of their 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
shareholders and boards 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 United Federal and its representatives.
3.06 Holding Company Reports. Since January 1, 1992, and where the failure
to file has had or could have a Material Adverse Effect on the Holding Company,
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 SEC,
(ii) the Board of Governors of the Federal Reserve System (the "FRB"), (iii) the
FDIC, (iv) the North Carolina Commissioner of Banks (the "Commissioner"), and
(v) any other governmental or regulatory authorities having jurisdiction over
the Holding Company or its subsidiaries. All such reports and statements filed
with the SEC, the FRB, the FDIC, the Commissioner or other such regulatory
authority are collectively referred to herein as the "Holding Company Reports."
As of their respective dates, the Holding Company Reports complied in all
material respects with all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Holding Company has not been notified that any of the
Holding Company Reports were deficient in any material respect as to form or
content. Following the date of this Agreement, the Holding Company shall deliver
to United Federal upon its request a copy of any report, registration, statement
or other regulatory filing made by the Holding Company or its subsidiaries with
the SEC, the FRB, the FDIC, the Commissioner or any other such regulatory
authority.
21
3.07. Holding Company Financial Statements. The Holding Company has
delivered to United Federal (i) a copy of the Holding Company's consolidated
balance sheets as of December 31, 1995 and December 31, 1996, and its
consolidated statements of income, changes in shareholders' equity, and cash
flows for the years ended December 31, 1994, December 31, 1995 and December 31,
1996 (the "Holding Company Financial Statements"), and (ii) a copy of the
Holding Company's balance sheet as of September 30, 1997 and its statement of
operations for the nine months ended September 30, 1997 (the "Holding Company
Interim Financial Statements"). The Holding Company Financial Statements and the
Holding Company Interim Financial Statements were prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated and present
fairly in all material respects the Holding Company's consolidated financial
condition, assets and liabilities, results of operations, changes in
shareholders' equity and changes in cash flows as of the dates and for the
periods specified therein. The Holding Company Financial Statements have been
audited by the Holding Company's independent accountants, Coopers & ▇▇▇▇▇▇▇
L.L.P.
3.08 Absence of Material Adverse Changes. Since September 30, 1997 there
has been no material adverse change, and there has occurred no event or
development and, to the best knowledge of management of the Holding Company,
there currently exists no condition or circumstance which, with the lapse of
time or otherwise, is reasonably likely to cause, create or result in a Material
Adverse Change in the Holding Company.
3.09 Litigation and Compliance with Law. (i) There are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or, to the
knowledge of management of the Holding Company, any facts or circumstances which
reasonably could result in such), including without limitation any such action
by any governmental or regulatory authority, which currently exists or is
ongoing, pending or, to the knowledge of management of the Holding Company,
threatened, contemplated or probable of assertion, against, relating to or
otherwise affecting the Holding Company or any of its properties or assets
which, if determined adversely, could result in liability on the part of the
Holding Company for, or subject it to, monetary damages, fines or penalties, or
an injunction, and which could have a Material Adverse Change in the Holding or
on the ability of the Holding Company or Triangle to consummate the Merger;
(ii) The Holding Company and its subsidiaries each has all licenses,
permits, orders, authorizations or approvals ("Permits") of any federal,
state, local or foreign governmental or regulatory body that are material
to or necessary for the conduct of its business or to own, lease and
operate its properties; all such Permits are in full force and effect; no
violations are or have been recorded in respect of any such Permits; and no
proceeding is pending or, to the knowledge of management of the Holding
Company, threatened or probable of assertion to suspend, cancel, revoke or
limit any Permit;
(iii) Neither the Holding Company nor any of its subsidiaries is
subject to any supervisory agreement, enforcement order, writ, injunction,
capital directive, supervisory directive, memorandum of understanding or
other similar agreement, order, directive, memorandum or consent of, with
or issued by any regulatory or other governmental authority (including
without limitation the FDIC, the FRB or the Commissioner) relating to its
financial condition, directors or officers,
22
operations, capital, regulatory compliance or otherwise; there are no
judgments, orders, stipulations, injunctions, decrees or awards against the
Holding Company or any of its subsidiaries which in any manner limit,
restrict, regulate, enjoin or prohibit any present or past business or
practice of the Holding Company or any of its subsidiaries; and neither the
Holding Company nor any of its subsidiaries has been advised or has any
reason to believe that any regulatory or other governmental authority or
any court is contemplating, threatening or requesting the issuance of any
such agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award; and,
(iv) Neither the Holding Company nor any of its subsidiaries is in
violation or default in any material respect under, and each has complied
in all material respects with, all laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any court or federal,
state, municipal or other governmental or regulatory authority having
jurisdiction or authority over it or its business operations, properties or
assets (including without limitation all provisions of North Carolina law
relating to usury, the Consumer Credit Protection Act, and all other laws
and regulations applicable to extensions of credit by the Holding Company's
bank subsidiaries) 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 a Material Adverse Effect
on 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 United Federal; (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,
Triangle or their 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.
3.11. Obstacles to Regulatory Approval, Accounting Treatment or Tax
Treatment. To the knowledge of management of the Holding Company, no fact or
condition (including the Holding Company's bank subsidiaries' records of
compliance with the Community Reinvestment Act) relating to the Holding Company
exists that may reasonably be expected to (i) prevent or materially impede or
delay the Holding Company regulatory approvals required in order to consummate
the transactions described herein, (ii) prevent the Merger from qualifying to be
a reorganization under Section 368(a)(1)(A) of the Code, or (iii) prevent the
Merger from being treated as a "pooling-of-interests" for accounting purposes;
and, if any such fact or condition becomes known to the executive officers of
the Holding Company, it promptly (and in any event within three days after
obtaining such knowledge) shall communicate such fact or condition to the
President of United Federal.
3.12. Disclosure. To the knowledge of management of the Holding Company, 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
United Federal 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
23
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 United Federal 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 UNITED FEDERAL
4.01. Affirmative Covenants of United Federal. United Federal hereby
covenants and agrees as follows with the Holding Company and Triangle.
a. "Affiliates" of United Federal. United Federal 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 United Federal (as defined in
Paragraph 2.28 above), to execute and deliver to the Holding Company at least
forty-five (45) 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 United Federal shall
bear a restrictive legend (substantially in the form as shall be set forth in
the Affiliates' Agreement) with respect to the restrictions applicable to such
shares.
b. Conduct of Business Prior to Effective Time. While the parties recognize
that the operation of United Federal until the Effective Time is the
responsibility of United Federal and its Board of Directors and officers, United
Federal agrees that, between the date of this Agreement and the Effective Time,
it 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, United
Federal agrees that it will:
(i) preserve intact its present business organization, keep available
its present officers and employees, and preserve its relationships with
customers, depositors, creditors, correspondents, suppliers, and others
having business relationships with it;
(ii) maintain all its properties and equipment in customary repair,
order and condition, ordinary wear and tear excepted;
(iii) maintain its books of account and records in the usual, regular
and ordinary manner in accordance with sound business practices applied on
a consistent basis;
(iv) comply with all laws, rules and regulations applicable to it, its
properties and to the conduct of its business;
(v) continue to maintain in force insurance such as is described in
Paragraph 2.26. above; not modify any bonds or policies of insurance in
effect as of the date hereof unless the same, as modified, provides
substantially equivalent coverage; and not cancel, allow to be terminated
or, to the
24
extent available, fail to renew, any such bond or policy of insurance
unless the same is replaced with a bond or policy providing substantially
equivalent coverage;
(vi) provide to the Holding Company on a monthly basis United
Federal's market value report on its investment portfolio and on its
hedging portfolio; and,
(vii) promptly provide to the Holding Company such information about
United Federal and its financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations, as the Holding Company reasonably shall request.
c. Periodic Information Regarding Loans and Other Information. All new
extensions of unsecured credit in excess of $50,000 and of secured credit in
excess of $100,000 will be submitted by United Federal to the Holding Company on
an after-the-fact basis for the Holding Company's review within fifteen (15)
business days of the end of the month in which the extension of credit was made.
Additionally, United Federal agrees to make available and provide to the
Holding Company the following information with respect to United Federal's loans
and other extensions of credit (such assets herein referred to as "Loans") as of
December 31, 1997, and each month thereafter until the Effective Time, such
information for each month to be in form and substance as is usual and customary
in the conduct of United Federal's business and to be furnished within fifteen
(15) business days of the end of each month ending after the date hereof:
(i) a list of Loans past due for sixty (60) days or more as to
principal or interest;
(ii) an analysis of the Loan Loss Reserve and management's assessment
of the adequacy of the Loan Loss Reserve, which analysis and assessment
shall include a list of all classified or "watch list" Loans, along with
the outstanding balance and amount specifically allocated to the Loan Loss
Reserve for each such classified or "watch list" Loan (this report shall be
delivered quarterly rather than monthly);
(iii) a list of Loans in nonaccrual status;
(iv) a list of all Loans over $50,000 without principal reduction for
a period of longer than one year;
(v) a list of all foreclosed real property or other real estate owned
and all repossessed personal property;
(vi) a list of reworked or restructured Loans over $25,000 and still
outstanding, including original terms, restructured terms and status;
(vii) a list of any actual or threatened litigation by or against
United Federal 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;
25
(viii) mortgage pipeline report, including hedged and unhedged
positions; and
(ix) a list of the aggregate dollar amount of fundings and commitments
for floor planning, indirect lending, and speculative lending.
Further, United Federal shall provide to the Holding Company a copy of the
monthly package, including financial information, sent by United Federal to its
board members at the same time as such packages are sent to such members.
d. Notice of Certain Changes or Events. Following the execution of this
Agreement and up to the Effective Time, United Federal promptly will notify the
Holding Company in writing of and provide to it such information as it shall
request regarding (i) any Material Adverse Change in United Federal or of the
actual or prospective occurrence of any condition or event which, with the lapse
of time or otherwise, is reasonably likely to cause, create or result in a
Material Adverse Change in United Federal, 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 United Federal herein, or any information that has been Previously
Disclosed by United Federal to the Holding Company or Triangle, 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
United Federal'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. United Federal will use its reasonable
best efforts to obtain all consents of its landlords and lessors to the Merger
as may be required under the Real Property Leases and all other leases, each of
which consents shall be in form and substance reasonably satisfactory to the
Holding Company.
f. Further Action; Instruments of Transfer, etc. United Federal covenants
and agrees with the Holding Company and Triangle that it (i) will use its
reasonable best efforts in good faith to take or cause to be taken all action
required of it hereunder as promptly as practicable so as to permit the
consummation of the transactions described herein at the earliest possible date,
(ii) shall perform all acts and execute and deliver to the Holding Company all
documents or instruments required herein or as otherwise shall be reasonably
necessary or useful to or requested by either of them in consummating such
transactions, and (iii) will cooperate with the Holding Company and Triangle in
every way in carrying out, and will pursue diligently the expeditious completion
of, such transactions.
g. Loan Loss Reserve. Beginning in the month after the execution of this
Agreement, United Federal will, on a monthly basis until the Effective Time, add
to its loan loss reserve an amount equal to $1.50 for each $100.00 in aggregate
commercial loan growth each month.
h. Incentive Compensation. Beginning in the month after the execution of
this Agreement, United Federal will not pay incentive compensation (i) to any
lending officer that approves his or her own loans, or (ii) in excess of $500.00
per loan for loans (excluding mortgage loans originated for sale in the
secondary market) approved by a credit administrator in excess of a loan
officer's authority.
26
4.02. Negative Covenants of United Federal. United Federal hereby covenants
and agrees that, between the date hereof and the Effective Time, it will not do
any of the following things or take any of the following actions without the
prior written consent and authorization of the President or an Executive Vice
President of the Holding Company.
a. Amendments to Charter or Bylaws. United Federal will not amend its
Charter or Bylaws.
b. Change in Capital Stock. Except for United Federal Stock to be issued
under the United Federal Stock Plans, United Federal will not (i) make any
change in its authorized capital stock, or create any other or additional
authorized capital stock or other securities, or (ii) issue, sell, purchase,
redeem, retire, reclassify, combine or split any shares of its capital stock or
other securities issued by it, other than the issuance of shares upon the
exercise of stock options which are outstanding as of the date of this Agreement
(including securities convertible into capital stock), or enter into any
agreement or understanding with respect to any such action.
c. Options, Warrants and Rights. United Federal will not grant or issue any
options, warrants, calls, puts or other rights of any kind relating to the
purchase, redemption or conversion of shares of its capital stock or any other
securities (including securities convertible into capital stock) or enter into
any agreement or understanding with respect to any such action.
d. Dividends. Except for the payment of a six cents ($.06) cash dividend
per share each quarter (consistent with past practices) United Federal will not
declare or pay any dividends or make any other distributions on or in respect of
any shares of its capital stock or otherwise to its shareholders.
e. Employment, Benefit or Retirement Agreements or Plans. Except as
required by law and except as may occur under the United Federal Stock Plans,
United Federal 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 United Federal
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, United Federal will not increase the compensation or benefits
of, or pay any bonus or other special or additional compensation to, any of its
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,
including bonuses, made to employees or directors in connection with existing
compensation or benefit plans, so long as such increases or payments, including
bonuses, are effected at such times and in such manner and amounts
27
as shall be consistent with United Federal's past compensation policies and
practices and, in the case of payments made pursuant to compensation or benefit
plans, consistent with the terms of those plans.
g. Accounting Practices. United Federal 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. United Federal 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 OTS, the
FDIC, or any other governmental or other regulatory agency or as shall be
required by applicable law, regulation or this Agreement, United Federal 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. United Federal 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 and Triangle) relating to a merger or other
acquisition of United Federal, or the purchase or acquisition of any United
Federal Stock, any branch office of United Federal or all or any significant
part of United Federal's assets; or provide assistance to any person in
connection with any such offer; (ii) except as the fiduciary duties of its Board
of Directors may require, disclose to any person or entity any information not
customarily disclosed to the public concerning United Federal or its business,
or afford to any other person or entity access to its properties, facilities,
books or records; (iii) except for the fiduciary duties of its Board of
Directors may require, sell or transfer any branch office of United Federal or
all or any significant part of United Federal's assets to any other person or
entity; or (iv) except for the fiduciary duties of its Board of Directors may
require, enter into or become bound by any contract, agreement, commitment or
letter of intent relating to, or otherwise take or agree to take any action in
furtherance of, any such transaction.
k. Acquisition or Disposition of Assets. United Federal will not, without
the prior written consent of the Holding Company, which consent shall not be
unreasonably withheld:
(i) sell or lease (as lessor), or enter into or become bound by any
contract, agreement, option or commitment relating to the sale, lease (as
lessor) or other disposition of any real estate; or sell or lease (as
lessor), or enter into or become bound by any contract, agreement, option
or commitment relating to the sale, lease (as lessor) or other disposition
of any equipment or any other fixed or capital asset having a value on
United Federal's books or a fair market value, whichever is greater, of
more than $10,000 for any individual item or asset, or more than $25,000 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 having a
purchase price, or involving aggregate lease payments, in excess of $10,000
for any individual item or asset, or more than $25,000 in the aggregate for
all such items or assets;
28
(iii) enter into any purchase commitment for supplies or services
which calls for prices of goods or fees for services materially higher than
current market prices or fees or which obligates United Federal for a
period longer than twelve (12) months;
(iv) other than in the ordinary course of business and at a level
consistent with past practice, sell, purchase or repurchase, or enter into
or become bound by any contract, agreement, option or commitment to sell,
purchase or repurchase, any loan or other receivable or any participation
in any loan or other receivable; or
(v) other than in the ordinary course of business and at a level
consistent with past practice, sell or dispose of, or enter into or become
bound by any contract, agreement, option or commitment relating to the sale
or other disposition of, any other asset of United Federal (whether
tangible or intangible, and including without limitation any trade name,
copyright, service ▇▇▇▇ 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 United Federal'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),United Federal 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. United Federal 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. United Federal 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.
29
o. Other Contracts. United Federal 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 United Federal would assume, guarantee,
endorse or otherwise become liable for the debt, liability or obligation of any
other person; (iv) which is entered into other than in the ordinary course of
its business; and (v) which, in the case of any one contract, agreement,
commitment or understanding and whether or not in the ordinary course of its
business, would obligate or commit United Federal to make expenditures of more
than $10,000.
ARTICLE V. COVENANTS OF THE HOLDING COMPANY
The Holding Company hereby covenants and agrees as follows with United
Federal.
5.01. Advisory Board of Directors. After the Effective Time, the current
members of United Federal's Board of Directors shall serve as members of
applicable Triangle local advisory boards, subject to satisfactory performance,
and for such service, such individuals shall be compensated in accordance with
Triangle's standard arrangements for the compensation of local advisory board
members.
5.02. NYSE Notification of Listing of Additional Shares of Triangle Stock.
As soon as practical after the Effective Time, the Holding Company shall file
with the NYSE such notifications and other materials (and shall pay such fees)
as shall be required for the listing on the NYSE of the shares of Triangle Stock
to be issued to United Federal'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 promptly will notify
United Federal in writing of and provide to it such information as it shall
request regarding (i) any Material Adverse Change in the Holding Company, or of
the actual or prospective occurrence of any condition or event which, with the
lapse of time or otherwise, is reasonably likely to cause, create or result in a
Material Adverse Change in the Holding Company, 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 United Federal, 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.
5.04. The Holding Company to Provide Necessary Information. The Holding
Company will promptly provide to United Federal information regarding the
Holding Company and its subsidiaries that United Federal reasonably requests in
order to satisfy any of its obligations under Paragraph 4.01.e.
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ARTICLE VI. MUTUAL AGREEMENTS
6.01. Shareholders' Meeting; Registration Statement; Proxy
Statement/Prospectus
a. Meeting of Shareholders. United Federal shall cause a meeting of its
shareholders (the "United Federal 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
United Federal's shareholders of the "Proxy Statement/Prospectus" described
below) for the purpose of United Federal'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 United Federal Shareholder Meeting (including
the solicitation of proxies), United Federal shall fully comply with all
provisions of applicable law and regulations and with its Charter and Bylaws.
b. Preparation and Distribution of Proxy Statement/Prospectus. The Holding
Company and United Federal jointly will prepare a "Proxy Statement/Prospectus"
for distribution to United Federal's shareholders as United Federal's proxy
statement relating to its solicitation of proxies for use at the United Federal
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 United Federal Shareholder Meeting, this
Agreement, the parties hereto, the Merger and other transactions described
herein as is required by applicable law and regulations and otherwise as shall
be agreed upon by the Holding Company and United Federal. The Holding Company
shall include the Proxy Statement/Prospectus as the prospectus in its
"Registration Statement" described below; 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 thereon.
United Federal will mail the Proxy Statement/Prospectus to United Federal's
shareholders not less than twenty (20) days prior to the scheduled date of the
United Federal Shareholder Meeting; provided, however, that no such materials
shall be mailed to United Federal'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 United
Federal pursuant to this Agreement and will use its reasonable best efforts in
good faith to see that the Registration Statement is declared effective by the
SEC under the 1933 Act. Additionally, the Holding Company shall take all such
other actions, if any, as shall be required by applicable state securities or
"blue sky" laws (i) to cause the Triangle Stock to be issued upon consummation
of the Merger, at the time of the issuance thereof, to be duly qualified or
registered (unless exempt) under such laws, (ii) to cause all conditions to any
exemptions from qualification or registration under such laws to have been
satisfied, and (iii) to obtain any and all required approvals or consents to the
issuance of such stock.
31
d. Recommendation of United Federal's Board of Directors. Unless, due to a
material change in circumstances or for any other reason United Federal's Board
of Directors reasonably believes that such a recommendation would violate the
directors' duties or obligations as such to United Federal or to its
shareholders, United Federal's Board of Directors will recommend to and actively
encourage United Federal's shareholders that they vote their shares of United
Federal Stock at the United Federal Shareholder Meeting to ratify and approve
this Agreement and the Merger, and the Proxy Statement/Prospectus mailed to
United Federal's shareholders will so indicate and state that United Federal's
Board of Directors considers the Merger to be advisable and in the best
interests of United Federal and its shareholders.
e. Information for Proxy Statement/Prospectus and Registration Statement.
Each of the Holding Company and United Federal agrees to respond promptly, and
to use its reasonable best efforts to cause its directors, officers, accountants
and affiliates to respond promptly, to requests by any other such party and its
counsel for information for inclusion in the various applications for regulatory
approvals and in the Proxy Statement/Prospectus. Each of the Holding Company and
United Federal hereby covenants with the other that none of the information
provided by it for inclusion in the Proxy Statement/Prospectus will, at the time
of its mailing to United Federal'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. Within sixty (60) days of the date of this
Agreement, the Holding Company, Triangle and United Federal shall use their
respective reasonable best efforts in good faith to (i) prepare and file, or
cause to be prepared and filed, all applications for regulatory approvals and
actions as may be required of them, respectively, by applicable law and
regulations with respect to the transactions described herein (including
applications or notices, as applicable, to the FRB, the OTS, 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, United Federal shall provide the Holding Company and its
employees, accountants and counsel, access to all its books, records, files and
other information (whether maintained electronically or otherwise), to
32
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 the Holding Company shall, in its sole discretion,
consider to be necessary or appropriate; provided, however, that any such review
conducted by the Holding Company shall be performed in such a manner as will not
interfere unreasonably with United Federal's normal operations, or with United
Federal's relationship with its customers or employees, and shall be conducted
in accordance with procedures established by the parties having due regard for
the foregoing.
6.04. Costs. Subject to the provisions of Paragraph 8.03. below, and
whether or not this Agreement shall be terminated or the Merger shall be
consummated, United Federal, on the one hand, and the Holding Company and
Triangle, on the other, shall pay their own legal, accounting and financial
advisory fees and all their 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 United
Federal, all fees owed to The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Company ("▇▇▇▇▇▇ ▇▇▇▇▇▇") for the
cost of United Federal's fairness opinion described in Paragraph 7.01.d. below,
and, in the case of the Holding Company, 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 thirty percent (30%) by United Federal and seventy percent (70%)
by the Holding Company.
6.05. Announcements. United Federal, Triangle and the Holding Company each
agrees that no person other than the parties to this Agreement is authorized to
make any public announcement or statement about this Agreement or any of the
transactions described herein, and that, without the prior review and consent of
the others (which consent shall not unreasonably be denied or delayed), no party
hereto may make any public announcement, statement or disclosure as to the terms
and conditions of this Agreement or the transactions described herein, except
for such disclosures as may be required incidental to obtaining the prior
approval of any regulatory agency or official, or the consent of any lessor or
landlord of United Federal to the consummation of the transactions described
herein. However, notwithstanding anything contained herein to the contrary,
prior review and consent shall not be required if in the good faith opinion of
counsel to the Holding Company or United Federal any such disclosure by such
entity is required by law or otherwise is prudent.
6.06. Environmental Studies. At its option the Holding Company may cause to
be conducted Phase I environmental assessments of the Real Property, the real
estate subject to any Real Property Lease, or the Loan Collateral, or any
portion thereof, together with such other studies, testing and intrusive
sampling and analyses as the Holding Company shall deem necessary or desirable
(collectively, the "Environmental Survey"). The Holding Company shall complete
all such Phase I environmental assessments within sixty (60) days following the
date of this Agreement and thereafter conduct and complete any such additional
studies, testing, sampling and analyses within sixty (60) days following
completion of all Phase I environmental assessments. Subject to the provisions
of Paragraph 8.03. below, the costs of the Environmental Survey shall be paid by
the Holding Company. If (i) the final results of any Environmental Survey (or
any related analytical data) reflect that there likely has been any discharge,
disposal, release or emission by any 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
33
event likely has occurred or exists, with respect to any of the Real Property,
real estate subject to a Real Property Lease or Loan Collateral which
constitutes or would or may constitute a violation of any Environmental Laws,
and if, (ii) based on the advice of its legal counsel or other consultants, the
Holding Company believes that United Federal is reasonably likely to become
responsible for the remediation of such discharge, disposal, release or emission
or for other corrective action with respect to any such violation, or that
United Federal is reasonably likely to become liable for monetary damages
(including without limitation any civil or criminal penalties or assessments)
resulting therefrom (or that, in the case of any of the Loan Collateral, United
Federal is reasonably likely to incur any such liability if it acquired title to
such Loan Collateral), and if, (iii) based on the advice of its legal counsel or
other consultants, the Holding Company believes the amount of expenses or
liability which United Federal is reasonably likely to incur or for which United
Federal could become responsible or liable on account of any and all such
remediation, corrective action or monetary damages at any time or over any
period of time could equal or exceed an aggregate of $100,000, then the Holding
Company shall give United Federal written notice thereof (together with all
information in its possession relating thereto) within fifteen (15) days of the
completion of the Environmental Survey and, at the Holding Company's sole option
and discretion, at any time thereafter and up to the Effective Time, the Holding
Company may terminate this Agreement without further obligation or liability to
United Federal or its shareholders.
6.07. Employees; Severance Payments; Employee Benefits
a. Consulting and Employment Agreements. From and after the Effective Time,
the Holding Company and Triangle will honor the employment agreements between
United Federal and each of ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated January 1,
1997 and April 1, 1997, respectively. In addition, at the Effective Time, the
Holding Company will enter into a consulting agreement with each of ▇▇. ▇▇▇▇▇▇
and ▇▇. ▇▇▇▇▇ in the form attached hereto as Schedule C to this Agreement.
Provided they each remain employed by United Federal at the Effective Time
in their respective current position, Triangle shall enter into an employment
agreement with ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ as of the
Effective Time which shall contain substantially the same terms and conditions
and be in substantially the same form as is attached as Schedule D to this
Agreement; provided, that in the event Triangle and any of those three
individuals do not agree within ninety (90) days prior to the Closing as to the
terms and provisions of the form of employment agreement and as to any specifics
left incomplete in the form of employment agreement, Triangle shall pay such
individual his current monthly base salary for fifteen (15) months, provided he
remains employed by United Federal from the date of this Agreement until thirty
(30) days after the Effective Time, such payments to begin in the month
following the 30-day period after the Effective Time. In consideration of this
payment, the individual would enter into a non-compete provision identical to
that contained in the form of employment agreement attached as Schedule D except
that the non-compete would (i) have a duration of the 15-month payment periods,
and (ii) prohibit employment with any financial institution operating a branch
in any county in which any banking subsidiary of the Holding Company has a
branch.
b. Employment of Other United Federal Employees. Provided they remain
employed by United Federal at the Effective Time, Triangle will attempt in good
faith, but shall have
34
no obligation, to locate suitable positions for and to offer employment to all
other employees of United Federal (other than employees serving pursuant to an
employment agreement or change in control agreement or other similar
arrangement). Any employment so offered by Triangle to an employee of United
Federal 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 shall be on an "at-will" basis,
and nothing in this Agreement shall be deemed to constitute an employment
agreement with any such person or to obligate Triangle or the Holding Company to
employ any such person for any specific period of time or in any specific
position or to restrict the Holding Company's or Triangle's right to terminate
the employment of any such person at any time and for any reason satisfactory to
it.
▇. ▇▇▇▇▇▇▇▇▇ Payment. At the Effective Time, Triangle will pay to each
individual employed by United Federal at the Effective Time who has been
continuously employed as a full-time employee by United Federal for at least one
(1) year prior to the Effective Time, but who is not offered employment with
Triangle following the Effective Time at a position and salary comparable to his
or her current position and salary and within thirty (30) miles of his or her
location, a severance payment in an amount equal to one week's salary or wages
for each year of full prior continuous service with United Federal, provided
that any severance payment shall consist of a minimum of one (1) month's salary
or wages and a maximum of three (3) months' salary or wages for non-officers and
a minimum of three (3) months' salary or wages and a maximum of six (6) months'
salary or wages for officers (any employee elected as assistant vice president
or higher), who were employed as an officer on December 24, 1997; if the officer
was not employed as an officer on December 24, 1997, he or she shall be treated
either as a non-officer or an employee with less than one (1) year's employment,
as the case may be. Each individual employed by United Federal at the Effective
Time who has not been continuously employed as a full-time employee by United
Federal 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 (2) 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 United Federal at the Effective Time. Notwithstanding the provisions
of this paragraph, no severance payment shall be made hereunder to any employee
of United Federal who is or will be party to an employment or consulting
agreement, a change in control agreement, severance agreement or other similar
arrangement with United Federal, the Holding Company or Triangle, whether oral
or written. To the extent United Federal 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 United Federal ("United Federal 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
United Federal who become employees of Triangle Bank (i) shall be eligible to
receive group hospitalization, medical, life, disability and similar benefits on
the same basis and under the same terms available to the present employees of
the Holding Company and its subsidiaries on a "no gain, no loss" basis, (ii) in
the event a United Federal Benefit Plan is terminated, the rights and benefits
of United Federal's employees thereunder shall become fully vested, with each
participating United Federal employee having the right or option either to
receive the benefits to which
35
he or she is entitled as a result of such termination or to have such benefits
"rolled" into the appropriate Holding Company benefit plan ("Triangle Benefit
Plan"), on the same basis and applying the eligibility standards as would apply
to the employees of the Holding Company and its subsidiaries as if such
employee's prior service to United Federal had been performed on behalf of the
Holding Company and its subsidiaries for qualification, participation and
vesting, but not for funding, purposes, and (iii) in the event a United Federal
Benefit Plan is merged into a Triangle Benefit Plan, shall be entitled to
participate in such Triangle Benefit Plan on the same basis and applying the
same eligibility standards as would apply to employees of the Holding Company
and its subsidiaries. United Federal, Triangle and the Holding Company agree
that for purposes of qualification, participation and vesting in Triangle
Benefit Plans, the employees of United Federal shall receive credit for their
prior continuous periods of service to United Federal, including employees who
have had a break in service, but who were granted prior service credit by United
Federal when rehired by United Federal.
6.08 Confidentiality. The Holding Company, Triangle and United Federal each
agrees that it will treat as confidential and not disclose to any unauthorized
person any documents or other information obtained from or learned about the
others during the course of the negotiation of this Agreement and the carrying
out of the events and transactions described herein (including any information
obtained during the course of any due diligence investigation or review provided
for herein or otherwise) and which documents or other information relates in any
way to the business, operations, personnel, customers or financial condition of
such other parties; and that it will not use any such documents or other
information for any purpose except for the purposes for which such documents and
information were provided to it and in furtherance of the transactions described
herein. However, the above obligations of confidentiality shall not prohibit the
disclosure of any such document or information by any party to this Agreement to
the extent (i) such document or information is then available generally to the
public or is already known to the person or entity to whom disclosure is
proposed to be made (other than through the previous actions of such party in
violation of this Paragraph 6.08), (ii) such document or information was
available to the disclosing party on a nonconfidential basis prior to the same
being obtained pursuant to this Agreement, (iii) disclosure is required by
subpoena or order of a court or regulatory authority of competent jurisdiction,
or by the SEC or regulatory authorities in connection with the transactions
described herein, or (iv) to the extent that, in the reasonable opinion of legal
counsel to such party, disclosure otherwise is required by law.
In the event this Agreement is terminated for any reason, then each of the
parties hereto immediately shall return to the other parties all copies of any
and all documents or other written materials or information of or relating to
such other parties which were obtained from them during the course of the
negotiation of this Agreement and the carrying out of the events and
transactions described herein (whether during the course of any due diligence
investigation or 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
United Federal each undertakes and agrees to use its reasonable best efforts to
cause the Merger to qualify as a
36
"reorganization" within the meaning of Section 368(a)(1)(A) of the Code, and
that it will not intentionally take any action that would cause the Merger to
fail to qualify.
6.10. Accounting Treatment. The Holding Company, Triangle and United
Federal each undertakes and agrees to use its reasonable best efforts to cause
the Merger to qualify to be treated as a "pooling-of-interests" for accounting
purposes and that it will not intentionally take any action that would cause the
Merger to fail to so qualify.
6.11. Other Permissible Transactions. The Holding Company, Triangle and
United Federal agree that the Holding Company and its subsidiaries may offer to
acquire, enter into agreements to acquire and acquire financial institution
holding companies and their subsidiaries, financial institutions or financial
services entities and their subsidiaries, leasing companies and other entities
which are permissible for financial institution holding companies and financial
institutions to own, and/or the assets and liabilities of such entities prior to
the Effective Time, and such action by the Holding Company and its subsidiaries
shall have no effect on this Agreement.
6.12. Dividend Coordination. The shareholders of United Federal shall
receive a quarterly dividend from either United Federal or the Holding Company,
but not from both, in the quarter in which the Merger occurs, and United Federal
and the Holding shall coordinate the Closing, the Effective Time and the payment
of such quarterly dividend to ensure such dividend payment.
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 OTS, 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, Triangle, or United Federal to be
materially disadvantageous or burdensome or to impact so adversely the
economic or business benefits of this Agreement as to render it inadvisable
for such party to consummate the Merger;
(iii) all waiting periods required following necessary approvals by
governmental or regulatory agencies or authorities shall have expired, and,
in the case of the waiting
37
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. 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 actions, if any, as required by applicable state
securities laws (i) to cause the Triangle Stock to be issued upon consummation
of the Merger, at the time of the issuance thereof, to be duly qualified or
registered (unless exempt) under such laws, (ii) to cause all conditions to any
exemptions from qualification or registration under such laws to have been
satisfied, and (iii) to obtain any and all required approvals or consents with
respect to the issuance of such stock, and any such required approvals or
consents shall have been obtained and shall remain in effect.
c. Adverse Proceedings, Injunction, Etc. There shall not be (i) any order,
decree or injunction of any court or agency of competent jurisdiction which
enjoins or prohibits the Merger or any of the other transactions described
herein or any of the parties hereto from consummating any such transaction, (ii)
any pending or threatened investigation of the Merger or any of such other
transactions by the U.S. Department of Justice, or any actual or threatened
litigation under federal antitrust laws relating to the Merger or any other such
transaction, (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
United Federal, Triangle or the Holding Company from consummating the Merger or
carrying out any of the terms or provisions of this Agreement, or (iv) any other
suit, claim, action or proceeding pending or threatened against United Federal,
Triangle or the Holding Company or any of their officers or directors which
shall reasonably be considered by United Federal, Triangle or the Holding
Company to be materially burdensome in relation to the proposed Merger or
materially adverse in relation to the financial condition of either such
corporation, and which has not been dismissed, terminated or resolved to the
satisfaction of all parties hereto within ninety (90) days of the institution or
threat thereof.
d. Approval by Boards of Directors and Shareholders. The Boards of
Directors of United Federal, Triangle and the Holding Company shall have duly
approved and adopted this Agreement by appropriate resolutions, and the
shareholders of United Federal 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 Charter or Articles of Incorporation and Bylaws.
e. Fairness Opinions United Federal shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇
an opinion, in form and substance satisfactory to United Federal, dated as of
the date of the Proxy Statement/Prospectus, to the effect that the terms of the
Merger are fair, from a financial point of view, to United Federal and its
shareholders. The Holding Company shall have received from its financial
advisor, ▇▇▇ Management Company, an opinion, in form and substance satisfactory
to the Holding Company, dated as of the Proxy Statement/Prospectus, to the
effect that the terms of the Merger are fair, from a financial point of view, to
the Holding Company and its shareholders.
38
f. Tax Opinion. The Holding Company shall have received, in form and
substance satisfactory to the Holding Company, an opinion of Coopers & ▇▇▇▇▇▇▇
L.L.P. substantially to the effect that: (i) for federal income tax purposes,
consummation of the Merger will constitute a "reorganization" as defined in
Section 368(a)(1)(A) of the Code; (ii) that no taxable gain will be recognized
by a shareholder of United Federal upon such shareholder's receipt of Triangle
Stock in exchange for his or her United Federal Stock; (iii) that the basis of
the Triangle Stock received by the shareholder in the Merger will be the same as
his or her United Federal Stock surrendered in exchange therefor; (iv) that, if
United Federal 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 United Federal
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 & ▇▇▇▇▇▇▇ L.L.P. may rely on representations contained in certificates
of officers of the Holding Company and United Federal.
g. No Termination or Abandonment. This Agreement shall not have been
terminated by any party hereto.
7.02. Additional Conditions to United Federal's Obligations.
Notwithstanding any other provision of this Agreement to the contrary, United
Federal's 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 been any Material Adverse
Change in the Holding Company, and there shall not have occurred any event or
development and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, is reasonably likely to cause, create or result
in a Material Adverse Change in the Holding Company.
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 is reasonably
likely to have a Material Adverse Effect on the Holding Company.
c. The Holding Company's and Triangle's Representations and Warranties and
Performance of Agreements; Officers' Certificate. Unless waived in writing by
United Federal as provided in Paragraph 10.03. below, each of the
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 in all material respects on and as of the Effective Time
with the same force and effect as though made on and as of such date, except (i)
representations and warranties that speak as of a specific date, (ii) for
changes which do not, in the aggregate, result in a Material Adverse Change in
the Holding Company, and (iii) as otherwise contemplated by this Agreement; and
the Holding Company and Triangle each shall have performed in all material
respects all its respective obligations, covenants and agreements hereunder to
be performed by it on or before the Closing Date.
39
United Federal shall have received a certificate dated as of the Closing
Date and executed by the Holding Company's President and Chief Financial Officer
to the foregoing effect.
d. Legal Opinion of the Holding Company Counsel. United Federal shall have
received from ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., General Counsel of the Holding
Company, a written opinion dated as of the Closing Date in the form of Schedule
E attached hereto.
e. Other Documents and Information from the Holding Company and Triangle.
The Holding Company and Triangle shall have provided to United Federal correct
and complete copies of its Bylaws, Articles of Incorporation and board
resolutions (all certified by its Secretary), together with a certificate of the
incumbency of its officers and such other closing documents and information as
may be reasonably requested by United Federal or its counsel.
f. Acceptance by United Federal's Counsel. The form and substance of all
legal matters described herein or related to the transactions contemplated
herein shall be reasonably acceptable to United Federal'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 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 United Federal, and there shall not have occurred any event or
development and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, is reasonably likely to cause, create or result
in a Material Adverse Change in United Federal.
b. Compliance with Laws; Adverse Proceedings, Injunction, Etc. United
Federal shall have complied in all material respects with all federal and state
laws and regulations applicable to the transactions described herein and where
the violation of or failure to comply with any such law or regulation is
reasonably likely to have a Material Adverse Effect on United Federal.
c. United Federal's Representations and Warranties and Performance of
Agreements; Officers' Certificate. Unless waived in writing by the Holding
Company as provided in Paragraph 10.03. below, each of the representations and
warranties of United Federal contained in this Agreement shall have been true
and correct as of the date hereof and shall remain true and correct on and as of
the Effective Time with the same force and effect as though made on and as of
such date, except (i) representations and warranties that speak as of a specific
date, (ii) for changes which do not, in the aggregate, result in a Material
Adverse Change in United Federal, and (iii) as otherwise contemplated by this
Agreement; United Federal 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 shall have received a certificate dated as of the
Closing Date and executed by United Federal's President and Chief Financial
Officer to the foregoing effect and as to such other matters as may be
reasonably requested by the Holding Company.
40
d. Agreements from United Federal Affiliates. The Holding
Company shall have received at least thirty (30) days prior to the Effective
Time 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 United Federal as provided in Paragraph
4.01.a. above.
e. Accounting Treatment. (i) The Holding Company shall have received
assurances from Coopers & ▇▇▇▇▇▇▇ L.L.P., in form and content satisfactory to
it, to the effect that the Merger will qualify to be treated as a
"pooling-of-interests" for accounting purposes; (ii) if requested by the Holding
Company, United Federal's independent public accountants shall have delivered to
the Holding Company a letter in form and content satisfactory to it to the
effect that such accountants are not aware of any fact or circumstance that
might cause the Merger not to qualify for such treatment; and (iii) it shall not
have come to the attention of management of the Holding Company that any event
has occurred or that any condition or circumstance exists that makes it likely
that the Merger may not so qualify.
f. Legal Opinion of United Federal's Counsel. The Holding Company shall
have received from United Federal's counsel, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, a
written opinion, dated as of the Closing Date in the form of Schedule F attached
hereto.
g. Other Documents and Information from United Federal. United Federal
shall have provided to the Holding Company correct and complete copies of its
Articles of Incorporation, Bylaws and board and shareholder resolutions (all
certified by United Federal's Secretary), together with certificates of the
incumbency of United Federal's officers and such other closing documents and
information as may be reasonably requested by the Holding Company or its
counsel.
h. Consents to Assignment of Leases. United Federal shall have obtained all
required consents to the Merger as may be required under the Real Property
Leases and all other leases, under the same terms, rates and conditions of such
Real Property Leases and all other leases in effect as of the date of this
Agreement, and such consents shall be in such form and substance as shall be
satisfactory to the Holding Company; and each of United Federal's lessors shall
have confirmed in writing that United Federal is not in material default under
the terms and conditions of the Real Property Lease or any other lease between
such lessor and United Federal.
i. Acceptance by the Holding Company's Counsel. The form and substance of
all legal matters described herein or related to the transactions contemplated
herein shall be reasonably acceptable to the Holding Company's legal counsel.
j. Expenses. Amounts paid or payable by United Federal for legal,
accounting and other professional services related to the Merger (not including
fees charged by ▇▇▇▇▇▇ ▇▇▇▇▇▇ to United Federal for financial advisory services)
shall not exceed $80,000, including not more than $60,000 in legal fees.
k. Tainted Shares. The aggregate number of shares of United Federal Stock
as to which cash is proposed to be paid as the result of the distribution of
cash in lieu of fractional shares
41
(as described in Paragraph 1.5.c. above), when coupled with any other shares of
Triangle Stock or United Federal Stock deemed tainted for "pooling-of-interest"
purposes, shall not exceed 10% of the total number of shares of United Federal
Stock outstanding at the date of this Agreement or at the Effective Time.
l. Mortgage Loan Portfolio. The portion of the real estate mortgage loan
portfolio originated for sale in the secondary market (including outstanding
commitments) for which no binding contract for sale exists one (1) week prior to
the Closing shall not exceed ten percent (10%) of the dollar value of the total
portfolio.
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 United Federal),
this Agreement may be terminated by the mutual agreement of the Holding Company
and United Federal. Upon any such mutual termination, all obligations of United
Federal, Triangle and the Holding Company hereunder shall terminate and each
party shall pay costs and expenses as provided in Paragraph 6.04. above.
8.02. Unilateral Termination. This Agreement may be terminated by either
the Holding Company or United Federal (whether before or after approval hereof
by United Federal's shareholders) upon written notice to the other parties and
under the circumstances described below.
a. Termination by the Holding Company. This Agreement may be terminated by
the Holding Company by action of its Board of Directors or Executive Committee:
(i) if United Federal shall have violated or failed to fully perform
any of its obligations, covenants or agreements contained in Article IV or
Article VI herein in any material respect;
(ii) if the Holding Company determines at any time that any of United
Federal'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, is reasonably likely to cause any such representations or
warranties to become false or misleading in any material respect;
(iii) if, notwithstanding the Holding Company's satisfaction of its
obligations under Paragraphs 6.01.b., 6.01.c. and 6.01.e. above, United
Federal's shareholders do not ratify and approve this Agreement and approve
the Merger at the United Federal Shareholder Meeting;
(iv) under the circumstances described in Paragraph 1.05.a. or 6.06.
above; or,
(v) if any of the conditions of the obligations of the Holding Company
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, or
if the Merger shall not have become effective on or
42
before December 31, 1998, unless such date is extended as evidenced by the
written mutual agreement of the parties hereto.
However, before the Holding Company may terminate this Agreement for any of
the reasons specified above in (i) or (ii) of this Paragraph 8.02.a., it shall
give written notice to United Federal as provided herein stating its intent to
terminate and a description of the specific breach, default, violation or other
condition giving rise to its right to so terminate, and such termination by the
Holding Company shall not become effective if, within thirty (30) days following
the giving of such notice, United Federal shall cure such breach, default or
violation or satisfy such condition to the reasonable satisfaction of the
Holding Company.
b. Termination by United Federal. This Agreement may be terminated by
United Federal by action of its Board of Directors:
(i) if the Holding Company or Triangle shall have violated or failed
to fully perform any of its obligations, covenants or agreements contained
in Article V or VI herein in any material respect;
(ii) if United Federal determines that any of the Holding Company's or
Triangle's representations and warranties contained in Article III herein
or in any other certificate or writing delivered pursuant to this Agreement
shall have been false or misleading in any material respect when made, or
that there has occurred any event or development or that there exists any
condition or circumstance which has caused or, with the lapse of time or
otherwise, is reasonably likely to cause any such representations or
warranties to become false or misleading in any material respect;
(iii) if, subject to United Federal'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 United Federal Shareholder Meeting;
(iv) under the circumstances described in Paragraph 1.05.a. above; or,
(v) if any of the conditions of the obligations of United Federal (as
set forth in Paragraph 7.01. or 7.02. above) shall not have been satisfied
or effectively waived in writing by United Federal, or if the Merger shall
not have become effective on or before December 31, 1998, unless such date
is extended as evidenced by the written mutual agreement of the parties
hereto.
However, before United Federal may terminate this Agreement for any of the
reasons specified above in clause (i) or (ii) of this Paragraph 8.02.b., it
shall give written notice to the Holding Company as provided herein stating its
intent to terminate and a description of the specific breach, default, violation
or other condition giving rise to its right to so terminate, and such
termination by United Federal shall not become effective if, within thirty (30)
days following the giving of such notice, the Holding Company shall cure such
breach, default or violation or satisfy such condition to the reasonable
satisfaction of United Federal.
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8.03. Breach; Remedies.
a. Breach of Agreement. In the event of a breach by United Federal of any
of its representations or warranties contained in Article II of this Agreement,
or in the event of its failure to perform or violation of any of its
obligations, agreements or covenants contained in Articles IV or VI of this
Agreement, then the Holding Company's sole right and remedy shall be to
terminate this Agreement prior to the Effective Time as provided in Paragraph
8.02. above, or, in the case of a failure to perform by United Federal or a
violation of any of its 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 United Federal'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 by the Holding Company or Triangle or
violation of any their obligations, agreements or covenants, to seek specific
performance thereof.
b. Payment of Expenses. Notwithstanding anything contained herein to the
contrary, if any party to this Agreement breaches this Agreement by willfully 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. above (regardless of the allocation provided 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 United Federal,
and its directors or officers, the Holding Company agrees that it will indemnify
United Federal's officers and directors to the same extent United Federal
currently indemnifies its directors and officers against liabilities arising
from actions in their official capacities as officers and directors of United
Federal.
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.
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ARTICLE X. MISCELLANEOUS PROVISIONS
10.01. "Previously Disclosed" Information; "Material Adverse Effect".
(a) "Previously Disclosed" shall mean, as to United Federal or as to the
Holding Company, the disclosure of information in a letter delivered by such
party to the other prior to the date of this Agreement and which specifically
refers to this Agreement and is arranged in paragraphs corresponding to the
Paragraphs, subparagraphs and items of this Agreement applicable thereto, all of
which documents are incorporated herein by reference.
Information disclosed in either party's letter described above shall be
deemed to have been Previously Disclosed by such party for the purpose of any
given Paragraph, subparagraph or item of this Agreement only to the extent that
information is expressly set forth in such party's letter described above and
that, in connection with such disclosure, a specific reference is made in the
letter to that Paragraph, subparagraph or item.
(b) Where used in this Agreement, the terms "Material Adverse Effect" and
"Material Adverse Change" shall mean any event, matter, item or circumstance
(other than as a result of (i) changes in GAAP, (ii) changes in banking and
similar laws of general application or interpretations thereof by courts or
governmental authorities, or (iii) any non-recurring merger-related expense of
any kind) 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 material adverse effect on the business, financial condition,
operations, results of operations or prospects of either party, including but
not limited to, in the case of United Federal, a decrease in United Federal's
consolidated net income, exclusive of any merger-related expense and any
non-recurring income item such as the sale of any assets (other than in the
ordinary and customary course of business of United Federal), such that
consolidated net income for the months in 1998 preceding the Closing would, in
the aggregate, be less than $1,500,000, pro rated over 1998 by multiplying
$1,500,000 by the percentage of completed months preceding the Closing to all
months in 1998, or a decrease in total consolidated assets of 20% or more from
the level of total consolidated assets at December 31, 1997 for United Federal,
or, in the case of the Holding Company, a decrease in anticipated 1998
consolidated net income of $21,000,000 (exclusive of the anticipated
acquisitions of Guaranty State Bancorp and United Federal and of any
merger-related expenses and any non-recurring items) of 20% or more from net
income projected (as of the date of this Agreement) or a decrease in total
consolidated assets of 20% or more from the level of total consolidated assets
at December 31, 1997 ($1,600,000,000) for the Holding Company.
10.02. Survival of Representations, Warranties, Indemnification and Other
Agreements.
a. Representations, Warranties and Other Agreements. None of the
representations, warranties or agreements herein shall survive the effectiveness
of the Merger, and no party shall have any right after the Effective Time to
recover damages or any other relief from any other party to this Agreement by
reason of any breach of representation or warranty, any nonfulfillment or
nonperformance of any agreement contained herein, or otherwise; provided,
however, that the parties' agreements contained in Paragraphs 6.07. and 6.08.
and Articles VIII and IX hereof, and the
45
Holding Company's representations and warranties contained in Paragraph 3.02.,
shall survive the effectiveness of the Merger.
b. Indemnification. The Holding Company's indemnification agreements and
obligations pursuant to Paragraph 9.01. above shall become effective only at the
Effective Time, and the Holding Company shall not have any obligation under that
Paragraph prior to the Effective Time or in the event of or following
termination of this Agreement prior to the Effective Time.
10.03. Waiver. Any term or condition of this Agreement may be waived
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof; provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors or, in the case of the Holding
Company, its Executive Committee) 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 United Federal, by an agreement in
writing approved by a majority of the Board of Directors of the Holding Company
and United Federal executed in the same manner as this Agreement; provided
however, that, except with the further approval of United Federal's shareholders
of that change or as otherwise provided herein, following approval of this
Agreement by the shareholders of United Federal no change may be made in the
number of shares of Triangle Stock into which each share of United Federal 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 United Federal, to:
United Federal Savings Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
46
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇. ▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
b. If to the Holding Company, to:
Triangle Bancorp, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
10.06. Further Assurance. United Federal, Triangle and the Holding Company
each agree to furnish to the others such further assurances with respect to the
matters contemplated herein and their respective agreements, covenants,
representations and warranties contained herein, including the opinion of legal
counsel, as such other parties may reasonably request.
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 internal laws (and not the laws of conflict) of
the State of North Carolina.
47
10.13. Inspection. Any right of the Holding Company or United Federal
hereunder to investigate or inspect the assets, books, records, files and other
information of the other in no way shall establish any presumption that the
Holding Company or United Federal should have conducted any investigation or
that such right has been exercised by the Holding Company, United Federal, their
respective agents, representatives or others. Any investigations or inspections
that have been made by the Holding Company or United Federal 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 United Federal in this
Agreement.
48
IN WITNESS WHEREOF, United Federal, Triangle and the Holding Company each
has caused this Agreement to be executed in its name by its duly authorized
officers as of the date first above written.
TRIANGLE BANCORP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
TRIANGLE BANK
[Corporate Seal]
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
[Corporate Seal]
UNITED FEDERAL SAVINGS BANK
By:
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
ATTEST:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Assistant Secretary
[Corporate Seal]
49
With respect to the above Agreement and Plan of Reorganization and Merger
(the "Agreement"), each of the individuals signing below agree as follows:
1. As a director of United Federal Savings Bank ("United Federal"), unless
there has been a material change in circumstances since the date of this
Agreement or for any reason it would, in my reasonable opinion, violate my duty
or obligations as a director to United Federal or to its shareholders, I will:
a. Recommend to United Federal's shareholders that they vote their
shares in favor of ratification and approval of the Agreement and approval
of the Merger described therein;
b. Vote against any action on the part of United Federal that would be
in violation of the Agreement; and
c. Vote in favor of any action on the part of United Federal that is
necessary or appropriate to carry out the intent and purposes or the
Agreement.
2. Further, in my individual capacity, I will:
a. Vote all shares of United Federal's common stock which I have the
power to vote (excluding shares held by me in a fiduciary capacity) in
favor of ratification and approval of the Agreement and approval of the
Merger described therein;
b. Execute and deliver to United Federal at least forty-five (45) days
prior to the Effective Time an Affiliates Agreement in the form attached as
Schedule B to this Agreement; and
c. During a period of one year following the Effective Time (the
"Restriction Period"), I will not "Compete" (as defined below), directly or
indirectly, with the Holding Company or any of its direct or indirect
subsidiaries (collectively, "Triangle") in the geographic area consisting
of Edgecombe or ▇▇▇▇ Counties, North Carolina and any contiguous counties
in North Carolina (the "Relevant Market").
I hereby acknowledge and agree 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 2(c), 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)
inducing or attempting to induce any Person who is a Customer of United Federal
at the time of the Merger or a Customer of Triangle following the Merger, to
change any depository, loan and/or other banking relationship of the Customer
from Triangle to another Financial Institution; (iii) acting as a director,
incorporator, officer or employee of any Financial Institution that has its main
or principal office in the Relevant Market, or,
50
in acting in any such capacity with any other Financial Institution, to maintain
an office or to be employed at or assigned to or to have any direct involvement
in the management, supervision, business or operation of any office of such
Financial Institution located in the Relevant Market; (iv) serving as a local or
advisory director for any branch or office of a Financial Institution, which
branch or office is located in the Relevant Market; or (v) communicating to any
Financial Institution the names or addresses or any financial information
concerning any Person who is a Customer of United Federal at the time of the
Merger or a Customer of Triangle following the Merger.
Customer. The terms "Customer of United Federal " and "Customer of
Triangle" mean any Person with whom United Federal or Triangle, respectively,
has or at any time 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, credit
union or financial services entity, 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, receiving deposits, or providing financial
or investment advice or services, other than United Federal or Triangle.
Person. The term "Person" means any natural person or any corporation,
partnership, proprietorship, joint venture, trust, estate, governmental agency
or instrumentality, fiduciary, unincorporated association or other entity.
IN WITNESS WHEREOF, the undersigned each has hereunto set his or her
hand and adopted the written word "Seal" by his or her signature as a personal
seal, all as of the date of the foregoing Agreement.
_______________________(SEAL) ________________________(SEAL)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
_______________________(SEAL) ________________________(SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
________________________(SEAL)
▇▇▇▇ ▇. ▇▇▇▇▇
51
SCHEDULE A
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Plan of Merger
PLAN OF MERGER
OF
UNITED FEDERAL SAVINGS BANK
WITH AND INTO
TRIANGLE BANK
A. Names of Merging Corporations. The names of the corporations proposed to
be merged are UNITED FEDERAL SAVINGS BANK, a federally chartered savings bank
("United Federal") and TRIANGLE BANK, a North Carolina banking corporation
("Triangle").
B. Nature of Transaction. Subject to the provisions of this Plan of Merger,
United Federal shall be merged into and with Triangle (the "Merger").
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 March 4, 1998, by and among United Federal, Triangle and Triangle
Bancorp, Inc. (the "Holding Company") (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 United Federal 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 United
Federal'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 United Federal, 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 United Federal, 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 United Federal as of the Effective Time. At the
Effective Time, and by reason of the Merger, Triangle shall assume and become
responsible for the liquidation account established by United Federal in
connection with its conversion to the stock form of organization. At the
Effective Time, and by reason of the Merger, all savings
1
accounts and certificates of deposit in United Federal shall, without reissue,
be and become savings accounts and certificates of deposit in Triangle without
change in their respective terms.
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 United Federal's shareholders with
respect to all then outstanding shares of United Federal's common stock ($0.01
par value) ("United Federal 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 United Federal Stock (other than any shares held by
the Holding Company) shall be converted, without any action on the part of the
holder of such share, the Holding Company, Triangle, United Federal or United
Federal, into 0.63 (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 United Federal,
Triangle, the Holding Company or any holder thereof, United Federal's stock
transfer books shall be closed as to holders of United Federal Stock immediately
prior to the Effective Time and, thereafter, no transfer of United Federal Stock
by any such holder may be made or registered; and the holders of shares of
United Federal Stock shall cease to be, and shall have no further rights as,
stockholders of United Federal other than as provided herein. Following the
Effective Time, certificates representing shares of United Federal 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, 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.
3. As promptly as practicable following the Effective Time, the Holding
Company shall cause Registrar and Transfer Company, the transfer agent for
Triangle Stock (the "Exchange Agent"), to mail to each former shareholder of
United Federal 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 United
Federal 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.
2
4. (i) At the Effective Time, each option or other right to purchase shares
of United Federal Stock pursuant to stock options ("United Federal Options")
granted by United Federal under the United Federal Savings Bank 1993 Stock
Option Plan for Outside Directors and the United Federal Savings Bank 1993
Incentive Stock Option Plan (collectively, the "United Federal Stock Plans"),
which are outstanding at the Effective Time, whether or not exercisable, shall
be converted into and become rights with respect to Triangle Stock, and the
Holding Company shall assume each United Federal Option, in accordance with the
terms of the United Federal Stock Plans and stock option agreement by which it
is evidenced, except that from after the Effective Time (A) the Holding Company
and its Compensation Committee shall be substituted for United Federal and the
Committee of United Federal's Board of Directors (including, if applicable, the
entire Board of Directors of United Federal) administering the United Federal
Stock Plans, (B) each United Federal Option assumed by the Holding Company may
be exercised solely for shares of Triangle Stock, (C) the number of shares of
Triangle Stock subject to such United Federal Option shall be equal to the
number of shares of United Federal Stock subject to such United Federal Option
immediately prior to the Effective Time multiplied by the Exchange Rate and
rounding down to the nearest whole share, and (D) the per share exercise price
under each such United Federal Option shall be adjusted by dividing the per
share exercise price under each such United Federal Option by the Exchange Rate
and rounding up to the nearest cent.
(ii) All restrictions or limitations on transfer with respect to United
Federal Stock awarded under the United Federal Stock Plans or any other plan,
program, or arrangement of United Federal, to the extent that such restrictions
or limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of 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 125,500 shares of United Federal 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 United Federal, 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 United Federal 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 United Federal
unless and until such shareholder shall have properly surrendered to the
Exchange Agent the Old Certificate(s) formerly representing his or her shares of
United Federal 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
3
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, United Federal, 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 United Federal whose certificate evidencing shares of
United Federal 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.
8. 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.
4
SCHEDULE B
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Affiliate's Letter
_________________, 1998
Triangle Bancorp, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Pursuant to the terms of that certain Agreement and Plan of Reorganization and
Merger dated March 4, 1998 (the "Agreement") by and among Triangle Bancorp, Inc.
(the "Holding Company"), Triangle Bank and United Federal Savings Bank ("United
Federal") (i) United Federal will be merged into and with Triangle Bank (the
"Merger"), and (ii) each outstanding share of United Federal's common stock
("Bank Stock") will be converted into and exchanged for newly issued shares
(determined as provided in the Agreement) of the Holding Company's no par value
common stock ("Triangle Stock").
Based upon the list of persons submitted by United Federal and approved by the
Holding Company, the undersigned "Affiliate" is considered an "affiliate" of
United Federal 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;
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 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 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 United Federal's shareholders the Affiliate and each such
Related Person will be considered to be an "affiliate" of United
Federal, 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. Following the date of the Merger, neither the Affiliate nor any of the
Related Persons, if any, 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, (i) will make
any sale, transfer or other disposition of any shares of Bank Stock or
of Triangle Stock during the 30 days prior to the date of the Merger,
or (ii) 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 (a) filed with the Commission in
a Quarterly Report on Form 10-Q, (b) sent to the shareholders of the
Holding Company, or (c) 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 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
2
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 ___________,
1998. 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 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:________________________ (Seal)
Print name: _______________________
Related Persons", if any:
_____________________________(Seal)
Print name: _______________________
_____________________________(Seal)
Print name: _______________________
3
_____________________________(Seal)
Print name: _______________________
_____________________________(Seal)
Print name: _______________________
___________________________________
Name of Corporation
By: ______________________________
Name: ____________________________
Title: ___________________________
___________________________________
Name of Corporation
By: ______________________________
Name: ____________________________
Title: ___________________________
4
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."
5
SCHEDULE C
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Form of Consulting Agreement
STATE OF NORTH CAROLINA
COUNTY OF WAKE
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT entered into as of _________ __ , 1998, by and
between TRIANGLE BANCORP, INC. (hereinafter referred to as "Triangle") and
_____________________ (hereinafter referred to as "Consultant").
W I T N E S S E T H:
WHEREAS, Consultant has been employed as the ____ Vice President of United
Federal Savings Bank ("UFSB") and in such position has provided continued
leadership and guidance in UFSB's growth and development; and has developed many
contacts throughout the banking industry and has developed many business
relationships in the market areas served by UFSB; and,
WHEREAS, Triangle desires to retain the advantage of Consultant's knowledge
of UFSB's affairs, and his knowledge of and experience, standing and reputation
in the banking industry and UFSB's market area, and Triangle desires that
Consultant continue to support and encourage the development of Triangle's
banking business and not compete against Triangle or its subsidiaries, and
Consultant is willing to do so; and,
WHEREAS, the parties desire to enter into this Agreement to set forth their
mutual understanding regarding Consultant's relationship with Triangle.
NOW, THEREFORE, for and in consideration of the premises and mutual
promises, covenants and conditions hereinafter set forth, and for other good and
valuable considerations, the receipt and sufficiency of which hereby are
acknowledged, Consultant and Triangle hereby agree as follows:
1. Services. During the term of this Agreement, Consultant shall make himself
available, in person or by telephone, at such times and for such amount of
time as shall be mutually agreeable to him and Triangle, to consult with
Triangle on such matters as Triangle reasonably may request from time to
time regarding matters involving the customers, employees, products,
services and operations of, loan quality control and review, and other
business and operational matters of Triangle.
1
Consultant is an independent contractor for purposes of this Agreement. As
such, Consultant shall be responsible for and incur all costs and expenses
in the performance of his obligations under this Agreement. However,
Triangle shall promptly reimburse or cause one of its subsidiaries to
reimburse Consultant for all reasonable travel and other expenses incurred
by him in the performance of his duties under this Agreement which have
been documented to the reasonable satisfaction of the Chief Financial
Officer of Triangle pursuant to established procedures.
2. Term. The term of this Agreement shall be for a period commencing on the
date hereof and continuing for a period of four (4) months.
3. Compensation. For the consulting services and Consultant's other agreements
hereunder, Consultant shall be paid _____________ and no/100 Dollars
($______) per annum payable on a monthly basis on the first regular payroll
day of Triangle.
4. Noncompetition; Confidentiality. Consultant hereby acknowledges and agrees
that (i) Triangle has made a significant investment in the development of
its business in the geographic area identified below as the "Relevant
Market" and that Triangle, has a valuable economic interest in banking
business in the Relevant Market which it is entitled to protect; (ii) in
the course of his service as an officer of UFSB he has gained, and in the
course of his services pursuant to this Agreement he will gain, substantial
knowledge of and familiarity with Triangle's and UFSB's banking customers
and their dealings with them, and other information concerning Triangle's
banking business and UFSB's banking 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 its banking business, it
is reasonable and necessary to place certain restrictions on Consultant's
ability to compete against Triangle and on his disclosure of information
about Triangle's customers. For that purpose, and in consideration of
Triangle's agreements contained herein, Consultant covenants and agrees as
provided below.
(a) Covenant Not to Compete. During the term of this Agreement or, in the event
of a termination of this Agreement prior to the end of its term for
"Cause," for a period equal to the unexpired term hereof (the "Restriction
Period"), Consultant will not "Compete (as defined below), directly or
indirectly, with Triangle or any of its subsidiaries in the banking
business in the geographic area (the "Relevant Market") consisting of any
county (without regard to state or other jurisdiction) in which Triangle
Bank or any other bank subsidiary of Triangle maintains a banking office;
provided, however, that in the event that Triangle Bank or any other such
bank subsidiary of Triangle shall be merged into another entity or
otherwise shall cease to exist as a separate entity, then, insofar as the
Relevant Market is defined by the counties in which such bank subsidiary
maintains banking offices, the Relevant Market shall be limited to those
counties in which such bank subsidiary maintained a banking office as of
the effective date of such merger or cessation of existence.
2
Consultant 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 purposes of this Paragraph 4(a), the following terms shall have the
meanings set forth below:
Compete. Except as otherwise provided below, the term "Compete means (i)
soliciting or securing the banking, leasing, brokerage or other financial
services business of any Person residing in the Relevant Market for any
Financial Institution; (ii) soliciting any Person residing in the Relevant
Market to become a customer of any Financial Institution, (iii) knowingly
inducing or attempting to induce any Person who was a Customer of UFSB on
the date of this Agreement or who was a Customer of any of Triangle's
subsidiaries, on the date of termination of this Agreement, to change such
Customer's financial relationship from UFSB or Triangle to another
Financial Institution; (iv) acting as a consultant, officer, director,
independent contractor, or employee in the operation 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 such Financial
Institution's banking operations 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 UFSB on
the date of this Agreement, or who was a Customer of any of Triangle's
subsidiaries at the date of the termination of this Agreement for any
reason except as required by law or any regulatory agency or in the
performance of his duties or responsibilities hereunder.
Customer. The term "Customer" means any Person with whom, as of the
effective date of this Agreement or the date of termination of this
Agreement for any reason, UFSB or Triangle Bank has or has had a financial
services.
Financial Institution. The term "Financial Institution" means any federal
or state chartered bank, savings bank, savings and loan association, credit
union, financial institution or financial services entity or any holding
company for or corporation that owns or controls any such entity, or any
other Person engaged in the banking business, other than UFSB, Triangle or
a subsidiary of 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.
3
(b) Confidentiality Covenant. Consultant covenants and agrees that any and all
data, figures, projections, estimates, lists, files, records, documents,
manuals or other such materials or information (whether financial or
otherwise) relating to Triangle or UFSB and their banking business,
regulatory examinations, financial results and condition, leasing,
brokerage, lending and deposit operations, customers (including lists of
UFSB's and Triangle's customers and information regarding their accounts
and business dealings with UFSB and Triangle), policies and procedures,
computer systems and software, shareholders, employees, officers and
directors (herein referred to as "Confidential Information") are
proprietary to Triangle and UFSB and are valuable, special and unique
assets of Triangle's and UFSB's business to which Consultant has had access
as an officer of UFSB and will have access during the term of this
Agreement. Consultant agrees that (i) all such Confidential Information
shall be considered and kept as the confidential, private and privileged
records and information of UFSB and Triangle, and (ii) at all times during
the term of this Agreement and following the termination of this Agreement
for any reason, and except as shall be required in the course of the
performance by Consultant of his duties on behalf of Triangle or otherwise
pursuant to the direct, written authorization of Triangle, Consultant 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 or its subsidiaries' 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 or a
subsidiary of Triangle. However, following the termination of this
Agreement, this subparagraph (b) shall not apply to any Confidential
Information which then is in the public domain (provided that Consultant
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 Consultant from a third party which or
who is not obligated under an agreement of confidentiality with respect to
such information.
(c) Remedies for Breach. Consultant understands and acknowledges that a breach
or violation by him of any of the covenants contained in Paragraphs 4(a)
and 4(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 Consultant's actual or threatened
breach or violation of the covenant contained in either such Paragraph,
Triangle shall be entitled to bring a civil action seeking an injunction
restraining Consultant 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.
Consultant agrees that, if Triangle institutes any action or proceeding
against Consultant 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, Consultant shall be deemed to have waived the claim or
defense that Triangle has an adequate
4
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, in the event
that Triangle believes that Consultant has breached or violated any
provision of this Paragraph 4, it first shall be required to give
Consultant written notice thereof (which notice shall describe in
reasonable detail the facts or conduct which Triangle alleges to constitute
such breach or default). Triangle agrees that Consultant shall not be
deemed to have breached or violated any provision of this Paragraph 4 if,
within five (5) business days following his receipt of any such written
notice from Triangle, he ceases the conduct described in such notice or
otherwise takes or commences (and thereafter pursues in good faith)
reasonable action to cure the alleged breach or violation, provided
however, that, after giving notice and an opportunity to cure once with
respect to a particular breach or violation, Triangle shall not be
obligated to give any additional notice with respect to, and Consultant
shall have no right to cure, any further breach or violation involving the
same or substantially similar facts or circumstances as the breach or
violation as to which such notice was given.
Notwithstanding anything contained herein to the contrary, Consultant
agrees that the provisions of Paragraph 4(b) above and the remedies
provided in this Paragraph 4(c) for a breach by Consultant 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. Consultant's covenants and agreements and Triangle's
rights and remedies provided for in this Paragraph 4 shall survive any
termination of this Agreement.
5. Termination.
a) This Agreement may be terminated at any time by Consultant upon thirty
(30) days' written notice to Triangle.
b) Except as otherwise provided below, this Agreement shall be terminated
upon the death, physical disability or mental incapacity of Consultant
during the term of this
5
Agreement. In the event of Covenant's death, physical disability or mental
incapacity during the term of this Agreement, Triangle shall pay to
Covenant's estate (or to his beneficiary previously designated by him in
writing) any compensation that Consultant shall have earned prior to the
date of his death or mental incapacity which remains unpaid.
c) Triangle, pursuant to action of its Chief Executive Officer or his
delegatee, may terminate this Agreement at any time for any reason with or
without "Cause" (as defined below), but, in the case of any termination by
Triangle other than termination for "Cause (as defined below), Consultant
shall be entitled to continue to receive, and Triangle shall be obligated
to continue to pay to Consultant, all compensation under this Agreement for
its remaining term. Following any termination of this Agreement for
"Cause", Consultant shall have no further rights under this Agreement
(including any right to receive compensation for any period after such
termination).
For purposes of this Paragraph 5(c) , Triangle shall have "Cause" to
terminate this Agreement upon a determination by Triangle's Chief Executive
Officer or his delegatee, in good faith, that Consultant (i) has breached
in any material respect any of the terms or conditions of this Agreement,
(ii) has engaged in any act of fraud or proven personal dishonesty (whether
or not in the course of his services to Triangle hereunder) or any other
illegal act in the course of his services to Triangle hereunder (in either
event, whether or not resulting in criminal prosecution or conviction), or
(iii) is engaging or has engaged in willful misconduct or conduct which has
had or likely will have a material adverse effect on Triangle's or
Consultant's business or reputation; provided however, that, before
Triangle may terminate this Agreement for Cause, Triangle first shall give
Consultant five (5) days written notice of the facts or circumstances
constituting a breach by Consultant and, if during such period Consultant
shall cure such breach to the reasonable satisfaction of Triangle, then
this Agreement shall continue in effect.
d) Triangle's obligation for the continued payment of compensation pursuant
to subsection (c) above shall survive any termination of this Agreement.
6. 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 Consultant.
Therefore, Consultant shall be precluded from assigning or delegating his
rights or duties
6
hereunder without first obtaining the written consent of Triangle's Chief
Executive Officer.
7. 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 Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
8. 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.
9. 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.
10. 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 any agreements between,
any of the parties hereto other than those contained herein in writing.
7
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 BANCORP, INC
By: _____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
ATTEST:
___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
(Corporate Seal)
CONSULTANT
_______________________
8
SCHEDULE D
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Form of Employment Agreement
STATE OF NORTH CAROLINA
COUNTY OF WAKE
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of ___________, 1998, by and between
TRIANGLE BANK (hereinafter referred to as "Triangle") and ______________
(hereinafter referred to as "Employee")
W I T N E S S E T H:
WHEREAS, Employee heretofore has been employed a __________ Vice President
of United Federal Savings 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 Employee'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
Employee's services as an employee of Triangle for the period specified herein,
and Employee 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 Employee'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 Employee hereby agree as follows:
1. Employment. Triangle hereby agrees to employ Employee, and Employee
hereby agrees to serve as an employee of Triangle, all upon the terms and
conditions stated herein. As an employee of Triangle, Employee will (i) serve as
a ________________ 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
business development activities in the Bank's former market area, and (iv) have
such other duties and responsibilities, and render to Triangle such other
1
management services, as are customary for persons in Employee's position with
Triangle or as shall otherwise be reasonably assigned to him from time to time
by Triangle.
Employee 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.
Employee hereby agrees to devote such number of hours of his working time
and endeavors to the employment granted hereunder as Employee and Triangle shall
deem to be necessary to discharge his duties hereunder, and, for so long as
employment hereunder shall exist, Employee shall not engage in any other
occupation which requires a significant amount of Employee's personal attention
during Triangle's regular business hours or which otherwise interferes with
Employee'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 Employee from personally, and for Employee's own
account, trading in stocks, bonds, securities, real estate or other forms of
investment for Employee's own benefit so long as said activities do not
interfere with Employee's attention to or performance of his duties and
responsibilities as an employee of Triangle hereunder.
2. Compensation. For all services rendered by Employee to Triangle under
this Agreement, Triangle shall pay Employee a base salary at a rate of
______________________ Thousand and No/100 Dollars ($_____________) per annum.
Salary paid under this Agreement shall 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 March __, 1998 among the
Bank, Triangle Bancorp, Inc. and Triangle, Employee 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 or its Compensation Committee or Executive Committee
establishing such programs and plans, and Triangle's normal practices and
established policies regarding such programs and plans. Employee 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 term
hereof, Employee also shall be entitled to participate in Triangle's Management
Incentive Compensation Plan which provides for an annual incentive opportunity
of ___% of base salary.
In addition to the other compensation and benefits described in this
Agreement, Triangle shall promptly reimburse Employee 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.
4. Term. Unless extended or sooner terminated as provided in this Agreement
and subject to the right of either Employee or Triangle to terminate Employee's
employment at any time as provided herein, the term of this Agreement and
Employee's employment with Triangle
2
hereunder shall be for a period commencing on the date hereof and continuing for
a period of two (2) years.
5. Noncompetition; Confidentiality. Employee 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 Employee'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, Employee covenants and agrees as
provided below.
(a) Covenant Not to Compete. During any period during which Employee is
receiving any compensation from Triangle, whether pursuant to this Agreement or
any other agreement, plan or other arrangement, and for a period of one (1) year
after the termination of this Agreement by Employee for any reason, Employee
will not "Compete" (as defined below), directly or indirectly, with Triangle in
the geographic area consisting of (i) ________ County, North Carolina, and (ii)
any county (whether in North Carolina or another state) contiguous to
______________ County, North Carolina (the "Relevant Market").
Employee 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 Employee's
employment with Triangle, to change such Customer's depository, loan and/or
other banking or financial 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
3
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 Customer of Triangle at the date of the termination of this
Agreement or Employee'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 Employee's employment with
Triangle for any reason, Triangle has or has had a depository, loan and/or other
banking or financial relationship.
Financial Institution. The term "Financial Institution" means any federal
or state chartered bank, savings bank, savings and loan association, credit
union, or financial services entity 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, receiving deposits, or providing financial
or investment advice or services, 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 Employee 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 and other financial
services 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 Employee has had access as an officer of the Bank and will have access
during his employment with Triangle. Employee agrees that (i) all such
Confidential Information shall be considered and kept as the confidential,
private and privileged records and information of Triangle, and (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 Employee of
his duties on behalf of Triangle or otherwise pursuant to the direct, written
authorization of Triangle, Employee 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 Employee's employment
with Triangle, this subparagraph (b) shall not apply to any Confidential
Information which then is in the public domain (provided that Employee 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 Employee from a third party which or who is not obligated under an
agreement of confidentiality with respect to such information.
4
c. Remedies for Breach. Employee 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 Employee'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 Employee 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. Employee agrees that, if Triangle institutes any action or proceeding
against Employee 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, Employee shall be deemed to 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, Employee agrees
that the provisions of Paragraph 5(b) above and the remedies provided in this
Paragraph 5(c) for a breach by Employee 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. Employee's covenants and agreements and
Triangle's rights and remedies provided for in this Paragraph 5 shall survive
any termination of this Agreement or Employee's employment with Triangle.
6. Standards. Employee, in the execution of his duties under this
Agreement, shall at all times and in all respects comply with the Triangle Bank
Code of Ethics (the "Code of Ethics"), as the same is in effect as of the date
hereof and as 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) Employee's employment under this
Agreement may be terminated at any time by Employee upon sixty (60) days'
written notice to Triangle. Upon such termination, Employee shall be entitled to
receive compensation through the effective date of such termination; provided,
however, that Triangle, in its sole discretion, may elect for Employee not to
serve out part or all of said notice period.
(b) Employee's employment under this Agreement shall be terminated upon the
death of Employee during the term of this Agreement. Employee's estate shall be
entitled to
5
receive any compensation that Employee shall have earned prior to the date of
his death but which remains unpaid.
(c) In the event Employee becomes disabled during the term of his
employment hereunder and it is determined by Triangle's Chief Executive Officer
that Employee is permanently unable to perform his duties under this Agreement,
Employee shall be entitled to receive compensation under this Agreement through
the date of such disabling event and thereafter shall be entitled to disability
benefits under any disability income plan of Triangle which is applicable to
Employee.
(d) Triangle, pursuant to action of its Chief Executive Officer or his
delegatee, may terminate Employee'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 Employee's
right to compensation or other benefits under this Agreement for its remaining
term. Following any termination of Employee's employment by Triangle for
"Cause", Employee 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 Employee's employment upon:
(i) A determination by Triangle's Chief Executive Officer or his
delegatee, in good faith, that Employee (A) has breached in any material
respect any of the terms or conditions of this Agreement or of 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 Employee's employment
for a breach, failure to perform or conduct described in this subparagraph
(i), Triangle shall give Employee written notice which describes such
breach, failure to perform or conduct and if during a period of five (5)
days following such notice Employee cures or corrects the same to the
reasonable satisfaction of Triangle's Chief Executive Officer or his
delegatee, then this Agreement shall remain in full force and effect.
However, notwithstanding the above, if Triangle has given written notice to
Employee 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 Chief Executive Officer or his delegatee
determines in good faith to be of substantially similar import, or if
Triangle's Chief Executive Officer or his delegatee determines in good
faith that the then current breach, failure to perform or conduct is not
reasonably curable, then termination under this subparagraph (i) shall be
effective immediately and Employee shall have no right to cure such breach,
failure to perform or conduct.
(ii) The violation by Employee 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 Employee'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;
6
(iii) The commission in the course of Employee'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 Employee 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 Employee from serving as an
employee or executive officer of, or a party affiliated with, Triangle or
its bank holding company; (v) Employee 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's Chief
Executive Officer or his delegatee, in good faith, to have resulted in
Employee being excluded from coverage, or having coverage limited as to
Employee 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.
8. Additional Regulatory Requirements. Notwithstanding anything contained
in this Agreement to the contrary, it is understood and agreed that Triangle (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 reasonable 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's Chief Executive Officer or his
delegatee.
(b) Triangle is contracting for the unique and personal skills of Employee.
Therefore, Employee shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of Triangle's
Chief Executive Officer or his delegatee.
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
7
provisions or conditions at the same or at any prior or subsequent time. No
amendments or additions to this 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: ________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
ATTEST:
___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
[Corporate Seal]
EMPLOYEE
______________________(SEAL)
8
SCHEDULE E
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Form of Legal Opinion of Counsel for the Holding Company
_______________, 1998
United Federal Savings Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
I am General Counsel of Triangle Bancorp, Inc. (the "Holding Company") and,
in such capacity, I have reviewed that certain Agreement and Plan of
Reorganization and Merger dated March 4, 1998, by and among United Federal
Savings Bank ("United Federal"), Triangle Bank ("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,
United Federal is proposed to be merged into and with Triangle (the "Merger")
and the outstanding shares of United Federal'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 General Counsel of the Holding Company, I have examined originals or copies
of its Articles of Incorporation, Bylaws and corporate minute books, the
Agreement, the Registration Statement (No. 333-___) on Form S-4 (the
"Registration Statement") filed by the Holding Company with the Securities and
Exchange Commission (the "Commission") and containing the Proxy
Statement/Prospectus, dated , 1998 (the "Proxy Statement"), certificates and
written statements of officers and agents of the Holding Company, certificates
of public officials, and such other documents and records of the Holding Company
as we have deemed necessary for the purpose of giving the opinions hereinafter
expressed.
In giving certain of the opinions set forth below, I 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, I have relied solely upon (i) certificates and statements of
officers, employees and accountants of the Holding Company, (ii) the
representations and warranties of the Holding Company and Triangle set forth in
the Agreement, and (iii) Certificates of Existence dated _____, 1998 as to the
Holding Company and Triangle issued by the North
1
Carolina Secretary of State, and a Certificate of Good Standing dated _____,
1998 as to Triangle issued by the North Carolina Banking Commissioner. Except as
expressly stated herein, I 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 my opinion that, except as described in the Registration Statement or the
Agreement or as Previously Disclosed by the Holding Company to United Federal:
1. The Holding Company and Triangle each (i) is duly incorporated and
validly existing 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 (iv) to my 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.
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 United Federal 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, 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 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, 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 my
Actual Knowledge, any contract, agreement, lease, mortgage, note, bond,
indenture, license, or obligation or understanding (oral or written) to which
the Holding Company or its subsidiaries is bound or by which it, its business,
capital stock or any of its properties or assets may be affected; (ii) to my
Actual Knowledge, result in the creation or imposition of any lien, claim,
interest, charge, restriction or encumbrance upon any of the Holding Company's
properties or assets; (iii) violate any applicable federal or state statute,
law, rule or
2
regulation, or any judgment order, writ, injunction or decree of any court,
administrative or regulatory agency or governmental body; or (iv) to my Actual
Knowledge, result in the acceleration of any obligation or indebtedness of the
Holding Company.
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 its 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
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 with such Regulatory
Approvals that are required to be satisfied prior to consummation of such
transactions have been satisfied or waived, and, to my 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) To my Actual Knowledge, except as set forth in the disclosure letter
dated March 4, 1998 from the Holding Company to United Federal, 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, to my
Actual Knowledge, threatened, contemplated or probable of assertion, against,
relating to or otherwise affecting the Holding Company or any of its properties
or assets which, if determined adversely, could result in liability on the part
of the Holding Company for, or subject it to, monetary damages, fines,
penalties, or an injunction, and which could have a Material Adverse Effect on
the Holding Company or on the ability of the Holding Company and Triangle to
consummate the Merger; and
(ii) To my Actual Knowledge, neither the Holding Company nor any of
its subsidiaries is subject to any supervisory agreement, enforcement
order, writ, injunction, capital directive, supervisory directive,
memorandum of understanding or other similar agreement, order, directive,
memorandum or consent of, with or issued by any regulatory or other
governmental authority (including without limitation the 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 any of its subsidiaries which in any manner
limit, restrict, regulate, enjoin or prohibit any present or past business
or practice of the Holding Company or any of its subsidiaries; and, to my
Actual Knowledge, neither the Holding Company nor any of its subsidiaries
has been advised or has any reason to believe that any regulatory or other
governmental authority or any court is contemplating, threatening or
requesting the issuance of any such agreement, order, injunction,
directive, memorandum, judgment, stipulation, decree or award.
3
8. When Articles of Merger have been duly executed by 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, I 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) nothing has come to my 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 United
Federal'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 I make no statement
regarding any information included in the Registration Statement regarding
United Federal or regarding any of the Holding Company's financial statements or
other financial, accounting or statistical data).
In giving the opinions set forth above, I have assumed, without independent
verification, that:
A. United Federal is duly organized, validly existing and in good
standing as a savings bank under the laws of the United States and all
other applicable laws to which it is subject. United Federal 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 United Federal in connection therewith
have been duly and validly executed and delivered on behalf of and are
enforceable in accordance with their terms against United Federal;
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 me as originals are authentic, and all
documents submitted to me 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;
4
F. United Federal has complied or will comply with all conditions of all
required approvals of regulatory authorities having jurisdiction over
United Federal, the Holding Company and 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 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. My opinion in paragraph 1 regarding the good standing of the Holding
Company and Triangle is based solely on our examination of a
Certificate of Existence dated ______________, 1998, issued by the
North Carolina Secretary of State for each of the Holding Company and
Triangle, and on a Certificate of Good Standing dated ______, 1998
issued by the North Carolina Commissioner of Banks for Triangle.
c. As used in any paragraph of this letter, the phrase "Actual Knowledge"
means that, in giving the opinion contain in such paragraph, I have
relied with your consent exclusively on certificates of officers of
the Holding Company and Triangle, 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 I have not conducted any independent
investigation in this regard), and that I have no actual conscious
awareness of any information to the contrary.
d. My opinions are limited to the matters expressly stated herein, and no
opinion may be inferred or implied beyond the matters expressly
stated.
e. 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
5
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
f. I express no opinion with respect to compliance by the Holding Company
or any of its subsidiaries 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.
g. 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 my 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 my 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 I
undertake no responsibility to revise or supplement this letter or the
opinions herein to reflect any change in the law or facts.
Yours truly,
6
SCHEDULE F
to Agreement and Plan of Reorganization and Merger
dated March 4, 1998
Form of Legal Opinion of Counsel for United
____________, 1998
Triangle Bancorp Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We have acted as special counsel to United Federal Savings Bank ("United
Federal"), a federally chartered savings bank, in connection with the
transactions described in that certain Agreement and Plan of Reorganization and
Merger dated March 4, 1998, by and among United Federal, Triangle Bank 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, United Federal is proposed to be merged into
and with Triangle Bank (the "Merger") and the outstanding shares of United
Federal'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 United Federal, we have examined originals or copies of each
of its Charter, Bylaws and certain corporate minute books, the Agreement, the
Registration Statement (No. 333- ) on Form S-4 (the "Registration Statement")
filed by the Holding Company with the Securities and Exchange Commission (the
"Commission") and containing the Proxy Statement/Prospectus, dated , 1998 (the
"Proxy Statement"), certificates and written statements of officers and agents
of United Federal, certificates of public officials, and such other documents
and records of United Federal 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 of
officers, employees and accountants of United Federal, and (ii) the
representations and warranties of United Federal set forth in the Agreement. We
have not independently verified any factual matters in connection with the
giving of the opinions set forth below.
1
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 United Federal to the Holding Company in connection therewith, we
are of the opinion that:
1. United Federal (i) is validly existing as a federally-chartered savings
bank under the laws of the United States; (ii) has all requisite power and
authority (corporate and other) to own, lease and operate its properties and to
conduct its business as disclosed in the Proxy Statement/Prospectus; (iii) is
duly qualified to do business 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 United
Federal; 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 United Federal.
2. United Federal's authorized capital stock consists of 10,000,000 shares
of common stock, $0.01 par value per share ("United Federal Stock").
Each outstanding share of United Federal Stock (i) has been duly authorized
and is validly issued and outstanding, and is fully paid and nonassessable, and
(ii) has not been issued in violation of the preemptive rights of any
shareholder. Each share of United Federal Stock has been issued pursuant to an
effective registration statement or in compliance with the requirements of an
applicable exemption from registration requirements under the Securities Act of
1933, as amended (the "1933 Act"). Holders of United Federal Stock do not have
any rights of dissent.
3. (i) United Federal 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 United Federal 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 United Federal,
enforceable in accordance with its terms.
4. Except where the same would not have a Material Adverse Effect on United
Federal, neither the execution and delivery of the Agreement, nor the
consummation of the transactions described therein, nor compliance by United
Federal 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, United Federal's
Charter 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 United Federal 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 United Federal's
properties or assets; (iii) violate any applicable federal or state statute,
law, rule or regulation, or any judgment, order, writ,
2
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 United Federal.
5. No consents, approvals or waivers are required to be obtained from any
person or entity in connection with United Federal's execution and delivery of
the Agreement, or the performance of its obligations or agreements or the
consummation of the transactions described therein.
6. All approvals of governmental or regulatory authorities ("Regulatory
Approvals") required to be obtained by United Federal 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 United Federal
in connection with such Regulatory Approvals that are required to be satisfied
prior to consummation of such transactions have been satisfied or waived.
7. (i) To our Actual Knowledge, except as set forth in the disclosure
letter dated March 4, 1998 from United Federal to the Holding Company, 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 United Federal or any of its properties or assets which, if
determined adversely, could result in liability on the part of United Federal
for, or subject it to, monetary damages, fines, penalties, or an injunction, and
which could have a Material Adverse Effect on United Federal or on the ability
of United Federal to consummate the Merger; and
(ii) To our Actual Knowledge, United Federal 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 OTS or the FDIC) 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 United Federal which in any manner limit,
restrict, regulate, enjoin or prohibit any present or past business or
practice of United Federal; and, to our Actual Knowledge, United Federal
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.
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 United Federal) 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
3
Statement at the time it was distributed to United Federal'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 regarding United Federal (except that we make no statement
regarding any information included in the Registration Statement regarding the
Holding Company or Triangle Bank or regarding any of United Federal's financial
statements or other financial, accounting or statistical data).
In giving the opinions set forth above, we have assumed, without
independent verification, that the following is true:
a. The Holding Company and Triangle Bank 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 they are subject. The
Holding Company and Triangle Bank each have 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 the
Holding Company and Triangle Bank in connection therewith have been
duly and validly executed and delivered on behalf of and are
enforceable in accordance with their terms against the Holding Company
and Triangle Bank;
b. Other than persons executing documents on behalf of United Federal,
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 Bank have complied or will comply
with all conditions of all required approvals of regulatory
authorities having jurisdiction over the Holding Company, Triangle
Bank and the transactions described in the Agreement;
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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 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 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. Our opinion in paragraph 1 regarding the good standing of United
Federal is based solely on an examination of a Certificate of
Existence dated _______, 1998, issued by the OTS for United Federal.
c. As used in any paragraph of this letter, the phrase "Actual Knowledge"
means that, in giving the opinion contained in such paragraph, we have
relied with your consent exclusively on certificates of officers of
United Federal 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
the primary lawyer group from this firm working on the transaction has
no actual conscious awareness of any information to the contrary.
d. Our opinions are limited to the matters expressly stated herein, and
no opinion may be inferred or implied beyond the matters expressly
stated.
e. 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
or the rights of creditors of a savings bank the deposits of which are
insured by the FDIC, (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
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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.
f. We express no opinion with respect to compliance by United Federal
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.
g. 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,
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