As filed with the Securities and Exchange Commission on July 21, 1998
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
FLAG FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Georgia 58-2094179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 North Greenwood Street, LaGrange, Georgia 30240
(Address of principal executive offices and zip code)
Beth Lanier, Esq.
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E., 16th Floor
Atlanta, Georgia 30303
(Name and address of agent for service)
(404) 572-4571
(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement becomes effective.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|_________________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|_________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Offering Registration
be Registered Registered Per Share Price Fee
- ------------------------------------------------------------------------------
Common Stock, 597,600 $16.25 (1) $9,711,000 (1) $3350.00
$1.00 par value shares (1)
(1) The average of the high and low prices of the Registrant's Common Stock as
reported by the Nasdaq Stock Market for July 1, 1998.
This Registrant hereby amends this registration on such date or dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective with Section 8(a) of the Securities Act of
1933 or until this registration statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
P R O S P E C T U S
597,600 Shares
FLAG FINANCIAL CORPORATION
Common Stock
--------------------
This Prospectus relates to 597,600 shares (the "Shares") of common
stock, $1.00 par value ("Common Stock"), of FLAG Financial Corporation (the
"Company"). The Shares may be offered by certain shareholders of the Company
from time to time in transactions in the open market, in negotiated transactions
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). See "Sale of Shares."
The Selling Shareholders acquired the Shares from the Company as of May
8, 1998 in connection with the Company's acquisition of a company of which the
Selling Shareholders (as defined herein) owned shares of common stock. The
Selling Shareholders may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). See "Selling
Shareholders" and "Sale of the Shares."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than selling commissions) in connection with the registration
and sale of the Shares being offered by the Selling Shareholders.
The Common Stock is listed on the Nasdaq Stock Market. On July 1, 1998,
the last reported sale price of the Common Stock of the Company reported on the
Nasdaq Stock Market was $16.25 per share.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is ________________, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement"), of which this Prospectus forms a part, covering the Shares to be
sold pursuant to this offering.
As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in the
Registration Statement. Such additional information, exhibits and undertakings
can be inspected at and obtained from the Commission as set forth below. For
additional information regarding the Company, the Common Stock and related
matters and documents, reference is made to the Registration Statement and
exhibits thereto.
Certain documents previously filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are incorporated by reference in this Prospectus. See "Incorporation of
Certain Documents by Reference." Copies of any documents incorporated herein by
reference, other than exhibits to such documents unless they are specifically
incorporated by reference therein, are available without charge to any person to
whom a Prospectus is delivered upon request to John S. Holle, FLAG Financial
Corporation, 101 North Greenwood Street, LaGrange, Georgia 30240 (telephone:
(706) 845-5000).
The Company is subject to the informational and reporting requirements
of the Exchange Act, and accordingly files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission, as well as the Registration Statement,
are available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 and at certain regional offices of the Commission
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
2
<PAGE>
THE COMPANY
The Company is a Georgia corporation and a bank/thrift holding company
located in LaGrange, Georgia. The Company provides financial services through
its three subsidiary financial institutions (the "Banks") which offer a variety
of banking and other financial services to individuals and businesses. Its
market area includes Troup, Dooly, Macon, Crisp, Telfair, and Muscogee Counties,
Georgia.
The Company was formed on February 9, 1993, when First Federal Savings
Bank of LaGrange reorganized itself into a holding company. In this
reorganization, each shareholder of First Federal Savings Bank of LaGrange
received stock in the new parent company on a one-for-one basis. On March 31,
1998, the Company acquired Middle Georgia Bankshares, Inc., the parent company
of Citizens Bank, Vienna, Georgia. As of May 8, 1998, the Company acquired all
the outstanding stock of Three Rivers Bancshares, Inc. ("Three Rivers"), the
parent company of Bank of Milan, issuing 398,400 shares of its stock to Three
Rivers shareholders. As a result of a three-for-two stock split which occurred
on June 3, 1998, the 398,400 shares issued to Three Rivers shareholders were
adjusted to 597,600 shares.
SELLING SHAREHOLDERS
In conjunction with the acquisition of Three Rivers, the Company issued
398,400 shares of its stock to the three shareholders of Three Rivers (the
"Selling Shareholders"). The Shares were then adjusted up to 597,600 shares as a
result of the June 3, 1998, three-for-two stock split.
The Selling Shareholders and the number of shares being offered by each
are set forth below:
Donovan B. Bell, Jr. 289,440
J. Preston Martin 288,000
Three Rivers Bancshares-ESOP 20,160
Prior to the offering, the Selling Shareholders beneficially owned, in
the aggregate, 11.56% of the number of shares of Common Stock of the Company
outstanding on the date of this Prospectus. Upon the sale by the Selling
Shareholders of all of the Shares and completion of the offering, assuming all
of the Shares being offered hereby are sold and that no other changes in the
Selling Shareholders' beneficial ownership occur prior to completion of this
offering, the Selling Shareholders will beneficially own, in the aggregate, no
shares of Common Stock of the Company. Two of the Selling Shareholders, Messrs.
Bell and Martin, currently own 5.60% and 5.57%, respectively, of the Common
Stock.
One of the Selling Shareholders holds a position with the Company: Mr.
Martin is a senior vice president and director of the Company.
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Shareholders or by the pledgees, donees or transferees of or other
successors-in-interest to the Selling Shareholders directly to one or more
purchasers (including pledgees) or through brokers, dealers or underwriters who
may act solely as agents or may acquire shares as principals at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices which may be changed. The
distribution of the shares may be effected by one or more of the following
methods: (i) ordinary brokers' transactions which may include long or short
sales; (ii) transactions involving cross or block trades or otherwise on the
3
<PAGE>
Nasdaq National Market, (iii) purchases by brokers, dealers or underwriters as
principals and resale by such purchasers for their own accounts pursuant to this
prospectus, (iv) "at the market" to or through market makers or into an existing
market for the Common Stock, (v) in other ways not involving market makers or
established trading markets including direct sales to purchasers or sales
effected through agents, or (vi) any combination of the foregoing or by any
other legally available means. In addition, the Selling Shareholders or their
successors-in-interest may also enter into option or other transactions with
broker-dealers that require the delivery to such broker-dealers of the shares,
which shares may be resold thereafter pursuant to this Prospectus.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares as agents may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders (and if they
act as agent for the purchaser of such shares from such purchaser). Such
discounts, concessions or commissions as to a particular broker, dealer,
underwriter or agent might be greater or less than those customary in the type
transaction involved.
The Selling Shareholders and any brokers, dealers or other agents who
act in connection with the distribution of the Shares hereunder may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discounts, commissions, or concessions received by them and profit on any
resale of the Shares as principals might be deemed to be underwriting discounts
and commissions under the Securities Act.
LEGAL MATTERS
A legal opinion to the effect that the Shares are legally issued, fully
paid and nonassessable has been rendered by Powell, Goldstein, Frazer & Murphy
LLP, Sixteenth Floor, 191 Peachtree Street, N.E., Atlanta, Georgia 30303.
EXPERTS
The consolidated financial statements of the Company appearing or
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended have been audited by Porter Keadle Moore, LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1998;
(3) The Company's Report on Form 8-K filed January 28, 1998;
4
<PAGE>
(4) The Company's Report on Form 8-K filed February 18, 1998;
(5) The Company's Report on Form 8-K filed April 15, 1998;
(6) The Company's Report on Form 8-K filed May 22, 1998;
(7) The Company's Report on Form 8-K filed June 4, 1998; and
(8) The description of the Company's Common Stock contained in the
Company's Registration Statement filed pursuant to Section 12 of
the Exchange Act and any amendment or report filed for the
purpose of updating any such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the date
upon which this offering is terminated shall be deemed to be incorporated by
reference herein and to be part hereof from the date any such document is filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which is also incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded. All information appearing in this Prospectus is qualified in its
entirety by the information and financial statements (including notes thereto)
appearing in the documents incorporated herein by reference, except to the
extent set forth in this paragraph.
5
<PAGE>
---------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, THE SHARES OF COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
---------------------------------
6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Other Expenses of Issuance and Distribution.
Registration fee to the Securities
and Exchange Commission $ 3,350.00
Accounting fees and expenses $ 1,500.00
Legal fees and expenses $ 3,000.00
Miscellaneous expenses $ 500.00
-----------
Total $ 8,350.00
The foregoing items, except for the SEC registration fee, are
estimated. The Company has agreed to bear all expenses (other than selling
commissions) in connection with the registration and sale of the Shares.
Item 15. Indemnification of Directors and Officers.
Section 14-2-851 of the Georgia Business Corporation Code ("GBCC")
provides that a corporation may indemnify its directors and officers against
civil and criminal liabilities. Directors and officers may be indemnified
against expenses if they acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interest of the corporation, if they have
not been adjudged liable on the basis of the improper receipt of a personal
benefit and, with respect to any criminal action, if they had no reasonable
cause to believe their conduct was unlawful. A director or officer may be
indemnified against expenses incurred in connection with a derivative suit if he
or she acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interest of the corporation, except that no indemnification
may be made without court approval if such person was adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Statutory indemnification is not exclusive of any rights provided
by any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise.
The Company's Articles and Bylaws generally provide that any director
who is deemed eligible will be indemnified against liability and other expenses
incurred in a proceeding in which the director was made a party by reason of the
fact that he or she is or was a director, to the fullest extent authorized by
GBCC; provided, however, that the Company will not indemnify any director for
any liability or expenses incurred by such director (i) for any appropriation in
violation of his or her duties of any business opportunity of the Company; (ii)
for any acts or omissions which involve intentional misconduct or a knowing
violation of law; (iii) for the types of liability set forth in Section 14-2-832
of the GBCC or successor provisions; or (iv) for any transaction from which the
director derives an improper personal benefit. The Company's Articles and Bylaws
provide for the advancement of expenses to its directors at the outset of a
proceeding, upon the receipt from such director of the written affirmation and
repayment promise required by Section 14-2-856 of the GBCC, the purchase of
insurance by the Company against any liability of the director arising from his
duties and actions as a director, the survival of such indemnification to the
directors, heirs, executors and administrators, and the limitation of the
directors' liability to the corporation (except under the four situations
described above). The indemnification provisions are nonexclusive, and shall not
impair any other rights to which those seeking indemnification or advancement of
expenses may be entitled. The Company's Bylaws also provide for a similar amount
of indemnification for the officers of the Company. In the Bylaws of the Company
stockholders are entitled to notification of any indemnification paid to the
directors.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits.
4(a) Instruments defining rights of shareholders: Articles of Incorporation
of the Company (incorporated herein by reference to Exhibit 3.1(i) in
the Company's Annual Report on Form 10-k for the fiscal year ended
December 31, 1993);
4(b) Instruments defining rights of shareholders: Bylaws of the Company
(incorporated by reference to Exhibit 3.1(ii) to the Company's Annual
Report on Form 10-k for the fiscal year ended December 31, 1993).
5 Opinion of Powell, Goldstein, Frazer & Murphy LLP, as to the legality
of the securities being registered.
23(a) Consent of Porter Keadle Moore, LLP.
23(b) Consent of Powell, Goldstein, Frazer & Murphy LLP, is contained in its
opinion filed as Exhibit 5 hereto.
24 Power of Attorney (see signature page to this Registration Statement).
99 Merger Agreement dated February 12, 1998 between FLAG Financial
Corporation and Three Rivers Bancshares, Inc.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-2
<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information
------------------
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction to the questions whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of LaGrange, State of Georgia, on July 20, 1998.
FLAG FINANCIAL
By:/s/ John S. Holle
--------------------
John S. Holle
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints JOHN S. HOLLE and DANIEL J. SPEIGHT, JR., and
each of them, as his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title
/s/ John S. Holle
- -----------------
John S. Holle Chairman of the Board
/s/ J. Daniel Speight, Jr.
- --------------------------
J. Daniel Speight, Jr. President, Chief Executive
Officer, and Director
/s/ Ellison C. Rudd
- -------------------
Ellison C. Rudd Senior Vice President,
Chief Financial Officer,
and Treasurer
/s/ Dr. Albert Glenn Bailey
- ---------------------------
Dr. Albert Glenn Bailey Director
/s/ H. Speer Burdette, III
- --------------------------
H. Speer Burdette, III Director
/s/ Patti S. Davis
- ------------------
Patti S. Davis Senior Vice President,
Secretary, and Director
/s/ Fred A. Durand, III
- -----------------------
Fred A. Durand, III Director
/s/ Kelly R. Linch
- ------------------
Kelly R. Linch Director
/s/ James W. Johnson
- --------------------
James W. Johnson Director
/s/ J. Preston Martin
- ---------------------
J. Preston Martin Senior Vice President
and Director
/s/ John W. Stewart, Jr.
- ------------------------
John W. Stewart, Jr. Director
/s/ Robert W. Walters
- ---------------------
Robert W. Walters Director
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4(a) Instruments defining rights of shareholders: Articles of
Incorporation of the Company (incorporated herein by reference
to Exhibit 3.1(i) in the Company's Annual Report on Form 10-k
for the fiscal year ended December 31, 1993);
4(b) Instruments defining rights of shareholders: Bylaws of the
Company (incorporated by reference to Exhibit 3.1(ii) to the
Company's Annual Report on Form 10-k for the fiscal year ended
December 31, 1993).
5 Opinion of Powell, Goldstein, Frazer & Murphy LLP, as to the
legality of the securities being registered.
23(a) Consent of Porter Keadle Moore LLP.
23(b) Consent of Powell, Goldstein, Frazer & Murphy LLP, is
contained in its opinion filed as Exhibit 5 hereto.
24 Power of Attorney (see signature page to this Registration
Statement).
99 Merger Agreement dated February 12, 1998, between FLAG
Financial Corporation and Three Rivers Bancshares, Inc.
223955
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the July 21,
1998 Registration Statement on Form S-3 of our report, dated January 22, 1998,
relating to the consolidated financial statements of FLAG Financial Corporation
and subsidiary, contained in the annual report on Form 10-K for the year ended
December 31, 1997, and to the reference to our Firm under the caption "Experts"
in the Prospectus.
/s/ Porter Keadle Moore, LLP
Atlanta, Georgia
July 20, 1998
EXHIBIT 23(b)
July 20, 1998
FLAG Financial Corporation
101 North Greenwood Street
LaGrange, Georgia 30240
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have served as counsel for FLAG Financial Corporation, a Georgia
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-3 (the "Registration Statement"), of an aggregate of 597,600 shares (the
"Shares") of common stock, $1.00 par value per share, of the Company to be sold
by the Selling Shareholders named in the Registration Statement.
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and to the authorization for issuance of the Shares as we have deemed it
necessary and advisable.
In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all certified, conformed or photostatic copies. As to
questions of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate state,
local and federal officials.
We express no opinion as to matters under or involving laws other than
the laws of the State of Georgia.
Based upon and subject to the foregoing and having regard for such
legal considerations as we have deemed relevant, it is our opinion that the
Shares have been duly authorized and, when sold as described in the Registration
Statement and upon receipt of consideration therefor as contemplated therein
will be, validly issued, fully paid and non-assessable.
<PAGE>
FLAG Financial Corporation
July 20, 1998
Page 2
We hereby consent to the reference to our Firm under the heading "Legal
Matters" in the Prospectus contained in the Registration Statement and to the
filing of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
224467
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FLAG FINANCIAL CORPORATION
AND
THREE RIVERS BANCSHARES, INC.
Dated as of February 12, 1998
<PAGE>
iv
TABLE OF CONTENTS
Page
Preamble...................................................................... 1
ARTICLE 1. TRANSACTIONS AND TERMS OF MERGER....................................2
1.1. MERGER....................................................................2
1.2. TIME AND PLACE OF CLOSING.................................................2
1.3 EFFECTIVE TIME.............................................................2
ARTICLE 2. TERMS OF MERGER.....................................................2
2.1. CHARTER...................................................................2
2.2. BYLAWS....................................................................2
2.3 DIRECTORS AND OFFICERS.....................................................2
ARTICLE 3. MANNER OF CONVERTING SHARES.........................................3
3.1. CONVERSION OF SHARES......................................................3
3.2. ANTI-DILUTION PROVISIONS..................................................3
3.3. SHARES HELD BY THREE RIVERS OR FLAG.......................................3
3.4. DISSENTING SHAREHOLDERS...................................................3
ARTICLE 4. EXCHANGE OF SHARES..................................................4
4.1. EXCHANGE PROCEDURES.......................................................4
4.2. RIGHTS OF FORMER THREE RIVERS SHAREHOLDERS................................5
4.3. REGISTRATION OF SHARES....................................................5
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THREE RIVERS......................6
5.1. ORGANIZATION, STANDING, AND POWER.........................................6
5.2. AUTHORITY OF THREE RIVERS; NO BREACH BY AGREEMENT.........................6
5.3. CAPITAL STOCK.............................................................7
5.4. THREE RIVERS SUBSIDIARIES.................................................7
5.5. FINANCIAL STATEMENTS......................................................8
5.6. ABSENCE OF UNDISCLOSED LIABILITIES........................................9
5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS......................................9
5.8. TAX MATTERS...............................................................9
5.9. ALLOWANCE FOR POSSIBLE LOAN LOSSES.......................................10
5.10. ASSETS..................................................................11
5.11. INTELLECTUAL PROPERTY...................................................11
5.12. ENVIRONMENTAL MATTERS...................................................12
5.13. COMPLIANCE WITH LAWS....................................................13
5.14. LABOR RELATIONS.........................................................13
5.15. EMPLOYEE BENEFIT PLANS..................................................14
5.16. MATERIAL CONTRACTS......................................................16
5.17. LEGAL PROCEEDINGS.......................................................16
5.18. REPORTS.................................................................17
5.19. STATEMENTS TRUE AND CORRECT.............................................17
5.20. ACCOUNTING, TAX AND REGULATORY MATTERS..................................17
5.21. CHARTER PROVISIONS......................................................18
5.22. BOARD RECOMMENDATION....................................................18
5.23. Y2K.....................................................................18
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF FLAG.............................19
6.1. ORGANIZATION, STANDING, AND POWER........................................19
6.2. AUTHORITY OF FLAG; NO BREACH BY AGREEMENT................................19
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6.3. CAPITAL STOCK............................................................20
6.4. FLAG SUBSIDIARIES........................................................20
6.5. SEC FILINGS; FINANCIAL STATEMENTS........................................21
6.6. ABSENCE OF UNDISCLOSED LIABILITIES.......................................22
6.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.....................................22
6.8. TAX MATTERS..............................................................22
6.9. ALLOWANCE FOR POSSIBLE LOAN LOSSES.......................................24
6.10. ASSETS..................................................................24
6.11. INTELLECTUAL PROPERTY...................................................25
6.12. ENVIRONMENTAL MATTERS...................................................25
6.13. COMPLIANCE WITH LAWS....................................................26
6.14. LABOR RELATIONS.........................................................26
6.15. EMPLOYEE BENEFIT PLANS..................................................27
6.16. MATERIAL CONTRACTS......................................................29
6.17. LEGAL PROCEEDINGS.......................................................29
6.18. REPORTS.................................................................30
6.19. STATEMENTS TRUE AND CORRECT.............................................30
6.20. ACCOUNTING, TAX AND REGULATORY MATTERS..................................30
6.21. CHARTER PROVISIONS......................................................30
6.22. BOARD RECOMMENDATION....................................................31
6.23. Y2K.....................................................................31
ARTICLE 7. CONDUCT OF BUSINESS PENDING CONSUMMATION...........................31
7.1. AFFIRMATIVE COVENANTS OF THREE RIVERS....................................31
7.2. NEGATIVE COVENANTS OF THREE RIVERS.......................................31
7.3. AFFIRMATIVE COVENANTS OF FLAG............................................33
7.4. NEGATIVE COVENANTS OF FLAG...............................................34
7.5. ADVERSE CHANGES IN CONDITION.............................................36
7.6. REPORTS..................................................................36
ARTICLE 8. ADDITIONAL AGREEMENTS..............................................36
8.1. SHAREHOLDER APPROVAL.....................................................36
8.2. APPLICATIONS.............................................................37
8.3. FILINGS WITH STATE OFFICES...............................................37
8.4. AGREEMENT AS TO EFFORTS TO CONSUMMATE....................................37
8.5. INVESTIGATION AND CONFIDENTIALITY........................................37
8.6. PRESS RELEASES...........................................................38
8.7. CERTAIN ACTIONS..........................................................38
8.8. ACCOUNTING AND TAX TREATMENT.............................................38
8.9. CHARTER PROVISIONS.......................................................39
8.10. AGREEMENTS OF AFFILIATES................................................39
8.11. EMPLOYEE BENEFITS AND CONTRACTS.........................................39
8.12. INDEMNIFICATION.........................................................40
ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE..................41
9.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY..................................41
9.2. CONDITIONS TO OBLIGATIONS OF FLAG........................................42
9.3. CONDITIONS TO OBLIGATIONS OF THREE RIVERS................................43
ARTICLE 10. TERMINATION.......................................................44
10.1. TERMINATION.............................................................44
10.2. EFFECT OF TERMINATION...................................................45
10.3. NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS...........................45
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ARTICLE 11. MISCELLANEOUS.....................................................45
11.1. DEFINITIONS.............................................................45
11.2. EXPENSES................................................................53
11.3. BROKERS AND FINDERS.....................................................53
11.4. ENTIRE AGREEMENT........................................................54
11.5. AMENDMENTS..............................................................54
11.6. WAIVERS.................................................................54
11.7. ASSIGNMENT..............................................................55
11.8. NOTICES.................................................................55
11.9. GOVERNING LAW...........................................................56
11.10. COUNTERPARTS...........................................................56
11.11. CAPTIONS; ARTICLES AND SECTIONS........................................56
11.12. INTERPRETATIONS........................................................56
11.13. ENFORCEMENT OF AGREEMENT...............................................56
11.14. SEVERABILITY...........................................................56
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LIST OF EXHIBITS
Exhibit Number Description
1. Forms of agreement of affiliates of Three Rivers. (ss. 8.10(a)).
2. Matters as to which Morris, Manning & Martin will opine. (ss.
9.2(d)).
3. Form of Claims Letter (ss. 9.2(f)).
4. Matters as to which Powell, Goldstein, Frazer & Murphy LLP will
opine. (ss. 9.3(d)).
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 12, 1998, by and between FLAG FINANCIAL CORPORATION
("FLAG"), a Georgia corporation, and THREE RIVERS BANCSHARES, INC. ("Three
Rivers"), a Georgia corporation.
Preamble
The respective Boards of Directors of Three Rivers and FLAG are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective shareholders. This Agreement
provides for the combination of Three Rivers with FLAG pursuant to the merger of
Three Rivers with and into FLAG. At the effective time of such merger, the
outstanding shares of the capital stock of Three Rivers shall be converted into
shares of the common stock of FLAG (except as provided herein). As a result,
shareholders of Three Rivers shall become shareholders of FLAG and FLAG shall
conduct the business and operations of Three Rivers. The transactions described
in this Agreement are subject to the approvals of the shareholders of Three
Rivers, the Board of Governors of the Federal Reserve System, the Georgia
Department of Banking and Finance and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Certain terms used in this Agreement are defined in Section 11.1
hereof.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
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ARTICLE 1.
TRANSACTIONS AND TERMS OF MERGER
1.1. Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Three Rivers shall be merged with and into FLAG in
accordance with the provisions of Section 14-2-1101 of the GBCC and with the
effect provided in Section 14-2-1106 of the GBCC (the "Merger"). FLAG shall be
the Surviving Corporation resulting from the Merger and shall continue to be
governed by the Laws of the State of Georgia. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Three Rivers and FLAG, as set forth
herein.
1.2. Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on the fifth business
day following the last to occur of (i) the effective date (including expiration
of any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the earliest date on which the shareholders of Three Rivers have approved this
Agreement to the extent such approval is required by applicable Law; provided,
however, that the date of the Effective Time shall not extend past the
termination date set forth in W039 10.1(e) hereof.
ARTICLE 2.
TERMS OF MERGER
2.1. Charter. The Articles of Incorporation of FLAG in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until duly amended or repealed.
2.2. Bylaws. The Bylaws of FLAG in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
2.3 Directors and Officers.
(a) The directors of the Surviving Corporation shall be (i)
the directors of FLAG immediately prior to the Effective Time and (ii) J.
Preston Martin, together with such additional persons as may thereafter be
elected. Such persons shall serve as the directors of the Surviving Corporation
2
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from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation.
(b) The executive officers of the Surviving Corporation shall
be (i) the executive officers of FLAG immediately prior to the Effective Time
and (ii) J. Preston Martin, Senior Vice President, together with such additional
persons as may thereafter be elected. Such persons shall serve as the officers
of the Surviving Corporation from and after the Effective Time in accordance
with the Bylaws of the Surviving Corporation.
ARTICLE 3.
MANNER OF CONVERTING SHARES
3.1. Conversion of Shares. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of FLAG, Three Rivers, or the shareholders of either of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of FLAG issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of Three Rivers Common Stock (excluding shares
held by any Three Rivers Entity or any FLAG Entity, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, and excluding
shares held by shareholders who perfect their statutory dissenters' rights as
provided in Section 3.4) issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive forty-eight (48) shares of FLAG Common Stock
(the "Exchange Ratio").
3.2. Anti-Dilution Provisions. In the event FLAG changes the number of
shares of FLAG Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) and prior to the
Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3. Shares Held by Three Rivers or FLAG. Each of the shares of Three
Rivers Common Stock held by any Three Rivers Entity or by any FLAG Entity, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4. Dissenting Shareholders. Any holder of shares of Three Rivers
Common Stock who perfects his dissenters' rights in accordance with and as
contemplated by Article 13, Part 2 of Title 14 of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
3
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applicable provisions of the GBCC and surrendered to Three Rivers the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
Three Rivers fails to perfect, or effectively withdraws or loses, his right to
appraisal and of payment for his shares, FLAG shall issue and deliver the
consideration to which such holder of shares of Three Rivers Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of Three Rivers Common
Stock held by him. If and to the extent required by applicable Law, Three Rivers
will establish (or cause to be established) an escrow account with an amount
sufficient to satisfy the maximum aggregate payment that may be required to be
paid to dissenting shareholders. Upon satisfaction of all claims of dissenting
shareholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to the Surviving Corporation.
ARTICLE 4.
EXCHANGE OF SHARES
4.1. Exchange Procedures. At the Closing, the holders of record of
Three Rivers Common Stock shall deliver to FLAG a certificate or certificates
which represented shares of Three Rivers Common Stock immediately prior to the
Effective Time (the "Certificates"), together with appropriate endorsements for
transfer executed by such holders of record, as FLAG have required. In exchange
for such Certificates, at the Closing, FLAG shall deliver to each holder of
shares of Three Rivers Common Stock (other than shares to be canceled pursuant
to Section 3.3 or as to which statutory dissenters' rights have been perfected
as provided in Section 3.4) the consideration provided in Section 3.1, together
with all undelivered dividends or distributions in respect of such shares
without interest thereon) pursuant to Section 4.2. In the event of a transfer of
ownership of shares of Three Rivers Common Stock represented by Certificates
that are not registered in the transfer records of Three Rivers, the
consideration provided in Section 3.1 may be issued to a transferee, if the
Certificates representing such shares are delivered to FLAG, accompanied by all
documents required to evidence such transfer and by evidence satisfactory to
FLAG that any applicable stock transfer taxes have been paid. If any Certificate
shall have been lost, stolen, mislaid or destroyed, upon receipt of (i) an
affidavit of that fact from the holder claiming such Certificate to be lost,
mislaid, stolen or destroyed, (ii) such bond, security or indemnity as FLAG may
reasonably require and (iii) any other documents necessary to evidence and
effect the bona fide exchange thereof, FLAG shall issue (or shall cause its
exchange agent to issue) to such holder the consideration into which the shares
represented by such lost, stolen, mislaid or destroyed Certificate shall have
been converted. FLAG shall not be obligated to deliver the consideration to
which any former holder of Three Rivers Common Stock is entitled as a result of
the Merger until such holder surrenders such holder's Certificate or
Certificates for exchange as provided in this Section 4.1. Any other provision
of this Agreement notwithstanding, FLAG shall not be liable to a holder of Three
Rivers Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property, escheat or
similar Law.
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4.2. Rights of Former Three Rivers Shareholders. At the Effective Time,
the stock transfer books of Three Rivers shall be closed as to holders of Three
Rivers Common Stock immediately prior to the Effective Time and no transfer of
Three Rivers Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1, each Certificate theretofore representing shares of Three Rivers
Common Stock (other than shares to be canceled pursuant to Sections 3.3 and 3.4)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 3.1 and 3.5 in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by Three Rivers in respect of
such shares of Three Rivers Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. To the extent permitted
by Law, former shareholders of record of Three Rivers shall be entitled to vote
after the Effective Time at any meeting of FLAG shareholders the number of whole
shares of FLAG Common Stock into which their respective shares of Three Rivers
Common Stock are converted, regardless of whether such holders have exchanged
their Certificates for certificates representing FLAG Common Stock in accordance
with the provisions of this Agreement. Whenever a dividend or other distribution
is declared by FLAG on the FLAG Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of FLAG Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of FLAG Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any Certificate until such holder surrenders
such Certificate for exchange as provided in Section 4.1. However, upon
surrender of such Certificate, both the FLAG Common Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each share represented by such
Certificate.
4.3. Registration of Shares. Within six (6) months following the
Effective Time, FLAG shall, with the cooperation of the former shareholders of
Three Rivers, prepare and file a Registration Statement on Form S-3 of the
S.E.C. to effect registration of the FLAG shares received in this transaction,
and shall take all necessary steps to list the shares so registered on the
Nasdaq National Market. FLAG will use its best efforts to maintain the
effectiveness of such Registration Statement for no less than two years, the
Registration Statement on Form S-3 shall be a "shelf" Registration Statement
pursuant to which the FLAG Common Stock held by the Three Rivers shareholders
are being offered, and from time to time FLAG will amend or supplement such
Registration Statement and the prospectus contained therein to the extent
necessary to comply with the 1933 Act and any applicable state securities
statute or regulation. FLAG will also provide each former Three Rivers
shareholder holding FLAG Common Stock with as many copies of the prospectus
contained in any such registration statement as such shareholder may reasonably
request.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THREE RIVERS
Three Rivers hereby represents and warrants to FLAG as follows:
5.1. Organization, Standing, and Power. Three Rivers is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its material Assets.
Three Rivers is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Three Rivers
Material Adverse Effect. The minute book and other organizational documents for
Three Rivers have been made available to FLAG for its review and, except as
disclosed in Section 5.1 of the Three Rivers Disclosure Memorandum, are true and
complete in all material respects as in effect as of the date of this Agreement
and accurately reflect in all material respects all amendments thereto and all
proceedings of the Board of Directors and shareholders thereof.
5.2. Authority of Three Rivers; No Breach By Agreement.
(a) Three Rivers has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Three
Rivers, subject to the approval of this Agreement by the holders of a majority
of the outstanding shares of Three Rivers Common Stock, which is the only
shareholder vote required for approval of this Agreement and consummation of the
Merger by Three Rivers. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid, and binding obligation of Three Rivers,
enforceable against Three Rivers in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Three Rivers, nor the consummation by Three Rivers of the transactions
contemplated hereby, nor compliance by Three Rivers with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of Three
Rivers' Articles of Incorporation or Bylaws or the certificate or articles of
incorporation or bylaws of any Three Rivers Subsidiary or any resolution adopted
by the board of directors or the shareholders of any Three Rivers Entity, or
(ii) except as disclosed in Section 5.2 of the Three Rivers Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
6
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pursuant to, or result in the creation of any Lien on any Asset of any Three
Rivers Entity under, any Contract or Permit of any Three Rivers Entity, where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Three Rivers Material
Adverse Effect, or, (iii) subject to receipt of the requisite Consents referred
to in Section 9. 1 (b), constitute or result in a Default under, or require any
Consent pursuant to, any Law or Order applicable to any Three Rivers Entity or
any of their respective material Assets (including any FLAG Entity or any Three
Rivers Entity becoming subject to or liable for the payment of any Tax or any of
the Assets owned by any FLAG Entity or any Three Rivers Entity being reassessed
or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
other than Consents required from Regulatory Authorities, and other than notices
to or filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Three Rivers Material Adverse Effect, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Three Rivers
of the Merger and the other transactions contemplated in this Agreement.
5.3. Capital Stock.
(a) As of the date of this Agreement, the authorized capital
stock of Three Rivers consists of 1,000,000 shares of Three Rivers Common Stock,
of which 8,300 shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of Three Rivers are duly and validly issued
and outstanding and are fully paid and nonassessable under the GBCC. None of the
outstanding shares of capital stock of Three Rivers has been issued in violation
of any preemptive rights of the current or past shareholders of Three Rivers.
(b) Except as set forth in Section 5.3(a), or as disclosed in
Section 5.3(b) of the Three Rivers Disclosure Memorandum, there are no shares of
capital stock or other equity securities of Three Rivers outstanding and no
outstanding Equity Rights relating to the capital stock of Three Rivers.
5.4. Three Rivers Subsidiaries. Three Rivers has disclosed in Section
5.4 of the Three Rivers Disclosure Memorandum all of the Three Rivers
Subsidiaries that are corporations (identifying its jurisdiction of
incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership) and all of the Three Rivers
Subsidiaries that are general or limited partnerships, limited liability
companies, or other non-corporate entities (identifying the Law under which such
entity is organized, each jurisdiction in which the character of its Assets or
the nature or conduct of its business requires it to be qualified and/or
licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.4 of the Three Rivers
7
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Disclosure Memorandum, Three Rivers or one of its wholly-owned Subsidiaries owns
all of the issued and outstanding shares of capital stock (or other equity
interests) of each Three Rivers Subsidiary. No capital stock (or other equity
interest) of any Three Rivers Subsidiary is or may become required to be issued
(other than to another Three Rivers Entity) by reason of any Equity Rights, and
there are no Contracts by which any Three Rivers Subsidiary is bound to issue
(other than to another Three Rivers Entity) additional shares of its capital
stock (or other equity interests) or Equity Rights or by which any Three Rivers
Entity is or may be bound to transfer any shares of the capital stock (or other
equity interests) of any Three Rivers Subsidiary (other than to another Three
Rivers Entity). There are no Contracts relating to the rights of any Three
Rivers Entity to vote or to dispose of any shares of the capital stock (or other
equity interests) of any Three Rivers Subsidiary. All of the shares of capital
stock (or other equity interests) of each Three Rivers Subsidiary held by a
Three Rivers Entity are fully paid and (except pursuant to 12 U.S.C. Section 55
in the case of national banks and comparable, applicable state Law, if any, in
the case of state depository institutions) nonassessable and are owned by the
Three Rivers Entity free and clear of any Lien. Except as disclosed in Section
5.4 of the Three Rivers Disclosure Memorandum, each Three Rivers Subsidiary is
either a bank, a savings association, or a corporation, and each such Subsidiary
is duly organized, validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each Three
Rivers Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Three Rivers
Material Adverse Effect. Each Three Rivers Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund. The minute book and other organizational
documents for each Three Rivers Subsidiary have been made available to FLAG for
its review, and, except as disclosed in Section 5.4 of the Three Rivers
Disclosure Memorandum, are true and complete in all material respects as in
effect as of the date of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the Board of Directors
and shareholders thereof.
5.5. Financial Statements. Each of the Three Rivers Financial
Statements (including, in each case, any related notes) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements),
and fairly presented in all material respects the consolidated financial
position of Three Rivers and its Subsidiaries as at the respective dates and the
consolidated results of operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount or effect.
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5.6. Absence of Undisclosed Liabilities. No Three Rivers Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Three Rivers
as of December 31, 1996 or September 30, 1997, included in the Three Rivers
Financial Statements or reflected in the notes thereto. No Three Rivers Entity
has incurred or paid any Liability since September 30, 1997, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Three Rivers Material Adverse Effect or (ii)
in connection with the transactions contemplated by this Agreement.
5.7. Absence of Certain Changes or Events. Since December 31, 1996,
except as disclosed in the Three Rivers Financial Statements delivered prior to
the date of this Agreement or as disclosed in Section 5.7 of the Three Rivers
Disclosure Memorandum, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect, and (ii) the Three Rivers
Entities have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of Three Rivers provided in Article 7.
5.8. Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the Three Rivers Entities have been timely filed or requests for
extensions have been timely filed, granted, and, to the Knowledge of Three
Rivers, have not expired for such periods, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Three
Rivers Material Adverse Effect, and all Tax Returns filed are complete and
accurate in all material respects. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Three Rivers Material Adverse
Effect, except as reserved against in the Three Rivers Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section 5.8 of
the Three Rivers Disclosure Memorandum. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have been
paid. There are no Liens with respect to Taxes upon any of the Assets of the
Three Rivers Entities, except for any such Liens which are not reasonably likely
to have a Three Rivers Material Adverse Effect or with respect to which the
Taxes are not yet due and payable.
(b) None of the Three Rivers Entities has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) The provision for any Taxes due or to become due for any
of the Three Rivers Entities for the period or periods through and including the
date of the respective Three Rivers Financial Statements that has been made and
is reflected on such Three Rivers Financial Statements is sufficient to cover
all such Taxes.
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(d) Deferred Taxes of the Three Rivers Entities have been
provided for in accordance with GAAP.
(e) Except as disclosed in Section 5.8 of the Three Rivers
Disclosure Memorandum, none of the Three Rivers Entities is a party to any Tax
allocation or sharing agreement and none of the Three Rivers Entities has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Three Rivers) or has any
Liability for Taxes of any Person (other than Three Rivers and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the Three Rivers Entities is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Three Rivers Material Adverse Effect.
(g) Except as disclosed in Section 5.8 of the Three Rivers
Disclosure Memorandum, none of the Three Rivers Entities has made any payments,
is obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Sections 28OG or 162(m) of the Internal Revenue Code.
(h) Exclusive of the Merger, there has not been an ownership
change, as defined in Internal Revenue Code Section 382(g), of the Three Rivers
Entities that occurred during or after any Taxable Period in which the Three
Rivers Entities incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 1996.
(i) No Three Rivers Entity has or has had in any foreign
country a permanent establishment, as defined in any applicable tax treaty or
convention between the United States and such foreign country.
(j) All material elections with respect to Taxes affecting the
Three Rivers Entities have been or will be timely made.
5.9. Allowance for Possible Loan Losses. The allowance for possible
loan or credit losses (the "Allowance") shown on the consolidated balance sheets
of Three Rivers included in the most recent Three Rivers Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Three Rivers included in the Three Rivers
Financial Statements as of dates subsequent to the execution of this Agreement
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will be, as of the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide for all known or
reasonably anticipated losses relating to or inherent in the loan and lease
portfolios (including accrued interest receivables) of the Three Rivers Entities
and other extensions of credit (including letters of credit and commitments to
make loans or extend credit) by the Three Rivers Entities as of the dates
thereof, except where the failure of such Allowance to be so adequate is not
reasonably likely to have a Three Rivers Material Adverse Effect.
5.10. Assets.
(a) Except as disclosed in Section 5.10 of the Three Rivers
Disclosure Memorandum or as disclosed or reserved against in the Three Rivers
Financial Statements delivered prior to the date of this Agreement, the Three
Rivers Entities have good and marketable title, free and clear of all Liens, to
all of their respective Assets, except for any such Liens or other defects of
title which are not reasonably likely to have a Three Rivers Material Adverse
Effect. All tangible properties used in the businesses of the Three Rivers
Entities are usable in the ordinary course of business consistent with Three
Rivers' past practices.
(b) All Assets which are material to Three Rivers' business on
a consolidated basis, held under leases or subleases by any of the Three Rivers
Entities, are held under valid Contracts enforceable against Three Rivers in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and, assuming the enforceability of such Contract against the
third party thereto, each such Contract is in full force and effect.
(c) The Three Rivers Entities currently maintain the insurance
policies described in Section 5.10(c) of the Three Rivers Disclosure Memorandum.
None of the Three Rivers Entities has received written notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts exceeding in any individual case $25,000 pending under
such policies of insurance and no written notices of claims in excess of such
amounts have been given by any Three Rivers Entity under such policies.
(d) The Assets of the Three Rivers Entities include all
material Assets required to operate the business of the Three Rivers Entities as
presently conducted.
5.11. Intellectual Property. Each Three Rivers Entity owns or has a
license to use all of the Intellectual Property used by such Three Rivers Entity
in the ordinary course of its business. Each Three Rivers Entity is the owner of
or has a license to any Intellectual Property sold or licensed to a third party
by such Three Rivers Entity in connection with such Three Rivers Entity's
business operations, and such Three Rivers Entity has the right to convey by
sale or license any Intellectual Property so conveyed. No Three Rivers Entity is
in material Default under any of its Intellectual Property licenses. No
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proceedings have been instituted, or are pending or to the Knowledge of Three
Rivers threatened, which challenge the rights of any Three Rivers Entity with
respect to Intellectual Property used, sold or licensed by such Three Rivers
Entity in the course of its business, nor has any person claimed or alleged any
rights to such Intellectual Property. To the Knowledge of Three Rivers, the
conduct of the business of the Three Rivers Entities does not infringe any
Intellectual Property of any other person. Except as disclosed in Section 5.11
of the Three Rivers Disclosure Memorandum, no Three Rivers Entity is obligated
to pay any recurring royalties to any Person with respect to any such
Intellectual Property.
5.12. Environmental Matters.
(a) Except as disclosed in Section 5.12 of the Three Rivers
Disclosure Memorandum, to the Knowledge of Three Rivers, each Three Rivers
Entity, its Participation Facilities, and its Operating Properties are, and have
been, in compliance with all Environmental Laws, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Three Rivers
Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of
Three Rivers, threatened, before any court, governmental agency, or authority or
other forum in which any Three Rivers Entity or any of its Operating Properties
or Participation Facilities (or Three Rivers in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the emission,
migration, release, discharge, spillage, or disposal into the environment of any
Hazardous Material, whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased, or operated by any
Three Rivers Entity or any of its Operating Properties or Participation
Facilities or any neighboring property, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect, nor, to the Knowledge of
Three Rivers, is there any reasonable basis for any Litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Three Rivers Material Adverse Effect.
(c) Except as disclosed in Section 5.12 of the Three Rivers
Disclosure Memorandum, during the period of (i) any Three Rivers Entity's
ownership or operation of any of their respective current Assets, or (ii) any
Three Rivers Entity's participation in the management of any Participation
Facility or any Operating Property, to the Knowledge of Three Rivers, there have
been no emissions, migrations, releases, discharges, spillages, or disposals of
Hazardous Material in, on, at, under, adjacent to, or affecting (or potentially
affecting) such properties or any neighboring properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Three Rivers
Material Adverse Effect. Except as disclosed in Section 5.12 of the Three Rivers
Disclosure Memorandum, prior to the period of (i) any Three Rivers Entity's
ownership or operation of any of their respective current properties, (ii) any
Three Rivers Entity's participation in the management of any Participation
Facility or any Operating Property, to the Knowledge of Three Rivers, there were
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no releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Three Rivers Material Adverse Effect.
5.13. Compliance with Laws. Three Rivers is duly registered as a bank
holding company under the BHC Act. Each Three Rivers Entity has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Three Rivers Material Adverse Effect, and, to the Knowledge of Three Rivers,
there has occurred no Default under any such Permit, other than Defaults which
are not reasonably likely to have, individually or in the aggregate, a Three
Rivers Material Adverse Effect. Except as disclosed in Section 5.13 of the Three
Rivers Disclosure Memorandum, none of the Three Rivers Entities:
(a) is in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect; or
(c) since January 1, 1993, has received any written
notification or written communication from any agency or department of federal,
state, or local government or any Regulatory Authority or the staff thereof (i)
asserting that any Three Rivers Entity is not in compliance with any of the Laws
or Orders which such governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have, individually
or in the aggregate, a Three Rivers Material Adverse Effect, or (iii) requiring
any Three Rivers Entity to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business or in any material manner
relates to its capital adequacy, its credit or reserve policies, its management,
or the payment of dividends. Copies of all material reports, correspondence,
notices and other documents relating to any inspection, audit, monitoring or
other form of review or enforcement action by a Regulatory Authority have been
made available to FLAG.
5.14. Labor Relations. No Three Rivers Entity is the subject of any
Litigation asserting that it or any other Three Rivers Entity has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Three Rivers Entity
to bargain with any labor organization as to wages or conditions of employment,
nor is any Three Rivers Entity party to any collective bargaining agreement, nor
is there any strike or other labor dispute involving any Three Rivers Entity,
pending or threatened, or to the Knowledge of Three Rivers, is there any
activity involving any Three Rivers Entity's employees seeking to certify a
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collective bargaining unit or engaging in any other organization activity.
5.15. Employee Benefit Plans.
(a) Three Rivers has disclosed in Section 5.15 of the Three
Rivers Disclosure Memorandum, and has delivered or made available to FLAG prior
to the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee 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 ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any Three Rivers Entity
or ERISA Affiliate (as defined in subparagraph (c) below) thereof 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 "Three Rivers Benefit Plans").
Any of the Three Rivers 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 "Three Rivers ERISA Plan." Each Three Rivers ERISA Plan which is also a
"defined benefit plan" (as defined in Section 4140 of the Internal Revenue Code)
is referred to herein as a "Three Rivers Pension Plan." No Three Rivers Pension
Plan is or has been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All Three Rivers Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Three Rivers Material Adverse Effect. Each
Three Rivers 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 Three Rivers has no Knowledge of any
circumstances likely to result in revocation of any such favorable determination
letter. To the Knowledge of Three Rivers, no Three Rivers Entity has engaged in
a transaction with respect to any Three Rivers Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any Three Rivers Entity 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 Three Rivers Material Adverse
Effect.
(c) No Three Rivers Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of any Three Rivers Pension Plan, (ii)
no change in the actuarial assumptions with respect to any Three Rivers Pension
Plan, and (iii) no increase in benefits under any Three Rivers Pension Plan as a
result of plan amendments or changes in applicable Law which is reasonably
likely to have, individually or in the aggregate, a Three Rivers Material
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Adverse Effect or materially adversely affect the funding status of any such
plan. Neither any Three Rivers Pension Plan nor any "single employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any Three Rivers Entity, or the single-employer plan of any entity
which is considered one employer with Three Rivers under Section 4001 of ERISA
or Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether or
not waived) (an "ERISA Affiliate") has an "accumulated funding deficiency"
within the meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, which is reasonably likely to have a Three Rivers Material Adverse
Effect. No Three Rivers Entity has provided, or is required to provide, security
to a Three Rivers Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time,
no Liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any Three Rivers Entity with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Three Rivers Material
Adverse Effect. No Three Rivers Entity has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Three Rivers Material Adverse Effect.
No notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any Three Rivers Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the Three Rivers
Disclosure Memorandum, no Three Rivers Entity has any Liability for retiree
health and life benefits under any of the Three Rivers Benefit Plans and there
are no restrictions on the rights of such Three Rivers Entity to amend or
terminate any such retiree health or benefit Plan without incurring any
Liability thereunder, which Liability is reasonably likely to have a Three
Rivers Material Adverse Effect.
(f) Except as disclosed in Section 5.15 of the Three Rivers
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Three Rivers
Entity from any Three Rivers Entity under any Three Rivers Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Three Rivers
Benefit Plan, or (iii) 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 Three Rivers
Material Adverse Effect.
(g) 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 any Three Rivers Entity and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
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the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Three Rivers Financial Statements to the
extent required by and in accordance with GAAP.
5.16. Material Contracts. Except as disclosed in Section 5.16 of the
Three Rivers Disclosure Memorandum or otherwise reflected in the Three Rivers
Financial Statements, none of the Three Rivers Entities, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any Three Rivers Entity or the guarantee
by any Three Rivers Entity of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances or depository
institution Subsidiaries, trade payables and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (iii) any Contract which
prohibits or restricts any Three Rivers Entity from engaging in any business
activities in any geographic area, line of business or otherwise in competition
with any other Person, (iv) any Contract between or among Three Rivers Entities,
(v) any Contract relating to the provision of data processing, network
communication, or other technical services to or by any Three Rivers Entity,
(vi) any exchange-traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract not included on its balance sheet which is a
financial derivative Contract, and (vii) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-K filed by Three
Rivers with the SEC (assuming Three Rivers were subject to the reporting
requirements of the 1934 Act) as of the date of this Agreement (together with
all Contracts referred to in Sections 5.10 and 5.15(a), the "Three Rivers
Contracts"). With respect to each Three Rivers Contract and except as disclosed
in Section 5.16 of the Three Rivers Disclosure Memorandum: (i) assuming the
enforceability of such Contract against the third party thereto, each such
Contract is in full force and effect; (ii) no Three Rivers Entity is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Three Rivers Material Adverse Effect; (iii)
no Three Rivers Entity has repudiated or waived any material provision of any
such Contract; and (iv) no other party to any such Contract is, to the Knowledge
of Three Rivers, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Three Rivers
Material Adverse Effect, or has repudiated or waived any material provision
thereunder. Except as disclosed in Section 5.16 of the Three Rivers Disclosure
Memorandum, no officer, director or employee of any Three Rivers Entity is party
to any Contract which restricts or prohibits such officer, director or employee
from engaging in activities competitive with any Person, including any Three
Rivers Entity. All of the indebtedness of any Three Rivers Entity for money
borrowed is prepayable at any time by such Three Rivers Entity without penalty
or premium.
5.17. Legal Proceedings. There is no Litigation instituted or pending,
or, to the Knowledge of Three Rivers, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Three Rivers Entity, or
against any director, employee or employee benefit plan (acting in such
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capacity) of any Three Rivers Entity, or against any Asset, interest, or right
of any of them, that is reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect, nor are there any Orders of
any Regulatory Authorities, other governmental authorities or arbitrators
outstanding against any Three Rivers Entity, that are reasonably likely to have,
individually or in the aggregate, a Three Rivers Material Adverse Effect.
Section 5.17 of the Three Rivers Disclosure Memorandum contains a summary of all
Litigation as of the date of this Agreement to which any Three Rivers Entity is
a party and which names a Three Rivers Entity as a defendant or cross-defendant
or for which, to the Knowledge of Three Rivers, any Three Rivers Entity has any
potential Liability.
5.18. Reports. Since January 1, 1993, or the date of organization if
later, each Three Rivers Entity has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with Regulatory Authorities, except for such filings which
the failure to so file is not reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect. As of their respective dates,
each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report and document did
not, in all material respects, 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 made therein, in light of the circumstances under which they
were made, not misleading.
5.19. Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Three Rivers
Entity to FLAG pursuant to this Agreement or any other document, agreement, or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any Three
Rivers Entity for inclusion in the registration statement to be filed by FLAG
with the SEC in accordance with Section 4.3 will, when such registration
statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. All documents that any Three Rivers Entity is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law. No documents to be filed by a Three
Rivers Entity with any Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.20. Accounting, Tax and Regulatory Matters. No Three Rivers Entity
has taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
for pooling of interest accounting treatment and as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
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Section 9.1(b) or result in the imposition of a condition or restriction of the
type referred to in the last sentence of such Section.
5.21. Charter Provisions. Each Three Rivers Entity has taken all action
so that the entering into of this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any Three Rivers Entity
or restrict or impair the ability of FLAG or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
Three Rivers Entity that may be directly or indirectly acquired or controlled by
them.
5.22. Board Recommendation.
The Board of Directors of Three Rivers, at a meeting duly called and
held, has by unanimous vote of those directors present (who constituted all of
the directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the
shareholders and (ii) resolved to recommend that the holders of the shares of
Three Rivers Common Stock approve this Agreement.
5.23. Y2K.
Three Rivers has formed a committee to review policies and directives
issued by Regulatory Authorities with respect to preparedness for year 2000 data
processing and other operations, and intends to implement such committee's
recommendations for ensuring compliance with such policies and directives.
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ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF FLAG
FLAG hereby represents and warrants to Three Rivers as follows:
6.1. Organization, Standing, and Power. FLAG is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. FLAG is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a FLAG Material Adverse Effect. The minute book and other
organizational documents for FLAG have been made available to Three Rivers for
its review and, except as disclosed in Section 6.1 of the FLAG Disclosure
Memorandum, are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
6.2. Authority of FLAG; No Breach By Agreement.
(a) FLAG has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of FLAG. This
Agreement represents a legal, valid, and binding obligation of FLAG, enforceable
against FLAG in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by
FLAG, nor the consummation by FLAG of the transactions contemplated hereby, nor
compliance by FLAG with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of FLAG's Articles of Incorporation or
Bylaws or the certificate or articles of incorporation or bylaws of any FLAG
Subsidiary or any resolution adopted by the board of directors or the
shareholders of any FLAG Entity, or (ii) constitute or result in a Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any FLAG Entity under, any Contract or Permit of any FLAG
Entity, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a FLAG Material
Adverse Effect, or (iii) subject to receipt of the requisite Consents referred
to in Section 9.1(b), constitute or result in a Default under, or require any
Consent pursuant to, any Law or Order applicable to any FLAG Entity or any of
their respective material Assets (including any FLAG Entity becoming subject to
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or liable for the payment of any Tax or any of the Assets owned by any FLAG
Entity being reassessed or revalued by any Taxing authority).
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a FLAG Material Adverse Effect, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
FLAG of the Merger and the other transactions contemplated in this Agreement.
6.3. Capital Stock.
(a) The authorized capital stock of FLAG consists of (i)
20,000,000 shares of FLAG Common Stock, of which 2,036,990 shares are issued and
outstanding as of the date of this Agreement, and not more than 3,049,274 shares
will be outstanding at the Effective Time, and (ii) 10,000,000 shares of FLAG
Preferred Stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of FLAG Capital Stock are, and all of the shares
of FLAG Common Stock to be issued in exchange for shares of Three Rivers Common
Stock upon consummation of the Merger, when issued in accordance with the terms
of this Agreement, will be, duly and validly issued and outstanding and fully
paid and nonassessable under the GBCC. None of the outstanding shares of FLAG
Capital Stock has been, and none of the shares of FLAG Common Stock to be issued
in exchange for shares of Three Rivers Common Stock upon consummation of the
Merger will be, issued in violation of any preemptive rights of the current or
past shareholders of FLAG.
(b) Except as set forth in Section 6.3(a), or as disclosed in
Section 6.3 of the FLAG Disclosure Memorandum, there are no shares of capital
stock or other equity securities of FLAG outstanding and no outstanding Equity
Rights relating to the capital stock of FLAG.
6.4. FLAG Subsidiaries. FLAG has disclosed in Section 6.4 of the FLAG
Disclosure Memorandum all of the FLAG Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership) and
all of the FLAG Subsidiaries that are general or limited partnerships, limited
liability companies, or other non-corporate entities (identifying the Law under
which such entity is organized, each jurisdiction in which the character of its
Assets or the nature or conduct of its business requires it to be qualified
and/or licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 6.4 of the FLAG Disclosure
Memorandum, FLAG or one of its wholly-owned Subsidiaries owns all of the issued
and outstanding shares of capital stock (or other equity interests) of each FLAG
Subsidiary. No capital stock (or other equity interest) of any FLAG Subsidiary
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are or may become required to be issued (other than to another FLAG Entity) by
reason of any Equity Rights, and there are no Contracts by which any FLAG
Subsidiary is bound to issue (other than to another FLAG Entity) additional
shares of its capital stock (or other equity interests) or Equity Rights or by
which any FLAG Entity is or may be bound to transfer any shares of the capital
stock (or other equity interests) of any FLAG Subsidiary (other than to another
FLAG Entity). There are no Contracts relating to the rights of any FLAG Entity
to vote or to dispose of any shares of the capital stock (or other equity
interests) of any FLAG Subsidiary. All of the shares of capital stock (or other
equity interests) of each FLAG Subsidiary held by a FLAG Entity are fully paid
and nonassessable under the applicable corporation Law of the jurisdiction in
which such Subsidiary is incorporated or organized and are owned by the FLAG
Entity free and clear of any Lien. Each FLAG Subsidiary is either a bank,
savings association or a corporation, and is duly organized, validly existing,
and (as to corporations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease and operate its Assets and to carry on its
business as now conducted. Each FLAG Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
FLAG Material Adverse Effect. Each FLAG Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder. The minute book and other
organizational documents for each FLAG Subsidiary have been made available to
Three Rivers for its review, and, except as disclosed in Section 6.4 of the FLAG
Disclosure Memorandum, are true and complete in all material respects as in
effect as of the date of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the Board of Directors
and shareholders thereof.
6.5. SEC Filings; Financial Statements.
(a) FLAG has timely filed and made available to Three Rivers
all SEC Documents required to be filed by FLAG since December 31, 1993 (the
"FLAG SEC Reports"). The FLAG SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws and (ii) did not, at the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such FLAG SEC Reports or
necessary in order to make the statements in such FLAG SEC Reports, in light of
the circumstances under which they were made, not misleading. No FLAG Subsidiary
is required to file any SEC Documents.
(b) Each of the FLAG Financial Statements (including, in each
case, any related notes) contained in the FLAG SEC Reports, including any FLAG
SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
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may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of FLAG
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
6.6. Absence of Undisclosed Liabilities. No FLAG Entity has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a FLAG Material Adverse Effect, except Liabilities which are accrued
or reserved against in the consolidated balance sheets of FLAG as of December
31, 1996 and September 30, 1997, included in the FLAG Financial Statements
delivered prior to the date of this Agreement or reflected in the notes thereto.
No FLAG Entity has incurred or paid any Liability since September 30, 1997,
except for such Liabilities incurred or paid (i) in the ordinary course of
business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a FLAG Material Adverse Effect
or (ii) in connection with the transactions contemplated by this Agreement.
6.7. Absence of Certain Changes or Events. Since December 31, 1996,
except as disclosed in the FLAG Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.7 of the FLAG Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a FLAG
Material Adverse Effect, and (ii) the FLAG Entities have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of FLAG
provided in Article 7.
6.8. Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of
any of the FLAG Entities have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a FLAG
Material Adverse Effect, and all Tax Returns filed are complete and accurate in
all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a FLAG Material Adverse Effect, except
as reserved against in the FLAG Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.8 of the FLAG Disclosure
Memorandum. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid. There are no Liens
with respect to Taxes upon any of the Assets of the FLAG Entities, except for
any such Liens which are not reasonably likely to have a FLAG Material Adverse
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Effect or with respect to which the Taxes are not yet due and payable.
(b) None of the FLAG Entities has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any
of the FLAG Entities for the period or periods through and including the date of
the respective FLAG Financial Statements that has been made and is reflected on
such FLAG Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the FLAG Entities have been provided for
in accordance with GAAP.
(e) None of the FLAG Entities is a party to any Tax allocation
or sharing agreement and none of the FLAG Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was FLAG) or has any Liability for Taxes of any
Person (other than FLAG and its Subsidiaries) under Treasury Regulation Section
1. 1502-6 (or any similar provision of state, local or foreign Law) as a
transferee or successor or by Contract or otherwise.
(f) Each of the FLAG Entities is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a FLAG Material Adverse Effect.
(g) Except as disclosed in Section 6.8 of the FLAG Disclosure
Memorandum, none of the FLAG Entities has made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Sections 280G or
162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the FLAG Entities that occurred during
or after any Taxable Period in which the FLAG Entities incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1996.
(i) No FLAG Entity has or has had in any foreign country a
permanent establishment, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
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(j) All material elections with respect to Taxes affecting the
FLAG Entities have been or will be timely made.
6.9. Allowance for Possible Loan Losses. The Allowance shown on the
consolidated balance sheets of FLAG included in the most recent FLAG Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of FLAG included in the FLAG Financial
Statements as of dates subsequent to the execution of this Agreement will be, as
of the dates thereof, adequate (within the meaning of GAAP and applicable
regulatory requirements or guidelines) to provide for all known or reasonably
anticipated losses relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the FLAG Entities and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the FLAG Entities as of the dates thereof, except where the
failure of such Allowance to be so adequate is not reasonably likely to have a
FLAG Material Adverse Effect.
6.10. Assets.
(a) Except as disclosed in Section 6.10 of the FLAG Disclosure
Memorandum or as disclosed or reserved against in the FLAG Financial Statements
delivered prior to the date of this Agreement, the FLAG Entities have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for any such Liens or other defects of title which are not
reasonably likely to have a FLAG Material Adverse Effect. All tangible
properties used in the businesses of the FLAG Entities are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with FLAG's past practices.
(b) All Assets which are material to FLAG's business on a
consolidated basis, held under leases or subleases by any of the FLAG Entities,
are held under valid Contracts enforceable in accordance with their respective
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws affecting the enforcement
of creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect.
(c) The FLAG Entities currently maintain insurance similar in
amounts, scope and coverage to that maintained by other peer banking
organizations. None of the FLAG Entities has received notice from any insurance
carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no claims for amounts exceeding in any individual case $25,000 pending under
such policies of insurance and no notices of claims in excess of such amounts
have been given by any FLAG Entity under such policies.
(d) The Assets of the FLAG Entities include all Assets
required to operate the business of the FLAG Entities as presently conducted.
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6.11. Intellectual Property. Each FLAG Entity owns or has a license to
use all of the Intellectual Property used by such FLAG Entity in the course of
its business. Each FLAG Entity is the owner of or has a license to any
Intellectual Property sold or licensed to a third party by such FLAG Entity in
connection with such FLAG Entity's business operations, and such FLAG Entity has
the right to convey by sale or license any Intellectual Property so conveyed. No
FLAG Entity is in Default under any of its Intellectual Property licenses. No
proceedings have been instituted, or are pending or to the Knowledge of FLAG
threatened, which challenge the rights of any FLAG Entity with respect to
Intellectual Property used, sold or licensed by such FLAG Entity in the course
of its business, nor has any person claimed or alleged any fights to such
Intellectual Property. The conduct of the business of the FLAG Entities does not
infringe any Intellectual Property of any other person. Except as disclosed in
Section 6.11 of the FLAG Disclosure Memorandum, no FLAG Entity is obligated to
pay any recurring royalties to any Person with respect to any such Intellectual
Property.
6.12. Environmental Matters.
(a) To the Knowledge of FLAG, each FLAG Entity, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a FLAG Material
Adverse Effect.
(b) To the Knowledge of FLAG, there is no Litigation pending
or threatened before any court, governmental agency, or authority or other forum
in which any FLAG Entity or any of its Operating Properties or Participation
Facilities (or FLAG in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the emission, migration, release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any FLAG Entity or
any of its Operating Properties or Participation Facilities or any neighboring
property, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a FLAG Material
Adverse Effect, nor is there any reasonable basis for any Litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a FLAG Material Adverse Effect.
(c) During the period of (i) any FLAG Entity's ownership or
operation of any of their respective current properties, (ii) any FLAG Entity's
participation in the management of any Participation Facility or any Operating
Property, there have been no emissions, migrations, releases, discharges,
spillages, or disposals of Hazardous Material in, on, at, under, adjacent to, or
affecting (or potentially affecting) such properties or any neighboring
properties, except such as are not reasonably likely to have, individually or in
the aggregate, a FLAG Material Adverse Effect. Prior to the period of (i) any
FLAG Entity's ownership or operation of any of their respective current
properties, (ii) any FLAG Entity's participation in the management of any
Participation Facility or any Operating Property, to the Knowledge of FLAG,
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there were no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a FLAG Material Adverse Effect.
6.13. Compliance with Laws. FLAG is duly registered as a savings and
loan holding company under the HOLA, and at the Effective Time, Flag will be
duly registered as a bank holding company under the Federal and state bank
holding company statutes. Each FLAG Entity has in effect all Permits necessary
for it to own, lease or operate its material Assets and to carry on its business
as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a FLAG Material
Adverse Effect, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a FLAG Material Adverse Effect. Except as disclosed in Section 6.13
of the FLAG Disclosure Memorandum, none of the FLAG Entities:
(a) is in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for Defaults which
are not reasonably likely to have, individually or in the aggregate, a FLAG
Material Adverse Effect; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any FLAG Entity is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
FLAG Material Adverse Effect, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a FLAG Material Adverse Effect, or (iii) requiring any FLAG Entity to
enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Three
Rivers.
6.14. Labor Relations. No FLAG Entity is the subject of any Litigation
asserting that it or any other FLAG Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other FLAG Entity to bargain with any
labor organization as to wages or conditions of employment, nor is any FLAG
Entity party to any collective bargaining agreement, nor is there any strike or
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other labor dispute involving any FLAG Entity, pending or threatened, or to the
Knowledge of FLAG, is there any activity involving any FLAG Entity's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
6.15. Employee Benefit Plans.
(a) FLAG has disclosed in Section 6.15 of the FLAG Disclosure
Memorandum and has delivered or made available to Three Rivers prior to the
execution of this Agreement copies in each case of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee 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 ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any FLAG Entity or ERISA Affiliate
thereof 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 "FLAG Benefit
Plans"). Any of the FLAG 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 "FLAG ERISA Plan." Each FLAG ERISA Plan which is also a "defined benefit
plan" (as defined in Section 4140) of the Internal Revenue Code) is referred to
herein as a "FLAG Pension Plan." No FLAG Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All FLAG Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a FLAG Material Adverse Effect. Each FLAG
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 FLAG is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. To the
Knowledge of Flag, no FLAG Entity has engaged in a transaction with respect to
any FLAG Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject any FLAG Entity 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
FLAG Material Adverse Effect.
(c) No FLAG Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, based on actuarial
assumptions set forth for such plan's most recent actuarial valuation. Since the
date of the most recent actuarial valuation, there has been (i) no material
change in the financial position of a FLAG Pension Plan, (ii) no change in the
actuarial assumptions with respect to any FLAG Pension Plan, and (iii) no
increase in benefits under any FLAG Pension Plan as a result of plan amendments
or changes in applicable Law which is reasonably likely to have, individually or
in the aggregate, a FLAG Material Adverse Effect or materially adversely affect
the funding status of any such plan. Neither any FLAG Pension Plan nor any
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"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any FLAG Entity, or the single-employer plan
of any ERISA Affiliate has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a FLAG Material Adverse Effect. No FLAG
Entity has provided, or is required to provide, security to a FLAG Pension Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section 40 1
(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time,
no Liability under Subtitle C or D of Title IV of ERISA has been or is expected
to be incurred by any FLAG Entity with respect to any ongoing, frozen or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a FLAG Material Adverse
Effect. No FLAG Entity has incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate), which Liability is reasonably
likely to have a FLAG Material Adverse Effect. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
FLAG Pension Plan or by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(e) Except as disclosed in Section 6.15 of the FLAG Disclosure
Memorandum, no FLAG Entity has any Liability for retiree health and life
benefits under any of the FLAG Benefit Plans and there are no restrictions on
the rights of such FLAG Entity to amend or terminate any such retiree health or
benefit Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a FLAG Material Adverse Effect.
(f) Except as disclosed in Section 6.15 of the FLAG Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any FLAG Entity from
any FLAG Entity under any FLAG Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any FLAG Benefit Plan, or (iii) 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 FLAG Material Adverse Effect.
(g) 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 any FLAG Entity and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the FLAG Financial Statements to the extent
required by and in accordance with GAAP.
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6.16. Material Contracts. Except as disclosed in Section 6.16 of the
FLAG Disclosure Memorandum or otherwise reflected in the FLAG Financial
Statements, none of the FLAG Entities, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $50,000, (ii) any Contract relating to the borrowing
of money by any FLAG Entity or the guarantee by any FLAG Entity of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contract which prohibits or restricts any FLAG Entity from engaging in
any business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among FLAG
Entities, (v) any Contract relating to the provision of data processing, network
communication, or other technical services to or by any FLAG Entity, (vi) any
exchange-traded or over-the-counter swap, forward, future, option, cap, floor,
or collar financial Contract, or any other interest rate or foreign currency
protection Contract not included on its balance sheet which is a financial
derivative Contract, or (vii) any other Contract or amendment thereto that would
be required to be filed as an exhibit to a Form 10-K filed by FLAG with the SEC
as of the date of this Agreement that has not been filed as an exhibit to FLAG's
Form 10-K filed for the fiscal year ended December 31, 1996, or in an SEC
Document and identified to Three Rivers (together with all Contracts referred to
in Sections 6.10 and 6.15(a), the "FLAG Contracts"). With respect to each FLAG
Contract and except as disclosed in Section 6.16 of the FLAG Disclosure
Memorandum: (i) the Contract is in full force and effect; (ii) no FLAG Entity is
in Default thereunder, other than Defaults which are not reasonably likely to
have, individually or in the aggregate, a FLAG Material Adverse Effect; (iii) no
FLAG Entity has repudiated or waived any material provision of any such
Contract- and (iv) no other party to any such Contract is, to the Knowledge of
FLAG, in Default in any respect, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a FLAG Material Adverse
Effect, or has repudiated or waived any material provision thereunder. Except as
disclosed in Section 6.16 of the FLAG Disclosure Memorandum, no officer,
director or employee of any FLAG Entity is party to any Contract which restricts
or prohibits such officer, director or employee from engaging in activities
competitive with any Person, including any FLAG Entity. All of the indebtedness
of any FLAG Entity for money borrowed is prepayable at any time by such FLAG
Entity without penalty or premium.
6.17. Legal Proceedings. There is no Litigation instituted or pending,
or, to the Knowledge of FLAG, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any FLAG Entity, or against any director,
employee or employee benefit plan of any FLAG Entity, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a FLAG Material Adverse Effect, nor are there
any Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any FLAG Entity, that are reasonably likely to
have, individually or in the aggregate, a FLAG Material Adverse Effect. Section
6.17-of the FLAG Disclosure Memorandum contains a summary of all Litigation as
of the date of this Agreement to which any FLAG Entity is a party and which
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names a FLAG Entity as a defendant or cross-defendant or for which any FLAG
Entity has any potential Liability.
6.18. Reports. Since January 1, 1993, each FLAG Entity has timely filed
all reports and statements, together with any amendments required to be made
with respect thereto, that it was required to file with Regulatory Authorities
(except, in the case of state securities authorities, failures to file which are
not reasonably likely to have, individually or in the aggregate, a FLAG Material
Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, 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 made therein,
in light of the circumstances under which they were made, not misleading.
6.19. Statements True and Correct. No statement, certificate,
instrument or other writing furnished or to be furnished by any FLAG Entity to
Three Rivers pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the information supplied or to be supplied by any FLAG
Entity for inclusion in any registration statement to be filed by FLAG with the
SEC, will, when such registration statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the documents
to be filed by any FLAG Entity with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All documents that any FLAG Entity thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.20. Accounting, Tax and Regulatory Matters. No FLAG Entity has taken
or agreed to take any action or has any knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the Merger from qualifying for pooling
of interest accounting treatment and as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede or delay
receipt of any Consents of Regulatory Authorities referred to in Section 9 1(b)
or result in the imposition of a condition or restriction of the type referred
to in the last sentence of such Section.
6.21. Charter Provisions. Each FLAG Entity has taken all action so that
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement do not and will not result in
the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any FLAG Entity or restrict or impair
the ability of FLAG or any of its Subsidiaries to vote, or otherwise to exercise
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the rights of a shareholder with respect to, shares of any FLAG Entity that may
be directly or indirectly acquired or controlled by them.
6.22. Board Recommendation. The Board of Directors of FLAG, at a
meeting duly called and held, has by unanimous vote of those directors present
(who constituted all of the directors then in office) determined that this
Agreement and the transactions contemplated hereby, including the Merger, taken
together, are fair to and in the best interests of the shareholders.
6.23. Y2K.
FLAG is in compliance with all policies and directives issued by
Regulatory Authorities with respect to preparedness for year 2000 data
processing and other operations. Section 6.23 of the FLAG Disclosure Memorandum
sets forth a summary of the steps taken by FLAG to ensure such compliance.
ARTICLE 7.
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1. Affirmative Covenants of Three Rivers. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of FLAG shall have been obtained,
and except (i) for the right granted by Three Rivers to Dr. Bell to purchase,
prior to the Closing, that certain life insurance policy no. 4780194 issued by
Woodmen of the World Life Insurance Society, for the current cash surrender
value of approximately $190,000, (the "Insurance Plan Transfer Right"), and (ii)
as otherwise expressly contemplated herein, Three Rivers shall and shall cause
each of its Subsidiaries to (a) operate its business only in the usual, regular,
and ordinary course, (b) preserve intact its business organization and Assets
and maintain its rights and franchises, and (c) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), or (ii) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement.
7.2. Negative Covenants of Three Rivers. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of FLAG shall have been obtained,
and except (i) for the Insurance Plan Transfer Right, and (ii) as otherwise
expressly contemplated herein, Three Rivers covenants and agrees that it will
not do or agree or commit to do, or permit any of its Subsidiaries to do or
agree or commit to do, any of the following:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any Three Rivers Entity, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Three Rivers Entity to another
Three Rivers Entity) in excess of an aggregate of $100,000 (for the Three Rivers
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Entities on a consolidated basis) except in the ordinary course of the business
of Three Rivers Subsidiaries consistent with past practices (which shall
include, for Three Rivers Subsidiaries that are depository institutions,
creation of deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities), or impose, or
suffer the imposition, on any Asset of any Three Rivers Entity of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the date
hereof that are disclosed in Section 7.2(b) of the Three Rivers Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Three Rivers Entity, or declare or pay any
dividend or make any other distribution in respect of Three Rivers' capital
stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, or as disclosed in Section 7.2(d) of
the Three Rivers Disclosure Memorandum, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Three Rivers Common Stock or any other capital stock of any
Three Rivers Entity, or any stock appreciation rights, or any option, warrant,
or other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of
any Three Rivers Entity or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Three Rivers Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise encumber
any Asset having a book value in excess of $100,000 other than in the ordinary
course of business for reasonable and adequate consideration or any shares of
capital stock of any Three Rivers Subsidiary (unless any such shares of stock
are sold or otherwise transferred to another Three Rivers Entity); or
(f) except for loans made in the ordinary course of its
business, make any material investment, either by purchase of stock or
securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned Three Rivers Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, (ii)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity, or (iii) the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Three Rivers Entity, except in accordance with past
practice specifically disclosed in Section 7.2(g) of the Three Rivers Disclosure
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Memorandum or as required by Law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written Contracts in effect on
the date of this Agreement and disclosed in Section 7.2(g) of the Three Rivers
Disclosure Memorandum; and enter into or amend any severance agreements with
officers of any Three Rivers Entity; grant any material increase in fees or
other increases in compensation or other benefits to directors of any Three
Rivers Entity except in accordance with past practice disclosed in Section
7.2(g) of the Three Rivers Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits or other Equity Rights; or
(h) enter into or amend any employment Contract between any
Three Rivers Entity and any Person having a salary thereunder in excess of
$50,000 per year (unless such amendment is required by Law) that the Three
Rivers Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any Three Rivers
Entity or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any Three Rivers Entity other than any such
change that is required by Law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice or except as set forth in Section 7.2(k) of the Three Rivers Disclosure
Memorandum, settle any Litigation involving any Liability of any Three Rivers
Entity for material money damages or restrictions upon the operations of any
Three Rivers Entity; or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract (including any loan Contract
with an unpaid balance exceeding $50,000) or waive, release, compromise or
assign any material rights or claims.
7.3. Affirmative Covenants of FLAG. (a)From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Three Rivers shall have been obtained, and
except (i) for that certain acquisition by merger of Middle Georgia Bancshares,
Inc. (the "Middle Georgia Merger"), and (ii) as otherwise expressly contemplated
herein, FLAG shall and shall cause each of its Subsidiaries to (a) operate its
business only in the usual, regular, and ordinary course, (b) preserve intact
its business organization and Assets and maintain its rights and franchises, and
(c) take no action which would (i) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred to
in the last sentences of Section 9.1(b) or 9.1(c), or (ii) materially adversely
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affect the ability of any Party to perform its covenants and agreements under
this Agreement.
(b) From and after the date on which the Bank of Milan is
merged with and into Citizens Bank, the board of directors of the Bank of Milan
shall be permitted to continue as an advisory board of directors with regards to
the operations of the surviving corporation, which will operate under the trade
name "Bank of Milan."
7.4. Negative Covenants of FLAG. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, unless
the prior written consent of Three Rivers shall have been obtained, and except
(i) for the Middle Georgia Merger and (ii) as otherwise expressly contemplated
herein, FLAG covenants and agrees that it will not do or agree or continue to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Articles of Incorporation or Bylaws of FLAG
in any manner adverse to the holders of Three Rivers Common Stock, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a FLAG Entity to another FLAG
Entity) in excess of an aggregate of $100,000 (for the FLAG Entities on a
consolidated basis) except in the ordinary course of the business of FLAG
Subsidiaries consistent with past practices (which shall include, for FLAG
Subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition, on any
Asset of any FLAG Entity of any Lien or permit any such Lien to exist (other
than in connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of business,
the satisfaction of legal requirements in the exercise of trust powers, and
Liens in effect as of the date hereof that are disclosed in the FLAG Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any FLAG Entity, or declare or pay any dividend
or make any other distribution in respect of FLAG's capital stock, other than
its regular quarterly cash dividends; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, or as disclosed in, Section 7.4 of the
FLAG Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of FLAG Common Stock or any other capital stock of any FLAG
Entity, or any stock appreciation rights, or any option, warrant, or other
Equity Right; or
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(e) adjust, split, combine or reclassify any shares of FLAG
Capital Stock or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FLAG Capital Stock or sell, lease,
mortgage or otherwise dispose of or otherwise encumber any Asset having a book
value in excess of $100,000 other than in the ordinary course of business for
reasonable and adequate consideration or any shares of capital stock of any FLAG
Subsidiary (unless any such shares of stock are sold or otherwise transferred to
another FLAG Entity); or
(f) make any material investment, either by purchase of stock
of securities, contributions to capital, Asset transfers, or purchase of any
Assets, in any Person other than a wholly owned FLAG Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in connection
with (i) foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary capacity, or
(iii) the creation of new Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any FLAG Entity, except in accordance with past
practice disclosed in Section 7.4(g) of the FLAG Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.4(g) of the FLAG Disclosure Memorandum or
the provisions of any applicable program or plan adopted by its Board of
Directors prior to the date of this Agreement; enter into or amend any severance
agreements with officers of any FLAG Entity; grant any material increase in fees
or other increases in compensation or other benefits to directors of any FLAG
Entity except in accordance with past practice disclosed in Section 7.4(g) of
the FLAG Disclosure Memorandum- or voluntarily accelerate the vesting of any
stock options or other stock-based compensation or employee benefits or other
Equity Rights; or
(h) enter into or amend any employment Contract between any
FLAG Entity and any Person having a salary thereunder in excess of $50,000 per
year (unless such amendment is required by Law) that the FLAG Entity does not
have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time;
(i) adopt any new employee benefit plan of any FLAG Entity or
terminate or withdraw from, or make any material change in or to, any existing
employee benefit plans of any FLAG Entity other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any distributions
from such employee benefit plans except as required by Law, the terms of such
plans, or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in applicable Tax Laws or regulatory accounting
requirements or GAAP; or
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(k) commence any Litigation other than in accordance with past
practice or settle any Litigation involving any Liability of any FLAG Entity for
material money damages or restrictions upon the operations of any FLAG Entity;
or
(l) except in the ordinary course of business, enter into,
modify, amend or terminate any material Contract (including any loan Contract
with an unpaid balance exceeding $50,000) or waive, release, compromise or
assign any material rights or claims.
7.5. Adverse Changes in Condition. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Three Rivers Material Adverse Effect or a FLAG Material Adverse
Effect, as applicable, or (ii) would cause or constitute a material breach of
any of its representations, warranties, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy the same.
7.6. Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will 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. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8.
ADDITIONAL AGREEMENTS
8.1. Shareholder Approval. Three Rivers shall call a Shareholders'
Meeting, to be held as soon as reasonably practicable, for the purpose of voting
upon approval of this Agreement and such other related matters as it deems
appropriate. In connection with the Shareholders' Meeting, the Board of
Directors of Three Rivers shall recommend to its shareholders, subject to the
conditions in such authorization and recommendation by the Board of Directors,
the approval of the matters submitted for approval (subject to the Board of
Directors of Three Rivers, as applicable, after having consulted with and
considered the advice of outside counsel, reasonably determining in good faith
that the making of such recommendation, or the failure to withdraw or modify its
recommendation, would constitute a breach of fiduciary duties of the members of
such Board of Directors to Three Rivers' shareholders, under applicable law),
and the Board of Directors and officers of Three Rivers shall use their
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reasonable efforts to obtain such shareholders' approval (subject to the Board
of Directors of Three Rivers after having consulted with and considered the
advice of outside counsel, reasonably determining in good faith that the taking
of such actions would constitute a breach of fiduciary duties of the members of
such Board of Directors to Three Rivers' shareholders, under applicable law).
8.2. Applications. FLAG shall promptly prepare and file, and Three
Rivers shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. The
Parties shall deliver to each other copies of all filings, correspondence and
orders to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
8.3. Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, FLAG shall execute and file the Certificate of
Merger with the Secretary of State of the State of Georgia in connection with
the Closing.
8.4. Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.5. Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby, and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to it
by the other Party concerning its and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, each Party shall
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promptly return or certify the destruction of all documents and copies thereof,
and all work papers containing confidential information received from the other
Party.
(c) Each Party shall use its reasonable efforts to exercise
its rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Proposal with respect to such Party to preserve the
confidentiality of the information relating to such Party and its Subsidiaries
provided to such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a material breach of any representation, warranty, covenant or agreement of the
other Party or which has had or is reasonably likely to have a Three Rivers
Material Adverse Effect or a FLAG Material Adverse Effect, as applicable.
8.6. Press Releases. Prior to the Effective Time, Three Rivers and FLAG
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.7. Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, no Three Rivers Entity nor any Representatives
thereof retained by any Three Rivers Entity shall directly or indirectly solicit
any Acquisition Proposal by any Person, except to the extent the Board of
Directors of Three Rivers, after having consulted with and considered the advice
of outside counsel, reasonably determines in good faith that the failure to take
such actions would constitute a breach of fiduciary duties of the members of
such Board of Directors to Three Rivers' shareholders, under applicable Law, no
Three Rivers Entity or Representative thereof shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any Contract with respect to, any Acquisition Proposal, but
Three Rivers may communicate information about such an Acquisition Proposal to
its shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations. Three Rivers shall promptly advise FLAG
following the receipt of any Acquisition Proposal and the details thereof, and
advise FLAG of any developments with respect to such Acquisition Proposal.
Promptly upon the occurrence thereof, Three Rivers shall (i) immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Persons conducted heretofore with respect to any of the foregoing, and
(ii) direct and use its reasonable efforts to cause its Representatives not to
engage in any of the foregoing.
8.8. Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not to qualify for pooling of interest accounting
treatment and as a "reorganization" within the meaning of Section 368(a) of the
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Internal Revenue Code for federal income tax purposes.
8.9. Charter Provisions. Each Party shall take, and shall cause its
Subsidiaries to take, all necessary action to ensure that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to any
Person under the Articles of Incorporation, Bylaws or other governing
instruments of such Party or any of its Subsidiaries or restrict or impair the
ability of FLAG or any of its Subsidiaries.
8.10. Agreements of Affiliates. Three Rivers has disclosed in Section
8.10 of the Three Rivers Disclosure Memorandum all Persons whom it reasonably
believes is an "affiliate" of Three Rivers for purposes of Rule 145 under the
1933 Act. Three Rivers shall use its reasonable efforts to cause each such
Person to deliver to FLAG not later than 30 days after the date of this
Agreement, a written agreement, substantially in the form of Exhibit 1,
providing that such Person will not sell, pledge, transfer, or otherwise dispose
of the shares of Three Rivers Common Stock held by such Person except as
contemplated by such agreement or by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the shares of FLAG Common Stock to be received
by such Person upon consummation of the Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations thereunder.
FLAG shall be entitled to place restrictive legends upon certificates for shares
of FLAG Common Stock issued to affiliates of Three Rivers pursuant to this
Agreement to enforce the provisions of this Section 8.10, subject to the
provisions of Section 4.3 of this Agreement.
8.11. Employee Benefits and Contracts. Following the Effective Time,
FLAG shall either (i) continue to provide to officers and employees of the Three
Rivers Entities employee benefits under Three Rivers' existing employee benefit
and welfare plans or, (ii) if FLAG shall determine to provide to officers and
employees of the Three Rivers Entities employee benefits under other employee
benefit plans and welfare plans, provide generally to officers and employees of
the Three Rivers Entities employee benefits under employee benefit and welfare
plans (other than stock option or other plans involving the potential issuance
of FLAG Common Stock), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the FLAG Entities to their
similarly situated officers and employees. For purposes of participation and
vesting (but not accrual of benefits) under FLAG's employee benefit plans, (i)
service under any qualified defined benefit plan of Three Rivers shall be
treated as service under FLAG's defined benefit plan, if any, (ii) service under
any qualified defined contribution plans of Three Rivers shall be treated as
service under FLAG's qualified defined contribution plans, and (iii) service
under any other employee benefit plans of Three Rivers shall be treated as
service under any similar employee benefit plans maintained by FLAG. With
respect to officers and employees of the Three Rivers Entities who, at or after
the Effective Time, become employees of a FLAG Entity and who, immediately prior
to the Effective Time, are participants in one or more employee welfare benefit
plans maintained by the Three Rivers Entities, FLAG shall cause each comparable
employee welfare benefit plan which is substituted for a Three Rivers welfare
benefit plan to waive any evidence of insurability or similar provision, to
provide credit for such participation prior to such substitution with regard to
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the application of any pre-existing condition limitation, and to provide credit
towards satisfaction of any deductible or out-of-pocket provisions for expenses
incurred by such participants during the period prior to such substitution, if
any, that overlaps with the then current plan year for each such substituted
employee welfare benefit plans. FLAG also shall cause the Surviving Corporation
and its Subsidiaries to honor in accordance with their terms all employment,
severance, consulting and other compensation Contracts disclosed in Section 8.11
of the Three Rivers Disclosure Memorandum to FLAG between any Three Rivers
Entity and any current or former director, officer, or employee thereof, and all
provisions for vested benefits or other vested amounts earned or accrued through
the Effective Time under the Three Rivers Benefit Plans.
8.12. Indemnification.
(a) Subject to the conditions set forth in paragraph (b)
below, for a period of six years after the Effective Time, FLAG shall, as the
Surviving Corporation, indemnify, defend and hold harmless each person entitled
to indemnification from a Three Rivers Entity (each, an "Indemnified Party")
against all Liabilities arising out of actions or omissions occurring at or
prior to the Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under Georgia Law and by Three
Rivers' Articles of Incorporation and Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation. Without limiting the foregoing, in any case in which approval by
FLAG is required to effectuate any indemnification, FLAG shall direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel mutually agreed upon between FLAG and the
Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 8.12, upon learning of any such Liability or
Litigation, shall promptly notify FLAG thereof. In the event of any such
Liability or Litigation (whether arising before or after the Effective Time),
(i) FLAG shall have the right to assume the defense thereof (provided FLAG
acknowledges responsibility for such indemnification) and FLAG shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if FLAG elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between FLAG and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and FLAG shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received; provided,
that FLAG shall be obligated pursuant to this paragraph (b) to pay for only one
firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation, and
(iii) FLAG shall not be liable for any settlement effected without its prior
written consent; and provided further that FLAG shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
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ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1. Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6:
(a) Shareholder Approval. The shareholders of Three Rivers
shall have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law
or by the provisions of any governing instruments. The shareholders of FLAG
shall have approved the issuance of shares of FLAG Common Stock pursuant to the
Merger, as and to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of either Party would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such Party
would not, in its reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b)) or for the preventing of any Default under any
Contract or Permit of such Party which, if not obtained or made, is reasonably
likely to have, individually or in the aggregate, a Three Rivers Material
Adverse Effect or a FLAG Material Adverse Effect, as applicable. No Consent so
obtained which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of either Party would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement that, had such condition or requirement been known, such Party would
not, in its reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement.
(e) Tax Matters. Each Party shall have received a written
opinion of counsel from Powell, Goldstein, Frazer & Murphy LLP, in form
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reasonably satisfactory to such Parties (the "Tax Opinion"), to the effect that
(i) the Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, (ii) the exchange in the Merger of Three
Rivers Common Stock for FLAG Common Stock will not give rise to gain or loss to
the shareholders of Three Rivers with respect to such exchange (except to the
extent of any cash received), and (iii) none of Three Rivers or FLAG will
recognize gain or loss as a consequence of the Merger (except for amounts
resulting from any required change in accounting methods and any income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Internal Revenue Code). In rendering such Tax Opinion, such counsel
shall be entitled to rely upon representations of officers of Three Rivers and
FLAG reasonably satisfactory in form and substance to such counsel.
(f) Employment Matters. J. Preston Martin shall have
negotiated a mutually satisfactory employment relationship with FLAG, as the
Surviving Corporation.
9.2. Conditions to Obligations of FLAG. The obligations of FLAG to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by FLAG pursuant to Section 11.6(a):
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Three
Rivers set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date). The representations and warranties set
forth in Section 5.3 shall be true and correct (except for inaccuracies which
are de minimus in amount). The representations and warranties set forth in
Sections 5.20 and 5.21 shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of Three
Rivers set forth in this Agreement (including the representations and warranties
set forth in Sections 5.3, 5.20 and 5.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Three Rivers Material
Adverse Effect; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to "material"
of "Material Adverse Effect" or to the "Knowledge" of any Person shall be deemed
not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Three Rivers to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. Three Rivers shall have delivered to FLAG
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its secretary, to the effect that to the best of
their Knowledge the conditions set forth in Section 9.1 as relates to Three
Rivers and in Section 9.2(a) and 9.2(b) have been satisfied; provided, however,
that the representations, warranties and covenants to which such certificate
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relates shall not been deemed to have survived the Closing, and (ii) certified
copies of resolutions duly adopted by Three Rivers' Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as FLAG and its counsel shall request.
(d) Opinion of Counsel. FLAG shall have received an opinion of
Morris, Manning & Martin, L.L.P., counsel to Three Rivers, dated as of the
Closing, in form reasonably satisfactory to FLAG, as to the matters set forth in
Exhibit 2.
(e) Affiliates Agreements. FLAG shall have received from each
affiliate of Three Rivers and FLAG the affiliates letter referred to in Section
8.10.
(f) Claims Letters. Each of the directors and officers of
Three Rivers and Bank of Milan shall have executed and delivered to FLAG letters
in substantially the form of Exhibit 3.
9.3. Conditions to Obligations of Three Rivers. The obligations of
Three Rivers to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Three Rivers pursuant to Section 11.6(b):
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of FLAG set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 6.3 shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties of FLAG set forth in
Section 6.20 and 6.21 shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of FLAG set
forth in this Agreement (including the representations and warranties set forth
in Sections 6.3, 6.20 and 6.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a FLAG Material Adverse
Effect; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of any Person shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of FLAG to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. FLAG shall have delivered to Three Rivers
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the effect that
to the best of their knowledge the conditions set forth in Section 9.1 as
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relates to FLAG and in Section 9.3(a) and 9.3(b) have been satisfied; provided,
however, that the representations, warranties and covenants to which such
certificate relates shall not been deemed to have survived the Closing, and (ii)
certified copies of resolutions duly adopted by FLAG's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Three Rivers and its counsel shall request.
(d) Opinion of Counsel. Three Rivers shall have received an
opinion of Powell, Goldstein, Frazer & Murphy LLP, counsel to FLAG, dated as of
the Effective Time, in form reasonably acceptable to Three Rivers, as to the
matters set forth in Exhibit 4.
ARTICLE 10.
TERMINATION
10.1. Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Three Rivers and FLAG or both, this Agreement may be terminated
and the Merger abandoned at any time prior to the Effective Time.
(a) By mutual consent of FLAG and Three Rivers; or
(b) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach and which breach is reasonably
likely, in the opinion of the non-breaching Party, to have, individually or in
the aggregate, a Three Rivers Material Adverse Effect or a FLAG Material Adverse
Effect, as applicable, on the breaching Party; or
(c) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach by the
other Party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By either Party (provided that the terminating Party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final nonappealable
action of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the shareholders of Three
Rivers fail to vote their approval of the matters relating to this Agreement and
the transactions contemplated hereby at the Shareholders' Meetings where such
matters were presented to such shareholders for approval and voted upon; or
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(e) By either Party in the event that the Merger shall not
have been consummated by June 30, 1998, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 10.1(e); or
(f) By the Board of Directors of FLAG, at any time prior to
5:00 p.m. Eastern time, on March 13, 1998, without any Liability if it
determines in its reasonable good faith judgment that the Asset quality of Three
Rivers, the status of litigation involving Three Rivers (or any other liability
or undisclosed contingency of Three Rivers), or any information in the Three
Rivers Disclosure Memorandum are materially less favorable to FLAG than as set
forth in materials previously disclosed or provided to FLAG by Three Rivers; or
(g) By the Board of Directors of Three Rivers, at any time
prior to 5:00 p.m. Eastern time, on March 13, 1998, without any Liability if it
determines in its reasonable good faith judgment that the Asset quality of FLAG,
the status of litigation involving FLAG (or any other liability or undisclosed
contingency of FLAG), or any information in the FLAG Disclosure Memorandum are
materially less favorable to Three Rivers than as set forth in materials
previously disclosed or provided to Three Rivers by FLAG.
10.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article 11 and Section 8.5(b) shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c) or
10.1(f) shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
10.3. Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 1, 2, 3, 4 and 11 and Section 8.10.
ARTICLE 11.
MISCELLANEOUS
11.1. Definitions.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of all
of the stock or assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or the acquisition of a
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substantial equity interest in, or a substantial portion of the assets of, such
Party or any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity, and in
the case of Three Rivers, each shareholder of Three Rivers.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits, the FLAG Disclosure Memorandum and the Three Rivers
Disclosure Memorandum delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, or any Affiliate of such Person and wherever
located.
"Bank of Milan" shall mean Bank of Milan, a Georgia bank and a
Three Rivers Subsidiary.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Certificate of Merger" shall mean the Certificate of Merger
to be executed by FLAG and Three Rivers and filed with the Secretary of State of
the State of Georgia relating to the Merger as contemplated by Section 1.1.
"Closing Date" shall mean the date on which the Closing
occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement (provided
such oral agreement is, in any one year period, in excess of $5,000
individually, or $25,000 in the aggregate), arrangement, authorization,
commitment, contract, indenture, instrument, lease, obligation, plan, practice,
restriction, understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any Person or its
capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit,
after failing to cure any such breach, violation, default, contravention or
conflict within any applicable grace or cure period (ii) any occurrence of any
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event that with the passage of time or the giving of notice or both would
constitute a breach or violation of, default under, contravention of, or
conflict with, any Contract, Law, Order, or Permit, or (iii) any occurrence of
any event that with or without the passage of time or the giving of notice would
give rise to a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel, or modify or change the current
terms of, or renegotiate, or to accelerate the maturity or performance of, or to
increase or impose any Liability under, any Contract, Law, Order, or Permit.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and other federal, state and local agencies with jurisdiction
over, and including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and
other Laws relating to emissions, migrations, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution use, treatment, storage, disposal,
generation, recycling, transport, or handling of any Hazardous Material.
"Equity Rights" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exhibits" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"FLAG Capital Stock" shall mean, collectively, the FLAG Common
Stock, the FLAG Preferred Stock and any other class or series of capital stock
of FLAG.
"FLAG Common Stock" shall mean the $1.00 par value common
stock of FLAG.
"FLAG Disclosure Memorandum" shall mean the written
information entitled "FLAG Financial Corporation Disclosure Memorandum"
delivered prior to 5:00 p.m., Eastern time, on March 6, 1998 to Three Rivers
describing in reasonable detail the matters contained therein and, with respect
to each disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
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other Section not specifically referenced with respect thereto, unless it is
clear from the disclosure of such information that it applies to other Sections.
"FLAG Entities" shall mean, collectively, FLAG and all FLAG
Subsidiaries.
"FLAG Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of FLAG
as of September 30, 1997, and as of December 31, 1996 and 1995, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the nine months ended September 30,
1997, and for each of the three fiscal years ended December 31, 1996, 1995 and
1994, as filed by FLAG in SEC Documents, and (ii) the consolidated statements of
condition of FLAG (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1997.
"FLAG Material Adverse Effect" shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of FLAG and its Subsidiaries, taken as a
whole, or (ii) the ability of FLAG to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to savings associations and their holding
companies, and (c) actions and omissions of FLAG (or any of its Subsidiaries)
taken with the prior informed written Consent of Three Rivers in contemplation
of the transactions contemplated hereby.
"FLAG Preferred Stock" shall mean the shares of preferred
stock of FLAG.
"FLAG Subsidiaries" shall mean the Subsidiaries of FLAG, which
shall include the FLAG Subsidiaries described in Section 6.4 and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of FLAG in the future and held as a Subsidiary by FLAG at the
Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous constituent, hazardous waste, solid waste, special waste, regulated
substance, or toxic substance (as those terms are listed, defined or regulated
by any applicable Environmental Laws) and (ii) any chemicals, pollutants,
contaminants, petroleum, petroleum products, or oil (and specifically shall
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include asbestos requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications therefor,
and licenses, computer software (including any source or object codes therefor
or documentation relating thereto), trade secrets, franchises, inventions, and
other intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a FLAG Entity (including
references to being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer, chief
operating officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior, executive or other vice president of such
FLAG Entity. "Knowledge" as used with respect to a Three Rivers Entity
(including references to being aware of a particular matter) shall mean those
facts that are actually known (with no obligation of inquiry) by the president
and chief executive officer of such Three Rivers Entity.
"Law" shall mean any code, law (including common law),
ordinance, regulation, decision, judicial interpretation, reporting or licensing
requirement, rule, or statute applicable to a Person or its Assets, Liabilities,
or business, including those promulgated, interpreted or enforced by any
Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of the banking
business, and (iii) Liens which do not materially impair the use of or title to
the Assets subject to such Lien.
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"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other proceeding
relating to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but shall
not include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"Operating Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
"Party" shall mean either Three Rivers or FLAG, and "Parties"
shall mean both Three Rivers and FLAG.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets, or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Regulatory Authorities" shall mean, collectively, the SEC,
the NASD, the Federal Trade Commission, the United States Department of Justice,
the Board of the Governors of the Federal Reserve System, the Office of Thrift
Supervision (including its predecessor, the Federal Home Loan Bank Board), the
Federal Deposit Insurance Corporation, the Georgia Department of Banking and
Finance, and all other federal, state, county, local or other governmental or
regulatory agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative engaged by a
Person.
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"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of the
shareholders of Three Rivers to be held pursuant to Section 8.1, including any
adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations,
associations, or other business entities of which the entity in question either
(i) owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by its
parent (provided, there shall not be included any such entity the equity
securities of which are owned or controlled in a fiduciary capacity), (ii) in
the case of partnerships, serves as a general partner, (iii) in the case of a
limited liability company, serves as a managing member, or (iv) otherwise has
the ability to elect a majority of the directors, trustees or managing members
thereof
"Surviving Corporation" shall mean FLAG as the surviving
corporation resulting from the Merger.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions
imposed thereon or with respect thereto.
"Three Rivers Common Stock" shall mean the $10.00 par value
common stock of Three Rivers.
"Three Rivers Disclosure Memorandum" shall mean the written
information entitled "Three Rivers Bancshares, Inc. Disclosure Memorandum"
delivered prior to 5:00 p.m., Eastern time, on March 6, 1998 to FLAG describing
in reasonable detail the matters contained therein and, with respect to each
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disclosure made therein, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto, unless it is clear
from the disclosure of such information that it applies to other Sections.
"Three Rivers Entities" shall mean, collectively, Three Rivers
and all Three Rivers Subsidiaries.
"Three Rivers Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Three Rivers as of September 30, 1997, and as of December 31, 1996 and the
related statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months ended
September 30, 1997, and for the Fiscal year ended December 31, 1996, and (ii)
the consolidated balance sheets of Three Rivers (including related notes and
schedules, if any) and related statements of income, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any) with
respect to periods ended subsequent to September 30, 1997.
"Three Rivers Material Adverse Effect" shall mean an event,
change or occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of Three Rivers and its
Subsidiaries, taken as a whole, or (ii) the ability of Three Rivers to perform
its obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to banks and
their holding companies, and (c) actions and omissions of Three Rivers (or any
of its Subsidiaries) taken with the prior informed written Consent of FLAG in
contemplation of the transactions contemplated hereby.
"Three Rivers Subsidiaries" shall mean the Subsidiaries of
Three Rivers, which shall include the Three Rivers Subsidiaries described in
Section 5.4 and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Three Rivers in the future and held as
a Subsidiary by Three Rivers at the Effective Time.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Allowance Section 5.9
Certificates Section 4.1
Closing Section 1.2
Effective Time Section 1.3
ERISA Affiliate Section 5.15(c)
Exchange Ratio Section 3.1(b)
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FLAG Benefit Plans Section 6.15(a)
FLAG Contracts Section 6.16
FLAG ERISA Plan Section 6.15(a)
FLAG Pension Plan Section 6.15(a)
FLAG SEC Reports Section 6.5(a)
Insurance Plan Transfer Right Section 7.1
Merger Section 1.1
Middle Georgia Merger Section 7.3
Three Rivers Benefit Plans Section 5.15(a)
Three Rivers Contracts Section 5.16
Three Rivers ERISA Plan Section 5.15(a)
Three Rivers Pension Plan Section 5.15(a)
Tax Opinion Section 9.1(h)
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2. Expenses.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel.
(b) If this Agreement is terminated by FLAG pursuant to
Sections 10.1(b), (c) or (d)(ii), Three Rivers shall pay to FLAG an amount equal
to the lesser of $100,000 or FLAG's actual out of pocket expenses incurred in
connection with the transactions contemplated by this Agreement.
(c) If this Agreement is terminated by Three Rivers pursuant
to Sections 10.1(b) or (c), FLAG shall pay to Three Rivers an amount equal to
the lesser of $100,000 or Three Rivers' actual out of pocket expenses incurred
in connection with the transactions contemplated by this Agreement.
(d) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3. Brokers and Finders. Each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
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representing or being retained by or allegedly representing or being retained by
Three Rivers or by FLAG, each of Three Rivers and FLAG, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
11.4. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement,
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement
11.5. Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of each of the Parties, whether before or after shareholder approval of this
Agreement has been obtained; provided, that after any such approval by the
holders of Three Rivers Common Stock, there shall be made no amendment that
pursuant to Sections 14-2-1101 and 14-2-1103 of the GBCC requires further
approval by such shareholders without the further approval of such shareholders;
and further provided, that after any such approval by the holders of FLAG Common
Stock, the provisions of this Agreement relating to the manner or basis in which
shares of Three Rivers Common Stock will be exchanged for shares of FLAG Common
Stock shall not be amended after the Shareholders' Meetings in a manner adverse
to the holders of FLAG Common Stock without any requisite approval of the
holders of the issued and outstanding shares of FLAG Common Stock entitled to
vote thereon.
11.6. Waivers.
(a) Prior to or at the Effective Time, FLAG, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by Three Rivers, to waive or extend the time for the compliance or
fulfillment by Three Rivers of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of FLAG under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of FLAG.
(b) Prior to or at the Effective Time, Three Rivers, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by FLAG, to waive or extend the time for the compliance
or fulfillment by FLAG of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of Three
Rivers under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of Three Rivers.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7. Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8. Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid, or
by courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Three Rivers: Three Rivers Bancshares, Inc.
Mount Zion Road
Milan, GA 31060
Telecopy Number: (912) 362-4291
Attention: J. Preston Martin
Copy to Counsel: Morris, Manning & Martin
1600 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326
Telecopy Number: (404) 365-9532
Attention: T. Daniel Brannan
FLAG: FLAG Financial Corporation
101 North Greenwood St.
LaGrange, GA 30240
Telecopy Number: (706) 845-5155
Attention: John S. Holle
Copy to Counsel: Powell Goldstein Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, GA 30303
Telecopy Number: (404) 572-5958
Attention: Walter G. Moeling IV
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11.9. Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11. Captions; Articles and Sections. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
11.12. Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13. Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
[SIGNATURES APPEAR ON NEXT PAGE]
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[SIGNATURES TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
FLAG FINANCIAL CORPORATION
By: /s/ J. Daniel Speight, Jr.
--------------------------
President
THREE RIVERS BANCSHARES, INC.
By: /s/ J. Preston Martin
---------------------
President
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