<PAGE>
As filed with the Securities and Exchange Commission on January 21, 1998
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
One Valley Bancorp, Inc.
(Exact name of Registrant as specified in its charter)
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West Virginia 6711 55-0609408
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
One Valley Square
Summers and Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
(304) 348-7000
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
J. HOLMES MORRISON, President and Chief Executive Officer
One Valley Bancorp, Inc.
Summers and Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
(304) 348-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
With copies to
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CHARLES D. DUNBAR MARK J. MENTING MERRELL S. MCILWAIN II CHARLES E. SLOANE
ELIZABETH OSENTON LORD SULLIVAN & CROMWELL ONE VALLEY BANCORP, INC. MALIZIA, SPIDI, SLOANE & FISCH, P.C.
JACKSON & KELLY 125 Broad Street One Valley Square One Franklin Square
1600 Laidley Tower New York, New York 10004 Summers and Lee Streets 1301 K Street, N.W.
P. O. Box 553 P. O. Box 1793 Suite 700, East
Charleston, West Virginia 25322 Charleston, West Virginia 25326 Washington, DC 20005
</TABLE>
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effectiveness of the Registration Statement.
If any of the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box.
|_| ____________________
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CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Title of Securities to be Registered Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $10 per share
(including associated rights
issued under the Shareholder
Protection Rights Plan)............. 5,537,580 $37.25 $206,274,855 $20,146
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $10 per share
(including associated rights
issued under the Shareholder
Protection Rights Plan)............. 634,055 (2) $37.25 $23,618,549 $ 7,157
====================================================================================================================================
</TABLE>
(1) Based upon the average of the high and low prices per share of the common
stock of FFVA Financial Corporation reported as of January 14, 1998, less
$42,362 previously paid.
(2) As a part of the merger and, as described herein, One Valley is registering
634,055 shares to be issued upon the exercise of options granted under certain
stock option plans of FFVA Financial Corporation.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
ONE VALLEY BANCORP, INC.
One Valley Square
Summers and Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
January 29, 1998
To the Shareholders of
One Valley Bancorp, Inc.:
You are cordially invited to attend a Special Meeting of Shareholders
of One Valley Bancorp, Inc. ("One Valley"), which will be held at The Charleston
Town Center Marriott, 200 Lee Street, East, in Charleston, West Virginia on
March 11, 1998, at 10:00 a.m., local time.
At the Special Meeting, you will be asked to consider and vote upon an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which FFVA
Financial Corporation ("FFVA Financial"), will be merged with and into One
Valley (the "Merger"), and One Valley will issue shares of common stock in
exchange for FFVA Financial common stock.
You will also be asked to approve an amendment to One Valley's Restated
Articles of Incorporation to increase the authorized common stock of One Valley
from forty million shares to seventy million shares (the "Amendment"). Approval
of the Amendment is not a condition of the Merger.
Enclosed with this letter are a Notice of Special Meeting of One Valley
shareholders and a Joint Proxy Statement/Prospectus of One Valley and FFVA
Financial, which describes in detail the proposed Merger, the background of the
Merger, the reasons for increasing One Valley's authorized shares and other
related information. Also enclosed is a proxy solicited by the Board of
Directors of One Valley in connection with the Special Meeting.
The Board of Directors has unanimously approved the Merger Agreement,
the proposed Merger and the Amendment to One Valley's Restated Articles of
Incorporation and recommends that shareholders vote their shares "FOR" the
Merger Agreement and "FOR" the Amendment. The Board of Directors believes that
the proposed Merger and the Amendment are in the best interest of One Valley and
its shareholders. The affirmative vote of a majority of One Valley's outstanding
shares is necessary to approve each of the Merger Agreement and the Amendment.
Accordingly, failure to return your proxy card or to vote in person at the
Special Meeting will have the effect of a vote against these proposals.
We urge you to consider carefully all of the materials in the Joint
Proxy Statement and to execute and return the enclosed proxy as soon as
possible. If you attend the Special Meeting, you may vote in person if you wish,
even though you have previously returned your proxy.
Sincerely,
J. Holmes Morrison,
Charleston, West Virginia President and Chief Executive Officer
January 29, 1998
<PAGE>
ONE VALLEY BANCORP, INC.
Charleston, West Virginia
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
January 29, 1998
Notice is hereby given that a Special Meeting of Shareholders of One
Valley Bancorp, Inc. ("One Valley"), will be held at The Charleston Town Center
Marriott, 200 Lee Street, East, in Charleston, West Virginia, on March 11, 1998,
at 10:00 a.m., local time, for the purpose of considering and voting upon the
following:
1. To approve the Agreement and Plan of Merger (the "Merger Agreement")
dated as of December 16, 1997, between One Valley and FFVA Financial Corporation
("FFVA Financial"), which agreement provides for the merger of FFVA Financial
with and into One Valley (the "Merger"). The Merger Agreement provides for the
conversion of each share of common stock of FFVA Financial into 1.05 (one and
five one-hundredths) shares of common stock of One Valley. The Merger Agreement
is attached as Appendix I to, and is described in the accompanying Joint Proxy
Statement.
2. To approve an amendment to One Valley's Restated Articles of
Incorporation to increase the authorized common stock of One Valley from forty
million shares to seventy million shares (the "Amendment").
3. To act upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on January 23,
1998, are entitled to notice of and to vote at the Special Meeting and any
adjournments thereof. The affirmative vote of a majority of One Valley's
outstanding shares is necessary to approve the Merger Agreement and the
Amendment. Accordingly, failure to return your proxy card or to vote in person
at the Special Meeting will have the effect of a vote against the Merger
Agreement and the Amendment. The proxy will be voted as specified thereon by the
shareholder. Where no specification is made on the proxy, a properly executed
proxy will be voted "FOR" the Merger and "FOR" the One Valley Amendment, and in
the discretion of the individuals named in the proxies as to any other matter
than may come before the One Valley Special Meeting or any adjournment or
postponement thereof, including a motion to adjourn or postpone the One Valley
Special Meeting to another time and/or place for the purpose of soliciting
additional proxies or otherwise, provided, however, that no proxy which is voted
against the proposal to approve the Merger Agreement will be voted in favor of
any such adjournment or postponement. We urge you to execute and return the
enclosed proxy as soon as possible to insure that your shares will be
represented at the meeting. Your proxy may be revoked in the manner described in
the accompanying Joint Proxy Statement at any time before it has been voted at
the Special Meeting.
By Order of the Board of Directors
J. Holmes Morrison,
President and Chief Executive Officer
Charleston, West Virginia
January 29, 1998
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.
<PAGE>
FFVA FINANCIAL CORPORATION
925 Main Street
Lynchburg, Virginia 24504
January 27, 1998
To the Shareholders of
FFVA Financial Corporation:
You are cordially invited to attend the Special Meeting of Shareholders
of FFVA Financial Corporation ("FFVA Financial"), which will be held at the
Holiday Inn Select, 601 Main Street, Lynchburg, Virginia, on March 10, 1998, at
10:00 a.m., local time.
At the Special Meeting, you will be asked to consider and vote upon an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which FFVA
Financial will be merged (the "Merger") with and into One Valley Bancorp, Inc.
("One Valley"). Under the terms of the Merger Agreement, each share of common
stock, par value $.10 per share, of FFVA Financial will be converted into 1.05
(one and five one-hundredths) shares of One Valley's common stock, par value
$10.00 per share ("One Valley Common Stock").
You will also be asked to consider and vote upon a proposal to amend
FFVA Financial's Restated Articles of Incorporation to provide for the Merger of
FFVA Financial with and into One Valley (the "Amendment"). The Amendment is
necessary to effectuate the Merger and requires for approval the affirmative
vote of 80% of FFVA Financial's outstanding shares entitled to vote.
Enclosed with this letter are a Notice of Special Meeting of FFVA
Financial's shareholders, a Joint Proxy Statement/Prospectus, which describes in
detail the proposed Merger and Amendment, the background of the Merger, the
reasons for the Amendment and other related information. Also enclosed is a
proxy solicited by FFVA Financial's Board of Directors in connection with the
Special Meeting and One Valley's Annual Report to Shareholders for the fiscal
year ended December 31, 1996.
The Board of Directors has unanimously approved the Merger Agreement,
the proposed Merger and the Amendment as being in the best interests of FFVA
Financial and its shareholders and recommends that shareholders vote their
shares "FOR" the Merger Agreement and "FOR" the Amendment. The affirmative vote
of two-thirds of FFVA Financial's outstanding shares entitled to vote is
necessary to approve the Merger Agreement, and the affirmative vote of 80% of
FFVA Financial's outstanding shares entitled to vote is necessary to approve the
Amendment. Both proposals must be approved to implement the Merger. The Merger
will not be effectuated unless the Amendment is approved. Failure to return your
proxy card or to vote in person at the Special Meeting will have the effect of a
vote against the Merger Agreement and a vote against the Amendment.
We urge you to consider carefully all of the materials in the Joint
Proxy Statement/Prospectus and to execute and return the enclosed proxy as soon
as possible. If you attend the Special Meeting, you may vote in person if you
wish, even though you have previously returned your proxy.
Sincerely,
James L. Davidson, Jr.,
President and Chief Executive Officer
Lynchburg, Virginia
January 27, 1998
<PAGE>
FFVA FINANCIAL CORPORATION
Lynchburg, Virginia
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 10, 1998
The Special Meeting of Shareholders of FFVA Financial Corporation
("FFVA Financial") will be held on March 10, 1998, at the Holiday Inn Select,
601 Main Street, Lynchburg, Virginia, at 10:00 a.m., local time, for the purpose
of considering and voting upon the following:
1. To approve the Agreement and Plan of Merger (the "Merger Agreement")
dated as of December 16, 1997, between FFVA Financial and One Valley Bancorp,
Inc. ("One Valley"), which agreement provides for the merger of FFVA Financial
with and into One Valley (the "Merger"). The Merger Agreement provides for the
conversion of each share of common stock of FFVA Financial into 1.05 (one and
five one-hundredths) shares of common stock of One Valley. The Merger Agreement
is attached as Appendix I to and is described in the accompanying Joint Proxy
Statement/Prospectus.
2. To approve an amendment to the Restated Articles of Incorporation
(the "Amendment"). The Amendment would provide for the Merger of FFVA Financial
with and into One Valley. The adoption of the Amendment must be accomplished to
consummate the Merger. A copy of Article 10, Section A is attached as Appendix
II to the Joint Proxy Statement/Prospectus enclosed herewith.
3. To act upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on the record
date, January 20, 1998, are entitled to notice of and to vote at the Special
Meeting and any adjournments thereof. The affirmative vote of not less than
two-thirds of FFVA Financial's outstanding shares of Common Stock entitled to
vote is necessary to approve the Merger Agreement and the affirmative vote of
not less than 80% of FFVA Financial's outstanding shares of Common Stock
entitled to vote is necessary to approve the Amendment. Both proposals must be
approved to implement the Merger. Accordingly, failure to return your proxy card
or to vote in person at the Special Meeting will have the effect of a vote
against the Merger. In the event there are not sufficient shares represented for
a quorum or votes to approve the Merger Agreement and the Amendment at the
Special Meeting, FFVA Financial's Board of Directors may adjourn the Special
Meeting to permit further solicitation. We urge you to execute and return the
enclosed proxy as soon as possible to ensure that your shares will be
represented at the Special Meeting. Your proxy may be revoked in the manner
described in the accompanying Joint Proxy Statement/Prospectus at any time
before it has been voted at the Special Meeting.
By Order of the Board of Directors
Lynchburg, Virginia James L. Davidson, Jr.,
January 27, 1998 President and Chief Executive Officer
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSALS TO ADOPT AND APPROVE THE MERGER AGREEMENT AND THE AMENDMENT. PLEASE
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. YOU MAY REVOKE YOUR PROXY AT ANY TIME
BEFORE IT IS VOTED AT THE SPECIAL MEETING.
<PAGE>
Joint Proxy Statement/Prospectus
JOINT PROXY STATEMENT
OF
ONE VALLEY BANCORP, INC.
AND
FFVA FINANCIAL CORPORATION
FOR SPECIAL MEETINGS OF
THEIR RESPECTIVE SHAREHOLDERS
-------------
ONE VALLEY BANCORP, INC.
PROSPECTUS
-------------
This Joint Proxy Statement/Prospectus is being furnished to the
shareholders of One Valley Bancorp, Inc. ("One Valley"), and to the shareholders
of FFVA Financial Corporation ("FFVA Financial"), in connection with the
solicitation of proxies by the Boards of Directors of One Valley and FFVA
Financial for use, respectively, at the Special Meeting of Shareholders of One
Valley to be held on March 11, 1998, at The Charleston Town Center Marriott, 200
Lee Street, East, in Charleston, West Virginia, and at the Special Meeting of
Shareholders of FFVA Financial to be held on March 10, 1998, at the Holiday Inn
Select, 601 Main Street, Lynchburg, Virginia. At the One Valley Special Meeting,
One Valley shareholders will consider and vote upon a proposal to approve the
Agreement and Plan of Merger (the "Merger Agreement") dated as of December 16,
1997, between FFVA Financial and One Valley, which agreement provides for the
merger (the "Merger") of FFVA Financial with and into One Valley. The Merger
Agreement provides for the conversion of each share of common stock of FFVA
Financial into 1.05 (one and five one-hundredths) shares of common stock, par
value $10.00 per share, of One Valley ("One Valley Common Stock"). One Valley
shareholders will also consider an amendment to its Restated Articles of
Incorporation to increase the number of authorized shares (the "One Valley
Amendment"). At the FFVA Financial Special Meeting, FFVA Financial shareholders
will consider and vote upon the Merger Agreement and an amendment to FFVA
Financial's Restated Articles of Incorporation to provide for the Merger (the
"FFVA Financial Amendment"). This Joint Proxy Statement/Prospectus also
constitutes a prospectus of One Valley relating to the shares of One Valley
Common Stock to be issued in connection with the Merger and the exercise of
certain options granted under FFVA Financial's 1994 Stock Option Plan.
THE SHARES OF ONE VALLEY COMMON STOCK TO BE ISSUED UNDER THE MERGER
AGREEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF ONE VALLEY COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE
SAVINGS ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Joint Proxy Statement/Prospectus and the accompanying form of
proxy are first being mailed to shareholders of One Valley on January 27, 1998,
and FFVA Financial on January 29, 1998.
The date of this Joint Proxy Statement/Prospectus is January 27, 1998.
<PAGE>
No persons have been authorized to give any information or to make any
representations other than those contained in this Joint Proxy Statement/
Prospectus or incorporated by reference herein in connection with the
solicitation of proxies or the offering of securities made hereby and, if given
or made, such information or representations must not be relied upon as having
been authorized by One Valley or FFVA Financial. This Joint Proxy Statement/
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any securities, or the solicitation of a proxy, in any jurisdiction to
or from any person to whom it is not lawful to make any such offer or
solicitation in such jurisdiction. Neither the delivery of this Joint Proxy
Statement/Prospectus nor any distribution of securities made hereunder shall,
under any circumstances, create an implication that there has been no change in
the affairs of One Valley or FFVA Financial since the date of this Joint Proxy
Statement/Prospectus or that the information herein or the documents or reports
incorporated by reference herein are correct as of any time subsequent to such
date. All information contained in this Joint Proxy Statement/Prospectus
relating to FFVA Financial and its subsidiaries has been supplied by FFVA
Financial and all information contained in this Joint Proxy Statement/Prospectus
relating to One Valley and its subsidiaries has been supplied by One Valley.
AVAILABLE INFORMATION
One Valley and FFVA Financial are each subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith file reports, proxy statements, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, information statements and other
information, when filed, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional offices in New York (7
World Trade Center, New York, New York 10048) and Chicago (Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of
such material can also be obtained from the Public Reference Section of the
Commission, at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains a World Wide Web Site on the Internet
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission.
One Valley's Common Stock is listed on the New York Stock Exchange, and
reports, proxy statements and other information concerning One Valley can be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
FFVA Financial's Common Stock is traded on the Nasdaq National Market,
and reports, proxy statements and other information concerning FFVA Financial
can be inspected and copied at the offices of Nasdaq Operations, 1735 K Street,
N.W., Washington, D.C. 20006.
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by One Valley are hereby incorporated by
reference into this Joint Proxy Statement/Prospectus:
1. One Valley's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. One Valley's reports on Form 10-Q filed May 14, 1997, August 14,
1997, and November 14, 1997, with the Commission.
3. One Valley's reports on Form 8-K dated October 19, 1995, October
30, 1997, December 16, 1997, and January 22, 1998 filed with the
Commission.
4. One Valley's Form 8-A filed on October 19, 1995, and April 30,
1997, with the Commission.
5. All documents filed by One Valley after the date of this Joint
Proxy Statement/Prospectus pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, prior to the
termination of the offering covered by this Joint Proxy
Statement/Prospectus.
The following documents filed by FFVA Financial are hereby incorporated
by reference into this Joint Proxy Statement/Prospectus:
1. FFVA Financial's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996.
2. FFVA Financial's reports on Form 10-Q filed May 9, 1997,
August 11, 1997, and November 10, 1997, with the Commission.
3. FFVA Financial's reports on Form 8-K filed December 23, 1997,
and January 23, 1998, with the Commission.
4. All documents filed by FFVA Financial after the date of this
Joint Proxy Statement/Prospectus pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
prior to the termination of the offering covered by this Joint
Proxy Statement/Prospectus.
One Valley has filed with the Commission a Registration Statement on
Form S-4 (together with any amendments thereof, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of One Valley Common Stock it will issue pursuant to the
Merger Agreement. This Joint Proxy Statement/Prospectus does not contain all
information set forth in the Registration Statement and the exhibits thereto.
Such additional information may be inspected and copied as set forth above.
Statements contained in this Joint Proxy Statement/Prospectus or in any document
incorporated by reference in this Joint Proxy Statement/Prospectus as to the
contents of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document each such statement being qualified in all
respects by such reference. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference in this Joint Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
of this Joint Proxy Statement/Prospectus to the extent that a statement
contained herein or any other
<PAGE>
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement/Prospectus.
This Joint Proxy Statement/Prospectus incorporates certain One Valley
documents by reference which are not presented herein or delivered herewith.
These documents are available upon request to Brien Chase, One Valley Bancorp,
Inc., One Valley Square, P. O. Box 1793, Charleston, WV 25326, and except for
exhibits attached thereto, are available without charge. In order to ensure
timely delivery of the documents, any request must be received by March 4,
1998.
This Joint Proxy Statement/Prospectus incorporates certain FFVA
Financial documents by reference which are not presented herein or delivered
herewith. These documents are available upon request to Margaret C. Burnette,
FFVA Financial Corporation, 925 Main Street, Lynchburg, Virginia 24504, and
except for exhibits attached thereto, are available without charge. In order to
ensure timely delivery of the documents, any request must be received by
March 3, 1998.
This Joint Proxy Statement/Prospectus contains or incorporates by
reference forward looking statements with respect to the financial condition,
results of operations and business of One Valley, FFVA Financial and, assuming
the consummation of the Merger, a combined One Valley/FFVA Financial including
statements relating to: (a) the cost savings and accretion to reported earnings
that will be realized from the Merger; (b) the impact on revenues of the Merger;
and (c) the restructuring charges expected to be incurred in connection with the
Merger. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by such forward looking statements include, among others, the
following possibilities: (1) expected cost savings from the Merger cannot be
fully realized or realized within the expected time frame; (2) revenues
following the Merger are lower than expected; (3) competitive pressure among
depository institutions increases significantly; (4) costs or difficulties
related to the integration of the business of One Valley and FFVA Financial are
greater than expected; (5) changes in the interest rate environment reduce
interest margins; (6) general economic conditions, either nationally or in
Virginia and West Virginia, are less favorable than expected; or (7) legislation
or regulatory changes adversely affect the businesses in which the combined
company would engage. These statements involve risk and uncertainty. Actual
results, accordingly, may differ materially from management's expectations.
<PAGE>
TABLE OF CONTENTS
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INTRODUCTION....................................1 THE SPECIAL MEETING OF ONE
SUMMARY INFORMATION.............................3 VALLEY SHAREHOLDERS........................16
The Merger.................................3 Matters to be Considered at the
The FFVA Financial Amendment...............3 Special Meeting..................16
The One Valley Amendment...................3 Record Date; Vote Required............16
The Parties................................4 Voting of Proxies; Revocability of
The One Valley Special Meeting Proxies; Solicitation of
of Shareholders.......................5 Proxies..........................17
The FFVA Financial Special Meeting Dissenters' Rights of Appraisal.......17
of Shareholders.......................6
Effective Date.............................7 THE SPECIAL MEETING OF FFVA
Recommendation of One Valley's FINANCIAL SHAREHOLDERS.....................17
Board of Directors....................7 Matters to be Considered at the
Recommendation of FFVA Financial's Special Meeting..................17
Board of Directors....................7 Record Date; Vote Required............18
Opinion of One Valley's Financial Voting of Proxies; Revocability
Advisor...............................7 of Proxies; Solicitation of
Opinion of FFVA Financial's Financial Proxies..........................19
Advisor...............................7 Dissenters' Rights of Appraisal.......19
Federal Income Tax Consequences............8
Accounting Treatment.......................8 THE MERGER.................................19
Conditions; Regulatory Approvals; General...............................19
Termination...........................8 Operations and Management After
Effect of the Merger on Shareholders' the Merger.......................20
Rights................................8 Background of the Merger..............21
Dissenters' Rights of Appraisal............9 FFVA Financial's Reasons for the
No Solicitation............................9 Merger...........................23
Stock Option Agreement.....................9 One Valley's Reasons for the
Expenses; Termination Fee..................9 Merger...........................25
Price-Based Termination....................9 Opinion of Financial Advisor to
Interests of Certain Persons in the FFVA Financial.................. 26
Merger...............................10 Opinion of One Valley's Financial
Market Value of Securities................10 Advisor..........................31
Market Price and Dividend Conditions to Consummation of the
Information..........................10 Merger; Waiver...................38
Comparative Per Share Information.........11 No Solicitation of Transactions.......38
Stock Option Agreement................39
SELECTED FINANCIAL DATA........................13 Price-Based Termination...............43
One Valley Bancorp, Inc...................13 Termination...........................45
FFVA Financial Corporation................14 Termination Fee.......................46
Pro Forma Selected Financial FFVA Financial's Stock Option
Information..........................15 Plans............................46
<PAGE>
Certain Federal Income Tax SHAREHOLDER PROPOSALS......................74
Consequences.........................47
Accounting Treatment......................48 EXPERTS....................................75
Exchange of Certificates..................48
Interests of Certain Persons in the VALIDITY OF SECURITIES.....................75
Merger..........................49
Resales by Affiliates.....................50 OTHER MATTERS..............................75
Regulatory Approvals......................51
Acquisitions Generally....................52 APPENDIX I -
MERGER AGREEMENT
RIGHTS OF DISSENTING
SHAREHOLDERS...................................52 APPENDIX II -
PROPOSED ARTICLE 10,
EFFECT OF THE MERGER ON SECTION A, OF FFVA
SHAREHOLDERS' RIGHTS...........................55 FINANCIAL'S RESTATED
General...................................55 ARTICLES OF
Antitakeover Provisions in INCORPORATION
One Valley's Restated Articles
and Bylaws...........................55 APPENDIX III -
Shareholder Protection Rights Plan........59 OPINION OF MERRILL LYNCH,
Antitakeover Provisions in FFVA PIERCE, FENNER & SMITH
Financial's Restated Articles INCORPORATED
of Incorporation and Bylaws..........59
APPENDIX IV -
HISTORICAL COMPARATIVE STOCK OPINION OF SANDLER
PRICES AND DIVIDENDS...........................61 O'NEILL & PARTNERS, L. P.
One Valley................................61
FFVA Financial............................62 APPENDIX V -
STOCK OPTION AGREEMENT
PRO FORMA COMBINED
CONDENSED BALANCE SHEETS.......................63 APPENDIX VI -
WEST VIRGINIA
PRO FORMA COMBINED CORPORATION ACT
CONDENSED STATEMENTS OF ss.ss. 31-1-122 AND 31-1-123
INCOME.........................................66
APPENDIX VII -
ONE VALLEY PROPOSAL TO PROPOSED ARTICLE VI
APPROVE INCREASE OF OF ONE VALLEY'S
AUTHORIZED CAPITAL STOCK.......................72 RESTATED ARTICLES OF
Vote Required.............................73 INCORPORATION
FFVA FINANCIAL PROPOSAL TO
AMEND RESTATED ARTICLES OF
INCORPORATION..................................73
</TABLE>
<PAGE>
ONE VALLEY BANCORP, INC. AND
FFVA FINANCIAL CORPORATION
JOINT PROXY STATEMENT/PROSPECTUS
INTRODUCTION
This Joint Proxy Statement/Prospectus and the accompanying proxy (the
"One Valley Proxy") are being furnished to the shareholders of One Valley
Bancorp, Inc. ("One Valley") in connection with the solicitation of proxies by
the Board of Directors of One Valley for a Special Meeting of Shareholders to be
held at 10:00 a.m., local time, on March 11, 1998, at The Charleston Town Center
Marriott, 200 Lee Street, East, in Charleston, West Virginia, and any
postponements or adjournments thereof (the "One Valley Special Meeting"), to
consider and vote upon a proposal to approve the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of December 16, 1997, between FFVA Financial
Corporation ("FFVA Financial") and One Valley. The Merger Agreement provides for
the merger of FFVA Financial with and into One Valley (the "Merger"). Under the
terms of the Merger Agreement, each share of common stock, par value $.10 per
share, of FFVA Financial ("FFVA Financial Common Stock") will be converted into
1.05 shares of common stock, par value $10.00 per share, of One Valley ("One
Valley Common Stock"). This Joint Proxy Statement/Prospectus and the One Valley
Proxy are also being furnished in connection with a proposal to increase the
number of authorized shares of One Valley Common Stock from forty million shares
to seventy million shares (the "One Valley Amendment"). Approval of the One
Valley Amendment is not a condition to the Merger.
This Joint Proxy Statement/Prospectus and the accompanying proxy (the
"FFVA Financial Proxy") are also being furnished to the shareholders of FFVA
Financial in connection with the solicitation of proxies by the Board of
Directors of FFVA Financial for a Special Meeting of Shareholders to be held at
10:00 a.m., local time, on March 10, 1998, at the Holiday Inn Select, 601 Main
Street, Lynchburg, Virginia, and any postponements or adjournments thereof (the
"FFVA Financial Special Meeting"), to consider and vote upon a proposal to
approve the Merger Agreement. This Joint Proxy Statement/Prospectus and the FFVA
Financial Proxy are also being furnished in connection with a proposal to amend
FFVA Financial's Restated Articles of Incorporation to provide for the Merger of
FFVA Financial with and into One Valley (the "FFVA Financial Amendment"). FFVA
Financial believes that this provision prohibits the Merger, unless amended. The
FFVA Financial Amendment is therefore necessary for consummation of the Merger
and must be approved by the affirmative vote of 80% of the outstanding shares of
FFVA Financial Common Stock.
This Joint Proxy Statement/Prospectus, the One Valley Proxy and the
FFVA Financial Proxy will be first sent or given to One Valley shareholders on
January 27, 1998, and to FFVA Financial shareholders on or about January 29,
1998.
1
<PAGE>
The shares of One Valley Common Stock represented by a One Valley Proxy
will be voted as directed if the proxy is properly signed and received by One
Valley prior to the One Valley Special Meeting. The proxy will be voted "FOR"
the approval of the Merger Agreement and "FOR" the approval of the One Valley
Amendment if no direction is made to the contrary on a duly executed and
returned proxy. The proxy may also be used to grant discretionary authority to
vote on other matters which may arise at the One Valley Special Meeting or any
adjournment or postponement thereof including, among other things, a motion to
adjourn or postpone the One Valley Special Meeting to another time and/or place,
for the purpose of soliciting additional proxies or otherwise; provided however,
that no proxy which is voted against the proposal to approve the Merger
Agreement will be voted in favor of any such adjournment or postponement. While
management is unaware of any such matters, the person or persons designated to
vote the shares will cast votes at the direction of the Board of Directors of
One Valley if any such matters properly come before the One Valley Special
Meeting. A person giving a One Valley Proxy may revoke it any time before it is
voted by notifying One Valley in person, by giving written notice to One Valley
of the revocation of the One Valley Proxy, by submitting to One Valley a
subsequently dated proxy, or by attending the meeting and withdrawing the proxy
before it is voted at the One Valley Special Meeting.
Shareholders of record of One Valley at the close of business on
January 23, 1998 (the "One Valley Record Date") will be entitled to vote at the
One Valley Special Meeting.
The shares of FFVA Financial Common Stock, par value $.10 per share
("FFVA Financial Common Stock") represented by a proxy will be voted as directed
if the proxy is properly signed and received by FFVA Financial prior to the FFVA
Financial Special Meeting. The proxy will be voted "FOR" the approval of the
Merger Agreement and "FOR" the approval of the FFVA Financial Amendment if no
direction is made to the contrary on a duly executed and returned proxy. The
proxy may also be used to grant discretionary authority to vote on other matters
which may arise at the FFVA Financial Special Meeting, or any adjournment or
postponement thereof including, among other things, a motion to adjourn or
postpone the FFVA Financial Special Meeting to another time and/or place, for
the purpose of soliciting additional proxies or otherwise; provided however,
that no proxy which is voted against the proposal to approve the Merger
Agreement or the FFVA Financial Agreement will be voted in favor of any such
adjournment or postponement. While management is presently unaware of any such
matters, the person or persons designated to vote the shares of FFVA Financial
Common Stock will cast votes at the direction of FFVA Financial's Board of
Directors if any such matters properly come before the Special Meeting. A person
giving a proxy has the power to revoke it at any time before it is voted by
notifying FFVA Financial in person, by giving written notice to FFVA Financial
of the revocation of the proxy, by submitting to FFVA Financial a subsequently
dated proxy, or by attending the meeting and withdrawing the proxy before it is
voted at the Special Meeting.
Shareholders of record of FFVA Financial at the close of business on
January 20, 1998 (the "FFVA Financial Record Date") will be entitled to vote at
the FFVA Financial Special Meeting.
2
<PAGE>
SUMMARY INFORMATION
The following is a brief summary of the matters to be considered at the
Special Meetings of FFVA Financial and One Valley. This summary is not intended
to be complete and is qualified in its entirety by reference to, and should be
read in conjunction with, the detailed information, including the appendices
attached hereto, contained or incorporated by reference herein. A copy of the
Merger Agreement is attached as Appendix I to this Joint Proxy
Statement/Prospectus. Shareholders are urged to read carefully the entire Joint
Proxy Statement/Prospectus, including the appendices hereto. The terms "One
Valley" and "FFVA Financial" refer to such organizations, and unless the context
otherwise requires, such organizations and their respective subsidiaries.
The Merger
The Merger Agreement provides for the Merger of FFVA Financial with and
into One Valley. Upon consummation of the Merger, First Federal Savings Bank of
Lynchburg (the "Savings Bank"), a wholly owned subsidiary of FFVA Financial,
will become a wholly owned subsidiary of One Valley. After the Merger, the
Savings Bank will be merged into One Valley Bank - Central Virginia, National
Association.
Under the terms of the Merger Agreement, each of the outstanding shares
of FFVA Financial Common Stock will be converted into 1.05 (one and five
one-hundredths) shares of One Valley Common Stock (the "Exchange Ratio"), except
that no fractional shares will be issued. One Valley will pay cash to the
holders of fractional interests in an amount equal to that fraction multiplied
by the closing price for One Valley Common Stock as reported on the New York
Stock Exchange on the business day immediately prior to the Effective Date (as
hereinafter defined). The affirmative vote of not less than two-thirds of the
outstanding shares of FFVA Financial Common Stock is required to approve the
Merger Agreement. See "The Merger - Conditions to Consummation of the Merger;
Waiver." As a condition to the Merger, FFVA Financial's shareholders also must
approve the FFVA Financial Amendment, which amendment requires approval by the
affirmative vote of 80% of the outstanding shares of FFVA Financial Common
Stock. The affirmative vote of a majority of the outstanding shares of One
Valley Common Stock is required to approve the Merger Agreement.
The FFVA Financial Amendment
At the FFVA Financial Special Meeting, FFVA Financial shareholders will
be asked to vote upon an amendment to Article 10, Section A of FFVA Financial's
Restated Articles of Incorporation to provide for the Merger. FFVA Financial
believes that this provision would, unless so amended, prohibit the Merger. To
be approved and adopted, the FFVA Financial Amendment must receive the
affirmative vote of at least 80% of the outstanding shares of FFVA Financial
Common Stock entitled to vote on the matter. The Merger will not be effectuated
unless the FFVA Financial Amendment is approved.
The One Valley Amendment
At the One Valley Special Meeting, One Valley shareholders will be
asked to approve an amendment to Article VI of its Restated Articles of
Incorporation to increase One Valley's authorized capital stock from forty-one
million shares consisting of forty million shares of common stock and one
million shares of preferred
3
<PAGE>
stock to seventy-one million shares consisting of seventy million shares of
common stock and one million shares of preferred stock. See "One Valley Proposal
to Approve Increase of Authorized Capital Stock." Approval of the One Valley
Amendment is not a condition of the Merger.
The Parties
One Valley. One Valley is a multi-bank holding company organized under
the laws of the State of West Virginia, with headquarters in Charleston, West
Virginia, and registered with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") pursuant to the Bank Holding Company Act of
1956, as amended (the "BHC Act"). One Valley has 11 banking subsidiaries located
in West Virginia and central Virginia and provides services to customers through
89 offices. Its other subsidiary is a real estate management company that owns
and operates the building housing One Valley's headquarters. At September 30,
1997, One Valley reported total assets of approximately $4.4 billion, loans of
$2.8 billion, deposits of $3.0 billion, and equity of $410 million. In addition
to providing commercial and retail banking services, One Valley provides trust
services to its customers. At September 30, 1997, One Valley administered more
than $3.0 billion in trust assets.
For more information about One Valley, reference is made to One
Valley's Form 10-K for the fiscal year ended 1996 and One Valley's Form 10-Q for
the nine months ended September 30, 1997, which are hereby incorporated by
reference. See "Available Information" and "Incorporation of Certain Information
by Reference."
One Valley's executive offices are located at One Valley Square,
Summers & Lee Streets, Charleston, West Virginia 25326. Its telephone number is
(304) 348-7000.
FFVA Financial. FFVA Financial, a Virginia corporation, is a unitary
thrift holding company formed in 1994 for the purpose of acquiring all of the
issued and outstanding common stock of the Savings Bank. The Savings Bank, a
federally chartered capital stock savings bank headquartered in Lynchburg,
Virginia, is in the principal business of attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations, primarily in one- to four-family residential mortgage loans. FFVA
Financial operates 11 full service branches in central Virginia. At September
30, 1997, FFVA Financial reported total assets of approximately $553 million,
loans of approximately $326 million and total deposits of approximately $406
million.
For more information about FFVA Financial, reference is made to FFVA
Financial's Form 10-K for the fiscal year ended 1996, and FFVA Financial's Form
10-Q for the nine months ended September 30, 1997, which are hereby incorporated
by reference. See "Available Information" and "Incorporation of Certain
Information by Reference."
FFVA Financial's executive offices are located at 925 Main Street,
Lynchburg, Virginia 24504. Its telephone number is (804) 845-2371.
4
<PAGE>
The One Valley Special Meeting of Shareholders
At the One Valley Special Meeting, holders of One Valley Common Stock
will be asked to approve the Merger Agreement which provides for the merger of
FFVA Financial with and into One Valley and requires the issuance of shares of
One Valley Common Stock to FFVA Financial shareholders. One Valley's Board of
Directors has unanimously approved the proposed Merger Agreement and recommends
that its shareholders vote "FOR" the Merger Agreement. See "The Merger -
Background of Merger" and "The Merger - One Valley's Reasons for the Merger."
At the One Valley Special Meeting, holders of One Valley Common Stock
will also be asked to approve the One Valley Amendment to increase One Valley's
authorized shares of One Valley Common Stock from forty million shares to
seventy million shares. One Valley's Board of Directors has unanimously approved
the proposed One Valley Amendment and recommends that its shareholders vote
"FOR" the One Valley Amendment. See "One Valley Proposal to Approve Increase of
Authorized Capital Stock." If One Valley's shareholders approve the Merger
Agreement, the Merger will be consummated even if shareholders do not approve
the One Valley Amendment.
Shareholders of record of One Valley at the close of business on
January 23, 1998 (the "One Valley Record Date") will be entitled to notice of
and to vote at the One Valley Special Meeting. One Valley's shareholders are
entitled to cast one vote for each share of One Valley Common Stock they own on
the One Valley Record Date. To approve the Merger Agreement and the One Valley
Amendment, the vote of a majority of the 27,173,842 issued and outstanding
shares (as of the One Valley Record Date) of One Valley Common Stock is
required. As of the One Valley Record Date, the directors, executive officers,
principal shareholders, and affiliates of One Valley had the authority to vote,
directly or indirectly, approximately 18% of the issued and outstanding shares
of One Valley Common Stock. The management of One Valley expects that such
shares will be voted "FOR" the Merger Agreement and "FOR" the One Valley
Amendment.
A proxy for use by One Valley's shareholders in connection with the One
Valley Special Meeting is enclosed with this Joint Proxy Statement/Prospectus
which will be mailed to One Valley's shareholders on or about January 29, 1998.
The proxy will be voted as specified thereon by the shareholder. Where no
specification is made on the proxy, a properly executed proxy will be voted
"FOR" the Merger and "FOR" the One Valley Amendment, and in the discretion of
the individuals named as proxies as to any other matter that may come before the
One Valley Special Meeting or any adjournment or postponement thereof including,
among other things, a motion to adjourn or postpone the One Valley Special
Meeting to another time and/or place, for the purpose of soliciting additional
proxies or otherwise; provided however, that no proxy which is voted against the
proposal to approve the Merger Agreement will be voted in favor of any such
adjournment or postponement.
As of the date of the mailing of this Joint Proxy Statement/Prospectus,
One Valley is not aware of any business to be acted upon at the One Valley
Special Meeting, other than consideration of the foregoing proposals.
A person giving a One Valley Proxy may revoke it at any time before it
is voted by notifying One Valley in person, by giving written notice to One
Valley of the revocation of the One Valley Proxy, by submitting to One Valley a
subsequently dated proxy, or by attending the meeting and withdrawing the proxy
before it is voted at the meeting. See "The Special Meeting of One Valley
Shareholders."
5
<PAGE>
The FFVA Financial Special Meeting of Shareholders
At the FFVA Financial Special Meeting, holders of FFVA Financial Common
Stock will be asked to approve the Merger Agreement and the FFVA Financial
Amendment. If the Merger is consummated, each share of FFVA Financial Common
Stock will be converted into 1.05 (one and five one-hundredths) shares of One
Valley Common Stock. No fractional shares of One Valley Common Stock will be
issued in connection with the Merger and, in lieu thereof, One Valley will pay
cash for fractional shares. FFVA Financial's Board of Directors has unanimously
approved the Merger Agreement and the FFVA Financial Amendment and recommends
that the shareholders of FFVA Financial vote "FOR" the Merger Agreement and
"FOR" the FFVA Financial Amendment. See "The Merger - Background of the Merger,"
"The Merger - FFVA Financial's Reasons for the Merger" and "FFVA Financial
Proposal to Amend Restated Articles of Incorporation."
Even if FFVA Financial's shareholders approve the Merger Agreement, the
Merger WILL NOT be consummated unless the shareholders also approve the FFVA
Financial Amendment.
Shareholders of record of FFVA Financial at the close of business on
the FFVA Financial Record Date will be entitled to notice of and to vote at the
FFVA Financial Special Meeting. FFVA Financial shareholders are entitled to cast
one vote for each share of FFVA Financial Common Stock they own on the FFVA
Financial Record Date. To approve the Merger Agreement, the affirmative vote of
two-thirds of the issued and outstanding shares of FFVA Financial Common Stock
is required. To approve the FFVA Financial Amendment, the affirmative vote of
80% of the issued and outstanding shares of FFVA Financial Common Stock is
required. FFVA Financial believes that the FFVA Financial Amendment is necessary
to effectuate the Merger. As of the FFVA Financial Record Date, the directors,
executive officers and affiliates of FFVA Financial owned 7.73% of the issued
and outstanding Common Stock of FFVA Financial. The management of FFVA Financial
expects that such shares will be voted "FOR" the approval of the Merger
Agreement and "FOR" approval of the FFVA Financial Amendment.
A proxy for use by FFVA Financial's shareholders in connection with the
FFVA Financial Special Meeting is enclosed with this Joint Proxy
Statement/Prospectus which was mailed to shareholders on or about January 27,
1998. The proxy will be voted as specified thereon by the shareholder. Where no
specification is made on the proxy, a properly executed proxy will be voted
"FOR" approval of the Merger Agreement and "FOR" approval of the FFVA Financial
Amendment, and in the discretion of the individuals named as proxies as to any
other matter that may come before the FFVA Financial Special Meeting or any
adjournment or postponement thereof including, among other things, a motion to
adjourn or postpone the FFVA Financial Special Meeting to another time and/or
place, for the purpose of soliciting additional proxies or otherwise; provided
however, that no proxy which is voted against the proposal to approve the Merger
Agreement will be voted in favor of any such adjournment or postponement.
As of the date of the mailing of this Joint Proxy Statement/Prospectus,
FFVA Financial is not aware of any business to be acted on at the FFVA Financial
Special Meeting other than consideration of the Merger Agreement and the FFVA
Financial Amendment.
A person giving an FFVA Financial Proxy may revoke it at any time
before it is voted by notifying FFVA Financial in person, by giving written
notice to FFVA Financial of the revocation of the FFVA Financial Proxy,
6
<PAGE>
by submitting to FFVA Financial a subsequently dated proxy or by attending the
FFVA Financial Special Meeting and withdrawing the proxy before it is voted at
the FFVA Financial Special Meeting. See "The Special Meeting of FFVA Financial
Shareholders."
Effective Date
Subject to the conditions to the obligations of the parties to effect
the Merger, the Merger will become effective (the "Effective Date") on such date
as selected by One Valley; provided, however, such date must not be more than 30
days after the receipt of all requisite approvals of regulatory authorities and
shareholders. Subject to the foregoing, it is currently anticipated that the
Merger will be consummated in the second quarter of 1998, although there can be
no assurances as to satisfaction of these conditions or the timing thereof.
Recommendation of One Valley's Board of Directors
The Board of Directors of One Valley, which has approved the Merger
Agreement and the One Valley Amendment by unanimous vote, believes they are in
the best interests of One Valley and its shareholders and unanimously recommends
their approval by One Valley's shareholders. See "The Merger - Background of the
Merger," "- One Valley's Reasons for the Merger" and "One Valley Proposal to
Approve Increase in Authorized Capital Stock."
Recommendation of FFVA Financial's Board of Directors
The Board of Directors of FFVA Financial, which has approved the Merger
Agreement and the FFVA Financial Amendment by unanimous vote, believes they are
in the best interests of FFVA Financial and its shareholders and unanimously
recommends their approval by FFVA Financial's shareholders. See "The Merger -
Background of the Merger," "- FFVA Financial's Reasons for the Merger" and "FFVA
Financial Proposal to Amend Restated Articles of Incorporation."
Opinion of One Valley's Financial Advisor
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
One Valley's financial advisor, has rendered its opinion to One Valley's Board
of Directors that as of the date hereof the Exchange Ratio to be paid to FFVA
Financial's shareholders is fair to One Valley from a financial point of view.
As discussed in "The Merger - One Valley's Reasons for the Merger," Merrill
Lynch's opinion and presentations were among the factors considered by One
Valley's Board in reaching the determination to approve the Merger Agreement. A
copy of Merrill Lynch's opinion is attached hereto as Appendix III and should be
read in its entirety with respect to the assumptions made, other matters
considered and limitations on the review undertaken by Merrill Lynch in
rendering its opinion. See "The Merger - Opinion of One Valley's Financial
Advisor."
Opinion of FFVA Financial's Financial Advisor
Sandler O'Neill & Partners, L.P. ("Sandler"), FFVA Financial's
financial advisor, has rendered its opinion to FFVA Financial's Board of
Directors that as of the date hereof the Exchange Ratio is fair to FFVA
Financial's shareholders from a financial point of view. As discussed in "The
Merger - FFVA Financial's Reasons for the Merger," Sandler's opinion and
presentations were among the factors considered by FFVA
7
<PAGE>
Financial's Board in reaching the determination to approve the Merger Agreement.
A copy of Sandler's opinion is attached hereto as Appendix IV and should be read
in its entirety with respect to the assumptions made, matters considered and
qualifications and limitations on the review undertaken by Sandler in rendering
its opinion. See "The Merger - Opinion of Financial Advisor to FFVA Financial."
Federal Income Tax Consequences
It is anticipated that the Merger will be a tax-free reorganization for
federal income tax purposes. FFVA Financial's shareholders will receive One
Valley Common Stock for their FFVA Financial Common Stock under the terms of the
Merger Agreement. Upon this conversion, FFVA Financial's shareholders will
generally recognize no gain or loss. Upon receipt of cash for fractional shares
of FFVA Financial Common Stock, FFVA Financial's shareholders will recognize
gain, but not in an amount in excess of cash received. See "The Merger - Certain
Federal Income Tax Consequences."
Accounting Treatment
One Valley expects that the Merger will be accounted for under the
pooling-of-interests method of accounting. See "The Merger - Accounting
Treatment."
Conditions; Regulatory Approvals; Termination
Consummation of the Merger is subject to various conditions, including
among others, approval of the Merger Agreement by two-thirds of the shares
entitled to be voted by FFVA Financial's shareholders, approval of the FFVA
Financial Amendment by 80% of the shares entitled to be voted by FFVA
Financial's shareholders and approval of the Merger Agreement by a majority of
the shares entitled to be voted by One Valley's shareholders. In addition, the
Merger is subject to receipt of required approvals from the Board of Governors
of the Federal Reserve and the State Corporation Commission of the Commonwealth
of Virginia (the "Virginia Corporation Commission"). Notice of the Merger was
filed with the Federal Reserve Board on January 20, 1998. On January 21, 1998,
One Valley filed an application seeking approval of the Virginia Corporation
Commission. See "The Merger - Regulatory Approvals."
One Valley and FFVA Financial anticipate that the Merger will be
completed during the second quarter of 1998. There can be no assurance, however,
that the necessary regulatory and other approvals will be received by the
parties or as to the timing of such approvals. Accordingly, there may be delays
following the Special Meetings before the Merger is consummated, and if any of
the conditions of the Merger Agreement is not satisfied or waived, the Merger
would not be consummated. See "The Merger - Conditions to Consummation of the
Merger; Waiver "- Termination." Also, the Merger Agreement may be terminated
under certain circumstances. See "The Merger - Termination."
Effect of the Merger on Shareholders' Rights
If the Merger Agreement is approved, FFVA Financial's shareholders will
receive shares of One Valley Common Stock which have different rights with
respect to certain important matters including certain provisions which are
intended to ensure that a party seeking control of One Valley will discuss its
proposal with One Valley's Board of Directors.
8
<PAGE>
If the Merger Agreement is approved, FFVA Financial shareholders will
become shareholders of One Valley, and their rights as shareholders of One
Valley will be determined by the West Virginia Corporation Code ("West Virginia
Code") and by One Valley's Restated Articles of Incorporation and Bylaws. The
rights of FFVA Financial shareholders are currently governed by the Virginia
Corporation Code and by FFVA Financial's Restated Articles of Incorporation and
Bylaws. See "Effect of the Merger on Shareholders' Rights."
Dissenters' Rights of Appraisal
One Valley's shareholders are entitled to exercise dissenters' rights
under West Virginia Code Sections 31-1-122 and 31-1-123 in connection with the
proposal to approve the Merger Agreement. See "Rights of Dissenting
Shareholders." FFVA Financial's shareholders are not entitled to dissenters'
rights of appraisal under Virginia law.
No Solicitation
FFVA Financial has agreed in the Merger Agreement that it will not
solicit or engage in any discussions with any person other than One Valley
concerning any acquisition of FFVA Financial or any of its subsidiaries, except
that FFVA Financial may respond to unsolicited inquiries to the extent the
fiduciary duty of FFVA Financial's Board of Directors legally requires the Board
of Directors to do so. See "The Merger - No Solicitation of Transactions."
Stock Option Agreement
As a condition of and an inducement to One Valley entering into the
Merger Agreement, One Valley and FFVA Financial have entered into a Stock Option
Agreement (the "Option Agreement"), whereby FFVA Financial granted One Valley an
option (the "Option") to purchase, under certain circumstances, up to 490,000
shares of FFVA Financial Common Stock at a price of $39.97 per share
representing up to 9.9% of the outstanding FFVA Financial Common Stock. None of
such circumstances has occurred as of the date of this Joint Proxy
Statement/Prospectus. See "The Merger - Stock Option Agreement" and the Stock
Option Agreement attached as Appendix V hereto.
Expenses; Termination Fee
All expenses incurred by or on behalf of the parties in connection with
the Merger Agreement and the transactions contemplated thereby shall be borne by
the party incurring the same. With certain exceptions, if the Merger Agreement
is terminated due to a willful breach, the breaching party shall be liable for
the expenses of the nonbreaching party. In addition, under certain circumstances
involving a transaction by or involving FFVA Financial and a third party, One
Valley will be entitled to a termination fee of $3.5 million. See "The Merger -
Termination Fee."
Price-Based Termination
The Merger Agreement provides a numerical formula under which FFVA
Financial may terminate the Merger Agreement if there is a significant decline
in the market value of the One Valley Common Stock that is
9
<PAGE>
not coincidental with a decline in the stock prices of certain other financial
institution holding companies unless One Valley is willing to increase the
Exchange Ratio. See "The Merger - Price-Based Termination."
Interests of Certain Persons in the Merger
Certain members of FFVA Financial's management and Board of Directors
have interests in the Merger in addition to their interests as stockholders. See
"The Merger - Interests of Certain Persons in the Merger."
Market Value of Securities
The following table sets forth the market value per share of One Valley
Common Stock, the market value per share of FFVA Financial Common Stock and the
equivalent market value per share of FFVA Financial Common Stock on December 15,
1997, the last business day preceding public announcement of the signing of the
Merger Agreement and January 20, 1998. The equivalent market value per share of
FFVA Financial Common Stock indicated in the table is based upon the Exchange
Ratio of 1.05 shares of One Valley Common Stock for each share of FFVA Financial
Common Stock.
The market values per share of One Valley Common Stock and FFVA
Financial Common Stock are the per share last sales prices on December 15, 1997,
and January 20, 1998, as reported on the New York Stock Exchange and Nasdaq
National Market, respectively.
<TABLE>
<CAPTION>
FFVA Financial
Equivalent Market
One Valley FFVA Financial Value Per Share
<S> <C> <C> <C>
December 15, 1997........................ $40.94 $35.13 $42.98
January 20, 1998......................... $36.13 $36.82 $37.94
</TABLE>
FFVA Financial and One Valley shareholders are advised to obtain
current market quotations for FFVA Financial Common Stock and One Valley Common
Stock. It is expected that the market price of One Valley Common Stock will
fluctuate between the date of this Joint Proxy Statement/Prospectus and the date
on which the Merger is consummated and thereafter. Because the number of shares
of One Valley Common Stock to be received by FFVA Financial shareholders in the
Merger is fixed (subject to possible increase in certain circumstances) and
because the market price of One Valley Common Stock is subject to fluctuation,
the value of the shares of One Valley Common Stock that FFVA Financial
shareholders will receive in the Merger may increase or decrease prior to the
Merger. No assurance can be given concerning the market price of One Valley
Common Stock before or after the Effective Date.
Market Price and Dividend Information
For information concerning cash dividends paid by One Valley and FFVA
Financial, see "Historical Comparative Stock Prices and Dividends."
10
<PAGE>
Comparative Per Share Information
The following tables present the historical per share data and the pro
forma combined per share data for One Valley and the historical per share data
and the pro forma equivalent per share data of FFVA Financial. The information
is based on the historical financial statements and does not purport to be
indicative of the results of future operations or the actual results that would
have occurred had the Merger been consummated at the beginning of each period
presented. The pro forma data gives effect to the Merger as if the entities had
been operating on a combined basis for all periods presented using the
pooling-of-interests method of accounting. For pro forma purposes, it is assumed
that the historical dividend rate of One Valley is the same as the pro forma
combined per share data. The information presented below should be read in
conjunction with other unaudited pro forma financial information included
elsewhere in this Joint Proxy Statement/Prospectus, and with the separate
financial statements of both One Valley and FFVA Financial, including applicable
notes, included elsewhere, or incorporated by reference, in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
ONE VALLEY
Pro Forma (1)
Historical Combined
Book Value at Period End:
<S> <C> <C>
September 30, 1997 $15.42 $16.07
September 30, 1996 14.38 18.36
December 31, 1996 14.77 18.60
December 31, 1995 13.74 18.08
December 31, 1994 12.11 16.58
Cash Dividends Declared:
For the Nine Months Ended
September 30, 1997 $0.59 $0.59
September 30, 1996 0.55 0.55
For the Year Ended
December 31, 1996 0.74 0.74
December 31, 1995 0.66 0.66
December 31, 1994 0.60 0.60
Earnings Per Share:
For the Nine Months Ended
September 30, 1997 $1.60 $1.54
September 30, 1996 1.42 1.31
For the Year Ended
December 31, 1996 1.94 1.80
December 31, 1995 1.83 1.72
December 31, 1994 1.73 1.58
</TABLE>
(1) Based on the issuance of 5,537,580 shares of One Valley Common Stock to
acquire all of the outstanding common shares of FFVA Financial.
11
<PAGE>
<TABLE>
<CAPTION>
FFVA FINANCIAL
Pro Forma
Historical Equivalent (1)
<S> <C> <C>
Book Value at Period End:
September 30, 1997 $16.70 $16.87
September 30, 1996 15.68 19.28
December 31, 1996 15.87 19.53
December 31, 1995 15.44 18.98
December 31, 1994 14.41 17.41
Cash Dividends Declared:
For the Nine Months Ended
September 30, 1997 $0.34 $0.62
September 30, 1996 0.275 0.58
For the Year Ended
December 31, 1996 0.375 0.78
December 31, 1995 0.30 0.69
December 31, 1994 0.00 0.63
Earnings Per Share:
For the Nine Months Ended
September 30, 1997 $1.27 $1.63
September 30, 1996 0.70 1.38
For the Year Ended
December 31, 1996 1.06 1.88
December 31, 1995 1.11 1.79
December 31, 1994 0.79 1.63
</TABLE>
(1) Based on the assumed exchange ratio of one (1) share of FFVA Financial
Common Stock for 1.05 (one and five one-hundredths) shares of One Valley Common
Stock. Pro forma equivalent per share information is calculated by multiplying
the One Valley Ratio of 1.05 shares of One Valley Common Stock for one share of
FFVA Financial Common Stock except for cash dividends declared, which is assumed
to be the historical dividend rate of One Valley.
12
<PAGE>
SELECTED FINANCIAL DATA
The following pages present selected financial information for the
years 1992 to 1996 and for the nine months ended September 30, 1997 and 1996,
for One Valley and FFVA Financial, which will be merged with and into One Valley
pursuant to the Merger Agreement. The following summary regarding One Valley and
FFVA Financial should be read in conjunction with the consolidated financial
statements of One Valley and FFVA Financial and notes thereto, respectively.
Consolidated historical financial and other data regarding One Valley and FFVA
Financial at or for the nine months ended September 30, 1997 and 1996, have been
prepared by One Valley and FFVA Financial, respectively without audit. In the
opinion of management of One Valley and FFVA Financial, all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation for such periods or dates for their respective information have
been made. Data regarding One Valley and FFVA Financial at and for the nine
months ended September 30, 1997, may not be indicative of results as of and for
the fiscal year ending December 31, 1997.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ONE VALLEY BANCORP, INC.
(Dollars in thousands except per share data)
- ---------------------------------------------------------------------------------------------------------
At or for the
Nine Months Ended
September 30, At or for the Year Ended December 31,
--------------------------- ---------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest income $ 247,682 $ 231,197 $ 312,153 $ 282,372 $ 251,383 $ 247,699 $ 263,484
Interest expense 113,772 102,689 139,285 121,080 94,897 99,786 120,039
Net interest income 133,910 128,508 172,868 161,292 156,486 147,913 143,445
Provision for loan losses 5,291 3,836 5,204 5,632 4,788 5,788 11,389
Non-interest income 34,679 30,154 40,792 37,574 36,578 39,305 36,766
Non-interest expense 96,897 96,738 128,415 119,591 120,156 125,150 115,538
Net income 43,878 38,708 53,155 49,106 46,211 37,954 36,638
Per Share Data
Net income $ 1.60 $ 1.42 $ 1.94 $ 1.83 $ 1.73 $ 1.41 $ 1.36
Cash dividends 0.59 0.55 0.74 0.66 0.60 0.54 0.45
Book value 15.42 14.38 14.77 13.74 12.11 11.33 10.42
Average Balance Sheet
Summary
Net loans $ 2,786,966 $ 2,617,987 $ 2,652,817 $ 2,392,572 $ 2,199,686 $2,026,748 $1,926,773
Investment securities 1,254,464 1,144,134 1,152,981 997,269 1,050,980 1,074,467 1,049,459
Total assets 4,354,183 4,057,128 4,104,520 3,689,211 3,540,451 3,467,261 3,373,245
Deposits 3,019,900 2,852,220 3,270,975 3,006,906 2,930,555 2,895,131 2,829,263
Long-term borrowings 28,883 15,412 18,602 11,416 22,931 36,088 25,703
Shareholders' equity 409,956 383,692 389,705 348,273 315,724 294,733 269,007
Selected Ratios
Average equity to assets 9.42% 9.46% 9.49% 9.44% 8.92% 8.50% 7.97%
Return on average assets 1.34 1.27 1.30 1.33 1.31 1.09 1.09
Return on average equity 14.27 13.45 13.64 14.10 14.64 12.88 13.62
Dividends declared as a %
of net income 36.88 38.73 37.86 36.24 34.72 38.07 32.94
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FFVA FINANCIAL CORPORATION
(Dollars in thousands except per share data)
- ----------------------------------------------------------------------------------------------------------------
At or for the
Nine Months Ended
September 30, At or for the Year Ended December 31,
------------------------ --------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest income $ 32,609 $ 30,548 $ 40,993 $ 37,683 $ 29,380 $ 28,430 $ 29,962
Interest expense 17,153 15,775 21,182 19,212 14,783 14,726 17,742
Net interest income 15,456 14,773 19,811 18,471 14,597 13,704 12,220
Provision for loan losses - 60 60 255 600 900 726
Non-interest income 1,282 894 1,321 1,054 896 1,700 1,699
Non-interest expense 7,479 9,953 (3) 12,569 (3) 9,084 7,496 7,134 6,974
Net income 5,906 3,677 5,463 6,474 4,703 5,347 3,916
Per Share Data
Net income $ 1.27 $ 0.70 1.06 $ 1.11(2) $ 0.79(1)(2) - -
Cash dividends 0.34 0.275 0.375 0.30(2) - - -
Book value 16.70 15.68 15.87 15.44(2) 14.41(2) - -
Average Balance Sheet
Summary
Net loans $325,716 $ 301,604 $305,344 $ 282,321 $ 262,823 $266,688 $260,915
Investment securities 201,899 194,134 192,520 176,732 113,465 88,032 83,409
Total assets 552,924 518,429 521,387 479,662 402,497 373,080 360,743
Deposits 405,923 383,054 385,612 354,815 342,166 333,397 328,882
Long-term borrowings 25,555 5,111 7,083 6,000 10,250 8,250 6,500
Shareholders' equity 73,546 83,489 81,738 90,541 44,242 26,670 21,720
Selected Ratios
Average equity to assets 13.30% 16.10% 15.68% 18.88% 10.99% 7.15% 6.02%
Return on average assets 1.42 0.95 1.05 1.35 1.17 1.43 1.09
Return on average equity 10.71 5.87 6.68 7.15 10.63 20.05 18.03
Dividends declared as a %
of net income 26.77 39.29 35.38 27.03 - - -
</TABLE>
(1) Based on the weighted average number of shares outstanding since the
conversion from a Federal Mutual Savings Bank to a Federal Stock Savings
Bank on October 12, 1994.
(2) Restated to reflect two-for-one stock split paid June 5, 1996.
(3) Includes $2,230 paid to recapitalize the SAIF portion of the FDIC insurance
fund.
14
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
PRO FORMA SELECTED FINANCIAL INFORMATION
(Dollars in thousands except per share data)
- ------------------------------------------------------------------------------------------------------------------------------------
At or for the
Nine Months Ended
September 30, At or for the Year Ended December 31,
----------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest income $ 281,752 $ 262,419 $ 354,224 $ 320,055 $ 280,763 $ 276,129 $ 293,446
Interest expense 130,925 118,464 160,467 140,292 109,680 114,512 137,781
Net interest income 150,827 143,955 193,757 179,763 171,083 161,617 155,665
Provision for loan losses 5,291 3,896 5,264 5,887 5,388 6,688 12,115
Non-interest income 35,961 31,048 42,113 38,628 37,474 41,005 38,465
Non-interest expense 104,376 106,691 140,984 128,675 127,652 132,284 122,512
Net income 50,749 42,834 59,334 55,580 50,914 43,301 40,554
Per Share Data
Net income $ 1.54 $ 1.31 $ 1.80 $ 1.72 $ 1.58 $ 1.33 $ 1.25
Cash dividends 0.59 0.55 0.74 0.66 0.60 0.54 0.45
Book value 16.07 18.36 18.60 18.08 16.58 13.52 10.33
Average Balance Sheet
Summary
Net loans $ 3,112,682 $ 2,919,591 $ 2,958,161 $ 2,674,893 $2,462,509 $2,293,436 $ 2,187,688
Investment securities 1,456,363 1,338,268 1,345,501 1,174,001 1,164,445 1,162,499 1,132,868
Total assets 4,907,107 4,575,557 4,625,907 4,168,873 3,942,948 3,840,341 3,733,988
Deposits 3,425,823 3,235,274 3,656,587 3,361,721 3,272,721 3,228,528 3,158,145
Long-term borrowings 54,438 20,523 25,685 17,416 33,181 44,338 32,203
Shareholders' equity 483,502 467,181 471,443 438,814 359,966 321,403 290,727
Selected Ratios
Average equity to assets 9.85% 10.21% 10.19% 10.53% 9.13% 8.37% 7.79%
Return on average assets 1.38 1.25 1.28 1.33 1.29 1.13 1.09
Return on average equity 13.99 12.22 12.59 12.67 14.14 13.47 13.95
Dividends declared as a %
of net income 38.29 42.07 40.82 38.68 38.07 40.19 35.83
</TABLE>
15
<PAGE>
THE SPECIAL MEETING OF ONE VALLEY SHAREHOLDERS
Matters to be Considered at the Special Meeting
This Joint Proxy Statement/Prospectus is being furnished by One Valley
to its shareholders in connection with the solicitation of proxies by the Board
of Directors of One Valley for use at the One Valley Special Meeting to be held
at 10:00 a.m., local time, on March 11, 1998, at The Charleston Town Center
Marriott, 200 Lee Street, East, Charleston, West Virginia, and any adjournment
or postponement thereof, to consider and vote upon a proposal to approve the
Merger Agreement, an amendment to One Valley's Restated Articles of
Incorporation to increase the authorized common stock of One Valley from forty
million shares to seventy million shares (the "One Valley Amendment") and any
other business as may properly come before the One Valley Special Meeting.
Approval of the One Valley Amendment is not necessary to effectuate the Merger.
THE BOARD OF DIRECTORS OF ONE VALLEY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND ONE VALLEY AMENDMENT, BELIEVES THEM TO BE IN THE BEST
INTERESTS OF ONE VALLEY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THEIR
APPROVAL BY ONE VALLEY SHAREHOLDERS. SEE "THE MERGER - BACKGROUND OF THE
MERGER," "- ONE VALLEY'S REASONS FOR THE MERGER" AND "ONE VALLEY PROPOSAL TO
APPROVE INCREASE OF AUTHORIZED CAPITAL STOCK."
Record Date; Vote Required
The Board of Directors of One Valley has fixed the close of business on
January 23, 1998, as the One Valley Record Date for determining shareholders
entitled to notice of and to vote at the One Valley Special Meeting, and,
accordingly, only holders of record of One Valley Common Stock at the close of
business on that day will be entitled to notice of and to vote at the One Valley
Special Meeting. The number of shares of One Valley Common Stock outstanding on
the One Valley Record Date was 27,173,842, each of such shares being entitled to
one vote.
As to the approval of the Merger Agreement and One Valley Amendment, by
checking the appropriate box, a stockholder may: (i) vote "FOR" approval of the
Merger Agreement and/or the One Valley Amendment; (ii) vote "AGAINST" approval
of the Merger Agreement and/or the One Valley Amendment; or (iii) "ABSTAIN."
Because the affirmative vote of the holders of a majority of the outstanding
shares of One Valley Common Stock entitled to vote is required to approve and
adopt each of the Merger Agreement and the One Valley Amendment, abstentions
will have the effect of a vote against the approval of each of the Merger
Agreement and the One Valley Amendment. Brokers who hold shares in street name
for customers who are the beneficial owners of such shares are, in some
instances, prohibited from giving a proxy to vote shares held for such customers
on the approval and adoption of the Merger Agreement and the One Valley
Amendment without specific instructions from such customers.
The directors and executive officers of One Valley (including certain
of their related interests) beneficially own, as of the Record Date, and are
entitled to vote at the One Valley Special Meeting 18% of the outstanding shares
of One Valley Common Stock.
16
<PAGE>
A FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY
CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
APPROVAL OF THE MERGER AGREEMENT AND THE ONE VALLEY AMENDMENT.
Voting of Proxies; Revocability of Proxies; Solicitation of Proxies
After having been submitted, the enclosed proxy may be revoked by the
person giving it, at any time before it is voted by: (i) notifying One Valley in
person; (ii) giving written notice to One Valley of the revocation of the proxy;
(iii) by submitting to One Valley a subsequently dated proxy; or (iv) by
attending the One Valley Special Meeting and withdrawing the proxy before it is
voted. All shares represented by valid proxies will be exercised in the manner
specified thereon. If no specification is made, duly executed proxies will be
voted in favor of each of approval of the Merger Agreement, the One Valley
Amendment, and in the discretion of the individuals named as proxies as to any
other matter that may come before the One Valley Special Meeting or any
adjournment or postponement thereof including, among other things, a motion to
adjourn or postpone the One Valley Special Meeting to another time and/or place,
for the purpose of soliciting additional proxies or otherwise; provided however,
that no proxy which is voted against the proposal to approve the Merger
Agreement will be voted in favor of any such adjournment or postponement.
The solicitation is being made by One Valley. Directors, officers and
employees of One Valley may solicit proxies from One Valley's shareholders,
either personally or by telephone, telegraph or other form of communication.
Such persons will receive no additional compensation for such services. All
expenses associated with the solicitation of proxies will be paid by One Valley
including the printing and mailing expenses of the proxy materials.
Dissenters' Rights of Appraisal
Under West Virginia Code Section 31-1-122 and 31-1-123, shareholders of
One Valley are entitled to dissenters' rights of appraisal in connection with
the Merger. See "Rights of Dissenting Shareholders."
THE SPECIAL MEETING OF FFVA FINANCIAL SHAREHOLDERS
Matters to be Considered at the Special Meeting
This Joint Proxy Statement/Prospectus is being furnished by FFVA
Financial to its shareholders in connection with the solicitation of proxies by
the Board of Directors of FFVA Financial for use at the FFVA Financial Special
Meeting to be held at 10:00 a.m., local time, on March 10, 1998, at the Holiday
Inn Select, 601 Main Street, Lynchburg, Virginia, and any adjournment or
postponement thereof, to consider and vote upon a proposal to approve the
Merger Agreement, the FFVA Financial Amendment and any other business as may
properly come before the FFVA Financial Special Meeting.
17
<PAGE>
THE BOARD OF DIRECTORS OF FFVA FINANCIAL HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE FFVA FINANCIAL AMENDMENT, BELIEVES THESE PROPOSALS TO
BE IN THE BEST INTERESTS OF FFVA FINANCIAL AND ITS SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THEIR APPROVAL BY FFVA FINANCIAL SHAREHOLDERS. SEE "THE MERGER -
BACKGROUND OF THE MERGER," "- FFVA FINANCIAL'S REASONS FOR THE MERGER" AND "FFVA
FINANCIAL PROPOSAL TO AMEND RESTATED ARTICLES OF INCORPORATION."
Record Date; Vote Required
The Board of Directors of FFVA Financial has fixed the close of
business on January 20, 1998, as the FFVA Financial Record Date for determining
shareholders entitled to notice of and to vote at the FFVA Financial Special
Meeting, and accordingly, only holders of record of FFVA Financial Common Stock
at the close of business on that day will be entitled to notice of and to vote
at the FFVA Financial Special Meeting. The number of shares of FFVA Financial
Common Stock outstanding on the Record Date was 4,580,874, each of such shares
being entitled to one vote.
As to the approval of the Merger Agreement, by checking the appropriate
box, a shareholder may: (i) vote "FOR" approval of the Merger Agreement; (ii)
vote "AGAINST" approval of the Merger Agreement; or (iii) "ABSTAIN." Because the
affirmative vote of the holders of two-thirds of the outstanding shares of FFVA
Financial Common Stock entitled to vote is required to approve and adopt the
Merger Agreement, abstentions will have the effect of a vote against the
approval of the Merger Agreement. Brokers who hold shares in street name for
customers who are the beneficial owners of such shares are, in some instances,
prohibited from giving a proxy to vote shares held for such customers on the
approval and adoption of the Merger Agreement without specific instructions from
such customers.
As to the approval of the FFVA Financial Amendment, by checking the
appropriate box, a shareholder may: (i) vote "FOR" approval of the FFVA
Financial Amendment; (ii) vote "AGAINST" approval of the FFVA Financial
Amendment; or (iii) "ABSTAIN." Because the affirmative vote of the holders of
80% of the outstanding shares of FFVA Financial Common Stock entitled to vote on
the FFVA Financial Amendment is required to approve and adopt the FFVA Financial
Amendment, abstentions will have the effect of a vote against the approval of
the FFVA Financial Amendment. Brokers who hold shares in street name for
customers who are the beneficial owners of such shares are, in some instances,
prohibited from giving a proxy to vote shares held for such customers on the
approval and adoption of the FFVA Financial Amendment without specific
instructions from such customers.
Consummation of the Merger is contingent upon approval of the FFVA
Financial Amendment.
The directors and executive officers of FFVA Financial (including
certain of their related interests) beneficially own, as of the Record Date, and
are entitled to vote at the FFVA Financial Special Meeting 7.73% of the
outstanding shares of FFVA Financial Common Stock.
A FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED PROXY OR BY
CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
APPROVAL OF THE MERGER AGREEMENT AND THE FFVA FINANCIAL AMENDMENT.
18
<PAGE>
Voting of Proxies; Revocability of Proxies; Solicitation of Proxies
After having been submitted, the enclosed proxy may be revoked by the
person giving it, at any time before it is voted by: (i) notifying FFVA
Financial in person; (ii) giving written notice to FFVA Financial of the
revocation of the proxy; (iii) by submitting to FFVA Financial a subsequently
dated proxy; or (iv) by attending the meeting and withdrawing the proxy before
it is voted at the meeting. All shares represented by valid proxies will be
exercised in the manner specified thereon. If no specification is made, duly
executed proxies will be voted in favor of each of approval of the Merger
Agreement and the FFVA Financial Amendment, and in the discretion of the
individuals named as proxies will be voted as to any other matter that may come
before the FFVA Financial Special Meeting or any adjournment or postponement
thereof including, among other things, a motion to adjourn or postpone the FFVA
Financial Special Meeting to another time and/or place, for the purpose of
soliciting additional proxies or otherwise; provided however, that no proxy
which is voted against the proposal to approve the Merger Agreement or the FFVA
Financial Amendment will be voted in favor of any such adjournment or
postponement.
The solicitation is being made by FFVA Financial. Directors, officers
and employees of FFVA Financial may solicit proxies from FFVA Financial
shareholders, either personally or by telephone, telegraph or other form of
communication. Such persons will receive no additional compensation for such
services. FFVA Financial has retained Georgeson & Company, Inc. to assist in
soliciting proxies and to send proxy materials to brokerage houses and other
custodians, nominees and fiduciaries for transmittal to their principals, at a
cost of approximately $17,000, plus out-of-pocket expenses. All expenses
associated with the solicitation of proxies will be paid by FFVA Financial
except that One Valley shall bear the printing and mailing expenses of the proxy
materials.
Dissenters' Rights of Appraisal
In accordance with Virginia law, record holders of FFVA Financial
Common Stock are not entitled to dissenters' rights of appraisal.
THE MERGER
THE FOLLOWING INFORMATION CONCERNING THE MERGER, INSOFAR AS IT RELATES
TO MATTERS CONTAINED IN THE MERGER AGREEMENT, IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF THE MERGER AGREEMENT WHICH IS ATTACHED AS APPENDIX
I TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
General
On December 16, 1997, One Valley and FFVA Financial entered into the
Merger Agreement which provides for the merger of FFVA Financial with and into
One Valley. On the effective date of the Merger, the shareholders of FFVA
Financial will become shareholders of One Valley, and the separate existence and
corporate organization of FFVA Financial will cease. As a result of the Merger,
the Savings Bank will become a subsidiary of One Valley, and each of the
outstanding shares of FFVA Financial Common Stock will be converted into One
Valley Common Stock at the exchange rate of 1.05 (one and five one-hundredths)
shares of
19
<PAGE>
One Valley Common Stock for each share of FFVA Financial Common Stock. In lieu
of fractional shares, each shareholder of FFVA Financial, who would otherwise be
entitled to receive a fraction of a share, will receive an amount in cash equal
to such fraction multiplied by the closing price of One Valley Common Stock on
the New York Stock Exchange on the business day immediately prior to the
Effective Date of the Merger.
The affirmative vote of not less than two-thirds of the outstanding
shares of FFVA Financial Common Stock entitled to vote and the affirmative vote
of not less than a majority of the outstanding shares of One Valley Common Stock
entitled to vote is required to approve the Merger Agreement. Further,
consummation of the Merger is contingent upon approval of the FFVA Financial
Amendment, which requires the affirmative vote of not less than 80% of the
outstanding shares of FFVA Financial Common Stock entitled to vote.
In connection with the announcement of the Merger, One Valley estimated
that the impact of the Merger on 1998 earnings is expected to be relatively
neutral. It expects that the Merger will be accretive to One Valley's reported
earnings per share in 1999 by approximately 0.8%, primarily through improved net
interest margin, fee income enhancements and expense reductions. This estimate
includes One Valley's current estimates of cost savings equal to 28% of FFVA
Financial's operating expenses. FFVA Financial recognized approximately $2.0
million in non-recurring expenses in the fourth quarter of 1997 in connection
with the Merger. During the fourth quarter of 1997, One Valley recognized
non-recurring expenses of $1.8 million related to the consolidation and growth
of its expanding banking operations.
Subject to the conditions to the obligations of the parties to effect
the Merger, the Merger will become effective on such date as selected by One
Valley; provided, however, such date must not be more than 30 days after the
receipt of all requisite approvals of regulatory authorities and shareholders.
Subject to the foregoing, it is currently anticipated that the Merger will be
consummated in the second quarter of 1998, although there can be no assurances
as to satisfaction of these conditions or the timing thereof.
Operations and Management After the Merger
Following consummation of the Merger, One Valley anticipates that it
will merge the Savings Bank with and into One Valley Bank-Central Virginia,
National Association (the "Bank Merger").
After the Bank Merger, One Valley's Virginia operations center will be
located in Lynchburg, Virginia. The Boards of Directors of the Savings Bank
(which is identical to the FFVA Financial Board) and One Valley Bank-Central
Virginia, National Association will be combined into one board after the Bank
Merger. All board members of FFVA Financial will continue to receive their
current compensation for 18 months from the date of the Bank Merger and
thereafter will become subject to the retirement policy and will be paid the
same as directors of One Valley Bank-Central Virginia, National Association. See
"Interests of Certain Persons in the Merger."
After the Merger and until the Bank Merger, the Savings Bank's current
directors and officers shall continue as the Savings Bank's directors and
officers and shall hold office as prescribed in the Savings Bank's bylaws and
under applicable law until their successors are elected and qualified. Upon the
effective date of the Merger, One Valley shall, by action of its Board of
Directors, elect James L. Davidson, Jr., President and Chief Executive Officer
of FFVA Financial, and one other person from the board of directors of FFVA
Financial selected by the board of directors of FFVA Financial as members of One
Valley's Board of Directors. Additionally, at its Annual Meeting of Shareholders
in April, 1999, One Valley shall nominate and recommend Mr. Davidson and such
other person for three-year terms as members of One Valley's Board of Directors.
See "- Interests of Certain Persons in the Merger."
20
<PAGE>
After the effective date, One Valley intends to integrate the benefit
plans of the Savings Bank with those of One Valley and eventually make available
to all employees and officers of the Savings Bank coverage under the benefit
plans generally available to One Valley's employees and officers (including
pension, profit-sharing, and health and hospitalization) on the terms and
conditions available to similarly situated employees and officers of One Valley.
Background of the Merger
The Savings Bank, organized in 1923, is a federally chartered savings
bank headquartered in Lynchburg, Virginia, and generally operates as a
traditional thrift institution. The Savings Bank has five locations in the City
of Lynchburg, Virginia, and locations at Altavista, Farmville, Keysville,
Madison Heights, South Boston and South Hill, Virginia. The Savings Bank's
primary market area includes the City of Lynchburg and all or a portion of
Amherst, Appomattox, Bedford, Brunswick, Buckingham, Campbell, Charlotte,
Cumberland, Halifax, Lunenburg, Mecklenburg, Nelson, Nottaway, Pittsylvania and
Prince Edward Counties in Virginia.
Like other thrifts, the core of the Savings Bank's business consists of
attracting deposits from the general public and originating loans to finance the
acquisition, construction, or improvement of residential properties located in
the market areas served by the Savings Bank. Management has worked several years
to diversify the Savings Bank's activities by expanding commercial real estate
and consumer lending and improving the array of deposit products and non-deposit
investment services. While a measure of success has been realized in such
diversification, it is also recognized that the basic business and identity of
the Savings Bank remains closely tied to its roots as a traditional thrift
institution.
On October 12, 1994, the Savings Bank converted from the mutual to the
stock form of organization through the formation of FFVA Financial and an
initial public offering. This transaction resulted in a capital to assets ratio
appreciably in excess of peer financial institutions. Since 1994, FFVA
Financial's Board of Directors and management have explored several growth
strategies seeking to better employ the company's capital in order to improve
the return on shareholders' equity.
During 1995 and 1996, FFVA Financial engaged in various discussions
relating to possible acquisitions of other financial institutions by FFVA
Financial. The Board was regularly advised of management's efforts to expand the
institution through acquisitions and, on several occasions, pursued offers to
acquire other financial institutions and branches of other financial
institutions. Except for the acquisition of a Crestar Bank branch located in
Keysville, Virginia, in 1995, for a variety of reasons, no final agreements were
reached with such other institutions.
The Board of Directors and management of FFVA Financial have recognized
that the increased competition from commercial banks and other financial
institutions has changed fundamentally the environment in which traditional
thrifts have operated and threatens the market shares held by thrifts for their
traditional services. For example, in the Lynchburg market, thirteen banks and
two thrifts have offices. Competition with these commercial banks, with other
financial institutions and with other providers of financial services, such as
credit unions, is strong, making it difficult for the Savings Bank, despite its
diversification efforts and accomplishments, to expand meaningfully into the
commercial banking business or make significant market share gains.
21
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The Board of Directors and management of FFVA Financial have assessed
the foregoing and other developments (such as expressions of interest of other
financial institutions in acquiring FFVA Financial) and their significance to
FFVA Financial and its shareholders. At the same time, the Board of Directors
has been cognizant of changes in FFVA Financial's operating environment,
including shrinking interest margins, causing the Board of Directors and
management to project the possibility of slower growth in earnings in coming
years.
In light of these occurrences and conditions, the Board of Directors,
in October, 1997, decided to undertake a comprehensive study of FFVA Financial's
future and the strategic options available to FFVA Financial. In October, 1997,
the Board of Directors employed Sandler to provide business and financial advice
regarding the strategic future of FFVA Financial. With the assistance of
Sandler, the Board of Directors reviewed the economic and competitive conditions
in the market areas of the Savings Bank, changes in the residential mortgage
industry, the trend of consolidation among federally insured depository
institutions, merger market prices paid for federally insured depository
institutions, the potential effects of the Riegle-Neal Interstate Banking and
Branching Efficiency Act, and the effects that rising interest rates and
cyclical trends could have on bank and thrift stock prices in coming years. The
Board of Directors also analyzed the history and market performance of FFVA
Financial since it converted to a stock institution in 1994.
The Board of Directors considered several options for the future of
FFVA Financial, including: (i) remaining independent and seeking to generate
growth and added profits by expanding and diversifying FFVA Financial's
financial services and product offerings; (ii) expanding through establishment
of new branches; (iii) expanding by acquiring smaller savings institutions,
commercial banks or branches; (iv) merging with an institution of similar size;
and (v) entering into a merger with a larger bank or thrift holding company. The
Board reviewed each option and concluded, in light of current business
conditions, FFVA Financial's particular circumstances and prospects, and the
risks and expenses of expanding its products, services, and/or branch network on
an independent basis, that the best interests of FFVA Financial and its
shareholders would be served by exploring closely the possibility of combining
with another institution in a sale transaction in the near term.
The FFVA Financial Board directed Sandler to assist in identifying
financial institutions that it believed would have an interest in a business
combination with FFVA Financial as well as have the financial resources
necessary to successfully complete such a transaction. In November 1997, Sandler
met with the FFVA Financial Board and identified and analyzed several companies
it believed met such conditions. Sandler also reviewed with the FFVA Financial
Board potential terms and structures of acquisition transactions. The FFVA
Financial Board instructed Sandler to approach two financial institutions,
including One Valley, and inquire as to their level of interest in pursuing a
transaction with FFVA Financial. Both parties submitted expressions of interest.
Sandler conveyed such expressions to the management of FFVA Financial. In early
December 1997, there were several discussions among Sandler, FFVA Financial and
both parties. During such period, both parties revised their initial expressions
of interest.
Throughout the foregoing process, management advised and informed the
Board of Directors of FFVA Financial of developments and was directed by the
Board to pursue discussions.
On December 11, 1997, the Executive Committee of the FFVA Financial
Board met with senior management and Sandler. Sandler reviewed with the
Committee the alternative strategies for future operation of FFVA Financial
including the expressions of interest of both parties. For the reasons discussed
below under "Reasons for the Merger," the Committee instructed senior management
and Sandler to pursue further
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negotiations with One Valley. Representatives of One Valley conducted due
diligence of FFVA Financial, and FFVA Financial representatives conducted due
diligence of One Valley. Beginning December 12, 1997, through December 16, 1997,
senior management of FFVA Financial and One Valley, with the assistance of
Sandler and legal counsel, negotiated a form of definitive merger agreement.
On December 16, 1997, the Board of Directors reviewed the proposal of
One Valley and met with Sandler and FFVA Financial's legal counsel to discuss
and review the final proposal and terms of the Merger Agreement. Sandler
presented a detailed analysis of the final proposal to the Board of Directors
and provided its oral opinion that the Exchange Ratio was fair to FFVA
Financial's shareholders from a financial point of view.
On the basis of the independent judgment of the members of the Board of
Directors of FFVA Financial, and the opinion of Sandler that the One Valley
proposal was fair to FFVA Financial's shareholders from a financial point of
view, the Board of Directors concluded that One Valley's offer was in the best
interests of FFVA Financial and its shareholders. Accordingly, for all of the
reasons discussed above, on December 16, 1997, FFVA Financial's Board of
Directors accepted One Valley's offer and authorized execution of the Merger
Agreement.
One Valley's strategic plan contemplates expansion through acquisition,
with a particular focus on central Virginia. At a meeting on December 9, 1997,
the possible acquisition of FFVA Financial was discussed at a special meeting of
the Merger and Acquisition Committee of the One Valley Board of Directors. FFVA
Financial was regarded as an attractive acquisition that advances One Valley's
strategic plan and was consistent with One Valley's financial goals.
Accordingly, on December 16, the Board of Directors of One Valley, after
consideration of presentations by management, counsel and Merrill Lynch, which
rendered its oral opinion that the Exchange Ratio was fair to One Valley from a
financial point of view, and after discussion of the transaction, approved the
Merger Agreement as in the best interests of One Valley and its shareholders.
FFVA Financial's Reasons for the Merger
In reaching its conclusion to approve the Merger Agreement, the FFVA
Financial Board considered a number of factors. The FFVA Financial Board did not
assign any relative or specific weights to the factors considered. Among other
things, the FFVA Financial Board considered: (i) the Merger consideration in
relation to the book value, assets and earnings of FFVA Financial and One
Valley; (ii) information concerning the financial condition, results of
operations and prospects of FFVA Financial and One Valley, including the return
on assets and return on equity; (iii) the financial terms of other recent
business combinations in the banking industry; and (iv) the opinion of Sandler
as to the fairness of the Exchange Ratio to FFVA Financial's shareholders from a
financial point of view.
The FFVA Financial Board believes that the terms of the Merger
Agreement, which are the product of arms-length negotiations between One Valley
and FFVA Financial, are in the best interest of FFVA Financial and its
shareholders. In the course of reaching its determination, the FFVA Financial
Board consulted with legal counsel with respect to its legal duties, the terms
of the Merger Agreement and the issues related thereto; with its financial
advisor with respect to the financial aspects and fairness of the transaction;
and with senior management regarding, among other things, retention of FFVA
Financial employees, customer service and depth of One Valley management.
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In reaching its determination to approve the Merger Agreement, the FFVA
Financial Board considered various factors it deemed material, including:
(a) The FFVA Financial Board analyzed information with respect to the
financial condition, results of operations, businesses and prospects of FFVA
Financial and One Valley. In this regard, the FFVA Financial Board analyzed the
options of having FVA Financial effect a transaction with a third party or
continuing on a stand-alone basis. The range of values on such a basis were
determined generally to exceed the present value of FFVA Financial shares on a
stand-alone basis under business strategies which could be reasonably
implemented by FFVA Financial.
(b) The FFVA Financial Board considered the oral opinion (which was
subsequently confirmed in writing) of Sandler that, as of December 16, 1997, the
Exchange Ratio was fair to FFVA Financial's shareholders from a financial point
of view. See "- Opinion of Financial Advisor to FFVA Financial."
(c) The FFVA Financial Board considered the current operating
environment, including, but not limited to, the continued consolidation activity
and increasing competition in the banking and financial services industries, the
prospect for further changes in these industries, and the importance of being
able to capitalize on developing opportunities in these industries. This
information has been periodically reviewed by the FFVA Financial Board at its
regular board meetings and was also discussed between the FFVA Financial Board
and FFVA Financial's various advisors.
(d) The FFVA Financial Board considered the other terms of the Merger
Agreement, including the tax-free nature of the transaction.
(e) The FFVA Financial Board considered the detailed financial analyses
and other information with respect to FFVA Financial and One Valley discussed by
Sandler, as well as the FFVA Financial Board's own knowledge of FFVA Financial,
One Valley and their respective businesses. In this regard, the latest
publicly-available financial and other information for FFVA Financial and One
Valley were analyzed, including a comparison to publicly-available financial and
other information for other similar institutions.
(f) The FFVA Financial Board considered the value of FFVA Financial
Common Stock continuing as a stand-alone entity compared to the effect of FFVA
Financial combining with One Valley in light of the factors summarized above and
the current economic and financial environment, including, but not limited to,
other possible strategic alternatives, the results of the contacts and
discussions between FFVA Financial and Sandler and various third parties and the
belief of the FFVA Financial Board and management that the Merger offered the
best transaction available to FFVA Financial and its shareholders.
(g) The FFVA Financial Board considered the likelihood of the Merger
being approved by the appropriate regulatory authorities, including factors such
as market share analysis, One Valley's Community Reinvestment Act rating at that
time and the estimated pro forma financial impact of the Merger on One Valley.
The Exchange Ratio of 1.05 shares of One Valley Common Stock represents
an exchange premium of approximately 22.3% to FFVA Financial shareholders based
on a comparison of the market value of One Valley Common Stock as of December
15, 1997, with the market value of FFVA Financial Common Stock as of December
15, 1997.
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Upon completion of the Merger, former shareholders of FFVA Financial
will have equity ownership in a substantial bank holding company. One Valley is
the largest bank holding company headquartered in the State of West Virginia. At
September 30, 1997, One Valley had $4.4 billion in total assets, and operated 10
affiliate banks with 79 locations in West Virginia and one affiliate bank with
10 locations in Virginia. In addition, it is anticipated that One Valley will
acquire 15 additional branches from Wachovia Corporation in the first quarter of
1998. When the Merger is consummated, shareholders of FFVA Financial will
receive, in the aggregate, 5,537,580 shares of One Valley Common Stock. If the
Merger had been completed on September 30, 1997, FFVA Financial shareholders
would have received 16.9% of the 32,836,549 shares of One Valley Common Stock
that would have been outstanding. Based upon financial data as of September 30,
1997, on a pro forma consolidated basis 11.3% of assets, 11.8% of deposits,
11.6% of net income, and 15.2% of shareholders' equity will be attributable to
FFVA Financial. If the Merger had been completed on September 30, 1997, One
Valley would have had approximately $4.9 billion in total assets, approximately
$3.4 billion in total deposits and approximately $3.1 billion in total loans.
The foregoing discussion of the information and factors considered by
the FFVA Financial Board is not intended to be exhaustive, but constitutes the
material factors considered by the FFVA Financial Board. In reaching its
determination to approve and recommend the Merger Agreement, the FFVA Financial
Board did not assign any relative or specific weights to the foregoing factors,
and individual directors may have weighted factors differently. After
deliberating with respect to the Merger and the other transactions contemplated
by the Merger Agreement, considering, among other things, the matters discussed
above and the opinion of Sandler referred to above, the FFVA Financial Board
approved and adopted the Merger Agreement, the FFVA Financial Amendment and the
transactions contemplated thereby as being in the best interests of FFVA
Financial and its shareholders.
One Valley's Reasons for the Merger
One Valley regards the development of a meaningful presence in central
Virginia as an important element of its strategic plan. Since March 1996, One
Valley has conducted operations in central Virginia, following the acquisition
of CSB Financial Corporation. One Valley has recently announced the acquisition
of 15 additional branches which it will purchase in February 1998, from Wachovia
Corporation in the same area of Virginia.
In reaching its conclusion to approve the Merger, the One Valley Board
considered a number of factors. The One Valley Board did not assign any relative
or specific weights to the factors considered. The One Valley Board considered
among other things: (i) the strategic considerations outlined in the preceding
paragraphs; (ii) the attractiveness of FFVA Financial; (iii) the anticipated
impact on earnings, book value and future prospects of the combined company;
(iv) the terms of the Merger Agreement; (v) presentations and financial analyses
concerning the financial condition, results of operations and prospects of
FFVA Financial and One Valley; (vi) the financial terms of other recent
business combinations in the banking industry; (vii) the regulatory approval
process; and (viii) the opinion of Merrill Lynch as to the fairness of the
Exchange Ratio to One Valley from a financial point of view.
The foregoing discussion of the information and factors considered by
the One Valley Board is not intended to be exhaustive, but constitutes the
material factors considered by the One Valley Board. In reaching its
determination to approve and recommend the Merger Agreement, the One Valley
Board did not assign any relative or specific weights to the foregoing factors,
and individual directors may have weighted factors differently. After
deliberating with respect to the Merger and the other transactions contemplated
by the
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Merger Agreement, considering, among other things, the matters discussed above
and the opinion of Merrill Lynch referred to above, the One Valley Board
approved and adopted the Merger Agreement and the transactions contemplated
thereby as being in the best interests of One Valley and its shareholders.
Opinion of Financial Advisor to FFVA Financial
Pursuant to an engagement letter dated as of October 23, 1997 (the
"Sandler Agreement"), FFVA Financial retained Sandler as an independent
financial advisor in connection with FFVA Financial's consideration of a
possible business combination with a second party. Sandler is a nationally
recognized investment banking firm whose principal business specialty is banks
and savings institutions, and as part of its investment banking business, is
regularly engaged in the valuation of such businesses and their securities in
connection with mergers and acquisitions and other corporate transactions.
Pursuant to the terms of the Sandler Agreement, Sandler acted as
financial advisor to FFVA Financial in connection with the Merger. In connection
therewith, the FFVA Financial Board requested Sandler to render its opinion as
to the fairness, from a financial point of view, of the Exchange Ratio to the
holders of FFVA Financial Common Stock. At the December 16, 1997 meeting at
which FFVA Financial's Board approved and adopted the Merger Agreement, Sandler
delivered to the FFVA Financial Board of Directors its oral opinion,
subsequently confirmed in writing, that, as of such date, the Exchange Ratio was
fair, from a financial point of view, to the holders of shares of the FFVA
Financial Common Stock. Sandler has also delivered to the FFVA Financial Board a
written opinion dated as of the date of this Joint Proxy Statement/Prospectus
(the "Sandler Fairness Opinion") which is substantially identical to the
December 16, 1997 opinion. The full text of the Sandler Fairness Opinion, which
sets forth the procedures followed, assumptions made, matters considered and
qualifications and limitations on the review undertaken in connection with such
opinion, is attached as Appendix IV to this Joint Proxy Statement/Prospectus and
is incorporated herein by reference. The description of the opinion set forth
herein is qualified in its entirety by reference to Appendix IV. Holders of
shares of FFVA Financial Common Stock are urged to read the Sandler Fairness
Opinion in its entirety in connection with their consideration of the proposed
Merger.
The Sandler Fairness Opinion was provided to FFVA Financial's Board for
its information and is directed only to the fairness, from a financial point of
view, of the Exchange Ratio to holders of FFVA Financial's Common Stock. It does
not address the underlying business decision of FFVA Financial to engage in the
Merger or any other aspect of the Merger and does not constitute a
recommendation to any holder of shares of FFVA Financial Common Stock as to how
such shareholder should vote at the FFVA Financial Special Meeting with respect
to the Merger Agreement or any other matter related thereto.
In connection with rendering its December 16, 1997 opinion, Sandler
performed a variety of financial analyses. The following is a summary of the
material analyses performed by Sandler, but does not purport to be a complete
description of all the analyses underlying Sandler's opinion. The preparation of
a fairness opinion is a complex process involving subjective judgments and is
not necessarily susceptible to a partial analysis or summary description.
Accordingly, Sandler believes that its analyses must be considered as a whole
and that selecting portions of such analyses and the factors considered by it,
without considering all factors and analyses, could create an incomplete view of
the evaluation processes underlying its opinion. In performing its analyses,
Sandler made numerous assumptions with respect to industry performance, business
and economic conditions and various other matters, many of which cannot be
predicted and are beyond the control of FFVA Financial,
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One Valley and Sandler. Any estimates contained in Sandler's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. Estimates on the values of companies
do not purport to be appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold. Because such estimates are
inherently subject to uncertainty, none of FFVA Financial, One Valley or Sandler
assumes responsibility for their accuracy.
Summary of Proposal. Sandler reviewed the financial terms of the
proposed transaction. Based on the closing price of One Valley Common Stock on
December 15, 1997 of $40.94, Sandler calculated an implied transaction value per
share of FFVA Financial Common Stock of $42.98. Based upon FFVA Financial's
September 30, 1997 financial information, Sandler calculated the price to
tangible book value, price to last twelve months' earnings and a core deposit
premium. This analysis yielded a price to tangible book value multiple of 2.6x,
a price to last twelve months' earnings multiple of 26.4x and a core deposit
premium of 28.7%.
Stock Trading History. Sandler reviewed the history of the reported
trading prices and volume of the FFVA Financial Common Stock and the One Valley
Common Stock, and the relationship between the movements in the prices of the
FFVA Financial Common Stock and the One Valley Common Stock, respectively, to
movements in certain stock indices, including the Standard & Poor's 500 Index,
the Nasdaq Banking Index and composite groups of publicly traded savings
institutions (in the case of FFVA Financial) and publicly traded commercial
banks (in the case of One Valley) in geographic proximity and of similar asset
size to FFVA Financial and One Valley, respectively.
Analysis of Selected Publicly Traded Companies. Sandler used publicly
available information to compare selected financial and market trading
information, including balance sheet composition, asset quality ratios, loan
loss reserve levels, profitability, capital adequacy, dividends and trading
multiples for FFVA Financial and two different groups of savings institutions.
The first group consisted of FFVA Financial and the following 10 publicly-traded
regional savings institutions (the "Regional Group"): Eagle Bancshares, HFNC
Financial Corp., CENIT Bancorp Inc., Virginia Beach Federal Financial, First
Federal Bancshares of AR, Coastal Financial Corp., FFLC Bancorp Inc.,
Cooperative Bankshares Inc., Fed One Bancorp and First Citizens Corp. Sandler
also compared FFVA Financial to a group of 12 publicly-traded savings
institutions which had a return on average equity (based on last quarter
annualized earnings) of greater than 15% and a price to tangible book value of
greater than 195% (the "Highly Valued Group"). The Highly Valued Group included
the following institutions: North American Savings Bank, Great Southern Bancorp
Inc., People's Bancshares Inc., American Bank of Connecticut, MetroWest Bank,
FMS Financial Corp., Glacier Bancorp Inc., Somerset Savings Bank, Coastal
Financial Corp., First Mutual Savings Bank, Progress Financial Corp. and PVF
Capital Corp. The analysis compared publicly available financial information for
FFVA Financial and each of the groups as of and for each of the years ended
December 31, 1992 through December 31, 1996 and as of and for the twelve months
(and, in certain cases, the three months) ended September 30, 1997.
Sandler also used publicly available information to perform a similar
comparison of selected financial and market trading information for One Valley
and two different groups of commercial banks. The first group consisted of One
Valley and the following 10 publicly-traded commercial banks (the "Peer Group"):
CCB Financial Corp., Centura Banks Inc., First Commercial Corp., Trustmark
Corp., National Commerce Bancorp., BancorpSouth Inc., United Bankshares Inc.,
F&M National Corp., First United Bancshares Inc. and Carolina First Corp.
Sandler also compared One Valley to a group of 12 publicly-traded commercial
banks which had a return on average equity (based on last twelve months'
earnings) of greater than 15% and a price to tangible
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book value of greater than 324% (the "Commercial Highly Valued Group"). The
Commercial Highly Valued Group institutions included the following institutions:
North Fork Bancorp, Wilmington Trust Corp., FirstMerit Corp., Valley National
Bancorp, City National Corp., National Commerce Bancorp., Community First
Bankshares, Commerce Bancorp Inc., U.S. Trust Corp., HUBCO Inc., Silicon Valley
Bancshares and TrustCo Bank Corp. of NY. The analysis compared publicly
available financial information for One Valley and each of the groups as of and
for each of the years ended December 31, 1992 through December 31, 1996 and as
of and for the twelve months ended September 30, 1997.
Analysis of Selected Merger Transactions. Sandler reviewed 60
transactions announced from January 1, 1997 to December 15, 1997 involving
public savings institutions nationwide as acquired institutions with transaction
values over $15 million ("Nationwide Transactions"), 13 transactions announced
from January 1, 1997 to December 15, 1997 involving public savings institutions
in the Southeast (Alabama, Arkansas, Florida, Georgia, Mississippi, North
Carolina, South Carolina, Tennessee, Virginia and West Virginia) as acquired
institutions with transaction values over $15 million ("Southeast
Transactions"), and 14 transactions announced from January 1, 1997 to December
15, 1997 involving public savings institutions nationwide as acquired
institutions with transaction values greater than $100 million and less than
$300 million ("Large Nationwide Transactions"). Sandler reviewed the ratios of
price to last twelve months' earnings, price to book value, price to tangible
book value, price to deposits, price to assets and deposit premium paid in each
such transaction and computed high, low, mean, and median ratios and premiums
for the respective groups of transactions. These multiples were applied to FFVA
Financial's financial information as of and for the twelve months ended
September 30, 1997. Based upon the median multiples for Nationwide Transactions,
Sandler derived an imputed range of values per share of the FFVA Financial
Common Stock of $21.82 to $36.76. Based upon the median multiples for Southeast
Transactions, Sandler derived an imputed range of values per share of the FFVA
Financial Common Stock of $20.20 to $43.02. Based upon the median multiples for
Large Transactions, Sandler derived an imputed range of values per share of the
FFVA Financial Common Stock of $19.96 to $36.74.
No company involved in the transactions included in the above analysis
is identical to FFVA Financial and no transaction included in the above analysis
is identical to the Merger. Accordingly, an analysis of the results of the
foregoing analysis is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of FFVA Financial and One Valley and the companies to which they
are being compared.
Discounted Dividend Stream and Terminal Value Analysis. Sandler also
performed an analysis which estimated the future stream of after-tax dividend
flows of FFVA Financial through 2001 under various circumstances, assuming FFVA
Financial performed in accordance with information regarding potential future
earnings provided by its management and certain variations thereof (including
variations with respect to the levels of assets, net interest spread,
non-interest income, non-interest expense and dividend payout ratio). To
approximate the terminal value of the FFVA Financial Common Stock at the end of
the five-year period, Sandler applied price to earnings multiples ranging from
12x to 30x and applied multiples of tangible book value ranging from 150% to
300%. The dividend income streams and terminal values were then discounted to
present values using different discount rates (ranging from 9% to 14%) chosen to
reflect different assumptions regarding required rates of return of holders or
prospective buyers of the FFVA Financial Common Stock. This analysis, assuming
the current dividend payout ratio, indicated an imputed range of values per
share of the FFVA Financial
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Common Stock of between $16.65 and $46.75 when applying the price to earnings
multiples, and an imputed range of values per share of the FFVA Financial Common
Stock of between $20.78 and $47.81 when applying multiples of tangible book
value. In connection with its analysis, Sandler extensively used sensitivity
analyses to illustrate the effects changes in the underlying assumptions would
have on the resulting present value, and discussed these changes with the FFVA
Financial Board. Sandler noted that the discounted dividend stream and terminal
value analysis is a widely used valuation methodology, but the results of such
methodology are highly dependent upon the numerous assumptions that must be
made, and the results thereof are not necessarily indicative of actual values or
actual future results.
Pro Forma Merger Analysis. Based upon earnings forecasts of FFVA
Financial and One Valley, expected one-time merger related charges, projected
cost savings, projected revenue enhancements and certain other assumptions
discussed with FFVA Financial's and One Valley's respective managements, Sandler
analyzed certain potential pro forma effects of the Merger on One Valley over a
six-year period. This analysis indicated that the Merger would be accretive to
earnings once the projected cost savings and projected revenue enhancements are
fully realized. The Merger would be accretive to tangible book value per share
for all periods analyzed. The actual results achieved by One Valley may vary
from projected results and the variations may be material. From the perspective
of a shareholder of FFVA Financial, as compared to the projected stand-alone
performance of FFVA Financial, the Merger would be accretive to earnings per
share and dividends per share for all periods analyzed and dilutive to tangible
book value per share for all periods analyzed.
Contribution Analysis. Sandler reviewed the relative contributions to,
among other things, total assets, total loans, total deposits, total equity,
total tangible equity, last twelve months' ("LTM") net income and market
capitalization to be made by FFVA Financial and One Valley to the combined
institution based on data at and for the twelve months ended September 30, 1997.
This analysis indicated that FFVA Financial's implied contribution was 11.18% of
total assets, 10.27% of total loans, 10.67% of total deposits, 15.23% of total
equity, 15.58% of total tangible equity, 11.65% of LTM net income and 12.46% of
market capitalization. Based upon an Exchange Ratio of 1.05, holders of the FFVA
Financial Common Stock would own approximately 15.38% of the outstanding shares
of the combined institution.
In connection with rendering its December 16, 1997 opinion, Sandler
reviewed, among other things: (i) the Merger Agreement and exhibits thereto;
(ii) the Stock Option Agreement; (iii) FFVA Financial's audited consolidated
financial statements and management's discussion and analysis of financial
condition and results of operations as contained in its annual report to
shareholders for the year ended December 31, 1996; (iv) One Valley's audited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations as contained in its annual report
to shareholders for the year ended December 31, 1996; (v) FFVA Financial's
unaudited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1997, respectively; (vi) One Valley's unaudited consolidated
financial statements and management's discussion and analysis of financial
condition and results of operations contained in its Quarterly Report on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1997,
respectively; (vii) certain financial analyses and forecasts of FFVA Financial
prepared by and reviewed with management of FFVA Financial and the views of
senior management of FFVA Financial regarding FFVA Financial's past and current
business operations, results thereof, financial condition and future prospects;
(viii) certain financial analyses and forecasts of One Valley prepared by and
reviewed with management of One Valley and the views of senior management of One
Valley regarding One Valley's past and
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current business operations, results thereof, financial condition and future
prospects; (ix) the potential pro forma impact of the Merger on One Valley; (x)
the publicly reported historical price and trading activity for the FFVA
Financial Common Stock and the One Valley Common Stock, respectively, including
a comparison of certain financial and stock market information for FFVA
Financial and One Valley with similar publicly available information for certain
other companies the securities of which are publicly traded; (xi) the financial
terms of recent business combinations in the savings institution industry, to
the extent publicly available; (xii) the current market environment generally
and the banking environment in particular; and (xiii) such other information,
financial studies, analyses and investigations and financial, economic and
market criteria as Sandler considered relevant.
In connection with rendering the Sandler Fairness Opinion, Sandler
confirmed the appropriateness of its reliance on the analyses used to render the
December 16, 1997 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the factors considered in connection therewith.
In performing its reviews and analyses and preparing its opinion,
Sandler assumed and relied upon, without independent verification, the accuracy
and completeness of all the financial information, analyses and other
information that was publicly available or otherwise furnished to, reviewed by
or discussed with it, and Sandler does not assume any responsibility or
liability therefor. Sandler did not make an independent evaluation or appraisal
of the specific assets, the collateral securing assets or the liabilities of
FFVA Financial or One Valley or any of their respective subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of FFVA Financial and One Valley). With respect to the information
regarding potential future financial performance provided by each company's
management, Sandler assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performances of FFVA
Financial and One Valley and that such performances will be achieved. Sandler
expressed no opinion as to such financial forecasts or the assumptions on which
they were based.
Sandler's opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of such
opinion. For purposes of rendering its opinion, Sandler assumed, in all respects
material to its analysis, that all of the representations and warranties
contained the Merger Agreement and all related agreements are true and correct,
that each party to such agreements will perform all of the covenants required to
be performed by such party under such agreements and that the conditions
precedent in the Merger Agreement are not waived. Sandler also assumed that
there has been no material change in FFVA Financial's or One Valley's assets,
financial condition, results of operations, business or prospects since
September 30, 1997, the date of the last financial statements reviewed by it,
that FFVA Financial and One Valley will remain as going concerns for all periods
relevant to its analyses, that the Merger will be accounted for as a pooling of
interests and that the Merger will qualify as a tax-free reorganization for
federal and local income tax purposes. Pooling-of-interest accounting is not a
condition to the Merger.
Under the Sandler Agreement, FFVA Financial has agreed to pay Sandler a
transaction fee in connection with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. Under the terms of the Sandler
Agreement, FFVA Financial has agreed to pay Sandler a transaction fee equal to
0.75% of the aggregate transaction price, of which approximately 25% has been
paid and the remainder is payable upon closing of the transaction. Sandler has
also received a fee of $100,000 for rendering its fairness opinion, which
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amount will be credited against the balance of the transaction fee payable to
Sandler upon consummation of the Merger. FFVA Financial has also agreed to
reimburse Sandler for its reasonable out-of-pocket expenses incurred in
connection with its engagement and to indemnify Sandler and its affiliates and
their respective partners, directors, officers, employees, agents, and
controlling persons against certain expenses and liabilities, including
liabilities under securities laws. It is expected that Sandler will act as
underwriter in connection with the offering of certain shares of FFVA Financial
treasury stock and, in connection therewith, will receive customary underwriting
discounts and commissions and will be indemnified by FFVA Financial (and
following the Merger, by One Valley) against certain liabilities, including
liabilities under securities laws.
In the ordinary course of its business, Sandler may actively trade the
debt and/or equity securities of FFVA Financial and One Valley and their
respective affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Opinion of One Valley's Financial Advisor
One Valley engaged Merrill Lynch to act as its exclusive financial
advisor in connection with the Merger. Pursuant to the terms of its engagement,
Merrill Lynch agreed to assist One Valley in analyzing, structuring, negotiating
and effecting a transaction with FFVA Financial.
Representatives of Merrill Lynch were present via telephone at the
meeting of the One Valley Board of Directors held on December 16, 1997, at which
the One Valley Board considered and approved the Merger Agreement. At that
meeting, Merrill Lynch rendered its oral opinion (subsequently confirmed in
writing) that, as of such date, the Exchange Ratio (see "- Exchange Ratio") was
fair to One Valley from a financial point of view. Merrill Lynch has reconfirmed
its opinion dated as of December 16, 1997, by delivering a written opinion to
the One Valley Board, dated the date of this Joint Proxy Statement/Prospectus,
to the effect that, as of the date thereof, the Exchange Ratio was fair to One
Valley from a financial point of view (the "Merrill Lynch Opinion")
THE FULL TEXT OF THE MERRILL LYNCH OPINION, DATED THE DATE OF THIS
JOINT PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX III TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. THE MERRILL LYNCH OPINION WAS PROVIDED TO THE
ONE VALLEY BOARD FOR ITS INFORMATION, IS DIRECTED ONLY TO THE FAIRNESS OF THE
EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ONE VALLEY SHAREHOLDERS AS TO HOW SUCH SHAREHOLDERS SHOULD
VOTE AT THE ONE VALLEY MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER
RELATED THERETO. THE DESCRIPTION OF THE MERRILL LYNCH OPINION SET FORTH HEREIN
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX III. ONE VALLEY
SHAREHOLDERS ARE URGED TO READ THE MERRILL LYNCH OPINION IN ITS ENTIRETY.
In arriving at the Merrill Lynch Opinion, Merrill Lynch, among other
things, (i) reviewed certain publicly available business and financial
information relating to One Valley and FFVA Financial that it deemed to be
relevant; (ii) reviewed certain information, including financial forecasts,
relating to the businesses, earnings, assets, liabilities and prospects of FFVA
Financial and One Valley furnished to it by senior management of One Valley, as
well as the amount and timing of the cost savings and related expenses and
revenue enhancements
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expected to result from the Merger furnished to it by senior management of One
Valley (the "expected Synergies"); (iii) conducted discussions with member of
senior management of One Valley concerning the foregoing, including the
respective businesses, prospects, regulatory condition and contingencies of One
Valley and FFVA Financial before and after giving effect to the Merger and the
Expected Synergies; (iv) reviewed the market prices and valuation multiples for
the One Valley Shares and FFVA Financial Shares and compared the One Valley
Shares and the FFVA Financial Shares with those of certain publicly traded
companies which it deemed to be relevant; (v) reviewed the results of operations
of One Valley and FFVA Financial and compared them with those of certain
publicly traded companies which it deemed to be relevant; (vi) compared the
proposed financial terms of the Merger with the financial terms of certain other
transactions which it deemed to be relevant; (vii) participated in certain
discussions and negotiations among representatives of One Valley and FFVA
Financial and their financial and legal advisors; (viii) reviewed the potential
pro forma impact of the Merger; (ix) reviewed the Merger Agreement and the
Option Agreement; (x) reviewed the Registration Statement of which this Joint
Proxy Statement/Prospectus is a part; and (xi) reviewed such other financial
studies and analyses and took into account such other matters as it deemed
necessary, including its assessment of the general economic, market and monetary
conditions.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all financial and other information supplied or otherwise made
available to it, discussed with or reviewed by or for it, or publicly available.
Merrill Lynch did not assume responsibility for independently verifying such
information, did not undertake an independent evaluation or appraisal of the
assets or liabilities, contingent or otherwise, of One Valley or FFVA Financial
or any of their subsidiaries and was not furnished with any such evaluation or
appraisal. Merrill Lynch is not an expert in the evaluation of allowances for
loan losses and did not make an independent evaluation of the adequacy of the
allowances for loan losses of each of One Valley or FFVA Financial, nor did
Merrill Lynch review any individual credit files relating to One Valley or FFVA
Financial, and Merrill Lynch assumed that the aggregate allowance for loan
losses for each of One Valley and FFVA Financial is adequate to cover such
losses and will be adequate on a pro forma basis for the combined entity. In
addition, Merrill Lynch did not assume any obligation to conduct, nor did it
conduct any physical inspection of the properties or facilities of One Valley or
FFVA Financial. Merrill Lynch also assumed and relied upon the senior management
of One Valley and FFVA Financial as to the reasonableness and achievability of
the financial forecasts (and the assumptions and bases therefore) provided to,
and discussed with, Merrill Lynch. In that regard, Merrill Lynch has assumed
with One Valley's consent that such forecasts, including, without limitation,
financial forecasts, evaluations of contingencies and projections regarding
under-performing and non-performing assets, net charge-offs, adequacy of
reserves, future economic conditions, results of operations, and the Expected
Synergies furnished to or discussed with Merrill Lynch by One Valley reflected
the best currently available estimates, allocations and judgment of One Valley's
senior management as to the expected future financial performance of One Valley,
FFVA Financial and the combined entity, as the case may be. Merrill Lynch
expressed no opinion as to such financial forecast information or the Expected
Synergies or the assumptions on which they were based. In addition, Merrill
Lynch assumed that the Merger will qualify as a pooling-of-interests for
accounting and financial reporting purposes and that it will qualify as a
tax-free reorganization for United States Federal income tax purposes.
Pooling-of-interest accounting treatment is not a condition of the Merger.
The Merrill Lynch Opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of such opinion. For purposes of rendering its opinion Merrill Lynch assumed, in
all respects material to its analysis, that the representations and warranties
of each party to the Merger Agreement and all related documents and instruments
(collectively, the "Documents") contained
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therein are true and correct, that each party to the Documents has performed and
will perform all of the covenants and agreements required to be performed by
such party under such Documents and that all conditions to the consummation of
the Merger will be satisfied without waiver thereof. Merrill Lynch also assumed
that in the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the Merger, no restrictions, including
any divestiture requirements or amendments or modifications, will be imposed
that will have a material adverse effect on the contemplated benefits of the
Merger.
In connection with rendering its opinion dated December 16, 1997,
Merrill Lynch performed a variety of financial analyses, including those
summarized below. The summary set forth below does not purport to be a complete
description of the analyses performed by Merrill Lynch underlying the Merrill
Lynch Opinion. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to a partial analysis
or summary description. Accordingly, notwithstanding the separate factors
summarized below, Merrill Lynch believes that its analyses must be considered as
a whole and that selecting portions of its analyses and factors considered by
it, without considering all analyses and factors, or attempting to ascribe
relative weights to some or all such analyses and factors, could create an
incomplete view of the evaluation process underlying the Merrill Lynch Opinion.
The projections furnished to Merrill Lynch and used by it in certain of
its analyses were prepared by the senior management of One Valley. One Valley
does not publicly disclose internal management projections of the type provided
to Merrill Lynch in connection with its review of the merger, and as a result,
such projections were not prepared with a view towards public disclosure. The
projections were based on numerous variables and assumptions which are
inherently uncertain, including, without limitation, factors related to general
economic and competitive conditions, and accordingly, actual results could vary
significantly from those set forth in such projections.
The following is a summary of the material analyses presented by
Merrill Lynch to the One Valley Board of Directors on December 16, 1997, in
connection with its fairness opinion dated as of such date.
Summary of Proposal. Merrill Lynch reviewed the terms of the proposed
transaction, including the Exchange Ratio and the implied aggregate transaction
value. Based on One Valley's closing stock price of $40.94 on December 15, 1997,
Merrill Lynch calculated an implied transaction value per share of FFVA
Financial of $42.98, and an implied total transaction value of approximately
$204 million. Merrill Lynch calculated the price to market, price to book, price
to tangible book, implied deposit premium (defined as the transaction value
minus the tangible book value divided by total deposits), price to trailing
twelve months' earnings and price to projected 1997 and 1998 earnings multiples
for FFVA Financial in the Merger based on such implied total transaction value.
This analysis yielded a price to market multiple of 1.22x , a price to book
value multiple of 2.41x, a price to tangible book value multiple of 2.46x, an
implied deposit premium of 31.44%, a price to trailing twelve months' earnings
multiple of 26.36x, a price to projected 1997 earnings multiple of 25.28x and a
price to projected 1998 earnings multiple of 23.75x.
Pro Forma Merger Analysis. Based on projections provided by One Valley
and the Expected Synergies, including an after-tax fully-phased in synergy
assumption of $2.5 million in 1999, Merrill Lynch analyzed certain pro forma
effects of the Merger. This analysis indicated that the transaction would be
neutral to projected earnings per share of One Valley Common Stock in 1998 and
accretive to projected earnings per
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share thereafter, and that the Merger would be accretive to One Valley's book
value and tangible book value per share. In this analysis, Merrill Lynch assumed
that One Valley performed in accordance with the earnings forecasts and Expected
Synergies provided to Merrill Lynch by One Valley's senior management.
Discounted Dividend Stream Analysis - FFVA Financial. Using a
discounted dividend stream analysis, Merrill Lynch estimated the present value
of the future streams of after-tax cash flows that FFVA Financial could produce
and distribute to shareholders ("dividendable net income") assuming after-tax
expected synergies of $2.5 million in 1999 and an after-tax restructuring charge
of $1.1 million in 1998. Merrill Lynch assumed that FFVA Financial performed in
accordance with earnings forecasts provided to Merrill Lynch by One Valley's
senior management from 1998 to 2000 and at an annual rate of 10% thereafter, and
that FFVA Financial's tangible common equity to tangible asset ratio would be
maintained at a 5.0% level. Merrill Lynch estimated the terminal values for the
FFVA Financial common stock at 14.00 to 16.00 times FFVA Financial's 2003
estimated operating income (defined as net income before amortization of
intangibles). The dividendable net income streams and terminal values were then
discounted to present values using different discount rates (ranging from 11.0%
to 13.0%) chosen to reflect different assumptions regarding required rates of
return of holders or prospective buyers of FFVA Financial Common Stock. This
discounted dividend stream analysis indicated a reference range of $40.51 to
$45.88 per share for FFVA Financial Common Stock. As indicated above, this
analysis was based on One Valley management estimates and is not necessarily
indicative of actual values or actual future results and does not purport to
reflect the prices at which any securities may trade at the present or at any
time in the future. Merrill Lynch noted that the discounted dividend stream
analysis is a widely used valuation methodology, but the results of such
methodology are highly dependent upon the numerous assumptions that must be
made, including earnings growth rates, dividend payout rates, terminal values
and discount rates.
Analysis of Selected Thrift Merger Transactions - FFVA Financial.
Merrill Lynch reviewed publicly available information regarding selected thrift
merger transactions with a value between $150 million and $450 million which had
occurred in the United States since January 1, 1997 that it deemed to be
relevant. Merrill Lynch compared the price to market, price to book value, price
to tangible book value, price to trailing twelve months' earnings and the
implied deposit premium paid in the Merger to the corresponding ratios for such
transactions. This analysis yielded a range of (i) price to market multiples of
1.03x to 1.73x with a mean of 1.29x (compared with multiple of 1.22x for FFVA
Financial in the Merger), (ii) price to book value multiples of 1.65x to 3.06x
with a mean of 2.20x (compared with a multiple of 2.41x for FFVA Financial in
the Merger), (iii) price to tangible book value multiples of 1.65x to 3.31x with
a mean of 2.34x (compared with a multiple of 2.46x for FFVA Financial in the
Merger), (iv) price to trailing twelve months' earnings multiples of 15.27x to
35.00x with a mean of 21.25x (compared with a multiple of 26.36x for FFVA
Financial in the merger), and (v) implied deposit premiums paid of 7.56% to
27.60% with a mean of 18.40% (compared with an implied deposit premium of 31.44%
for FFVA Financial in the Merger).
Merrill Lynch also reviewed publicly available information regarding
selected thrift merger transactions with a value between $150 million and $450
million which had occurred in the Mid-Atlantic states since January 1, 1997 that
it deemed to be relevant. Merrill Lynch compared the price to market, price to
book value, price to tangible book value, price to trailing twelve months'
earnings and the implied deposit premium paid in the Merger to the corresponding
ratios for such transactions. This analysis yielded a range of (i) price to
market multiples of 1.25x to 1.73x with a mean of 1.46x (compared with multiple
of 1.22x for FFVA Financial in the Merger), (ii) price to book value multiples
of 2.07x to 3.06x with a mean of 2.55x (compared with a multiple
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of 2.41x for FFVA Financial in the Merger), (iii) price to tangible book value
multiples of 2.13x to 3.31x with a mean of 2.65x (compared with a multiple of
2.46x for FFVA Financial in the Merger), (iv) price to trailing twelve months'
earnings multiples of 17.80x to 31.36x with a mean of 25.06x (compared with a
multiple of 26.36x for FFVA Financial in the merger), and (v) implied deposit
premiums paid of 18.54% to 27.60% with a mean of 24.39% (compared with an
implied deposit premium of 31.44% for FFVA Financial in the Merger).
No company or transaction used in the above analysis as a comparison is
identical to FFVA Financial or the Merger, respectively. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading values or announced merger transaction values as the case may be, of
FFVA Financial and the companies to which they are being compared.
Comparison of Selected Comparable Companies - FFVA Financial. Merrill
Lynch reviewed and compared selected operating and stock market results of FFVA
Financial to the publicly available corresponding data of certain other
companies Merrill Lynch deemed to be relevant. The group of selected thrifts
(the "Merrill Lynch - FFVA Financial Composite") included CENIT Bancorp Inc.,
Coastal Financial Corp., First Financial Holdings Inc., First Savings Bancorp
Inc., FirstSpartan Financial Corp., Green Street Financial Corp., HFNC Financial
Corp., Leeds Federal Savings Bank (MHC), Maryland Federal Bancorp, South Street
Financial Corp. and Virginia Beach Fed. Financial. This comparison showed, among
other things, that, on an annualized basis on results for the quarter ended
September 30, 1997 (i) FFVA Financial's net interest margin was 3.80% compared
to a mean 3.45% for the Merrill Lynch - FFVA Financial Composite, (ii) FFVA
Financial's efficiency ratio (defined as noninterest expenses divided by the sum
of noninterest income and net interest income before provision for loan losses)
was 43.84% compared to a mean of 51.77% for the Merrill Lynch-FFVA Financial
Composite, (iii) FFVA Financial's return on average assets was 1.48% compared to
a mean of 1.11% for the Merrill Lynch - FFVA Financial Composite, and (iv) FFVA
Financial's return on average equity was 11.20% compared to a mean of 9.14% for
the Merrill Lynch - FFVA Financial Composite. This comparison also indicated
that (i) at September 30, 1997, (A) FFVA Financial's tangible equity to tangible
asset ratio was 13.08% compared to a mean of 16.45% for the Merrill Lynch - FFVA
Financial Composite, (B) FFVA Financial's ratio of equity to assets was 13.31%
compared with a mean of 16.50% for the Merrill Lynch - FFVA Financial Composite,
(C) FFVA Financial's Core capital ratio was 19.85% compared with a mean of
35.03% for the Merrill Lynch - FFVA Financial Composite, (D) FFVA Financial's
ratio of nonperforming loans to total loans was 0.26% compared with a mean of
0.41% for the Merrill Lynch - FFVA Financial Composite, (E) FFVA Financial's
ratio of nonperforming assets to total assets was 0.16% compared with a mean of
0.45% for the Merrill Lynch - FFVA Financial Composite, (F) FFVA Financial's
ratio of loan loss reserves to nonperforming assets was 361.92% compared with a
mean of 197.56% for the Merrill Lynch - FFVA Financial Composite, (G) FFVA
Financial's ratio of loan loss reserves to nonperforming loans was 373.99%
compared with a mean of 197.59% for the Merrill Lynch - FFVA Financial
Composite, (ii) as of December 12, 1997 (A) the ratio of FFVA Financial's market
price to estimated earnings for the twelve month period ending December 31, 1997
was 19.85x compared to a mean of 23.35x for the Merrill Lynch - FFVA Financial
Composite (assuming reported average earnings estimates based on data from First
Call for the Merrill Lynch - FFVA Financial Composite and assuming management
estimates for FFVA Financial), (B) the ratio of FFVA Financial's market price to
estimated earnings for the twelve month period ending December 31, 1998 was
18.65x compared to a mean of 21.31x for the Merrill Lynch - FFVA Financial
Composite, (C) the ratio of FFVA Financial's market price to book value per
share at September 30, 1997 was 1.89x compared to a mean of 1.91x for the
Merrill Lynch -FFVA Financial Composite, (D) the ratio of FFVA Financial's
market price to tangible book value per share at
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September 30, 1997 was 1.93x compared to a mean of 1.93x for the Merrill Lynch -
FFVA Financial Composite, and (E) FFVA Financial's dividend yield was 1.44%
compared to a mean of 1.96% for the Merrill Lynch - FFVA Financial Composite.
Discounted Dividend Stream Analysis - One Valley. Using a discounted
dividend stream analysis, Merrill Lynch estimated the dividendable net income of
One Valley on a stand-alone basis from 1997 through 2002. Merrill Lynch assumes
that One Valley performs in accordance with the earnings forecasts provided to
Merrill Lynch by One Valley's senior management for 1998 and gross earnings at
an annual rate of 10.00% thereafter and that One Valley's tangible common equity
to tangible asset ratio would be maintained at a 6% level. Merrill Lynch
estimated the terminal values for the One Valley common stock at 14.00 and 16.00
times One Valley's 2003 estimated operating income (defined as net income before
amortization of intangibles). The dividendable net income streams and terminal
values were then discounted to present values using different discount rates
(ranging from 11.0% to 13.0%) chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of One Valley Common
Stock. This discounted dividend stream analysis indicated a reference range of
$36.43 to $43.11 per share for One Valley Common Stock. As indicated above, this
analysis is not necessarily indicative of actual values or actual future results
and does not purport to reflect the prices at which any securities may trade at
the present or at any time in the future. The discounted dividend stream
analysis is a widely used valuation methodology, but the results of such
methodology are highly dependent upon the numerous assumptions that must be
made, including earnings growth rates, dividend payout rates, terminal values
and discount rates.
Comparison of Selected Comparable Companies - One Valley. Merrill Lynch
compared selected operating and stock market results of One Valley to the
publicly available corresponding data of certain other companies which Merrill
Lynch deemed to be relevant. The companies included Centura Banks Inc., CCB
Financial Corp., F&M National Corp., First Citizens BancShares Inc., First
Commonwealth Financial, First Financial Bancorp, FirstMerit Corp., F.N.B. Corp,
Fulton Financial Corp., Keystone Financial Inc., Mid Am Inc., Park National
Corp., Provident Bankshares Corp., S&T Bancorp Inc., Susquehanna Bancshares
Inc., United Bankshares Inc., WesBanco Inc. (collectively the "Merrill Lynch -
One Valley Composite"). This comparison showed, among other things, that for the
twelve months ended September 30, 1997, (i) One Valley's net interest margin was
4.61% compared with a mean 4.67% for the Merrill Lynch - One Valley Composite,
(ii) One Valley's efficiency ratio (defined as noninterest expenses divided by
the sum of noninterest income and net interest income before provision for loan
losses) was 54.51% compared with a mean of 56.50% for the Merrill Lynch One
Valley Composite, (iii) One Valley's return on average assets was 1.35% compared
to a mean of 1.36% for the Merrill Lynch - One Valley Composite and (iv) One
Valley's return on average equity was 14.25% compared to a mean of 13.90% for
the Merrill Lynch - One Valley Composite. This comparison also indicated that
(i) at September 30, 1997, (A) One Valley's tangible equity to tangible asset
ratio was 7.39% compared to a mean of 9.32% for the Merrill Lynch - One Valley
Composite, (B) One Valley's ratio of equity to assets was 8.71% compared with a
mean of 9.86% for the Merrill Lynch - One Valley Composite, (C) One Valley's
Tier I capital ratio was 14.60% compared with a mean of 13.10% for the Merrill
Lynch - One Valley Composite, (D) One Valley's ratio of nonperforming loans to
total loans was 0.34% compared with a mean of 0.42% for the Merrill Lynch - One
Valley Composite, (E) One Valley's ratio of nonperforming assets to total assets
was 0.25% compared with a mean of 0.40% for the Merrill Lynch - One Valley
Composite, (F) One Valley's ratio of loan loss reserves to nonperforming assets
was 364.21% compared with a mean of 315.59% for the Merrill Lynch One Valley
Composite, (G) One Valley's ratio of loan loss reserves to nonperforming loans
was 423.36% compared with a mean of 381.66% for the Merrill Lynch - One Valley
Composite, (ii) as of December 12, 1997
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(H) the ratio of One Valley's market price to estimated earnings for the twelve
month period ending December 31, 1997 was 19.01x compared to a mean of 19.81x
for the Merrill Lynch - One Valley Composite (assuming reported average earnings
estimates based on data from First Call for the Merrill Lynch - One Valley
Composite and assuming management estimates for One Valley), (I) the ratio of
One Valley's market price to estimated earnings for the twelve month period
ending December 31, 1998 was 17.92x compared to a mean of 17.79x for the Merrill
Lynch - One Valley Composite), (J) the ratio of One Valley's market price to
book value per share at September 30, 1997 was 2.63x compared to a mean of 2.74x
for the Merrill Lynch - One Valley Composite, (K) the ratio of One Valley's
market price to tangible book value per share at September 30, 1997 was 3.09x
compared to a mean of 2.93x for the Merrill Lynch - One Valley Composite, and
(L) One Valley's dividend yield was 2.09% compared to a mean of 2.22% for the
Merrill Lynch - One Valley Composite.
In connection with its opinion dated as of the date of this Proxy
Statement, Merrill Lynch performed procedures to update, as necessary, certain
of the analyses described above and reviewed the assumptions on which such
analyses described above were based and the factors considered in connection
therewith. Merrill Lynch did not perform any analyses in addition to those
described above in updating its December 16, 1997 opinion.
In performing its analyses, Merrill Lynch made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of One Valley, FFVA
Financial and Merrill Lynch. The analyses performed by Merrill Lynch are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. With
respect to the comparison of selected companies analysis and the analysis of
selected thrift merger transactions summarized above, no public company utilized
as a comparison is identical to One Valley or FFVA Financial. Accordingly, an
analysis of publicly traded comparable companies and comparable business
combinations is not mathematical; rather it involves complex considerations and
judgments concerning the differences in financial and operating characteristics
of the companies and other factors that could affect the public trading values
of the companies concerned. The analyses do not purport to be appraisals or to
reflect the prices at which One Valley or FFVA Financial might actually be sold
or the prices at which any securities may trade at the present time or at any
time in the future. Merrill Lynch was not asked to consider, and the Merrill
Lynch Opinion does not in any manner address, the price at which shares of One
Valley common stock will actually trade following consummation of the Merger. In
addition, as described above, the Merrill Lynch Opinion was among many factors
taken into consideration by the One Valley Board in making its determination to
approve the Merger Agreement (see "- Recommendation of the Board and Reasons for
the Merger"). Consequently, the Merrill Lynch analyses described above should
not be viewed as determinative of any decision of the One Valley Board or One
Valley's management with respect to the Merger.
Merrill Lynch has been retained by the One Valley Board as an
independent contractor to act as financial advisor to One Valley in connection
with the Merger. One Valley retained Merrill Lynch based upon Merrill Lynch's
experience and expertise. Merrill Lynch is an internationally recognized
investment banking and advisory firm. Merrill Lynch, as part of its investment
banking business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Merrill Lynch has, in the past, provided financial advisory and
financing services to One Valley and may continue to do so and has received, and
may receive, fees for the rendering of such services. In the ordinary course of
its business, Merrill Lynch and its affiliates may actively trade the debt
and/or equity
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securities of One Valley and FFVA Financial and their respective affiliates for
their own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
One Valley and Merrill Lynch have entered into a letter agreement dated
December 12, 1997, relating to the services to be provided by Merrill Lynch in
connection with the Merger. One Valley has agreed to pay Merrill Lynch fees as
follows: (i) a cash fee of $100,000, which was paid upon the execution of the
letter agreement, and (ii) a cash fee of $750,000 (less the fees paid upon
execution of the letter agreement and certain retainer fees previously paid to
Merrill Lynch) payable at the Effective Date of the Merger. In such letter, the
Company also agreed to reimburse Merrill Lynch for its reasonable out-of-pocket
expenses incurred in connection with its advisory work, including the reasonable
fees and disbursements of its legal counsel, and to indemnify Merrill Lynch
against certain liabilities relating to or arising out of the Merger, including
liabilities under federal and state securities laws.
Conditions to Consummation of the Merger; Waiver
The Merger will occur only if holders of a majority of the issued and
outstanding shares of One Valley Common Stock and holders of two-thirds of the
issued and outstanding shares of FFVA Financial Common Stock approve the Merger
Agreement and the holders of eighty percent of the issued and outstanding shares
of FFVA Financial Common Stock approve the FFVA Financial Amendment.
Consummation of the Merger is subject to the satisfaction of certain other
conditions, including: (i) receipt of the regulatory approvals referred to below
under "- Regulatory Approvals"; (ii) representations and warranties of One
Valley and FFVA Financial contained in the Merger Agreement being true and
correct in all material respects on the effective date; (iii) receipt of certain
legal opinions from counsel, including an opinion regarding certain federal tax
aspects of the Merger; (iv) FFVA Financial having delivered to One Valley a
schedule of all persons deemed to be "affiliates" of FFVA Financial; and (v)
continued effectiveness of the registration statement filed with the Securities
and Exchange Commission and the absence of any pending or threatened stop order
proceedings with respect thereto.
One Valley and FFVA Financial may waive (i) any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document delivered pursuant thereto, and (ii) compliance by
the other party with any of the conditions, covenants and agreements contained
in the Merger Agreement.
Subject to the conditions to the obligations of the parties to effect
the Merger, the Merger will become effective on such date which the Certificate
of Merger approving the Merger is issued by the Secretary of State of the State
of West Virginia; such date must not be more than 30 days after the receipt of
all requisite approvals of regulatory authorities and shareholders. Subject to
the foregoing, it is currently anticipated by the parties that the Merger will
be consummated in the second quarter of 1998. The Board of Directors of either
One Valley or FFVA Financial may terminate the Merger Agreement if the Effective
Date does not occur on or before midnight on October 1, 1998. See "- Exchange of
Certificates" and "- Termination."
No Solicitation of Transactions
Pursuant to the Merger Agreement, FFVA Financial and its directors,
officers, representatives or agents may not, directly or indirectly, take any
action to solicit, support or encourage any offer or proposal from any other
person to acquire FFVA Financial or its assets or shares of FFVA Financial's
Common Stock, or of Savings
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Bank, or engage in negotiations with or provide information to such person with
respect to such offer or proposal. FFVA Financial may engage in such
negotiations or provide information if the Board of Directors of FFVA Financial
concludes after receipt of legal advice from its counsel, that their fiduciary
duties to the shareholders of FFVA Financial so require. In the case of any
action pursuant to the immediately preceding sentence regarding the specific
terms and structure of a possible Acquisition Transaction (as hereinafter
defined) (but excluding actions taken to determine whether an unsolicited offer
by a third party is a bona fide offer), One Valley may, in its sole discretion,
terminate the Merger Agreement at any time before consummation of the Merger.
FFVA Financial will immediately notify One Valley if any such negotiations
occur, if such information is provided, or if such offer or proposal is made,
and will keep One Valley informed of any such negotiations, offers, proposals,
or transactions.
Stock Option Agreement
In connection with the Merger Agreement, One Valley and FFVA Financial
entered into a Stock Option Agreement, dated as of December 16, 1997 (the
"Option Agreement"). Pursuant to the Option Agreement, FFVA Financial granted
One Valley an option (the "Option") to purchase, subject to adjustments in
certain circumstances, up to 490,000 fully paid and non-assessable shares of
FFVA Financial Common Stock (the "Option Shares") at a price per share equal to
$39.97.
Subject to applicable law and regulatory restrictions, One Valley may
exercise the Option, in whole or in part, but only if, a Fee Event (as defined
below) has occurred prior to the occurrence of a Fee Termination Event (as
defined below), provided that written notice of such exercise as required by the
Option Agreement is provided within six months following such Fee Event (or such
later period as provided in the Option Agreement). In addition, One Valley may
not exercise the Option at any time when One Valley shall be in material or
willful breach of any of its covenants or agreements in the Merger Agreement.
As used in the Option Agreement, "Fee Termination Event" means each of
the following: (i) the Closing Date; (ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs prior to the
occurrence of a Preliminary Fee Event, other than termination by One Valley if
(A) FFVA Financial has made a material misrepresentation, or is in breach of a
representation or warranty made by it, in the Merger Agreement or (B) in certain
circumstances if FFVA Financial enters into negotiations with a third party in
respect of an Acquisition Transaction (defined below); (iii) termination of the
Merger Agreement following the occurrence of a Preliminary Fee Event and the
passage of 18 months after such termination; or (iv) termination of the Merger
Agreement by One Valley for the reasons set forth in (ii) above and the passage
of 18 months after such termination.
As used in the Option Agreement, "Preliminary Fee Event" means any of
the following events or transactions occurring on or after the date of signing
the Option Agreement:
(i) FFVA Financial or Savings Bank, without having received One
Valley's prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction (as hereinafter defined) with any person other
than One Valley or any of its subsidiaries or affiliates, or the FFVA Financial
Board shall have approved, recommended, publicly proposed or publicly announced
an intention to authorize, recommend, propose or accept any Acquisition
Transaction with any person other than One Valley or any of its subsidiaries or
affiliates. For purposes of the Merger Agreement, "Acquisition Transaction"
shall mean (A) a merger or
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consolidation, or any similar transaction involving FFVA Financial or the
Savings Bank, (B) a purchase, lease or other acquisition of all or substantially
all of the assets or deposits of FFVA Financial or the Savings Bank, or (C) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of FFVA Financial or the Savings Bank, provided that the term "Acquisition
Transaction" does not include any internal merger or consolidation involving
only FFVA Financial and Savings Bank;
(ii) (A) Any person other than One Valley or any of its subsidiaries or
affiliates shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of FFVA Financial
Common Stock or (B) any group (as such term "group" is defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "1934 Act")), other than a
group of which any of One Valley or any of its subsidiaries or affiliates is a
member, shall have been formed that beneficially owns 10% or more of the FFVA
Financial Common Stock then outstanding;
(iii) Any person other than One Valley or any of its subsidiaries or
affiliates shall have made a bona fide proposal to FFVA Financial or its
shareholders, by public announcement or written communication that is or becomes
the subject of public discourse, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any person other than One
Valley or any of its subsidiaries or affiliates shall have commenced (as the
term is defined in Rule 14d-2 under the 1934 Act) or shall have filed a
registration statement under the Securities Act, with respect to, a tender offer
("Tender Offer") or exchange offer ("Exchange Offer") to purchase any Common
Stock such that, upon consummation of such offer, such person would own or
control 10% or more of the then outstanding FFVA Financial Common Stock;
(iv) After a proposal is made by a third party to FFVA Financial or its
shareholders to engage in an Acquisition Transaction, or such third party states
its intention to FFVA Financial to make such a proposal if the Merger Agreement
terminates, FFVA Financial shall have breached any representation, covenant or
obligation contained in the Merger Agreement and such breach would entitle One
Valley to terminate the Merger Agreement (without regard to the cure period
provided for therein unless such cure is promptly effected without jeopardizing
consummation of the Merger); or
(v) The holders of FFVA Financial Common Stock shall not have approved
the Merger Agreement at the FFVA Special Meeting or the FFVA Financial Special
Meeting shall not have been held or shall have been canceled prior to
termination of the Merger Agreement, in each case only after any person (other
than One Valley or any of its subsidiaries or affiliates) shall have (A) made,
or disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer, or (C) filed a
registration statement under the Securities Act with respect to any Exchange
Offer.
As used in the Option Agreement, "Fee Event" means any of the following
events or transactions occurring after the date of signing the Option Agreement:
(i) The acquisition by any person, other than One Valley or any of its
subsidiaries or affiliates, or group of beneficial ownership of 30% or more of
the then outstanding shares of FFVA Financial Common Stock; or
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(ii) The occurrence of the Preliminary Fee Event described in clause
(i) except that the percentage referred to in the definition of Acquisition
Transaction shall be 30%.
As provided in the Option Agreement, in the event that One Valley is
entitled to and wishes to exercise the Option, it is obligated to send to FFVA
Financial a written notice (the date of which being hereinafter referred to as
the "Notice Date") specifying (i) the total number of shares of FFVA Financial
Common Stock it intends to purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 15 business days
from the Notice of Date for the closing of such purchase (the "Purchase Closing
Date"); provided, that if prior notification to or approval of the Federal
Reserve Board or any other regulatory authority is required in connection with
such purchase, FFVA Financial shall cooperate with One Valley in the filing of
the required notice or application for approval and the obtaining of such
approval and the Purchase Closing Date shall occur immediately following such
regulatory approvals (and any mandatory waiting periods).
Under applicable law, One Valley may be required to obtain the prior
approval of the Federal Reserve Board prior to acquiring 5% or more the issued
and outstanding shares of FFVA Financial Common Stock. Certain other regulatory
approvals may also be required before such an acquisition could be completed.
Neither of the parties to the Option Agreement may assign any of its
rights or obligations under the Merger Agreement or the Option created
thereunder to any other person, without the express written consent of the other
party, except that (i) One Valley may assign the Option Agreement to a wholly
owned subsidiary of One Valley and (ii) One Valley may assign its rights
thereunder in whole or in part after the occurrence of a Fee Event; provided,
however, that until the Federal Reserve Board has approved an application by One
Valley to acquire the shares of Common Stock subject to the Option, One Valley
may not assign its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of FFVA Financial, (iii)
an assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on One Valley's
behalf or (iv) any other manner approved by the Federal Reserve Board.
In addition, any shares of FFVA Financial Common Stock purchased upon
the exercise of the Option may be resold by One Valley pursuant to registration
rights under the Option Agreement.
In the event of any change in, or distributions in respect of, the FFVA
Financial Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares or securities subject to the Option
will be appropriately adjusted and proper provision will be made in the
agreements governing such transaction so that One Valley would receive, upon
exercise of the Option, the number and class of shares or other securities or
property that One Valley would have received in respect of FFVA Financial Common
Stock if the Option had been exercised immediately prior to such event, or the
record date therefor, as applicable. If any additional shares of FFVA Financial
Common Stock are issued after the date of the Merger Agreement (other than
pursuant to an event described in the preceding sentence), the number of shares
of FFVA Financial Common Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 9.9% of the number of shares of FFVA Financial
Common Stock then issued and outstanding, after giving effect to any shares
subject to or issued pursuant to the Option.
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At any time within 12 months after the occurrence of a Repurchase Event
(as defined below) at the request of One Valley, FFVA Financial (or any
successor thereto) must repurchase from One Valley (i) the Option and (ii) all
shares of FFVA Financial Common Stock purchased by One Valley pursuant to the
Option Agreement in respect of which One Valley then has beneficial ownership,
in each case at purchase prices provided for in the Option Agreement.
A "Repurchase Event" will be deemed to have occurred upon the
occurrence of any of the following events or transactions after the date hereof:
(i) the acquisition by any person (other than One Valley or any of its
subsidiaries or affiliates) of beneficial ownership of 50% or more of the then
outstanding FFVA Financial Common Stock; or
(ii) the consummation of any of the transactions described in clauses
(i), (ii) and (iii) of the immediately succeeding paragraph.
In the event that FFVA Financial enters into an agreement (i) to
consolidate with or merge into any person, other than One Valley or any of its
subsidiaries or affiliates and would not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than One Valley or any of its subsidiaries or affiliates, to merge into FFVA
Financial and FFVA Financial is the continuing or surviving or acquiring
corporation, but, in connection with such merger, the then outstanding shares of
FFVA Financial Common Stock are changed into or exchanged for stock or other
securities of any other person or cash or any other property, or the then
outstanding shares of FFVA Financial Common Stock after such merger represent
less than 50% of the outstanding shares and share equivalents of the merged or
acquiring company, or (iii) to sell or otherwise transfer all or a substantial
part of its or the Savings Bank's assets or deposits to any person, other than
One Valley or any of its subsidiaries or affiliates, then, and in each such
case, the agreement governing such transaction must make proper provision so
that the Option will, upon the consummation of any such transaction and upon the
terms and conditions set forth in the Option Agreement, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of One
Valley, of either (A) the Acquiring Corporation (as defined in the Option
Agreement), (B) any person that controls the Acquiring Corporation or (C) in the
case of a merger described in clause (ii) of this paragraph, FFVA Financial.
One Valley may, at any time following a Repurchase Event and prior to
the occurrence of a Fee Termination Event (or such later period as provided in
the Option Agreement), relinquish the Option (together with any Option Shares
issued to and then owned by One Valley) to FFVA Financial in exchange for a cash
fee equal to the Surrender Price; provided, however, that One Valley may not
exercise such right if FFVA Financial has repurchased the Option (or any portion
thereof) or any Option Shares as described above. The "Surrender Price" will be
equal to $3.5 million (i) plus, if applicable, One Valley's purchase price
actually paid with respect to any Option Shares and (ii) minus, if applicable,
the excess of (A) the net cash amounts, if any, received by One Valley pursuant
to the arms' length sale of Option Shares (or any other securities into which
such Option Shares were converted or exchanged) to any unaffiliated party, over
(B) One Valley's purchase price of such Option Shares. One Valley's "profit"
under the Option is limited to $6 million, as provided for in the Option
Agreement.
Arrangements such as the Option Agreement are customarily entered into
in connection with corporate mergers and acquisitions in an effort to increase
the likelihood that the transactions will be consummated
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according to their terms, and to compensate the grantee for the efforts
undertaken and the expenses, losses and opportunity costs incurred by it in
connection with the transactions if they are not consummated under certain
circumstances involving an acquisition or potential acquisition of the issuer by
a third party. The Option Agreement was entered into to accomplish these
objectives. The Option Agreement may have the effect of discouraging offers by
third parties to acquire FFVA Financial prior to the Merger, even if such
persons were prepared to offer to pay consideration to FFVA Financial
shareholders which has a higher current market price than the shares of One
Valley Common Stock to be received by such holders pursuant to the Merger
Agreement.
To the best knowledge of FFVA Financial and One Valley, no event giving
rise to the right to exercise the Option has occurred as of the date of this
Joint Proxy Statement/Prospectus.
Price-Based Termination
The Merger Agreement contains a provision that permits FFVA Financial
to terminate the Merger Agreement if there is a significant decline in the per
share market price of One Valley's Common Stock that is not coincidental with a
significant decline in the stock prices of certain other financial institution
holding companies unless One Valley is willing to increase the consideration it
will pay for FFVA Financial Common Stock ("Merger Consideration"). Generally,
FFVA Financial will have the right to terminate the Merger Agreement if both (i)
the price of One Valley's Common Stock declines by 15% or more, and (ii) the
decline is at least 10% greater than the decline of the other institutions.
This provision specifically provides that FFVA Financial may terminate
the Merger Agreement at any time during the five-day period commencing with the
day (the "Determination Date") that is the 10th calendar day preceding the
closing date, if both of the following conditions are satisfied:
(i) the Converted Value (defined below) is less than $36.54; and
(ii) (A) the number obtained by dividing the Closing Value (defined
below) by $40.94 (the "One Valley Ratio") is less than (B) 90% of the number
obtained by dividing the Index Price (defined below) on the Determination Date
(defined below) by the Index Price (defined below) on the Starting Date (defined
below).
If the FFVA Financial Board elects to exercise this termination right,
it must give prompt written notice to One Valley following its election. During
the five-day period beginning when One Valley receives notice from FFVA
Financial, One Valley has the option to avoid a termination of the Merger
Agreement by electing to increase the Merger Consideration. The increase would
occur by adjusting the Exchange Ratio to a number so that the Converted Value is
no less than $36.54. If One Valley makes this election, it must give prompt
written notice to FFVA Financial of its election and the revised consideration.
As a result, no termination will occur and the Merger Agreement will otherwise
remain in effect in accordance with its terms.
The following terms have the meanings indicated below:
"Converted Value" shall mean the product of the Closing Value
multiplied by the Exchange Ratio of 1.05.
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"Closing Value" shall mean the average of the closing prices per share
of the One Valley Common Stock on the New York Stock Exchange Composite
Transactions Tape (as reported by The Wall Street Journal) by the ten trading
days (determined by excluding days on which the New York Stock Exchange is
closed) immediately preceding the Determination Date (the tenth day to be
determined by counting the day preceding the Determination Date as the first
day).
"Determination Date" shall mean the tenth calendar day preceding the
date designated by One Valley as the Closing Date.
"Index Group" shall mean the nineteen (19) bank holding companies
listed below, the Common Stock of all of which shall be publicly traded and as
to which there shall not have been, since December 15, 1997, and before the
Determination Date, any public announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization.
In the event that any such company or companies are removed from the Index
Group, the weights (which have been determined based upon the number of shares
of outstanding Common Stock) shall be redistributed proportionately for purposes
of determining the Index Price. The 19 bank holding companies and the weights
attributed to them are as follows:
Bank Holding Companies % Weighting
FMER FirstMerit Corp. 10.48%
FVB First Virginia Banks Inc. 8.26%
KSTN Keystone Financial Inc. 8.16%
NCBC National Commerce Bancorp. 8.00%
FULT Fulton Financial Corp. 7.56%
PFGI Provident Financial Group Inc. 6.92%
VLY Valley National Bancorp 6.66%
BNK CNB Bancshares Inc. 5.34%
WILM Wilmington Trust Corp. 5.30%
RIGS Riggs National Corp. 4.79%
HUBC HUBCO Inc. 4.45%
OLDB Old National Bancorp 4.37%
CBC Centura Banks Inc. 4.17%
SUSQ Susquehanna Bancshares Inc. 3.55%
CCB CCB Financial Corp. 3.27%
FMBI First Midwest Bancorp Inc. 2.64%
FFBC First Financial Bancorp 2.61%
FCNCA First Citizens BancShares Inc. 2.00%
PRK Park National Corp. 1.49%
Total 100.00%
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"Index Price" on a given date shall mean the weighted average (weighted
in accordance with the "% Weighting" listed above) of the closing sales prices
of the companies composing the Index Group (determined as provided with respect
to the Determination Value).
If One Valley or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction, the prices for the
common stock of such company will be appropriately adjusted for purposes of
applying the foregoing price-based termination option.
Prior to making any decision to terminate (or allowing the termination
of) the Merger Agreement, each of the FFVA Financial Board and the One Valley
Board would consult with its respective financial and other advisors and would
consider all financial and other information it deemed relevant to its decision.
It is not possible to know whether such termination right will be triggered
until after the Determination Date. The FFVA Financial Board has made no
decision as to whether it would exercise its right to terminate the Merger
Agreement if the termination right has been triggered. In considering whether to
exercise its termination right in such situation, the FFVA Financial Board
would, consistent with its fiduciary duties, take into account all relevant
facts and circumstances that exist at such time and would consult with its
financial advisors and legal counsel.
If the FFVA Financial Board elects to exercise its termination right,
FFVA Financial must give One Valley prompt notice of that decision during a
five-day period beginning with the Determination Date. During the five-day
period commencing with receipt of such notice, One Valley has the option, in its
sole discretion, to increase the consideration in the manner set forth in the
Merger Agreement and as described above and thereby avoid termination of the
Merger Agreement.
One Valley is under no obligation to increase the consideration, and
there can be no assurance that One Valley would elect to increase the Merger
Consideration if the FFVA Financial Board were to exercise its right to
terminate the Merger Agreement as set forth above. Any such decision would be
made by One Valley in consultation with its investment and legal advisors in
light of the circumstances existing at the time One Valley has the opportunity
to make an election. If One Valley elects to increase the Merger Consideration,
it must give FFVA Financial prompt notice of that election and such increased
consideration, in which case no termination of the Merger Agreement would occur
as a result of the triggering of the termination right.
Termination
In addition to terminating the Merger Agreement based upon a decline in
One Valley's Common Stock price described above, the Merger Agreement may be
terminated at any time prior to the Effective Date, whether before or after its
approval by the shareholders of FFVA Financial or One Valley: (i) by mutual
consent of FFVA Financial and One Valley; (ii) by One Valley if there has been a
material misrepresentation or breach of warranty in the representations and
warranties of FFVA Financial set forth in the Merger Agreement that has not been
cured within 30 days; (iii) or by FFVA Financial if there has been a material
misrepresentation or breach of warranty in the representations and warranties of
One Valley set forth in the Merger Agreement that has not been cured within 30
days; (iv) by either FFVA Financial or One Valley upon written notice to the
other if the closing date does not occur before midnight on October 1, 1998; (v)
by either FFVA Financial or One Valley if the Merger shall violate any
nonappealable final order, decree or judgment of any court or governmental body
having competent jurisdiction; (vi) by One Valley if FFVA Financial and its
directors, officers, representatives
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or agents will, directly or indirectly, take any action to solicit, support or
encourage any offer or proposal from any other person to acquire FFVA Financial
or its assets or shares of its Common Stock, or of Savings Bank, or engage in
negotiations with or provide information to such person with respect to such
offer or proposal; provided, however, that FFVA Financial may engage in
negotiations or provide information if the Board of Directors of FFVA Financial
concludes after receipt of legal advice from its counsel, that their fiduciary
duties to the shareholders of FFVA Financial so require. In the case of any
action pursuant to the immediately preceding sentence regarding the specific
terms and structure of a possible Acquisition Transaction (as hereinafter
defined) (but excluding actions taken to determine whether an unsolicited offer
by a third party is a bona fide offer), One Valley may, in its sole discretion,
terminate the Merger Agreement at any time before the closing date.
In the event of termination of the Merger Agreement, the Merger
Agreement shall thereafter become void and, subject to certain specified
provisions of the Merger Agreement dealing with confidentiality of information
and expenses, there shall be no liability on the part of any party or their
respective officers or directors, except that any termination shall be without
prejudice to the rights of a party arising out of the willful breach by any
other party of any covenant or wilful misrepresentation contained in the Merger
Agreement and except that in certain limited circumstances, a termination fee
may become payable as described under "- Termination Fee."
Termination Fee
In recognition of the efforts and expenses of, and other opportunities
foregone by One Valley while structuring the Merger, the Merger Agreement
provides that FFVA Financial shall pay to One Valley a termination fee of $3.5
Million dollars (the "Termination Fee") upon the occurrence of a Fee Event (as
defined above). One Valley must send written notice of its entitlement to the
Termination Fee within 90 days after One Valley actually becomes aware of an
occurrence that triggers the Termination Fee. One Valley's right to receive the
Termination Fee shall terminate upon a Fee Termination Event.
FFVA Financial's Stock Option Plans
At the Closing Date, each option FFVA Financial granted under its "FFVA
Financial Corporation Stock Option Plan" (the "Stock Option Plan"), which is
outstanding and unexercised immediately prior thereto, shall be converted into
an option to purchase One Valley Common Stock on the same terms and conditions
in effect immediately prior to the Merger. Each option that is converted shall
be converted into an option to purchase such an amount of One Valley Common
Stock at an exercise price determined as follows:
(a) the number of shares of One Valley Common Stock to be subject to
the new option shall be equal to 1.05 (one and five one-hundredths) times the
number of shares of FFVA Financial Common Stock subject to the original option,
rounded, if necessary, up to the nearest whole share; and
(b) the exercise price per share of One Valley Common Stock under the
new option shall be equal to the exercise price per share of FFVA Financial
Common Stock under the original option divided by 1.05 (one and five
one-hundredths), rounded, if necessary, up to the nearest cent. This adjustment
with respect to any options which are "incentive stock options" (as defined in
Section 422 of the Internal Revenue Code) shall be effected in a manner
consistent with Section 424(a) of the Internal Revenue Code.
One Valley has registered the shares to be issued pursuant to the Stock
Option Plan.
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Certain Federal Income Tax Consequences
The summary of certain federal income tax consequences set forth below
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
applicable treasury regulations and IRS guidance, all of which may be
retroactively revoked, and is for general information only. The tax treatment of
a particular shareholder may vary depending on his specific circumstances.
Special tax considerations not discussed herein may be applicable to particular
categories of taxpayers, such as broker-dealers, insurance companies, financial
institutions, tax exempt organizations, persons who hold shares of FFVA
Financial as part of a straddle, hedging or conversion transaction, or to any
shareholder who acquired his or her FFVA Financial Common Stock through the
exercise of an employee stock option or otherwise as compensation. This
discussion does not address the effect of any applicable foreign, state, local
or other tax laws and applies only to holders of shares of FFVA Financial Common
Stock who hold their shares as capital assets and who are (i) citizens or
residents of the United States, (ii) domestic corporations or (iii) otherwise
subject to United States federal income tax on a net income basis in respect of
shares of FFVA Financial Common Stock. SHAREHOLDERS OF FFVA FINANCIAL ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING THE APPLICABILITY OF AND EFFECT OF FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
In the opinion of Sullivan & Cromwell, special counsel to One Valley,
the Merger will have the following tax consequences:
1. The Merger will constitute a reorganization under Section
368(a)(1)(A) of the Code, and FFVA Financial and One Valley will each be "a
party to a reorganization" within the meaning of Section 368(b) of the Code.
2. Except as provided in (3) below, no gain or loss will be recognized
by FFVA Financial's shareholders upon their receipt of One Valley Common Stock
solely in exchange for FFVA Financial Common Stock.
3. The payment of cash in lieu of fractional share interests of One
Valley Common Stock will be treated as if the fractional shares were distributed
as part of the Merger and then were redeemed by One Valley. These cash payments
generally will be treated as having been received as distributions in full
payment in exchange for the stock redeemed as provided in Section 302(a) of the
Code.
4. The basis of the One Valley Common Stock to be received by FFVA
Financial's shareholders will be, in each instance, the same as the basis of the
FFVA Financial Common Stock surrendered in exchange therefor decreased by the
amount of cash, if any, received by the shareholder in lieu of a fractional
share interest in One Valley Common Stock and increased by the amount of gain,
if any, recognized by such shareholder with respect to any cash received in lieu
of a fractional share interest in One Valley Common Stock pursuant to the
Merger.
5. The holding period of the One Valley Common Stock received by FFVA
Financial shareholders (including any fractional shares of One Valley Common
Stock for which cash is received) will include the period during which the FFVA
Financial Common Stock surrendered in exchange therefor was held by the FFVA
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Financial shareholder, provided that the FFVA Financial Common Stock was a
capital asset in the hands of the FFVA Financial shareholder on the date of the
Merger.
In rendering the above opinions, Sullivan & Cromwell has relied upon
certain factual assumptions, and upon written representations and covenants of
One Valley and FFVA Financial. No ruling has been sought from the Internal
Revenue Service as to the federal income tax consequences of the Merger, and the
opinions of Sullivan & Cromwell set forth above are not binding on the Internal
Revenue Service or any Court.
Consummation of the Merger is conditioned on (i) receipt by One Valley
of an opinion of Sullivan & Cromwell, dated as of the Closing Date, to the
effect that the Merger constitutes a reorganization within the meaning of
Section 368 of the Code, and (ii) receipt by FFVA Financial of an opinion of
Sullivan & Cromwell to the effect that, for U.S. federal income tax purposes,
(a) holders of FFVA Financial Common Stock who receive solely One Valley Common
Stock pursuant to the Merger will not recognize gain or loss, (b) the basis of
One Valley Common Stock to be received by FFVA Financial shareholders will be
the same as the basis of the FFVA Financial Common Stock surrendered in exchange
therefor, and (c) the holding period of the One Valley Common Stock to be
received by the FFVA Financial shareholders will include the holding period of
the FFVA Financial Common Stock surrendered in exchange therefor, provided the
FFVA Financial Common Stock is held as a capital asset at the time of the
exchange. In rendering these opinions, Sullivan & Cromwell may rely upon certain
factual assumptions and upon written representations and covenants of One
Valley, FFVA Financial, and certain principal shareholders of FFVA Financial.
Accounting Treatment
It is intended that the Merger will be accounted for as a
"pooling-of-interests" under generally accepted accounting principles. To
conform to the provisions of Staff Accounting Bulletin 96 "Treasury Stock
Acquisitions Following Consummation of a Business Combination Accounted for as
Pooling of Interests," each of One Valley and FFVA Financial have terminated
their respective share repurchase programs and FFVA Financial will issue
approximately 750,000 shares of its authorized but unissued shares of Common
Stock (or such other amount as One Valley and FFVA Financial agree). The
unaudited pro forma financial information included in this Joint Proxy
Statement/Prospectus reflects the Merger using the "pooling-of-interests" method
of accounting and the reissuance of 750,000 shares of FFVA Financial Common
Stock.
Exchange of Certificates
As soon as practicable after the effective date of the Merger, the
certificates representing the outstanding shares of FFVA Financial Common Stock
shall be surrendered to Harris Trust and Savings Bank (the "Exchange Agent")
and, upon such surrender, the Exchange Agent will issue certificates
representing the number of shares of One Valley Common Stock into which
surrendered shares have been converted and will issue cash in lieu of fractional
shares (without interest). Certificates for FFVA Financial Common Stock should
not be forwarded to the Exchange Agent until after receipt of a letter of
transmittal and should not be returned to FFVA Financial with the enclosed
proxy.
Certificates representing shares of FFVA Financial Common Stock which
are not surrendered will be deemed for all purposes to evidence the ownership of
the number of shares of One Valley Common Stock into which the shares of FFVA
Financial Common Stock will have been converted. No dividends or distributions
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payable to holders of record of One Valley Common Stock will be paid to former
FFVA Financial shareholders who have not surrendered their certificates formerly
representing shares of FFVA Financial Common Stock, until they have exchanged
their certificates representing their FFVA Financial Common Stock for
certificates representing One Valley Common Stock, at which time the holder will
be paid the amount of dividends previously declared on such shares without
interest. All unclaimed dividends at the end of one year from the effective date
of the Merger will be repaid by the Exchange Agent to One Valley, and
thereafter, the holders of certificates of FFVA Financial Common Stock will be
paid directly by One Valley.
Interests of Certain Persons in the Merger
After consummation of the Merger, One Valley intends to merge the
Savings Bank into One Valley Bank-Central Virginia, National Association ("One
Valley-Central Virginia"). James L. Davidson, Jr., President of FFVA Financial,
will serve as Chairman of the Board of the merged bank and will receive a
consulting fee at the level of his current salary for a two-year period.
Mr. E.L. Rash, Jr., Executive Vice President of FFVA Financial, will be
named Executive Vice President-Retail Banking of One Valley-Central Virginia and
will be offered a three-year employment agreement at his current salary together
with a change of control contract that will provide him two times his current
salary in the event of a change of control of One Valley. He will also be a
participant in the One Valley Executive Incentive Compensation Plan, the One
Valley Incentive Stock Option Plan and other benefit plans offered to executives
at his level.
Mr. Ronald W. Neblett, Senior Vice President, Treasurer and Chief
Financial Officer of FFVA Financial, will be named Senior Vice President and
Chief Financial Officer of One Valley Bank-Central Virginia and will be offered
a three-year employment contract. Under the contract, he may resign after one
year and in that instance, he would be entitled to receive the remaining two
years' salary in a lump-sum amount. Additionally, he will enter into a change of
control contract that will provide him two times his current salary in the event
of a change of control of One Valley. He will also participate in the One Valley
Executive Incentive Compensation Plan, the One Valley Incentive Stock Option
Plan and other benefit plans offered to executives at his level.
Unexercised options awarded under FFVA Financial's Stock Option Plans
will be converted into options to purchase shares of One Valley Common Stock.
These options have vested in accordance with their terms.
One Valley also intends to retain the current members of the Board of
Directors of the Savings Bank as directors of One Valley-Central Virginia. For
18 months after the Merger, Mr. John W. Ferguson, Jr., Chairman of the Board of
Directors of FFVA Financial, will continue to receive his annual compensation of
$10,000. After the Merger, the Boards of Directors of the Savings Bank (which is
identical to the FFVA Financial Board) and One Valley Bank-Central Virginia,
National Association ("One Valley-Central Virginia") will combine into one board
and the FFVA Financial board members will continue to receive their current
compensation for 18 months from the date of the Savings Bank's merger with One
Valley-Central Virginia. Thereafter, these directors will become subject to the
retirement policy and will be paid the same as directors of One Valley-Central
Virginia. Mr. Davidson and one other person selected by and from the Board of
Directors of FFVA Financial will also be elected to the Board of Directors of
One Valley.
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The Merger Agreement provides that after the Effective Date, One Valley
shall continue to indemnify all persons who, as of the consummation of the
Merger, are directors and officers of FFVA Financial and its subsidiaries in
accordance with and subject to the requirements and other provisions of One
Valley's Restated Articles of Incorporation and Bylaws in effect on the date of
the Merger Agreement.
In connection with the Merger, the Savings Bank's Employee Stock
Ownership Plan and Trust (the "ESOP") would be terminated and all participant
accounts would be 100% vested and non-forfeitable. The termination of the ESOP
will require the ESOP trustee to use a certain portion of the proceeds received
from the exchange of shares of FFVA Financial Common Stock pursuant to the
Merger Agreement to repay the related outstanding debt. Pursuant to the terms of
the ESOP, any amounts remaining after the repayment of the debt would be
distributed to the ESOP participants. It should be noted that in general a
portion of these amounts have already vested. A participant's account may be
transferred to the One Valley 401(k) plan or a participant's IRA account.
At the Closing Date, the Savings Bank's retirement plan will be either
(i) terminated, (ii) amended to cease all future accruals, or (iii) merged into
the One Valley Retirement Plan. Participants in the Savings Bank's retirement
plan will be entitled to their vested accrued benefit under that plan at the
Closing Date plus such additional vested accrued benefit to which they shall be
entitled for years of service with the Savings Bank subsequent to the Closing
under the One Valley Retirement Plan.
One Valley will continue to fund health insurance for FFVA Financial
retirees through December 31, 1999, at a cost of up to $10,000 per year.
Other than as described herein and under "- Operations and Management
After the Merger," no director or officer of FFVA Financial or One Valley has
any direct or indirect material interest in the Merger, except in the case of
such persons insofar as ownership of FFVA Financial Common Stock might be deemed
to constitute an interest.
Resales by Affiliates
The shares of One Valley Common Stock issued to FFVA Financial's
shareholders upon consummation of the Merger have been registered under the
Securities Act, but such registration does not cover resales by affiliates of
FFVA Financial ("Affiliates"). One Valley Common Stock received and beneficially
owned by those FFVA Financial shareholders who are deemed to be Affiliates may
be resold without registration as provided for by Rule 145 under the Securities
Act, or as otherwise permitted. The term "Affiliate" is defined to include any
person who, directly or indirectly, controls, or is controlled by, or is under
common control with FFVA Financial at the time the Merger Agreement is submitted
for approval by a vote of the holders of FFVA Financial Common Stock. Generally,
this definition includes executive officers, directors and 10% shareholders of
FFVA Financial. Each Affiliate who desires to resell One Valley Common Stock
received in the Merger must sell such One Valley Common Stock either (i)
pursuant to an effective registration statement under the Securities Act; (ii)
in accordance with the applicable provisions of Rule 145 under the Securities
Act; or (iii) in a transaction which, in the opinion of counsel for such
Affiliate or as described in a "no-action" or interpretive letter from the staff
of the Securities and Exchange Commission, in each case reasonably satisfactory
in form and substance to One Valley, to the effect that such resale is exempt
from the registration requirements of the Securities Act.
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Rule 145(d) requires that persons deemed to be Affiliates resell their
One Valley Common Stock pursuant to certain of the requirements of Rule 144
under the Securities Act if such One Valley Common Stock is sold within the
first year after the receipt thereof. After one year, if such person is not an
affiliate of One Valley and One Valley is current in the filing of its periodic
securities law reports, a former Affiliate of FFVA Financial may freely resell
the One Valley Common Stock received in the Merger without limitation. After two
years from the issuance of the One Valley Common Stock, if such person is not an
affiliate of One Valley at the time of sale or for at least three months prior
to such sale, such person may freely resell such One Valley Common Stock,
without limitation, regardless of the status of One Valley's periodic securities
law reports.
Commission guidelines regarding qualifying for the pooling-of-interests
method of accounting also limit sales of the acquiring company and acquired
company by affiliates of either company in a business combination. Commission
guidelines also indicate that the pooling-of-interests method of accounting will
generally not be challenged on the basis of sales by affiliates of the acquired
or acquiring company if they do not dispose of any shares of the corporation
they own or shares of a corporation they receive in connection with a merger
during the period beginning 30 days before the merger and ending when financial
results covering at least 30 days of post-merger operations of the combined
operations have been published.
FFVA Financial has agreed to provide One Valley with a list of those
persons who may be deemed Affiliates at the time of the FFVA Financial Special
Meeting and to use its best efforts to cause each Affiliate to deliver to One
Valley a letter pursuant to which such person agrees, among other things, not to
offer to sell, transfer or otherwise dispose of any of the shares of One Valley
Common Stock distributed to them pursuant to the Merger except (i) with respect
to affiliates of FFVA Financial, in compliance with Rule 145 under the
Securities Act, or in a transaction that, in the opinion of counsel reasonably
satisfactory to One Valley, is otherwise exempt from the registration
requirements of the Securities Act, or in an offering which is registered under
the Securities Act, and (ii) with respect to affiliates of each of FFVA
Financial and One Valley, in compliance with Commission guidelines regarding
qualifying for pooling-of-interests accounting treatment. One Valley may place
restrictive legends on certificates representing One Valley Common Stock issued
to all persons who are deemed to be "Affiliates" under Rule 145. The
certificates of One Valley Common Stock issued to Affiliates in the Merger may
contain an appropriate restrictive legend, and appropriate stop transfer orders
may be given to the transfer agent for such certificates.
Regulatory Approvals
Pursuant to Federal Reserve Board Regulation Y (12 C.F.R., Part 225),
One Valley must notify the Federal Reserve Board of the Merger at least thirty
days prior to consummation. During this thirty-day period, the Federal Reserve
Board may approve the notice, refer the notice to the Federal Reserve Board or
extend the time period under certain circumstances.
Under the BHC Act, the Federal Reserve Board must conclude, as it has
previously done with respect to savings associations such as Savings Bank, that
the acquisition and operation of a savings association is a proper incident to
banking or managing or controlling banks. In so concluding, the Federal Reserve
Board considers whether such acquisition and operation of a savings bank can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interests, or unsound banking practices. The
relevant regulatory agency has the authority to deny an application
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if it concludes that the combined organization would have an inadequate capital
position or if the acquiring organization does not meet the requirements of the
Community Reinvestment Act of 1977.
Notice of the Merger was filed with the Federal Reserve Board on
January 20, 1998. Also, on January 21, 1998, One Valley filed an application
seeking approval with the State Corporation Commission of the Commonwealth of
Virginia.
The Merger cannot proceed in the absence of the requisite regulatory
approvals. There can be no assurance that such regulatory approvals will be
obtained, and, if the Merger is approved, there can be no assurance as to the
date of any such approvals. There can also be no assurance that any such
approvals will not contain a condition or requirement which causes such
approvals to fail to satisfy the conditions set forth in the Merger Agreement
and described below under "- Termination." There can likewise be no assurance
that the U.S. Department of Justice or a state Attorney General will not
challenge the Merger or, if such a challenge is made, as to the result thereof.
Acquisitions Generally
One Valley regularly evaluates acquisition opportunities and conducts
due diligence activities in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases, negotiations may take place and
future acquisitions involving cash, debt or equity securities may occur.
Acquisitions typically involve the payment of a premium over book and market
values, and, therefore, some dilution of One Valley's book value and net income
per common share may occur in connection with any future transactions.
RIGHTS OF DISSENTING SHAREHOLDERS
FFVA Financial's shareholders do not have dissenters' rights under
Virginia law. Sections 31-1-122 and 31-1-123 of the West Virginia Corporation
Act of 1974 (the "West Virginia Act") govern the rights of dissenting One Valley
shareholders. Pursuant to the provisions of Section 31-1-122, One Valley's
shareholders have the right to dissent from any plan of merger to which One
Valley is a party. Shareholders may dissent as to less than all of the shares
registered in their name and their rights shall be determined as if the shares
to which they have dissented and the other shares were registered in the names
of different shareholders. The following summary and description of the
statutory rights of dissenting shareholders is qualified in its entirety by
reference to the terms of Sections 31-1-122 and 31-1-123 of the West Virginia
Act, a copy of which is attached hereto as Appendix VI.
One Valley's shareholders electing to exercise dissenters' rights must
file with One Valley, prior to or at the One Valley Special Meeting, a written
objection to the Merger.
If the Merger is approved by the required vote and the dissenting
shareholder has not voted in favor of the Merger, the shareholder may, within
ten days after the date on which the vote was taken, make written demand on One
Valley for payment of the fair value of such shareholder's shares. If the Merger
is consummated, One Valley will pay to dissenting shareholders, upon surrender
of the certificate(s) representing such shares, the
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fair value thereof as of the day prior to the date on which the vote was taken
approving the Merger, excluding any appreciation or depreciation in anticipation
of the Merger.
Any shareholder failing to make a demand within the ten-day period
shall be bound by the terms of the Merger. Any shareholder making such demand
shall thereafter be entitled only to payment for the fair value of the shares
and shall not be entitled to vote or to exercise any other rights as a
shareholder. No such demand may be withdrawn unless One Valley consents thereto.
The rights of shareholders to be paid the fair value for their shares will cease
and their status as shareholders shall be restored, without prejudice to any
corporate proceedings which may have been taken during the interim, if (i) the
demand is withdrawn upon consent, (ii) the Merger is abandoned or rescinded,
(iii) the shareholders revoke the authority to effect such Merger, (iv) no
demand or petition for the determination of fair value by a court of general
civil jurisdiction has been made or filed within the statutory time provided, or
(v) a court of general civil jurisdiction determines that such shareholders are
not entitled to the relief provided by Section 31-1-123 of the West Virginia
Act.
Within 20 days after demanding payment for their shares, dissenting
shareholders demanding payment must submit the certificate(s) representing their
shares to One Valley for notation thereon that such demand has been made. At the
option of One Valley, failure of the shareholders to so submit their
certificate(s) will terminate the dissenting shareholders' rights under Section
31-1-123 of the West Virginia Act unless a court of general civil jurisdiction,
for good and sufficient cause shown, shall otherwise direct.
If shares represented by a certificate on which notation has been made
are transferred, each new certificate issued therefor will bear similar
notation, together with the name of the original dissenting holder of such
shares. The transferee of such shares will acquire by such transfer no rights
other than those which the original dissenting shareholder had after making
demand for payment of the fair value.
Within ten days after the Merger is effected, One Valley will give
written notice to each dissenting shareholder who has made a demand, and will
make a written offer to each shareholder to pay for such shares at a specified
price deemed by One Valley to be the fair value of such shares. The notice and
offer will be accompanied by a balance sheet of One Valley, as of the latest
available date and not more than 12 months prior to making such offer, and FFVA
Financial's profit and loss statement for the 12-month period ended on the date
of such balance sheet.
If within 30 days after the date on which the Merger is effected the
fair value of such shares is agreed upon between the dissenting shareholder and
One Valley, payment will be made within 90 days after the date on which the
Merger was effected. Upon payment of the agreed value, the dissenting
shareholder will cease to have any interest in such shares.
If within the 30-day period after the Merger is effected, a dissenting
shareholder and One Valley do not agree upon the fair value of such shares, then
One Valley will file within 30 days after receipt of written demand from any
dissenting shareholder (which written demand must be given within 60 days after
the date on which the Merger was effected), a complaint in a court of general
civil jurisdiction requesting that the fair value of such shares be found and
determined. The complaint will be filed in any court of general civil
jurisdiction in Kanawha County, West Virginia, which is the county in which the
principal office of One Valley is situated. If One Valley fails to institute
such proceedings, any dissenting shareholder may do so in the name of One
Valley.
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All dissenting shareholders, wherever residing, may be made parties to
the proceedings as an action against their shares quasi in rem. A copy of the
complaint will be served on each dissenting shareholder who is a resident of
West Virginia in the same manner as in other civil actions. Dissenting
shareholders who are nonresidents of West Virginia will be served a copy of the
complaint by registered or certified mail, return receipt requested. In
addition, service upon such nonresident shareholders shall be made by
publication, as provided in Rule 4(e)(2) of the West Virginia Rules of Civil
Procedure. All shareholders who are parties to the proceeding will be entitled
to judgment against One Valley for the amount of the fair value of their shares.
The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers will have the power and authority as specified in the
order of their appointment or any subsequent appointment. The judgment will be
payable only upon and concurrently with the surrender to One Valley of the
certificate(s) representing such shares. Upon payment of the judgment, the
dissenting shareholder will cease to have any interest in such shares.
The judgment will include an allowance for interest at a rate as the
court may find to be fair and equitable in all the circumstances, from the date
on which the vote was taken on the Merger to the date of payment.
The costs and expenses of any proceeding will be determined by the
court and will be assessed against One Valley, but all or any part of such costs
and expenses may be apportioned and assessed as the court may deem equitable
against any or all of the dissenting shareholders who are parties to the
proceeding to whom One Valley shall have made an offer to pay for the shares if
the court finds that the action of such shareholders in failing to accept the
offer was arbitrary or vexatious or not in good faith. Expenses will include
reasonable compensation for the reasonable expenses of the appraisers, but will
exclude the fees and expenses of counsel for and experts employed by any party;
but if the fair value of the shares materially exceeds the amount which One
Valley offered to pay therefor, or if no offer was made, the court in its
discretion may award to any shareholder who is a party to the proceeding such
sum as the court may determine to be reasonable compensation to any expert or
experts employed by the shareholder in the proceeding. Any party to the
proceeding may appeal any judgment or ruling of the court as in other civil
cases.
Shares acquired by One Valley pursuant to payment of the agreed value
therefor or to payment of the judgment entered therefor, may be held and
disposed of by One Valley as in the case of other treasury shares, except that,
in the case of a merger, they may be held and disposed of as the merger
agreement may otherwise provide.
Failure to follow the steps under Sections 31-1-122 and 31-1-123 of the
West Virginia Act may result in loss of the rights of dissenting shareholders
described above. In view of the complexity of the provisions of the statute,
shareholders of One Valley who are considering dissenting should consult their
own legal advisors.
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EFFECT OF THE MERGER ON SHAREHOLDERS' RIGHTS
General
Although One Valley is a West Virginia corporation and FFVA Financial
is a Virginia corporation, the respective rights of their shareholders with
regard to such rights as voting rights, dividend rights, liquidation rights,
preemptive rights and dissenters' rights are similar. However, under West
Virginia law, One Valley shareholders have cumulative voting rights with regard
to the election of directors whereas FFVA Financial shareholders do not have
cumulative voting rights. Cumulative voting means the right to vote, in person
or by proxy, the number of shares owned by the stockholder for as many persons
as there are directors to be elected and for whose election the stockholder has
a right to vote, or to cumulate votes by giving one candidate as many votes as
the number of shares owned multiplied by the number of such directors to be
elected, or by distributing such votes on the same principle among any number of
candidates. One Valley shareholders and FFVA Financial shareholders do not have
conversion rights.
One Valley relies primarily on the ability of its subsidiaries to pay
dividends to One Valley in order for it, in turn, to pay dividends to One Valley
shareholders. The dividends payable by One Valley's banking subsidiaries are
dependent upon their earnings and profitability and must be in compliance with
certain federal and state banking law requirements. Following consummation of
the proposed Merger, dividends received by One Valley's shareholders will
continue to be dependent upon the payment of dividends by its banking
subsidiaries.
In the case of One Valley and FFVA Financial, preemptive rights do not
exist, and the Board of Directors of each has the authority to issue additional
shares without first obtaining the approval of existing shareholders and without
first offering newly issued shares to existing shareholders for purchase.
Following the proposed Merger, One Valley Common Stock will continue to be
available for issuance by the Board of Directors when and as it determines
advisable for the purpose of raising capital, in acquiring other businesses and
for other appropriate purposes.
Under West Virginia Code Sections 31-1-122 and 31-1-123, shareholders
of One Valley possess dissenters' rights in connection with certain
transactions, which are dissimilar to FFVA Financial's appraisal rights under
Virginia law.
Antitakeover Provisions in One Valley's Restated Articles and Bylaws
In 1986, One Valley's shareholders adopted certain amendments to One
Valley's Articles of Incorporation (the "Articles") and Bylaws which are
intended to ensure that a party seeking control of One Valley will discuss its
proposal with One Valley's Board of Directors. These amendments are discussed
below.
Classification of the Board of Directors. Article V.1(a) of the
Articles permits the Board to fix the number of Directors from time to time
pursuant to the Bylaws and provides that the Board will be divided into three
classes of directors, each class to be as nearly equal in number of directors as
possible. This provision has the effect of making it more difficult and
time-consuming for a Shareholder who has acquired or controls a majority of One
Valley's outstanding Common Stock to gain immediate control of the Board of
Directors or
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otherwise disrupt the management of One Valley. Unless that shareholder can gain
the 80% vote required to amend the provisions regarding classifications or
number of directors or to remove directors, it would not be possible for that
shareholder to elect a majority of the directors at a single meeting of
shareholders. Accordingly, it takes at least two annual meetings to change the
composition of a majority of the Board of Directors.
This provision has the effect of making it more difficult for a
shareholder to elect a director pursuant to the exercise of his cumulative
voting rights. However, the Board believes that the benefits to One Valley and
its shareholders of encouraging prior consultation and negotiation outweigh the
disadvantages of discouraging any such proposals.
Nominations of Directors. Article V.1(b) of the Articles provides that
nominations for the election of directors must be made as provided in the
Bylaws. Article III of the Bylaws provides the manner in which nominations for
the election of directors may be made by a shareholder. Article V.1(b) requires
the affirmative vote of over 80% of the voting power of One Valley to repeal or
amend this provision regarding shareholder nominations.
The advance notice requirement, by regulating shareholder nominations
of directors, affords the Board of Directors the opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Board, to inform shareholders about these qualifications.
Although this provision does not give the Board of Directors any power to
approve or disapprove shareholder nominations for election of directors, it may
have the effect of precluding a contest for the election of directors if the
procedures established are not followed and may discourage a third party from
conducting a solicitation of proxies to elect its own slate of directors.
Newly-Created Directorships and Vacancies. Article V.1(c) of the
Articles and Section 9, Article III, of the Bylaws provide that a vacancy on the
Board occurring during the course of the year, including a vacancy created by an
increase in the number of directors, will be filled by the remaining directors.
They further provide that any new director elected to fill a vacancy on the
Board resulting from death, resignation, disqualification, removal or other
cause will serve for the remainder of the full term of the class (each class
having staggered three-year terms) in which the vacancy occurred rather than
until the next annual meeting of Shareholders. However, in accordance with West
Virginia law, the amendments provide that those directors elected to fill a
vacancy resulting from an increase in the number of directors will hold office
only until the next election of directors. It also provides that no decrease in
the number of directors will shorten the term of any incumbent.
The provision that newly-created directorships are to be filled by the
Board could prevent a third party seeking majority representation on the Board
of Directors from obtaining such representation simply by enlarging the Board
and immediately filling the new directorships created with its own nominees.
However, these new directors elected by the Board would only serve until the
next meeting of Shareholders under West Virginia law.
Removal of Directors. Article V.1(d) and Section 13, Article III of the
Bylaws provide that a director may be removed, with or without cause, by the
affirmative vote of the holders of at least 80% of the voting power of the
shares entitled to vote generally in the election of directors. These provisions
preclude a third party from removing incumbent directors and simultaneously
gaining control of the Board by filling the vacancies created by removal with
its own nominees unless the third party controls 80% of the voting power of the
voting stock and can amend provisions of the Bylaws and the Articles.
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Increased Shareholder and Director Vote for Alteration, Amendment or
Repeal of Proposed Amendments. Article V.1(e) of the Articles requires the
concurrence of the holders of at least 80% of the voting power of One Valley
entitled to vote generally in the election of directors for the alteration,
amendment or repeal of, or the adoption of any provision inconsistent with, all
of the foregoing provisions to the Articles and Bylaws. Under West Virginia
corporation law, amendments to the Articles of One Valley require the approval
of the holders of more than one-half of the outstanding stock entitled to vote
thereon and of more than one-half of the outstanding stock of each class
entitled to vote thereon voting as a class. However, West Virginia corporation
law also permits provisions in the Articles which require a greater vote than
the minimum vote otherwise required by law for any corporate action. In
addition, under Article V.2 of the Articles, none of the Bylaw provisions
discussed above relating to the Articles may be altered, amended or repealed,
nor may any provision inconsistent with those provisions be adopted, without the
concurrence of the holders at least 80% of the voting power of One Valley.
The requirement of an increased shareholder vote is designed to prevent
a shareholder with a majority of the voting power of One Valley from avoiding
the requirements of the foregoing provisions by simply repealing them.
Notification of Shareholder Business and Notice of Purpose of Annual
Meeting. Article II, Section 1 of One Valley's Bylaws provides that a
shareholder who wishes to bring business before an annual meeting of
shareholders must give advance notification in a manner similar to that required
for shareholder nominations for election of directors. Shareholders intending to
bring business before an annual meeting are required to deliver or mail notice
not less than 40 days prior to the meeting, unless less than 50 days' notice or
prior disclosure of the date of the meeting is made in which case the notice
must be received not later than the close of business on the eighth day
following the day on which notice of the date of the annual meeting was mailed
or public disclosure was made. The notice must be sent to the secretary and must
set forth a brief description of the business to be brought before the annual
meeting, the reasons for conducting the business at the annual meeting, the
name, address, number and class of shares held by the shareholder, and any
material interest of the shareholder in the proposal.
The advance notice requirement affords the Board of Directors the
opportunity to consider the shareholder's proposal and, to the extent deemed
necessary or desirable by the Board, inform other shareholders about the
proposal and the Board's position with respect to the proposal. Although the
Bylaw provision does not give the Board the power to approve or disapprove the
consideration of a matter which a shareholder wishes to bring before the Annual
Meeting, the Bylaw provision may discourage a shareholder from bringing a matter
before an Annual Meeting.
In addition, Section 4, Article II of the Bylaws requires that written
notice of all meetings and the purpose or purposes for which a meeting is to be
called must be delivered not less than ten nor more than 50 days before the date
of the meeting by those persons calling the meeting to each shareholder of
record entitled to vote the meeting.
Limitations on Amendments to Articles and Bylaws. Generally, the
Articles can be amended by a majority vote of the shareholders, however, the
following articles all require the affirmative vote of the shareholders of 80%
or more of the shares entitled to vote on such matters: (i) Article V.1 (board
of directors);
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(ii) Article V.2 (certain bylaw amendments, including Article II, Sections 1
(annual meetings), 4 (notice of meetings), and 13 (board of director
nominations); Article III, Sections 2 (number, election and terms of directors;
nominations), 9 (newly created directorships), and 13 (removal); and Article XI
(amendments); and (iii) Article VI (certain business combinations.) Article XI
of the Bylaws provides that subject to the laws of the State of West Virginia,
the Articles and other provisions of the Bylaws, the Bylaws may be altered,
amended or repealed at (1) any regular or special meeting for the shareholders
by a majority vote of the shares represented and entitled to vote at the meeting
provided notice of the proposed amendment is given; or by (2) a majority of the
Board at any meeting at which a quorum of the Directors are present except that
a two-thirds affirmative vote of all members of the Board is required to amend
the Bylaws to change the principal office, change the number of directors,
change the number of directors on the Executive Committee or make a substantial
change in the duties of the Chairman of the Board and the President.
The purpose of Article XI of the Bylaws is to prohibit directors who
only control a simple majority of the Board from amending or repealing those
Bylaws which could have significant effects on the operation of One Valley.
Fair Price Amendment. In 1986, the shareholders of One Valley also
approved a "Fair Price Amendment" concerning business combinations, such as
mergers or consolidations. The Fair Price Amendment requires the approval of the
holders of 80%, or a "super majority," of the shares of One Valley then entitled
to vote ("Voting Stock") as a condition to specified transactions with an
Interested shareholder, except in cases in which either (i) certain price
criteria and procedural requirements are satisfied, or (ii) the transaction is
recommended to the shareholders by a majority of the Disinterested Directors. In
the event the minimum price criteria and procedural requirements have been met
or the requisite approval of the Board of Directors of One Valley has been given
with respect to a particular business combination, the normal requirements of
West Virginia law would apply.
An "Interested Shareholder" is defined in the Fair Price Amendment as
any person, other than One Valley or any of its subsidiaries, who is, or who was
within the two-year period immediately before the announcement of the proposed
business combination, the Beneficial Owner of more than 10% of the voting power
of One Valley's Voting Stock. It also includes any person who is an assignee of,
or has succeeded to, any shares of Voting Stock in a transaction not involving a
public offering which were at any time within the prior two-year period
beneficially owned by Interested Shareholders. The term "Beneficial Owner"
includes persons directly or indirectly owning or having the right to acquire or
vote the stock. At present, One Valley is not aware of the existence of any
shareholder or group of shareholders who would be "Interested Shareholders"
except for those persons listed under "Principal Holders of Voting Securities."
A "Disinterested Director" is any member of the Board of Directors of
One Valley who is not affiliated with an Interested Shareholder and who was a
director of One Valley prior to the time the Interested Shareholder became an
Interested Shareholder, and any successor to such Disinterested Director who is
not affiliated with an Interested Shareholder who was recommended by a majority
of the Disinterested Directors then on the Board. The Merger is not subject to
the Fair Price Amendment.
58
<PAGE>
Shareholder Protection Rights Plan
On October 18, 1995, the Board of Directors of One Valley approved a
Shareholder Protection Rights Plan, which provides that each share of One Valley
Common Stock, including shares to be issued in the Merger, carries with it one
right under certain circumstances, to acquire shares of One Valley Common Stock
("Right"). The Rights are not currently exercisable or transferable, and no
separate certificates evidencing such Rights have been or will be distributed,
unless certain events occur. The Rights currently attached to the shares of One
Valley Common Stock will expire on October 18, 2005. The Rights are generally
exercisable if a person or group, as defined, acquired 10% or more of the
outstanding shares of One Valley Common Stock, or after a person commences a
tender offer for such stock. If a person or group acquires 10% or more of the
outstanding shares of One Valley Common Stock, holders of the Rights, other than
the 10% holder, could acquire shares of One Valley's Common Stock at a
substantially reduced price or the Board of Directors could exchange each such
right for one share of One Valley Common Stock. In addition, under certain
circumstances, holders of Rights could acquire shares of the 10% holder at a
substantially reduced price.
Antitakeover Provisions in FFVA Financial 's Restated Articles of Incorporation
and Bylaws.
Limitations on Voting Rights. The Restated Articles of Incorporation of
FFVA Financial provide that in no event shall any record owner of any
outstanding common stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of common stock (the "Limit") be entitled or permitted to any vote in respect of
the shares held in excess of the Limit. In addition, for a period of five years
from the completion of the conversion of the Savings Bank, no person may
directly or indirectly offer to acquire or acquire the beneficial ownership of
more than 10% of any class of any equity security of FFVA Financial. After five
years from the date of the conversion, a beneficial holder submitting a proxy or
proxies totaling more than 10% of the then outstanding shares of common stock
will be able to vote in the following manner: the number of votes which may be
cast by such a beneficial owner shall be a number equal to the total number of
votes that a single record owner of all common stock owned by such person would
be entitled to cast, multiplied by a fraction, the numerator of which is the
number of shares of such class or series which are both beneficially owned and
owned of record by such beneficial owner and the denominator of which is the
total number of shares of common stock beneficially owned by such beneficial
owner. The impact of these provisions on the submission of a proxy on behalf of
a beneficial holder of more than 10% of the common stock is (1) to disregard for
voting purposes and require divestiture of the amount of stock held in excess of
10% (if within five years of the conversion more than 10% of the common stock is
beneficially owned by a person) and (2) limit the vote on common stock held by
the beneficial owner to 10% or possibly reduce the amount that may be voted
below the 10% level (if more than 10% of the common stock is beneficially owned
by a person more than five years after the conversion). Unless the grantor of a
revocable proxy has an arrangement, agreement or understanding with such a 10%
holder, these provisions would not restrict the ability of such a 10% holder of
revocable proxies to exercise revocable proxies for which the 10% holder is
neither a beneficial nor record owner. A person is a beneficial owner of a
security if he has the power to vote or direct the voting of all or part of the
voting rights of the security, or has the power to dispose of or direct the
disposition of the security. The Restated Articles of Incorporation of FFVA
Financial further provide that this provision limiting voting rights may only be
amended upon the vote of 80% of the outstanding shares of voting stock.
Election of Directors. Certain provisions of FFVA Financial's Restated
Articles of Incorporation and Bylaws will impede changes in majority control of
the Board of Directors. FFVA Financial's Restated Articles
59
<PAGE>
of Incorporation provide that the Board of Directors of FFVA Financial will be
divided into three classes, with directors in each class elected for three-year
staggered terms. Thus, it would take two annual elections to replace a majority
of FFVA Financial's Board. FFVA Financial's Restated Articles of Incorporation
provide that the size of the Board of Directors may be increased or decreased
only if a majority of the total number of the directors then authorized to be in
office approve such action. The Restated Articles of Incorporation also provide
that any vacancy occurring in the Board of Directors, including a vacancy
created by an increase in the number of directors, shall be filled by a majority
vote of the directors then in office and any directors so chosen shall hold
office until the next succeeding annual election of directors. Finally, the
Restated Articles of Incorporation and the Bylaws impose certain notice and
information requirements in connection with the nomination by stockholders of
candidates for election to the Board of Directors or the proposal by
stockholders of business to be acted upon at an annual meeting of stockholders.
The Restated Articles of Incorporation provide that a director may only
be removed for cause by the affirmative vote of not less than 67% of the shares
eligible to vote.
Restrictions on Call of Special Meetings and Action Without a Meeting.
The Restated Articles of Incorporation of FFVA Financial provide that a special
meeting of stockholders may be called only pursuant to a resolution adopted by a
majority of the Board of Directors, the Chairman of the Board or the President.
The Restated Articles of Incorporation also provide that any action required or
permitted to be taken by the stockholders of FFVA Financial may be taken only at
an annual or special meeting and prohibits stockholder action by written consent
in lieu of a meeting.
Absence of Cumulative Voting. FFVA Financial's Restated Articles of
Incorporation provide that there shall be no cumulative voting rights in the
election of directors.
Authorized Shares. The Restated Articles of Incorporation authorize the
issuance of 11,500,000 shares of common stock and 500,000 shares of preferred
stock. The shares of common stock and preferred stock were authorized in an
amount greater than that to be issued in the Conversion to provide FFVA
Financial's Board of Directors with as much flexibility as possible to effect,
among other transactions, financing, acquisitions, stock dividends, stock splits
and employee stock options. However, these additional authorized shares may also
be used by the Board of Directors consistent with its fiduciary duty to deter
future attempts to gain control of FFVA Financial. The Board of Directors also
has sole authority to determine the terms of any one or more series of preferred
stock, including voting rights, conversion rates, and liquidation preferences.
As a result of the ability to fix voting rights for a series of preferred stock,
the Board has the power, to the extent consistent with its fiduciary duty, to
issue a series of preferred stock to persons friendly to management in order to
attempt to block a post-tender offer merger or other transaction by which a
third party seeks control, and thereby assist management to retain its position.
FFVA Financial's Board currently has no plans for the issuance of additional
shares, other than the issuance of additional shares upon exercise of stock
options.
Procedures for Certain Business Combinations. The Restated Articles of
Incorporation prohibit FFVA Financial from engaging in or entering into certain
"Business Combinations," as defined therein, with any Principal Shareholder (as
defined below) or any affiliates of the Principal Shareholder unless the
proposed transaction has been approved in advance by two-thirds of FFVA
Financial's Board of Directors, excluding those who were not directors prior to
the time the Principal Shareholder became a Principal Shareholder. The term
"Principal Shareholder" is defined to include any person and the affiliates and
associates of the person (other than
60
<PAGE>
FFVA Financial or its subsidiary) who beneficially owns directly or indirectly,
10% or more of the outstanding shares of voting stock of FFVA Financial. Any
amendment to this provision requires the affirmative vote of at least 80% of the
shares of FFVA Financial entitled to vote generally in an election of directors.
Amendment to Related Restated Articles of Incorporation and Bylaws.
Amendments to FFVA Financial's Restated Articles of Incorporation must be
approved by a majority vote of FFVA Financial's Board of Directors and also by a
majority of the outstanding shares of FFVA Financial's voting stock, provided,
however, that approval by at least 80% of the outstanding voting stock is
generally required for certain provisions (i.e., provisions relating to
restrictions on the acquisition and voting of greater than 10% of the common
stock; number, classification, election and removal of directors; amendment of
Bylaws; call of special stockholder meetings; director liability; certain
business combinations; power of indemnification; and amendments to provisions
relating to the foregoing in the Restated Articles of Incorporation).
The Bylaws may be amended by a majority vote of the Board of Directors
or the affirmative vote of the holders of at least 67% of the outstanding shares
of the voting stock of FFVA Financial.
HISTORICAL COMPARATIVE STOCK PRICES AND DIVIDENDS
One Valley
One Valley Common Stock is traded on the New York Stock Exchange under
the symbol "OV." At January 5, 1998, there were approximately 5,200 holders of
record of One Valley's Common Stock. The following table sets forth the price
range and the cash dividends paid per share for the periods indicated below.
<TABLE>
<CAPTION>
Price Range Cash Dividends
High Low Paid Per Share
<S> <C> <C> <C>
Fiscal 1995
First Quarter............................................... $19.84 $17.92 $0.16
Second Quarter.............................................. 19.92 18.40 0.16
Third Quarter............................................... 21.44 19.52 0.17
Fourth Quarter.............................................. 22.16 19.92 0.17
Fiscal 1996
First Quarter............................................... 22.96 19.76 0.18
Second Quarter.............................................. 22.24 19.60 0.18
Third Quarter............................................... 25.28 21.60 0.19
Fourth Quarter.............................................. 30.20 25.00 0.19
Fiscal 1997
First Quarter............................................... 32.20 28.60 0.19
Second Quarter.............................................. 33.60 28.60 0.19
Third Quarter............................................... 37.00 32.50 0.21
Fourth Quarter ............................................. 40.94 33.63 0.21
Fiscal 1998
First Quarter (through January 20, 1998).................... 38.94 35.44 -
</TABLE>
61
<PAGE>
On December 15, 1997, the day prior to the public announcement of the
Merger, the closing price of One Valley's Common Stock on the New York Stock
Exchange was $40.94 per share.
One Valley has historically paid dividends on a quarterly basis and
currently intends to continue to pay such dividends in the foreseeable future.
One Valley's ability to pay dividends depends upon dividends One Valley receives
from its banking subsidiaries. Dividends paid by One Valley's banking
subsidiaries are subject to restrictions by banking regulations. The most
restrictive provision requires regulatory approval if dividends in any year
exceed the year's retained net profits, as defined, plus the retained net
profits of the two preceding years.
FFVA Financial
FFVA Financial's Common Stock trades on the Nasdaq National Market
under the symbol "FFFC." The following table sets forth the price range and the
cash dividends paid per share for the periods indicated below since the Common
Stock began trading on October 12, 1994.
<TABLE>
<CAPTION>
Price Range Cash Dividends
High Low Paid Per Share
<S> <C> <C> <C>
Fiscal 1995
First Quarter............................................... $11.50 $ 9.32 $0.075
Second Quarter.............................................. 14.13 11.25 0.075
Third Quarter............................................... 14.63 13.38 0.075
Fourth Quarter.............................................. 14.63 13.38 0.075
Fiscal 1996
First Quarter............................................... 16.13 13.50 0.075
Second Quarter.............................................. 18.50 14.63 0.100
Third Quarter............................................... 18.50 15.75 0.100
Fourth Quarter.............................................. 22.00 17.75 0.100
Fiscal 1997
First Quarter............................................... 25.13 20.00 0.10
Second Quarter.............................................. 27.50 20.00 0.12
Third Quarter............................................... 33.50 26.25 0.12
Fourth Quarter ............................................. 40.00 31.63 0.12
Fiscal 1998
First Quarter (through January 20, 1998).................... 38.97 35.13 -
</TABLE>
As of January 5, 1998, FFVA Financial had approximately 1,500
shareholders of record.
62
<PAGE>
PRO FORMA COMBINED CONDENSED BALANCE SHEETS
(unaudited)
The following unaudited pro forma combined condensed balance sheets
combine the historical balance sheets of One Valley and FFVA Financial at
September 30, 1997, and December 31, 1996. These unaudited pro forma combined
balance sheets should be read in conjunction with the historical financial
statements incorporated by reference into this Joint Proxy Statement/Prospectus.
It is expected that the acquisition of FFVA Financial will be accounted
for under the pooling-of-interests method. As required by that method, financial
information of the merging companies is combined as though the companies had
always been a single entity. These pro forma financial statements may not be
indicative of the results that actually would have occurred if the combination
had been in effect on the dates indicated or which may be obtained in the
future. These unaudited pro forma combined condensed balance sheets have been
prepared by One Valley management based on the financial statements of FFVA
Financial incorporated herein by reference.
The pro forma adjustments reflect the issuance of 5,537,580 shares of
One Valley Common Stock for FFVA Financial's shareholders' equity. The issuance
represents an exchange ratio of 1.05 shares of One Valley Common Stock for each
of the 5,273,885 shares of FFVA Financial Common Stock (shares outstanding at
September 30, 1997, plus 750,000 shares of FFVA Financial Common Stock to be
issued before the consummation date to conform with pooling-of-interests
criteria). For purposes of this pro forma information, these shares are
estimated to be issued at a market price of $39 per share, which is net of
estimated transaction costs.
63
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro Forma Consolidated Condensed Balance Sheet (Unaudited)
September 30, 1997
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands) One Valley Financial Adjustments Combined
---------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Assets
Cash and due from banks $ 141,585 $ 3,518 $ - $ 145,103
Interest bearing deposits with other banks 5,483 290 5,773
Federal funds sold 44,000 5,475 49,475
Investment securities 1,294,442 217,935 29,250 a 1,541,627
Loans, net of unearned income 2,896,470 329,866 3,226,336
Less: Allowance for loan losses 41,790 3,250 45,040
---------------- ------------- --------------- ----------------
Net loans 2,854,680 326,616 - 3,181,296
Premises and equipment 84,316 6,061 90,377
Intangible assets 23,162 1,518 24,680
Other assets 58,810 5,853 64,663
================ ============= =============== ================
Total assets $ 4,506,478 $ 567,266 $ 29,250 $ 5,102,994
================ ============= =============== ================
Liabilities
Deposits:
Noninterest bearing $ 420,468 $ 8,972 $ - $ 429,440
Interest bearing 3,044,398 404,901 3,449,299
---------------- ------------- --------------- ----------------
Total deposits 3,464,866 413,873 - 3,878,739
Short-term borrowings 545,941 45,000 590,941
Long-term debt 28,877 29,000 57,877
Other liabilities 46,439 3,894 50,333
---------------- ------------- --------------- ----------------
Total liabilities 4,086,123 491,767 - 4,577,890
---------------- ------------- --------------- ----------------
Shareholders' Equity
Common stock 314,807 452 54,924 ab 370,183
Capital surplus 75,375 40,204 (25,674) ab 89,905
Retained earnings 120,024 34,843 154,867
Treasury stock (89,851) - (89,851)
---------------- ------------- --------------- ----------------
Total shareholders' equity 420,355 75,499 29,250 525,104
================ ============= =============== ================
Total liabilities and shareholders' equity $ 4,506,478 $ 567,266 $ 29,250 $ 5,102,994
================ ============= =============== ================
</TABLE>
a.) Under the Merger Agreement, FFVA Financial will issue approximately
750,000 shares of its authorized but unissued Common Stock prior to the
effective date so that the Merger will be eligible to be treated as a
pooling-of-interests for accounting purposes. The pro forma adjustments
assume the private placement reissuance of these previously cancelled
treasury shares of FFVA Financial at $39 per share, net of transaction
costs. The proceeds are assumed to be immediately invested in
short-term securities.
b.) The pro forma adjustments reflect the issuance of 5,537,580 shares of
One Valley Common Stock for FFVA Financial's shareholders' equity. The
issuance represents an exchange ratio of 1.05 shares of One Valley
Common Stock for each of the 5,273,885 shares of FFVA Financial Common
Stock outstanding.
64
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro Forma Consolidated Condensed Balance Sheet (Unaudited)
December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands) One Valley Financial Adjustments Combined
--------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Assets
Cash and due from banks $ 146,152 $ 5,236 $ - $ 151,388
Interest bearing deposits with other banks 9,897 128 10,025
Federal funds sold 4,825 1,270 6,095
Investment securities 1,170,230 192,679 29,250 a 1,392,159
Loans, net of unearned income 2,810,212 324,838 3,135,050
Less: Allowance for loan losses 41,745 3,310 45,055
--------------- ------------ ------------- ----------------
Net loans 2,768,467 321,528 - 3,089,995
Premises and equipment 84,087 6,283 90,370
Intangible assets 25,929 1,608 27,537
Other assets 57,716 5,094 62,810
=============== ============ ============= ================
Total assets $ 4,267,303 $ 533,826 $ 29,250 $ 4,830,379
=============== ============ ============= ================
Liabilities
Deposits:
Noninterest bearing $ 406,630 $ 6,567 $ - $ 413,197
Interest bearing 2,999,386 390,868 3,390,254
--------------- ------------ ------------- ----------------
Total deposits 3,406,016 397,435 - 3,803,451
Short-term borrowings 378,074 54,000 432,074
Long-term debt 28,892 6,000 34,892
Other liabilities 45,744 1,910 47,654
--------------- ------------ ------------- ----------------
Total liabilities 3,858,726 459,345 - 4,318,071
--------------- ------------ ------------- ----------------
Shareholders' Equity
Common stock 249,232 469 54,907 ab 304,608
Capital surplus 73,834 41,610 (25,657) ab 89,787
Retained earnings 152,889 32,402 185,291
Treasury stock (67,378) (67,378)
--------------- ------------ ------------- ----------------
Total shareholders' equity 408,577 74,481 29,250 512,308
=============== ============ ============= ================
Total liabilities and shareholders' equity $ 4,267,303 $ 533,826 $ 29,250 $ 4,830,379
=============== ============ ============= ================
</TABLE>
a.) Under the Merger Agreement, FFVA Financial will issue approximately
750,000 shares of its authorized but unissued Common Stock prior to the
effective date so that the Merger will be eligible to be treated as a
pooling-of-interests for accounting purposes. The pro forma adjustments
assume the private placement reissuance of these previously cancelled
treasury shares of FFVA Financial at $39 per share, net of transaction
costs. The proceeds are assumed to be immediately invested in
short-term securities.
b.) The pro forma adjustments reflect the issuance of 5,537,580 shares of
One Valley Common Stock for FFVA Financial's shareholders' equity. The
issuance represents an exchange ratio of 1.05 shares of One Valley
Common Stock for each of the 5,273,885 shares of FFVA Financial Common
Stock outstanding.
65
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(unaudited)
The following unaudited pro forma combined condensed statements of
income for the nine months ended September 30, 1997, and 1996, and for each of
the three years in the period ended December 31, 1996, give effect to the
pending Merger with FFVA Financial. The pro forma combined statements of income
should be read in conjunction with the historical financial statements and
related notes thereto of One Valley and FFVA Financial incorporated by reference
in this Joint Proxy Statement/Prospectus.
It is expected that the acquisition of FFVA Financial will be accounted
for under the pooling-of-interests method. As required by that method, financial
information of the merging companies is combined as though the companies had
always been a single entity. These pro forma financial statements may not be
indicative of the results that actually would have occurred if the combination
had been in effect on the dates indicated or which may be obtained in the
future. These unaudited pro forma combined condensed statements of income have
been prepared by One Valley management based on the financial statements of FFVA
Financial incorporated herein by reference.
The following pro forma average shares outstanding and the related per
share computations reflect the issuance of 5,537,580 shares of One Valley Common
Stock for 100% of the outstanding shares of FFVA Financial Common Stock. The
issuance represents an exchange ratio of 1.05 shares of One Valley Common Stock
for each of the 5,273,885 shares of FFVA Financial Common Stock to be
outstanding at the consummation date. The cash proceeds from the issuance of
750,000 shares of FFVA Common Stock is invested at an average yield of 6.59% for
the year ended December 31, 1996, and 6.66% and 6.58% for the nine months ended
September 30, 1997, and 1996, based on the approximate period of time these
shares were originally held in treasury.
66
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro forma Consolidated Condensed Historical Statements of Income (Unaudited)
For the nine months ended September 30, 1997
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands, except per share data) One Valley Financial Adjustments Combined
------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans
Taxable $ 183,956 $ 21,606 $ - $ 205,562
Tax-exempt 2,253 - - 2,253
------------- ---------------- ---------------- ----------------
Total 186,209 21,606 - 207,815
Interest on investment securities
Taxable 51,429 10,774 1,461 63,664
Tax-exempt 8,988 - - 8,988
------------- ---------------- ---------------- ----------------
Total 60,417 10,774 1,461 72,652
Other interest income 1,056 229 - 1,285
------------- ---------------- ---------------- ----------------
Total interest income 247,682 32,609 1,461 281,752
Interest Expense
Interest on deposits 95,959 14,197 - 110,156
Interest on short-term borrowings 16,478 1,737 - 18,215
Interest on long-term borrowings 1,335 1,219 - 2,554
------------- ---------------- ---------------- ----------------
Total interest expense 113,772 17,153 - 130,925
------------- ---------------- ---------------- ----------------
Net interest income 133,910 15,456 1,461 150,827
Provision for loan losses 5,291 - - 5,291
------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses 128,619 15,456 1,461 145,536
Other income 34,679 1,282 - 35,961
Other expenses 96,897 7,479 - 104,376
------------- ---------------- ---------------- ----------------
Income before income taxes 66,401 9,259 1,461 77,121
Provision for income taxes 22,523 3,353 496 26,372
============= ================ ================ ================
Net income $ 43,878 $ 5,906 $ 965 $ 50,749
============= ================ ================ ================
Net income per common share $ 1.60 $ 1.27 $ 1.54
============= ================ ================
Based on average shares outstanding 27,401 4,655 32,939
</TABLE>
67
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro forma Consolidated Condensed Historical Statements of Income (Unaudited)
For the nine months ended September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands, except per share data) One Valley Financial Adjustments Combined
------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans
Taxable $ 174,290 $ 20,217 $ - $ 194,507
Tax-exempt 2,044 - - 2,044
------------- ------------- ---------------- ----------------
Total 176,334 20,217 - 196,551
Interest on investment securities
Taxable 46,157 10,155 674 56,986
Tax-exempt 8,318 - - 8,318
------------- ------------- ---------------- ----------------
Total 54,475 10,155 674 65,304
Other interest income 388 176 - 564
------------- ------------- ---------------- ----------------
Total interest income 231,197 30,548 674 262,419
Interest Expense
Interest on deposits 88,292 13,758 - 102,050
Interest on short-term borrowings 13,691 1,705 - 15,396
Interest on long-term borrowings 706 312 - 1,018
------------- ------------- ---------------- ----------------
Total interest expense 102,689 15,775 - 118,464
------------- ------------- ---------------- ----------------
Net interest income 128,508 14,773 674 143,955
Provision for loan losses 3,836 60 - 3,896
------------- ------------- ---------------- ----------------
Net interest income after provision for loan losses 124,672 14,713 674 140,059
Other income 30,154 894 - 31,048
Other expenses 96,738 9,953 - 106,691
------------- ------------- ---------------- ----------------
Income before income taxes 58,088 5,654 674 64,416
Provision for income taxes 19,380 1,977 225 21,582
============= ============= ================ ================
Net income $ 38,708 $ 3,677 $ 449 $ 42,834
============= ============= ================ ================
Net income per common share $ 1.42 $ 0.70 $ 1.31
============= ============= ================
Based on average shares outstanding 27,228 5,228 32,766
</TABLE>
68
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro forma Consolidated Condensed Historical Statements of Income (Unaudited)
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands, except per share data) One Valley Financial Adjustments Combined
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans
Taxable $ 235,153 $ 27,201 $ - $ 262,354
Tax-exempt 2,813 - - 2,813
-------------- ---------------- ---------------- ----------------
Total 237,966 27,201 - 265,167
Interest on investment securities
Taxable 62,447 13,524 1,078 77,049
Tax-exempt 11,076 - - 11,076
-------------- ---------------- ---------------- ----------------
Total 73,523 13,524 1,078 88,125
Other interest income 664 268 - 932
-------------- ---------------- ---------------- ----------------
Total interest income 312,153 40,993 1,078 354,224
Interest Expense
Interest on deposits 119,865 18,382 - 138,247
Interest on short-term borrowings 18,276 2,385 - 20,661
Interest on long-term borrowings 1,144 415 - 1,559
-------------- ---------------- ---------------- ----------------
Total interest expense 139,285 21,182 - 160,467
-------------- ---------------- ---------------- ----------------
Net interest income 172,868 19,811 1,078 193,757
Provision for loan losses 5,204 60 - 5,264
-------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses 167,664 19,751 1,078 188,493
Other income 40,792 1,321 - 42,113
Other expenses 128,415 12,569 - 140,984
-------------- ---------------- ---------------- ----------------
Income before income taxes 80,041 8,503 1,078 89,622
Provision for income taxes 26,886 3,040 362 30,288
============== ================ ================ ================
Net income $ 53,155 $ 5,463 $ 716 $ 59,334
============== ================ ================ ================
Net income per common share $ 1.94 $ 1.06 $ 1.80
============== ================ ================
Based on average shares outstanding 27,370 5,137 32,908
</TABLE>
<PAGE>
ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro forma Consolidated Condensed Historical Statements of Income (Unaudited)
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands, except per share data) One Valley Financial Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans
Taxable $ 217,034 $ 25,140 $ - $ 242,174
Tax-exempt 2,453 - - 2,453
---------------- ---------------- ---------------- ----------------
Total 219,487 25,140 - 244,627
Interest on investment securities
Taxable 50,693 12,135 1,831 64,659
Tax-exempt 10,362 - - 10,362
---------------- ---------------- ---------------- ----------------
Total 61,055 12,135 1,831 75,021
Other interest income 1,830 408 - 2,238
---------------- ---------------- ---------------- ----------------
Total interest income 282,372 37,683 1,831 321,886
Interest Expense
Interest on deposits 106,493 17,260 - 123,753
Interest on short-term borrowings 13,899 1,537 - 15,436
Interest on long-term borrowings 688 415 - 1,103
---------------- ---------------- ---------------- ----------------
Total interest expense 121,080 19,212 - 140,292
---------------- ---------------- ---------------- ----------------
Net interest income 161,292 18,471 1,831 181,594
Provision for loan losses 5,632 255 - 5,887
---------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses 155,660 18,216 1,831 175,707
Other income 37,574 1,054 - 38,628
Other expenses 119,591 9,084 - 128,675
---------------- ---------------- ---------------- ----------------
Income before income taxes 73,643 10,186 1,831 85,660
Provision for income taxes 24,537 3,712 610 28,859
================ ================ ================ ================
Net income $ 49,106 $ 6,474 $ 1,221 $ 56,801
================ ================ ================ ================
Net income per common share $ 1.83 $ 1.11 $ 1.75
================ ================ ================
Based on average shares outstanding 26,835 5,864 32,373
</TABLE>
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ONE VALLEY BANCORP, INC and
FFVA FINANCIAL CORPORATION
Pro forma Consolidated Condensed Historical Statements of Income (Unaudited)
For the year ended December 31, 1994
<TABLE>
<CAPTION>
Pro Forma
FFVA Pro Forma Fully
(Dollars in thousands, except per share data) One Valley Financial Adjustments Combined
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans
Taxable $ 189,040 $ 21,735 $ - $ 210,775
Tax-exempt 2,352 - - 2,352
-------------- ---------------- ---------------- ----------------
Total 191,392 21,735 - 213,127
Interest on investment securities
Taxable 48,881 7,138 1,635 57,654
Tax-exempt 10,073 - - 10,073
-------------- ---------------- ---------------- ----------------
Total 58,954 7,138 1,635 67,727
Other interest income 1,037 507 - 1,544
-------------- ---------------- ---------------- ----------------
Total interest income 251,383 29,380 1,635 282,398
Interest Expense
Interest on deposits 85,221 13,894 - 99,115
Interest on short-term borrowings 8,491 81 - 8,572
Interest on long-term borrowings 1,185 808 - 1,993
-------------- ---------------- ---------------- ----------------
Total interest expense 94,897 14,783 - 109,680
-------------- ---------------- ---------------- ----------------
Net interest income 156,486 14,597 1,635 172,718
Provision for loan losses 4,788 600 - 5,388
-------------- ---------------- ---------------- ----------------
Net interest income after provision for loan losses 151,698 13,997 1,635 167,330
Other income 36,578 896 - 37,474
Other expenses 120,156 7,496 - 127,652
-------------- ---------------- ---------------- ----------------
Income before income taxes 68,120 7,397 1,635 77,152
Provision for income taxes 21,909 2,694 526 25,129
============== ================ ================ ================
Net income $ 46,211 $ 4,703 $ 1,109 $ 52,023
============== ================ ================ ================
Net income per common share $ 1.73 $ 0.79 $ 1.61
============== ================ ================
Based on average shares outstanding 26,769 5,994 32,307
</TABLE>
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ONE VALLEY PROPOSAL TO APPROVE INCREASE
OF AUTHORIZED CAPITAL STOCK
Under the provisions of Article VI of the Restated Articles of
Incorporation of One Valley, One Valley's current authorized capital stock is
forty-one million shares, consisting of forty million shares of Common Stock,
with a par value of $10.00 per share, and one million shares of preferred stock,
with a par value of $10.00 per share. There are presently 27,173,842 shares of
One Valley Common Stock issued and outstanding and 1,421,352 reserved for
issuance under One Valley's incentive stock option plans. At a meeting held on
January 21, 1998, a resolution was unanimously adopted by the Board of Directors
of One Valley which approved for submission to a vote of the shareholders a
proposal to amend the first paragraph of Article VI of the Articles of
Incorporation to provide for a total authorized capital stock of One Valley of
seventy-one million shares, consisting of seventy million shares of Common
Stock, par value $10.00 per share, and one million shares of preferred stock,
par value $10.00 per share. In all other respects, Article VI of the Articles of
Incorporation would remain unchanged.
The Board of Directors believes that the authorization of an additional
thirty million shares of Common Stock will provide increased flexibility for
future growth.
One Valley has had and continues to have discussions with various banks
regarding the possible acquisition of additional banking subsidiaries and branch
facilities, and the consideration for such possible acquisitions may be One
Valley Common Stock. The increase in the authorized capital stock of One Valley
would also permit the Board of Directors to consider the possibility of
declaring a stock dividend to its existing shareholders or to provide for
additional shares which are reserved for issuance under One Valley's 1993
Incentive Stock Option Plan as a means of retaining qualified management
personnel and attracting additional personnel. While the reasons for the
increase in the authorized capital stock which will result from the approval of
this proposed amendment are those discussed above, the availability of the
additional common stock could also theoretically be utilized by One Valley as a
part of a defensive strategy to counter any hostile takeover attempts, although
such action is not presently anticipated. Although One Valley anticipates
issuing the newly authorized stock at some time in the future for one or more of
the reasons set forth above, it has no present intention of doing so for any
particular purpose at the present time. Holders of One Valley Common Stock
presently have no preemptive right to subscribe to a pro rata share of any
future offerings of shares of One Valley. The newly authorized shares would
likewise have no preemptive rights. Therefore, future shares of One Valley
Common Stock may be offered to the investing public or to shareholders or to
both at the discretion of the Board of Directors. If One Valley should decide to
issue any or all of these shares, the effect would be to dilute or lessen the
percentage ownership of the shareholders who do not acquire a pro rate portion
of shares issued. No further vote of One Valley shareholders would be required
to issue such shares.
The Board recommends that the following amendment to the first paragraph
of Article VI of the Articles of Incorporation be approved by the shareholders.
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<PAGE>
"VI. The amount of total authorized capital stock of
the corporation shall be Seventy-One Million shares,
consisting of Seventy Million shares of Common Stock with a
par value of Ten Dollars ($10.00) per share and One Million
shares of Preferred Stock with a par value of Ten Dollars
($10.00) per share."
A copy of the entire text of Article VI of the Articles of Incorporation
is attached as Appendix VII to this Joint Proxy Statement/Prospectus. The
italicized portions of paragraph 1 of Article VI in Appendix VII reflect the
proposed amendment to be voted on at the Annual Meeting.
Vote Required
An affirmative vote of a majority of the outstanding shares of One
Valley Common Stock is required to approve the amendment. Shares voted "ABSTAIN"
and shares not voted will have the same effect as if the shares were voted
"AGAINST" approval of the amendment.
The Board of Directors unanimously recommends that shareholders vote
"FOR" approval of this proposal. The enclosed proxy will be voted "FOR" the
approval of the proposed increase in authorized shares of One Valley Common
Stock unless otherwise directed.
FFVA FINANCIAL PROPOSAL TO AMEND RESTATED
ARTICLES OF INCORPORATION
At the FFVA Financial Special Meeting, FFVA Financial's shareholders
will be asked to vote upon an amendment to FFVA Financial's Restated Articles of
Incorporation to provide for the Merger. FFVA Financial believes that Article
10, Section A, would, unless amended, prohibit the Merger. Currently, Article
10, Section A, restricts the acquisition of FFVA Financial's equity securities.
This Section of the Restated Articles of Incorporation reads as follows:
ARTICLE 10. RESTRICTION ON VOTING THE
CORPORATION'S COMMON STOCK
A. VOTING RESTRICTION. Unless otherwise indicated in
this Article, the definitions and other provisions set forth
in Articles 9.A, 9.B and 9.C are also applicable to this
Article 10. Notwithstanding any other provision of these
Articles of Incorporation, in no event shall any record owner
of any outstanding Common Stock which is beneficially owned,
directly or indirectly, by a Person who, as of any record date
for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the
then-outstanding shares of Common Stock (the "Limit"), be
entitled, or permitted to any vote in respect of the shares
held in excess of the Limit. The number of votes which may be
cast by any record
73
<PAGE>
owner by virtue of the provisions hereof in respect of Common
Stock beneficially owned by such person owning shares in
excess of the Limit shall be a number equal to the total
number of votes which a single record owner of all Common
Stock owned by such person would be entitled to cast,
multiplied by a fraction, the numerator of which is the number
of shares of such class or series which are both beneficially
owned by such person and owned of record by such record owner
and the denominator of which is the total number of shares of
Common Stock beneficially owned by such person owning shares
in excess of the Limit. For a period of five years from the
completion of the conversion of First Federal Savings Bank of
Lynchburg, from mutual to stock form, no Person shall directly
or indirectly Offer to Acquire or Acquire the beneficial
ownership of more than 10% of any class of an equity security
of the Corporation.
The FFVA Financial Amendment would amend this Article to provide for the
Merger of FFVA Financial with and into One Valley, and approval of this
Amendment is a condition to the Merger being consummated. To be approved and
adopted, the FFVA Financial Amendment must receive the affirmative vote of at
least 80% of the outstanding shares of FFVA Financial Common Stock entitled to
vote on the matter.
Article 10, Section A of FFVA Financial's Restated Articles of
Incorporation is attached hereto as Appendix II to this Joint Proxy
Statement/Prospectus. The italicized portion reflects the FFVA Financial
Amendment.
The Board of Directors of FFVA Financial recommends a vote "FOR"
approval of the FFVA Financial Amendment.
SHAREHOLDER PROPOSALS
Any proposals of shareholders intended to be presented at the 1998
Annual Meeting must have been received by One Valley no later than November 18,
1997, in order to be considered for inclusion in the One Valley 1998 proxy
materials.
FFVA Financial will hold a 1998 Annual Meeting of Shareholders only if
the Merger is not consummated. In the event that such a meeting is held, any
proposals of shareholders intended to be presented at the 1998 Annual meeting
must have been received by the Secretary of FFVA Financial no later than
November 28, 1997, in order to be considered for inclusion in the FFVA Financial
1998 proxy materials.
74
<PAGE>
EXPERTS
The consolidated financial statements of FFVA Financial, incorporated by
reference in FFVA Financial's Annual Report (Form 10-K) for the year ended
December 31, 1996, have been audited by Cherry Bekaert & Holland, L.L.P.,
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.
The consolidated financial statements of One Valley, incorporated by
reference in One Valley's Annual Report (Form 10-K) for the year ended December
31, 1996, have been audited by Ernst & Young 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.
VALIDITY OF SECURITIES
The validity of the One Valley Common Stock and associated rights issued
under the Shareholder Protection Rights Plan to be issued to FFVA Financial
shareholders pursuant to the Merger and certain other legal matters in
connection with the Merger will be passed upon for One Valley by Jackson &
Kelly, Charleston, West Virginia. James K. Brown, a director of One Valley, is a
partner in Jackson & Kelly.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, management of
One Valley and FFVA Financial know of no other business that will come before
the Special Meetings. Should any other matters properly come before the Special
Meetings, the persons designated to vote the shares shall have discretionary
authority to vote the same with respect to any other matter in accordance with
the direction of the Boards of Directors of One Valley and FFVA Financial.
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<PAGE>
APPENDIX I
AGREEMENT
AND
PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter sometimes referred to as
the "Agreement"), made and entered into as of the 16th day of December, 1997, by
and between One Valley Bancorp, Inc. ("One Valley") and FFVA Financial
Corporation ("FFVA Financial").
WITNESSETH:
RECITALS
A.One Valley is a West Virginia corporation duly organized and validly
existing under the laws of the State of West Virginia.
B.FFVA Financial is a Virginia corporation duly organized and validly
existing under the laws of the State of Virginia.
C.The Boards of Directors of FFVA Financial and of One Valley have each
approved this Agreement, authorized the execution hereof in counterparts, and
directed that it be submitted for shareholder approval.
D.As a condition and inducement to One Valley's willingness to enter
into this Agreement, immediately after the execution and delivery of this
Agreement, One Valley and FFVA Financial will enter into a Stock Option
Agreement, dated as of the date hereof (the "Option Agreement"), in the form
attached hereto as Exhibit A, pursuant to which FFVA Financial will grant to One
Valley an option to purchase authorized but unissued shares of FFVA Financial's
common stock, par value $.10 per share, upon the terms and conditions therein
contained.
E. One Valley and FFVA Financial intend, and it is a condition hereof,
that the Merger (as defined below) constitute a tax-free reorganization.
AGREEMENT
Now, therefore, for and in consideration of the premises and the mutual
agreements hereinafter set forth, and in accordance with the provisions of
applicable law, the parties agree as follows:
SECTION 1
THE PLAN OF MERGER
1.1 The Merger. On the Closing Date, FFVA Financial shall merge with
and into One Valley, under the Articles of Incorporation of One Valley (the
"Merger"). One Valley shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation").
1.2 Effects of Merger. On the Closing Date, the corporate name and
existence of FFVA Financial shall cease and all of its purposes, powers and
objects, and all of its rights, assets, liabilities and obligations, shall pass
to and vest in One Valley as the Surviving Corporation without any conveyance or
transfer, and One Valley as the Surviving Corporation shall continue to be
governed by the laws of the State of West Virginia and shall also succeed to all
rights, assets, liabilities and obligations of FFVA Financial in accordance with
the West Virginia Corporation Act. Upon the Closing Date of the Merger, the
separate existence and corporate organization of FFVA Financial shall cease.
<PAGE>
SECTION 2
ARTICLES OF INCORPORATION; BYLAWS;
BOARD OF DIRECTORS AND OFFICERS
2.1 Articles of Incorporation. The Articles of Incorporation of One
Valley shall continue unchanged as the Articles of Incorporation of One Valley
as the Surviving Corporation. From and after the Closing Date, said Articles of
Incorporation, as the same may be amended from time to time as provided by law,
shall be the Articles of Incorporation of the Surviving Corporation.
2.2 Bylaws. The Bylaws of One Valley as in effect on the Closing Date
shall continue as the Bylaws of the Surviving Corporation until the same shall
thereafter be altered, amended or repealed in accordance with law, its Articles
of Incorporation, or said Bylaws.
2.3 Directors and Officers. Except as provided in Section 11.3, the
directors and officers of One Valley on the Closing Date shall continue as the
directors and officers of the Surviving Corporation and shall hold office as
prescribed in the Bylaws of the Surviving Corporation and applicable law until
their successors shall have been elected and shall qualify.
SECTION 3
CONVERSION OF SHARES AND OPTIONS
3.1 Conversion of Shares. On the Closing Date:
(a) All issued and outstanding shares of common stock of One
Valley shall remain issued and outstanding.
(b) Each share of common stock of FFVA Financial then issued
and outstanding, excluding any shares held in the treasury of FFVA Financial
shall be converted by the Merger into 1.05 (one and five hundredths) shares of
common stock of One Valley ("Fixed Exchange Ratio"). Each person who, but for
the provisions of this Section 3.1 (b), would be entitled to a fractional share
interest in the common stock of One Valley as a result of the conversion, upon
surrender of certificates theretofore representing shares of common stock of
FFVA Financial, shall receive in lieu thereof an amount in cash equal to such
fraction multiplied by the closing price for the common stock of One Valley
reported on the New York Stock Exchange on the business day immediately prior to
the Closing Date. Shares of One Valley common stock shall be issued with
associated rights pursuant to the terms of its Shareholder Protection Rights
Agreement, dated as of October 18, 1995, between One Valley Bancorp, Inc., and
One Valley Bank, National Association (as rights agent).
(c) Shareholders of One Valley asserting dissenters' rights
under the laws of the State of West Virginia shall have their rights determined
pursuant to W. Va. Code ss.ss.31-1-122 and 123 and shall be entitled to cash
payment pursuant to the terms and provisions of said law with funds to be
provided by One Valley.
(d) From and after the Closing Date, the holders of the
certificates representing common stock of FFVA Financial shall cease to have any
rights with respect to such shares and their sole right shall be to receive cash
and common stock of One Valley as herein provided.
(e) If One Valley shall, at any time prior to the Closing
Date, (i) issue a dividend in shares of One Valley common stock, (ii) combine
the outstanding shares of One Valley common stock into a smaller number of
shares, (iii) subdivide the outstanding shares of One Valley common stock, or
(iv) reclassify the shares of One Valley common stock, then, in any such event,
the Fixed Exchange Ratio (as set forth in Section 3.1(b) hereof) shall be
adjusted by multiplying the Fixed Exchange Ratio by a fraction the numerator of
which is equal to the number of shares of One Valley common stock outstanding
immediately after the happening of such event and the denominator of which is
equal to the number of shares of One Valley common stock outstanding immediately
prior to the happening of such event.
3.2 Exchange of Certificates. As soon as practicable after the Closing
Date, the certificates representing the outstanding shares of FFVA Financial
shall be surrendered to Harris Trust and Savings Bank, or to such other entity
as One Valley may direct, as agent ("Exchange Agent") for One Valley and, upon
such surrender, the Exchange Agent shall issue and deliver in substitution
therefore, certificates representing the number of shares of common stock of One
Valley into which such surrendered shares have been converted as hereinbefore
provided, and cash in lieu of fractional shares (without interest). Certificates
representing shares of FFVA Financial which are not surrendered shall be deemed
for all purposes to evidence the ownership of the number of shares of common
stock of One Valley into which said shares of FFVA Financial shall have been
converted as hereinbefore set forth
2
<PAGE>
and the right to receive cash in the amount determined pursuant to Section 3.1;
provided, however, that One Valley will not distribute to the holder of an
unsurrendered certificate for common stock of FFVA Financial dividends declared
with respect to common stock of One Valley until such owner shall surrender such
certificate, at which time the holder thereof shall be paid the amount of the
dividends having a record date on or after the Closing Date theretofore declared
with respect to common stock without interest. All such dividends unclaimed at
the end of one year from the Closing Date shall be repaid by the Exchange Agent
to One Valley, and thereafter the holders of such outstanding certificates shall
look, subject to applicable escheat, unclaimed funds and other laws, as general
creditors only to One Valley for payment thereof.
3.3 Closing of Stock Transfer Books. At the close of business on the
business day immediately preceding the Closing Date, the stock transfer books of
FFVA Financial shall be deemed closed, and no shares of common stock of FFVA
Financial shall thereafter be transferred.
3.4 Conversion of Options. At the Closing Date, each option granted by
FFVA Financial to purchase shares of its common stock pursuant to the "FFVA
Financial Corporation 1994 Stock Option Plan" (the "Stock Option Plan"), which
is outstanding and unexercised immediately prior thereto, shall be converted
into an option to purchase shares of One Valley's common stock on the same terms
and conditions as are in effect immediately prior to the Merger as adjusted as
set forth below. Each such option that is converted shall be converted into an
option to purchase such number of shares of One Valley's common stock at such
exercise price as is determined as provided below (and otherwise having the same
duration and other terms as the original option):
(a) the number of shares of One Valley's common stock to be
subject to the new option shall be equal to 1.05 times the number of shares of
FFVA Financial's common stock subject to the original option, rounded, if
necessary, up to the nearest whole share; and
(b) the exercise price per share of One Valley's common stock
under the new option shall be equal to the exercise price per share of FFVA
Financial's common stock under the original option divided by 1.05, rounded, if
necessary, up to the nearest cent. The adjustment provided herein with respect
to any options which are "incentive stock options" (as defined in Section 422 of
the Internal Revenue Code) shall be effected in a manner consistent with Section
424 (a) of the Internal Revenue Code.
FFVA shall take, or shall cause to be taken, all appropriate action
pursuant to the Stock Option Plan prior to the Closing Date to provide for the
conversion of options provided in this Section. One Valley will register the
shares to be issued pursuant to the Stock Option Plan in the Registration
Statement to be filed pursuant to Section 5.11 of this Agreement, and after the
Closing Date will take such other steps, including the filing of a Form S-8, as
may be necessary or appropriate.
SECTION 4
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF FFVA FINANCIAL
Except as set forth in the disclosure schedule to be delivered by FFVA
Financial to One Valley on or before 30 days from the date of this Agreement
(the "Disclosure Schedule"), FFVA Financial represents and warrants to and
covenants with One Valley that:
4.1 Organization and Qualification of FFVA Financial and its
Subsidiary. FFVA Financial is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Virginia and has the
corporate power to own all of its properties and assets and to carry on its
business as it is now being conducted. FFVA Financial is qualified to do
business in each jurisdiction in which such qualification is required. FFVA
Financial owns 100% of the issued and outstanding shares of stock of First
Federal Savings Bank of Lynchburg (the "Bank" or the "Subsidiary"), free and
clear of all liens, claims and encumbrances. The Bank is duly organized, validly
existing and in good standing as a federal savings bank under the laws of the
United States and has the corporate power to own all of its assets and to carry
on its business as it is now being conducted. The issued and outstanding shares
of stock of the Bank are all duly authorized, validly issued, fully paid and
nonassessable. Except for its Subsidiary, FFVA Financial has no other direct or
indirect subsidiaries, and does not own 5% or more of the shares of stock of any
other corporation.
4.2 Authorization of Agreement. The Board of Directors of FFVA
Financial has authorized the execution of this Agreement as set forth herein,
and subject to the approval of this Agreement and an amendment to Article 10 of
the FFVA Financial Restated Articles of Incorporation ("Articles Amendment") by
the shareholders of FFVA Financial and all appropriate regulatory authorities as
provided in Virginia Stock Corporation Act (the
3
<PAGE>
"VSCA") and the Rules and Regulations of the Office of Thrift Supervision
("OTS"), FFVA Financial has the corporate power and is duly authorized to merge
with One Valley pursuant to this Agreement, and upon its execution and delivery
(and assuming due execution and delivery by One Valley) this Agreement is a
valid and binding agreement of FFVA Financial enforceable in accordance with its
terms.
4.3 No Violation of Other Instruments. Subject to the receipt of the
authorizations set forth in Section 4.2, the execution and delivery of this
Agreement do not, and the consummation of the Merger in accordance with this
Agreement will not, (i) violate any provisions of FFVA Financial's Restated
Articles of Incorporation or Bylaws, (ii) violate any provision of, or result in
the acceleration of any obligation under or in the termination, if applicable,
of, any mortgage, deed of trust, note, lien, lease, franchise, license, permit,
agreement, instrument, order, arbitration award, judgment or decree to which
either FFVA Financial or its Subsidiary is a party or by which any of them is
bound except for such as would not have a material adverse effect on the
financial condition, business, properties, or results of operations of FFVA
Financial and its Subsidiary, taken as a whole, or the transactions contemplated
hereby, (iii) violate or conflict with any other material restriction of any
kind or character by which FFVA Financial or its Subsidiary is bound, or (iv)
enable any person to enjoin the transactions contemplated hereby. After the
approval of this Agreement and the Articles Amendment by the shareholders of
FFVA Financial, FFVA Financial will have taken all action required by law, the
Restated Articles of Incorporation of FFVA Financial, its Bylaws or otherwise to
authorize the execution and delivery of this Agreement and to authorize the
Merger of FFVA Financial with One Valley pursuant to this Agreement and the
consummation of the transactions contemplated hereby.
4.4 Financial Statements. The consolidated balance sheets of FFVA
Financial as of December 31, 1994, 1995 and 1996, and its statements of income
and cash flows for each of the twelve month periods ended on such dates,
heretofore delivered to One Valley, were prepared in accordance with generally
accepted accounting principles consistently applied and those financial
statements, as well as the unaudited balance sheet as of September 30, 1997, and
the statement of income and cash flows for the nine-month period ended September
30, 1997, both of which have been delivered to One Valley, fairly present its
financial condition and results of operations as of such date and for such
period, subject to normal year-end audit adjustments.
4.5 No Material Adverse Change. There has been no material adverse
change, or development involving a reasonably foreseeable prospective material
adverse change, in or affecting the financial condition, businesses, properties,
results of operations or prospects of FFVA Financial or its Subsidiary, taken as
a whole, since December 31, 1996.
4.6 Form 10-K Annual Report and Other Reports. FFVA Financial's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
fiscal year ended December 31, 1996, heretofore delivered to One Valley, does
not contain, as of the date thereof, an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which such statements were made, not misleading.
Since January 1, 1995, FFVA Financial has filed with the Securities and Exchange
Commission and the OTS all documents and reports required to be filed and such
reports do not contain, as of their respective dates, an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading. The Bank has filed with the OTS and the Federal Deposit
Insurance Corporation all documents and reports required to be filed and such
reports are accurate and complete in all material respects.
4.7 No Actions, Etc. There are no actions, suits, claims, proceedings
or investigations pending or, to the knowledge of the executive officers or
directors of FFVA Financial or its Subsidiary, threatened or contemplated
against or relating to FFVA Financial or its Subsidiary or any of their
properties which, individually or in the aggregate, could materially and
adversely affect the financial condition, businesses, properties or results of
operations of FFVA Financial and its Subsidiary, taken as a whole, or the
ability of FFVA Financial to consummate the transactions contemplated hereby,
and such officers and directors do not know of any basis for any such action or
proceeding. Neither FFVA Financial nor its Subsidiary is transacting business in
violation of any applicable law or regulation which could materially adversely
affect the financial condition, businesses, properties or results of operations
of FFVA Financial or its Subsidiary, taken as a whole, or the ability of FFVA
Financial to consummate the transactions contemplated hereby.
4.8 Capitalization. The authorized capital stock of FFVA Financial
consists of (i) 11,500,000 shares of common stock, par value of $.10 per share,
4,523,885 of which as of the date hereof are issued and outstanding and are duly
authorized, validly issued, fully paid and nonassessable, and have not been
issued in violation of preemptive rights, and (ii) 500,000 shares of preferred
stock, par value of $.10 per share, none of which is issued. Other than stock
options granted under all of the stock option plan listed in the Disclosure
Schedule covering
4
<PAGE>
603,862 shares of common stock of FFVA Financial (as listed thereon), there are
no options, warrants, calls, reservations for issuance or commitments of any
kind relating to, or securities convertible into, the common stock of FFVA
Financial or its Subsidiary.
4.9 Copies of All Contracts, Leases, Etc. FFVA Financial has furnished
or made available or will promptly furnish or make available to One Valley true
and complete copies of all material contracts, leases and other agreements to
which FFVA Financial or its Subsidiary is a party or by which any of them is
bound, and has listed on the Disclosure Schedule and will furnish to One Valley
true and complete copies of all employment, pension, retirement, stock option,
employee stock option, profit sharing, deferred compensation, consultant, bonus,
group insurance or similar plans with respect to any of the directors, officers
or other employees of FFVA Financial or its Subsidiary.
4.10 Undisclosed Liabilities. Neither FFVA Financial nor its Subsidiary
has any material liabilities other than those liabilities disclosed on or
provided for in the balance sheet as of December 31, 1996, and liabilities
incurred since such date in the ordinary course of business consistent with past
practices.
4.11 Title to Properties. FFVA Financial and its Subsidiary have good
and marketable title to all their property and assets set forth in their balance
sheets as of December 31, 1996, except property and assets sold or otherwise
disposed of since December 31, 1996, in the ordinary course of business, subject
to no liens, mortgages, pledges, encumbrances or charges of any kind except
liens reflected on said balance sheet and except liens for taxes and assessments
not delinquent, pledges to secure deposits and such other liens and encumbrances
and imperfections of title as do not materially affect the value of such
property as reflected on said balance sheet and which do not interfere with or
impair its present or continued use, and all of their material leases are in
full force and effect and neither FFVA Financial nor its Subsidiary is in
default in any material respect thereunder.
4.12 Proxy Statement. The information pertaining to FFVA Financial
which has been or will be furnished by or on behalf of FFVA Financial or its
management for inclusion in the Proxy Statement referred to in Section 10 and
the Registration Statement referred to in Section 5.11 or any amendment or
supplement thereto will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they
are made, not misleading.
4.13 Good Faith. FFVA Financial shall use its reasonable best efforts
in good faith to take or cause to be taken all action required under this
Agreement on its part to be taken as promptly as practicable so as to permit the
consummation of this Agreement at the earliest practicable date and cooperate
fully with the other parties to that end.
4.14 Absence of Regulatory Actions. Neither FFVA Financial nor its
Subsidiary is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, federal governmental authorities
charged with the supervision or regulation of the operations of any of them nor
has it been advised by any such governmental authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
4.15 Employee Benefits.
(a) For purposes of this Agreement the following
definitions shall apply:
1. "Employee Pension Benefit Plan" has the meaning as
set forth in ERISA ss.3(2).
2. "Employee Welfare Benefit Plan" has the meaning
set forth in ERISA ss.3(1).
3. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
4. "Multiemployer Plan" shall mean a plan described
in ss.3(37) and/or ss.4001(a)(3) of ERISA.
5. "FFVA ESOP" shall mean the Bank's Employee Stock
Ownership Plan. 6. "FFVA Retirement Plan" shall mean
the Financial Institutions Retirement Fund as adopted
by the Bank.
7. "FFVA Employee" means an employee of either FFVA
Financial or the Bank.
8. "Employee Benefit Plan(s)" means any one or
more of the following in which a FFVA Employee is a participant in or benefits
from as a result of his employment (whether current or past with either FFVA
Financial or Bank): (a) Employee Pension Benefit Plan, (b) Employee Welfare
Benefit Plan or (c) any other deferred compensation plan, bonus plan, incentive,
disability or group insurance plan, stock option plan,
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employee stock purchase plan, vacation plan, severance plan, sick leave plan or
policy, holiday plan or policy, maternity leave or policy, or any other benefit
plan, program, agreement (including employment and severance agreements),
arrangements or commitments of any kind whether or not subject to the
requirements of ERISA.
9. "One Valley 401(k) Plan" shall mean the One Valley
Bancorp of West Virginia, Inc., 401(k) Plan.
10. "Code" means the Internal Revenue Code of 1986,
as amended.
11. "Control Group" shall mean a controlled group of
corporations within the meaning of ss.414(b) of the Internal Revenue Code and
entities under common control within the meaning of ss.414 (c) of the Internal
Revenue Code.
(b) Neither currently nor at any time during the preceding
five calendar years has FFVA Financial, or any entity which was in the same
Control Group with FFVA Financial at any time during such five-year period, or
its Subsidiary contributed to or had any obligation to contribute to any
Multiemployer Plan.
(c) Neither currently nor in the past has FFVA Financial (i)
had any employees (who were not also employees of the Bank), or (ii) had any
direct obligation to fund or contribute to any Employee Benefit Plan.
(d) Each Employee Benefit Plan will be listed in the
Disclosure Schedule, and copies of such plans and accompanying Summary Plan
Descriptions, if required, have been furnished to One Valley.
(e) Each of the Employee Benefit Plans has been administered
in all material respects in compliance with the applicable requirements of
ERISA, the Code, other federal statutes, applicable federal regulations,
applicable State law (including without limitation State insurance law) and in
accordance with its terms. Each of the FFVA Retirement Plan and the FFVA ESOP
has received a favorable determination letter from the Internal Revenue Service
with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and FFVA
Financial is not aware of any circumstances likely to result in revocation of
such favorable determination letters. All reports required by any governmental
agency with respect to each such Employee Benefit Plan has been timely and
properly filed and to the extent required, furnished to the participants in such
plan. Bank has paid all costs, benefits, premiums, contributions and any other
amounts required or coming due in connection with the Employee Benefit Plans and
no accumulated funding deficiency, as defined in ss.302(a)(2) of ERISA, exists
with respect to any Employee Benefit Plan. To the best of its knowledge, neither
FFVA Financial nor the Bank nor any fiduciary of any Employee Benefit Plan, has
engaged in (i) a transaction that would subject FFVA Financial or the Bank to
any tax, penalty or liability for prohibited transactions imposed by ERISA or by
ss.4975 of the Code, or (ii) any transaction in violation of ss.406(a) or
ss.406(b) of ERISA (for which no exemption exists under ss.408 of ERISA).
(f) With the exception of Employee Pension Benefit Plans and
except as set forth in the Disclosure Schedule, none of the benefits provided
under any of the Employee Benefit Plans are vested, and the Bank retains full
authority to terminate or amend any of the Employee Benefit Plans.
(g) Each Employee Benefit Plan, other than the FFVA Retirement
Plan, is either fully insured and all premiums have been timely paid or, if not
fully insured, adequate reserves have been established on the books of the Bank
in connection with such benefits, and all required contributions have been made
to such plans.
(h) With the exception of the FFVA Retirement Plan, no
Employee Benefit Plan is subject to the provisions of Title IV of ERISA. No
liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by FFVA Financial or its Subsidiary with respect to any ongoing,
frozen or terminated "single-employer plan', within the meaning of Section 4001
(a) (15) of ERISA, currently or formerly maintained by either of them, or the
single-employer plan of any entity which is or was in the same Control Group as
FFVA Financial. 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 the FFVA Retirement Plan within the 12-month
period ending on the date hereof.
(i) FFVA Financial and the Bank represent and warrant that as
of December 31, 1996, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001 (a) (16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the FFVA
Retirement Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of the FFVA Retirement Plan. FFVA Financial and Bank
further warrant and represent that they have taken no action since that date by
amendment of that plan or otherwise, to increase the actuarially determined
present value of the benefit liabilities of the FFVA
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Retirement Plan except with respect to changes in normal eligibility resulting
from increased terms of service or compensation changes.
(j) As of the Closing Date the FFVA Retirement Plan will be
either (i) terminated, (ii) amended to cease all future benefit accruals, or
(iii) merged into the One Valley Retirement Plan. The parties agree that the
preferred option is merger of the FFVA Retirement Plan into the One Valley
Retirement Plan, if the merger of the plans can be accomplished without
increasing the total unfunded liability of the One Valley Retirement Plan (as to
former FFVA Employees) in excess of such unfunded liability in the FFVA
Retirement Plan as set forth in Section 4.15(i). The parties agree that at a
minimum, participants in the FFVA Retirement Plan will be entitled to their
vested accrued benefit under that plan as of the Closing Date plus such
additional vested accrued benefit to which they shall be entitled to for years
of service with the Bank subsequent to the Closing Date under the One Valley
Retirement Plan.
(k) There has not been any (i) termination of the FFVA
Retirement Plan or (ii) the commencement of any proceeding to terminate such
plan pursuant to ERISA, or otherwise, or (iii) written notice given to FFVA
Financial or Bank of the intention to commence or seek the commencement of any
such proceeding.
(l) Within 90 days following the Closing Date, the Bank shall
cause the FFVA ESOP to be terminated in accordance with its provisions. It is
understood that prior to the Closing Date, the Bank may make a final cash
contribution equal to the maximum amount allowable without penalty pursuant to
sections 404 and 415 of the Code with respect to the FFVA ESOP plan year ending
on or before June 30, 1998; provided, however, that the final cash contribution
shall not exceed the greater of the contributions made by the Bank for either
the year 1996 or 1997. It is expressly warranted that such termination shall not
result in any additional funding obligation, including but not limited to any
obligation to pay off all stock obligations, to such ESOP and that sufficient
shares of stock held in the FFVA ESOP's Unallocated Stock Fund will be sold
pursuant to the provisions of the plan to fully pay off any stock obligation to
the extent that prior Bank contributions and dividend income on unallocated
stock are not sufficient to pay off such Stock Obligation as of the Closing
Date. Thereafter, any remaining unallocated ESOP assets shall be allocated as
trust earnings based upon account balances. Participants eligible to receive
distributions from the FFVA ESOP upon its termination shall be given the
opportunity to have such distribution transferred to the One Valley 401(k) Plan
pursuant to the provisions of ss.401(a)(31) of ERISA. Notwithstanding the
foregoing, FFVA Financial and the Bank shall make such amendments to the ESOP as
deemed appropriate to effectuate the purposes of the FFVA ESOP Plan and this
Section of the Agreement.
(m) From and after Closing, One Valley shall authorize the
Bank to adopt the One Valley 401(k) Plan and the One Valley Retirement Plan
(collectively "OVB Qualified Plans"). In adopting the OVB Qualified Plans it is
understood that such plans will recognize FFVA Employees years of employment
with Bank only for purposes of eligibility to participate in and vest under such
plans. It is specifically understood that FFVA Employees shall not be entitled
to any past service for benefit accrual purposes under any Employee Pension
Benefit Plans of One Valley, except that if the FFVA Retirement Plan and the One
Valley Retirement Plan are merged pursuant to Section 4.15(j), and in connection
with such merger it is decided that such past service can be granted without
increasing the unfunded liability of the One Valley Retirement Plan in excess of
such amount described in Section 4.15(j). It is further specifically understood
that, notwithstanding any provision hereof to the contrary, FFVA Employees shall
be employees at-will and that after the Closing Date, One Valley and/or the Bank
may alter, amend, or terminate any of its benefit programs covering such
employees.
(n) Except as specifically provided elsewhere in this
Agreement, Bank shall continue for the calendar years 1997 and 1998 those
Employee Benefits Plans in existence as of the date of the execution of this
Agreement and shall not adopt any other such plans nor otherwise amend such
plans except as authorized by One Valley. Except as expressly provided for
elsewhere in this Agreement, Bank shall terminate or amend each such plan
effective December 31, 1998. Bank shall adopt and One Valley shall authorize
such adoption effective January 1, 1999, of life, disability insurance, health,
welfare, vacation and other fringe benefits (collectively "fringe benefit
programs") of the types and in the amounts and at the contribution levels
provided to other similarly situated employees of One Valley. In determining
eligibility, benefit levels and required contributions under such fringe benefit
programs all full time years of employment with Bank shall be counted and
preexisting conditions shall be treated as such conditions were treated under
any such predecessor plan.
(o) Notwithstanding the limitation in (n) above it is
understood that FFVA employees employed by the Bank as of the Closing Date shall
(as long as they otherwise remain eligible under the terms of the Bank's
vacation policy) be entitled to annual vacation and sick leave for 1998 and
thereafter equal to the greater of (i) the number of days of vacation and sick
leave to which they were entitled to in 1997 or (ii) such vacation and sick
leave to which they are entitled to under Bank's policies then in effect.
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4.16 Labor Disputes. Neither FFVA Financial nor its Subsidiary is
directly or indirectly involved in or to the knowledge of any of them threatened
with any labor dispute or trouble or organizational effort, including, without
limitation, matters regarding actual or alleged discrimination by reason of
race, creed, sex, disability or national origin, which might materially and
adversely affect the financial condition, assets, businesses or results of
operations of any of them. Neither FFVA Financial nor its Subsidiary is a party
to, nor has ever been a party to, any collective bargaining agreement.
4.17 Reserve for Possible Loan Losses. The reserve for possible loan
losses shown on the consolidated balance sheet of FFVA Financial as of December
31, 1996, and shown on the unaudited balance sheet of FFVA Financial dated
September 30, 1997, is adequate as of the dates thereof. The reserve for
possible loan losses to be shown on the consolidated balance sheet of FFVA
Financial as of December 31, 1997, and future periods, if any, will be adequate
as of the dates thereof.
4.18 Knowledge as to Conditions. As of the date hereof:
(a) FFVA Financial knows of no reason relating to FFVA
Financial why the approvals, consents and waivers of governmental authorities
referred to in Sections 8.1 (b) and 8.1 (c) should not be obtained in a timely
manner and without the imposition of a condition of the type referred to in
Section 8.1(g);
(b) FFVA Financial and its Subsidiary are not aware of any
conditions or provisions of any actions, reports of examinations or similar
regulatory reports or findings which is anticipated to delay or precludes FFVA
Financial or its Subsidiary from entering into the Agreement or obtaining prompt
regulatory approval of all applications to be filed in connection with the
transaction contemplated by this Agreement, including but not limited to
compliance with the Community Reinvestment Act ("CRA"); and
(c) Provided that shares of common stock of FFVA Financial
held by FFVA Financial as authorized but unissued shares are reissued before the
Closing Date pursuant to Section 4.22 (i), FFVA Financial and its Subsidiary are
not aware of any reason relating to FFVA Financial why the Merger will not be
treated as a "pooling of interests" for accounting purposes.
4.19 Taxes.
(a) FFVA Financial and Subsidiary have each filed on a timely
basis all Federal Income Tax Returns and all other federal, state, municipal and
other tax returns which each of them is required to file, and each has paid all
taxes shown to be due on such returns and, in the opinion of its respective
Chief Executive and Financial Officers, has adequately reserved for all current
taxes;
(b) Neither the Internal Revenue Service nor any other taxing
authority is now asserting against FFVA Financial or Subsidiary, or, to the
knowledge of either of them, threatening to assert against any of them, any
deficiency or claim for additional taxes, interest or penalty;
(c) There is no pending, or to the knowledge of FFVA Financial
or its Subsidiary, threatened examination of the Federal Income Tax Returns of
FFVA Financial or its Subsidiary and, except for tax years still subject to the
assessment and collection of additional federal income taxes under the
three-year period of limitations prescribed in Section 6501(a) of the Internal
Revenue Code, no tax year of FFVA Financial or its Subsidiary remains open to
the assessment and collection of additional Federal Income Taxes; and
(d) There is no pending or, to the knowledge of FFVA Financial
or Subsidiary, threatened examination of State Tax (the "Virginia Taxes")
returns of FFVA Financial or any of its Subsidiary and, except for tax years
still subject to the assessment and collection of additional Virginia Taxes
under the applicable statutes of limitations, no tax year of FFVA Financial or
its Subsidiary remains open to the assessment and collection of additional
taxes.
4.20 Absence of Certain Changes. Since December 31, 1996:
(a) There has not been any damage, destruction or loss by
reason of fire, flood, accident or other casualty (whether insured or not
insured) materially and adversely affecting the assets, financial condition or
operations of FFVA Financial or its Subsidiary;
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(b) Except in the ordinary course of business, neither FFVA
Financial nor its Subsidiary has disposed of, or agreed to dispose of, any of
its material properties or assets, nor has any of them leased to others, or
agreed to so lease, any of such material properties or assets;
(c) Except for the exercise of stock options there has not
been any change in the authorized, issued or outstanding capital stock of FFVA
Financial or its Subsidiary, except as provided for in this Agreement, or any
material change in the outstanding debt of FFVA Financial or its Subsidiary,
other than changes due to payments in accordance with the terms of such debt and
FHLB advances and reverse repurchase agreements to meet funding needs of the
Bank in the ordinary course of business;
(d) No change has occurred in the personnel who are key
personnel with respect to the operations of FFVA Financial or Subsidiary, nor
has there been any increase in the compensation or fees payable by either FFVA
Financial or its Subsidiary to their directors or officers other than increases
in the ordinary course of business in accordance with the personnel policies of
FFVA Financial or its Subsidiary, or any material increase in any bonus,
insurance, pension or other Employee Benefit Plan, payment or arrangement for or
with any of such directors or officers;
(e) Neither FFVA Financial nor its Subsidiary has made any
material loan or advance other than in the ordinary course of business;
(f) Neither FFVA Financial nor its Subsidiary has made any
expenditure or major commitment for the purchase, acquisition, construction or
improvement of any material asset or assets which in the aggregate would be
material;
(g) Neither FFVA Financial nor its Subsidiary has entered into
any other material transaction, contract or lease or incurred any other material
obligation or liability;
(h) The Bank has not incurred any unusual or extraordinary
loan losses;
(i) There has not been any other event, condition or
development of any kind which materially and adversely affects the assets,
financial condition or results of operations of FFVA Financial and its
Subsidiary, taken as a whole, and neither FFVA Financial nor its Subsidiary has
knowledge of any such event, condition or development which may materially and
adversely affect the assets, financial condition or operations of FFVA Financial
and its Subsidiary, taken as a whole; and
(j) FFVA Financial and its Subsidiary are, and have been, in
substantial compliance with all environmental laws and regulations, and there is
no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending, or, to the knowledge of FFVA Financial or
its Subsidiary, threatened, before any court, governmental agency or board or
other forum against FFVA Financial or its Subsidiary for alleged noncompliance
with, or liability under, any environmental law or relating to the release into
the environment of any hazardous material or oil.
4.21 Negative Covenants. Except as otherwise expressly contemplated
hereby, between the date hereof and the Closing Date, or the time when this
Agreement terminates as provided herein, neither FFVA Financial nor its
Subsidiary, respectively, will, without the prior written consent of One Valley,
which consent shall not be unreasonably withheld:
(a) Make any change in its authorized capital stock or
corporate structure;
(b) Issue any shares of its capital stock, securities
convertible into its common stock or any long-term debt securities of FFVA
Financial or its Subsidiary, other than shares of capital stock issued pursuant
to the exercise of outstanding stock options granted prior to the date of this
Agreement under the Stock Option Plan; provided, however, that FFVA Financial
shall, following approval of the Merger by its shareholders and receipt of all
requisite regulatory approvals, issue shares of its common stock held as
authorized but unissued shares, which issuance is necessary in order that the
Merger be treated as a "pooling of interests" for accounting purposes pursuant
to Section 4.22 (i);
(c) Issue or grant any options, warrants or other rights to
purchase shares of its common stock or preferred stock;
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(d) Declare or pay any dividends or other distributions on any
shares of common stock, except a cash dividend in an amount not to exceed
fifteen cents ($.15) per share per quarter, in accordance with past practice,
for each quarter prior to the Closing Date, to be paid on or before the Closing
Date;
(e) Purchase, redeem or otherwise acquire, or agree to
purchase, redeem or acquire, for consideration any shares of its capital stock,
securities convertible into its common stock or any long-term debt securities of
FFVA Financial or its Subsidiary;
(f) Enter into or amend (except as otherwise specifically
contemplated by this Agreement or disclosed in the Disclosure Schedule) any
Employee Benefit Plan, consultant, or similar plan in respect of any of its
directors, officers or other employees or increase its contribution to any
Employee Benefit Plan;
(g) Take any action materially and adversely affecting the
transactions contemplated hereby or this Agreement or the financial condition,
businesses, properties or results of operations of FFVA Financial and its
Subsidiary, taken as a whole;
(h) Acquire any other company or acquire any branch or
deposits or, other than in the ordinary course of business, any assets of any
other company;
(i) Mortgage, pledge or subject to a lien or any other
encumbrance any of its assets, dispose of any of its assets, incur or cancel any
debts or claims or take any other action not in the ordinary course of its
business as heretofore conducted;
(j) Except as may be necessary to comply with this Agreement,
amend its Restated Articles of Incorporation or Bylaws;
(k) Sell, pledge or otherwise dispose of or encumber any of
its stock, or any of the stock of its Subsidiary or change the capital structure
of any of them;
(l) Sell any securities from its investment portfolio, except
in the ordinary course of business;
(m) Increase the compensation of or pay any benefit to any
director, officer or employee during or for the calendar years 1997 or 1998
other than in the ordinary course of business and, in any event, in the
aggregate not in excess of 5% of the total salary expense of the Bank; or
(n) Enter into any agreement to do any of the foregoing.
4.22 Additional Covenants. Except as otherwise contemplated by this
Agreement, FFVA Financial covenants and agrees:
(a) That, subsequent to the date of this Agreement and prior
to the Closing Date, it will operate its business and the businesses of its
Subsidiary only in the normal course and in a normal manner consistent with past
practices;
(b) That it will take no action which would adversely affect
or delay the ability of One Valley, FFVA Financial or its Subsidiary to obtain
any necessary approvals, consents or waivers of any governmental authority
required for the transaction contemplated hereby or to perform its covenants and
agreements on a timely basis under this Agreement;
(c) That immediately upon the execution of this Agreement it
will direct its accountants and attorneys to give One Valley access, upon
reasonable notice, to all relevant and material information, documents and
working papers pertaining to FFVA Financial and Subsidiary that it may
reasonably request;
(d) That it will use its reasonable best efforts in good faith
to take or cause to be taken all action required under this Agreement on its
part to be taken as promptly as practicable so as to permit the consummation of
the Merger at the earliest possible date and cooperate fully with the other
parties to that end;
(e) That neither FFVA Financial nor its directors, officers or
representatives or agents will, directly or indirectly, take any action to
solicit, support or encourage any offer or proposal from any other person to
acquire FFVA Financial or its assets, or shares of its common stock, or of its
Subsidiary, or engage in negotiations
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with or provide information to such person with respect to such offer or
proposal; provided, however that FFVA Financial may engage in negotiations or
provide information if the Board of Directors of FFVA Financial concludes after
receipt of legal advice from its counsel, that their fiduciary duties to the
shareholders of FFVA Financial so require; provided further, however, in the
case of any action pursuant to the immediately preceeding proviso regarding the
specific terms and structure of a possible Acquisition Transaction (as
hereinafter defined) (but excluding actions taken to determine whether an
unsolicited offer by a third party is a bona fide offer), One Valley may, in its
sole discretion, terminate this Agreement at any time before the Closing Date.
FFVA Financial will immediately notify One Valley if any such negotiations
occur, if such information is provided, or if such offer or proposal is made,
and will keep One Valley informed of any such negotiations, offers, proposals,
or transactions. Nothing contained in this Section 4.22 (e) shall prohibit the
Board of Directors of FFVA Financial from complying with Rule 14e-2 promulgated
under the Securities Exchange Act of 1934;
(f) That it will promptly advise One Valley of any material
adverse change in the financial condition, assets, businesses, results of
operations or prospects of FFVA Financial or its Subsidiary, and any material
breach of any representation, warranty, covenant or agreement made by FFVA
Financial or its Subsidiary in this Agreement known to FFVA Financial;
(g) That it will maintain in full force and effect adequate
fire, casualty, public liability, employer fidelity and other insurance coverage
in accordance with prudent practices to protect FFVA Financial and Subsidiary
against losses for which insurance can reasonably be obtained;
(h) That it will consult with One Valley as to the form and
substance of any press release or other public disclosure concerning matters
related hereto, and, except as required by law or within good faith, shall not
issue such release or disclosure without the reasonable consent of One Valley;
(i) That it will issue approximately 750,000 shares of its
common stock held as authorized but unissued shares, or such other amount as the
parties may agree, at such time as is necessary in order that the Merger be
treated as a "pooling of interests" for accounting purposes, and shall take no
action which would have the effect of precluding treatment of the Merger as a
"pooling of interests" for accounting purposes, and will cooperate fully with
One Valley to assure that the Merger can be treated as a "pooling of interests"
for accounting purposes;
(j) That it will immediately after the execution of this
Agreement enter into the Option Agreement with One Valley granting to One Valley
the right to purchase a specified number of shares of common stock of FFVA
Financial under certain specified conditions;
(k) That it will enforce its rights under, and the provisions
of, all confidentiality agreements it has or may have with third parties; and
(l) That it will take, in accordance with applicable law or
NASDAQ rules and its Restated Articles of Incorporation and Bylaws, all action
necessary to convene an appropriate meeting of its shareholders to consider and
vote upon the approval and adoption of this Agreement, the Articles Amendment,
and any other matters required to be approved by its shareholders for
consummation of the Merger (including any adjournment or postponement) as
promptly as practicable after the registration statement is declared effective.
Except to the extent that its Board of Directors concludes after receipt of
legal advice from its counsel that its fiduciary duties require otherwise, its
Board of Directors shall recommend such approval and it shall take all
reasonable, lawful action to solicit such approval by its shareholders.
4.23. Dissenters' Rights. The shareholders of FFVA Financial do not
have dissenters' rights pursuant to Virginia Code ss. 13.1 - 730.c.
4.24 Takeover Law. FFVA Financial has taken all action required to be
taken by it in order to exempt this Agreement, the Stock Option Agreement and
the transactions contemplated hereby and thereby from, and this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby (the
"Covered Transactions") are exempt from, the requirements of any "moratorium",
"control share", "fair price", "affiliate transaction", "business combination"
or other antitakeover laws and regulations of any state (collectively, "Takeover
Laws"), including, without limitation, the Commonwealth of Virginia, and
including, without limitation, Sections 13.1-725 through 13.1-728 of the VSCA
(because a majority of FFVA Financial's disinterested directors approved such
transactions for such purposes prior to any "determination date" with respect to
One Valley) and Sections 13.1-728.1 through 13.1-728.9 of the VSCA.
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SECTION 5
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF ONE VALLEY
One Valley represents and warrants to and covenants with FFVA Financial
that:
5.1 Organization and Qualification of One Valley. One Valley is a
corporation duly organized, validly existing and in good standing under the laws
of the State of West Virginia and has the corporate power to own all of its
properties and assets and to carry on its business as it is now being conducted.
Each of the banking subsidiary companies owned by One Valley is duly organized,
validly existing and in good standing as either a state banking corporation
under the laws of West Virginia or a national bank under the laws of the United
States and each has the corporate power to own all of its assets and to carry on
its business as it is now being conducted. One Valley is duly registered as a
bank holding company with the Board of Governors of the Federal Reserve. One
Valley owns directly or indirectly 100% of the issued and outstanding capital
sock of each of its Significant Subsidiaries (as defined in Regulation S-X),
free and clear of all liens, claims and encumbrances.
5.2 Authorization of Agreement. The Board of Directors of One Valley
has authorized the execution of this Agreement as set forth herein, and subject
to the approval of this Agreement by the shareholders of One Valley and all
appropriate regulatory authorities, One Valley has the corporate power to
execute and deliver this Agreement, and has taken all action required by law,
its Articles of Incorporation, its Bylaws or otherwise to authorize such
execution and delivery, the Merger and the consummation of the transactions
contemplated hereby, and upon its execution and delivery (and assuming due
execution and delivery by FFVA Financial) this Agreement is a valid and binding
agreement of One Valley enforceable in accordance with its terms.
5.3 No Violation of Other Instruments. Subject to the receipt of the
authorizations set forth in Section 5.2, the execution and delivery of this
Agreement do not, and the consummation of the Merger will not, (i) violate any
provision of the Articles of Incorporation or Bylaws of One Valley, (ii) violate
any provision of, or result in the acceleration of any obligation under or in
the termination, if applicable, of, any mortgage, deed of trust, note, lien,
lease, franchise, license, permit, agreement, instrument, order, arbitration
award, judgment or decree to which One Valley or any of its subsidiaries is a
party or by which it is bound except for such as would not have a material
adverse effect on the financial condition, business, properties, or results of
operations of One Valley and its subsidiaries, taken as a whole, or the
transactions contemplated hereby, (iii) violate or conflict with any other
material restriction of any kind or character to which One Valley or any of its
Subsidiaries is subject, or (iv) enable any person to enjoin the transactions
contemplated hereby. After approval of this Agreement by the shareholders of One
Valley, by the Board of Governors of the Federal Reserve, the West Virginia
Board of Banking and Financial Institutions, and the State Corporation
Commission of the Commonwealth of Virginia, One Valley will have taken all
action required by law and its Articles of Incorporation and Bylaws necessary to
authorize the execution and delivery of this Agreement and to authorize the
Merger of FFVA Financial with One Valley and the consummation of the
transactions contemplated hereby.
5.4 Regulatory Approvals. Prior to the Closing Date, One Valley,
separately and jointly with FFVA Financial, shall use its reasonable best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain: (i) the prior approval of the
Merger by the Board of Governors of the Federal Reserve System under the Bank
Holding Company Act of 1956, as amended, the State Corporation Commission of the
Commonwealth of Virginia, and the West Virginia Board of Banking and Financial
Institutions; and (ii) all other consents and approvals of governmental agencies
as are required by law or otherwise, and shall do any and all things deemed by
One Valley and FFVA Financial to be necessary or appropriate in order to cause
the Merger to be consummated on the terms provided herein.
5.5 Financial Statements. One Valley's consolidated balance sheets as
of December 31, 1994, 1995 and 1996, and its statement of income for each of the
twelve months ended on such dates, heretofore delivered to FFVA Financial, were
prepared in accordance with generally accepted accounting principles
consistently applied and those financial statements, as well as the unaudited
balance sheet as of September 30, 1997, and the statement of income for the
nine-month period ended September 30, 1997, fairly present its financial
condition and results of operations as of such respective dates and for such
respective periods, subject to normal year-end audit adjustments.
5.6 No Material Adverse Change. There has been no material adverse
change, or development involving a reasonably foreseeable prospective material
adverse change, in or affecting the financial condition, businesses, properties
or results of operations of One Valley and its subsidiaries, taken as a whole,
since December 31, 1996.
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<PAGE>
5.7 Form 10-K Annual Report and Other Reports. One Valley's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1996, heretofore delivered to FFVA Financial, does not
contain, as of the date thereof, any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading. Since
January 1, 1994, One Valley has filed with the Securities and Exchange
Commission all documents and reports required to be filed and such reports do
not contain, as of their respective dates, an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading.
5.8 No Actions, Etc. There are no actions, proceedings or
investigations pending or, to the knowledge of the executive officers or
directors of One Valley, threatened or contemplated against or relating to One
Valley or any of its subsidiaries or any of its properties, which, individually
or in the aggregate, could materially and adversely affect the financial
condition, businesses, properties or operations of One Valley and its
subsidiaries, taken as a whole, or the ability of One Valley to consummate the
transactions contemplated hereby, and such officers and directors do not know of
any basis for any action or proceeding. Neither One Valley, nor any of its
subsidiaries, is transacting business in violation of any applicable law or
regulation which could materially adversely affect the financial condition,
businesses, properties or operations of One Valley and its subsidiaries, taken
as a whole, or the ability of One Valley to consummate the transactions
contemplated hereby.
5.9 Capitalization. As of the date hereof, the authorized capital stock
of One Valley consists of (i) Forty Million shares of common stock, par value of
$10 per share, of which 27,172,342 are, as of December 9, 1997, issued and
outstanding and are fully paid and nonassessable, and (ii) One Million shares of
preferred stock, par value of $10 per share, none of which is issued.
5.10 Good Faith. One Valley shall use its reasonable best efforts in
good faith to take or cause to be taken all action required under this Agreement
on its part to be taken as promptly as practicable so as to permit the
consummation of this Agreement at the earliest practicable date and cooperate
fully with the other parties to that end, including obtaining the approval of
the New York Stock Exchange ("NYSE") for the listing of the One Valley common
stock issuable hereunder, subject to official notice of issuance.
5.11 Registration. One Valley will cause a Registration Statement (or
other appropriate form) to be filed with and declared effective by the
Securities and Exchange Commission, appropriate agencies regulating securities,
and other governmental agencies having jurisdiction, with respect to the
securities to be issued in conjunction with the Merger. The information
pertaining to One Valley which will appear in the Registration Statement and
Proxy Statement will contain no untrue statement of any material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
5.12 Copies of Public Information One Valley has made or will make
available for review by FFVA Financial all information publicly available
concerning One Valley and all pension, retirement, thrift, group insurance or
similar plans with respect to any of the directors, officers or other employees
of One Valley or its subsidiaries.
5.13 Undisclosed Liabilities; Taxes. One Valley has no material
liabilities other than those liabilities disclosed on or provided for in its
balance sheet as of December 31, 1996, and liabilities incurred since such date
in the ordinary course of business. One Valley has paid all federal, state and
local taxes now due and payable and there are no material tax items now in
dispute or anticipated to be disputed.
5.14 Title to Properties. One Valley has good and marketable title to
all its property and assets set forth on its balance sheet as of December 31,
1996, except property and assets sold or otherwise disposed of since December
31, 1996, in the ordinary course of business, subject to no liens, mortgages,
pledges, encumbrances or charges of any kind except liens reflected on said
balance sheet and except liens for taxes and assessments not delinquent, pledges
to secure deposits, and such other liens and encumbrances and imperfections of
title as do not materially affect the value of such property as reflected on
said balance sheet and which do not interfere with or impair its present or
continued use, and all of its leases are in full force and effect and One Valley
is not in default thereunder.
5.15 Absence of Regulatory Actions. Neither One Valley nor any of its
banking subsidiaries is a party to any cease and desist order, written agreement
or memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any board
resolutions at the request of, federal or state
13
<PAGE>
governmental authorities charged with the supervision or regulation of the
operations of any of them nor has it been advised by any such government
authority that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
5.16 Labor Disputes. One Valley is not directly or indirectly involved
in or threatened with any labor dispute or trouble or organizational effort,
including, without limitation, matters regarding actual or alleged
discrimination by reason of race, creed, sex, disability or national origin,
which might materially and adversely affect its financial condition, assets,
businesses or results of operations.
5.17 Reserve for Possible Loan Losses. The reserve for possible loan
losses shown on the consolidated balance sheet of One Valley as of December 31,
1996, and shown on the unaudited balance sheet of One Valley dated September 30,
1997, is adequate as of the dates thereof. The reserve for possible loan losses
to be shown on the consolidated balance sheet of One Valley as of December 31,
1997, and future periods, if any, will be adequate as of the dates thereof.
5.18 Knowledge as to Conditions. As of the date hereof, One Valley
knows of no reason relating to One Valley why the approvals, consents and
waivers of governmental authorities referred to in Sections 8.1 (b) and 8.1 (c)
should not be obtained in a timely manner; One Valley and One Valley
Subsidiaries are not aware of any conditions or provisions of any actions,
reports of examinations or similar regulatory reports or findings which is
anticipated to delay or precludes One Valley or any of One Valley Subsidiaries
from entering into the Agreement or obtaining prompt regulatory approval of all
applications to be filed in connection with the transaction contemplated by this
Agreement, including but not limited to compliance with the Community
Reinvestment Act ("CRA").
5.19 Other Transactions. One Valley has had, and will continue to have,
negotiations for the acquisition of other organizations. Nothing contained
herein shall in any manner limit the ability of One Valley to acquire additional
banking institutions or other corporations or entities, either before or after
the Closing Date, for such consideration (cash, notes, common or preferred
stock) and upon such terms and conditions as One Valley deems appropriate.
Notwithstanding the foregoing, One Valley will not, and will cause its
subsidiaries to not, make or agree to make any acquisition or take any action
that materially adversely affects its ability to consummate the transaction
contemplated hereby in a reasonably timely manner.
5.20 Press Release. One Valley will consult with FFVA Financial as to
the form and substance of any press release or other public disclosure
concerning matters related hereto, and, except as required by law or within good
faith, shall not issue such release or disclosure without the consent of FFVA
Financial.
5.21 Indemnification. One Valley shall indemnify, and advance expenses
(including legal fees and expenses) in matters that may be subject to
indemnification to, persons who served as directors and officers of FFVA
Financial and its Subsidiary on or before the Closing Date of the Merger with
respect to liabilities and claims (and related expenses) made against them
resulting from their service as such prior to the Closing Date of the Merger in
accordance with and subject to the requirements and other provisions of One
Valley's Articles of Incorporation and Bylaws in effect on the date of this
Agreement and applicable provisions of law to the same extent as One Valley is
obliged thereunder to indemnify and advance expenses to its own directors and
officers with respect to liabilities and claims made against them resulting from
their service as such to One Valley.
5.22 Employee Benefits. Each of One Valley's employee benefit plans has
been administered in all material respects in compliance with the applicable
requirements of ERISA, the Code, other federal statutes, applicable federal
regulations, applicable state law (including without limitation state insurance
law) and in accordance with its terms. All reports required by any governmental
agency with respect to each such employee benefit plan has been timely and
properly filed and to the extent required furnished to the participants in such
plan. One Valley has paid all costs, benefits, premiums and any other amounts
coming due in connection with the employee benefit plans and no accumulated
funding deficiency, as defined in ss.302(a)(2) of ERISA, exists with respect to
any employee benefit plan. One Valley has not engaged in a transaction that
would subject One Valley to any tax, penalty or liability for prohibited
transactions imposed by ERISA or by ss.4975 of ERISA. One Valley has not engaged
in any transaction in violation of ss.406(a) or ss.406(b) of ERISA (for which no
exemption exists under ss.408 of ERISA).
5.23 Environmental Matters. One Valley is, and has been, in substantial
compliance with all environmental laws and regulations, and there is no suit,
claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending, or, to the knowledge of One Valley,
threatened, before any court,
14
<PAGE>
governmental agency or board or other forum against One Valley for alleged
noncompliance with, or liability under, any environmental law or relating to the
release into the environment of any hazardous material or oil.
5.24 Shareholder Approval. One Valley will take, in accordance with
applicable law or NYSE rules and its Articles of Incorporation and Bylaws, all
action necessary to convene an appropriate meeting of its shareholders to
consider and vote upon the approval and adoption of this Agreement and any other
appropriate matters to be approved by its shareholders for consummation of the
Merger (including any adjournment or postponement) as promptly as practicable
after the registration statement is declared effective. Except to the extent
that its Board of Directors concludes after receipt of legal advice from its
counsel that its fiduciary duties require otherwise, its Board of Directors
shall recommend such approval and it shall take all reasonable, lawful action to
solicit such approval by its shareholders.
SECTION 6
INVESTIGATION AND CONFIDENTIALITY
6.1 Investigation. Prior to the Closing Date, either party may directly
and through its representatives, make such reasonable investigation of the
assets and business of the other party and its subsidiaries as deemed necessary
or advisable. Each party and its representatives shall have, at reasonable times
after the date of execution hereof, during normal business hours and upon
reasonable request, full access to the premises and to all the relevant and
material books and records of the other party and its subsidiaries.
6.2 Confidentiality. One Valley and FFVA Financial each agree to treat
as strictly confidential and agree not to divulge to any other person, natural
or corporate (other than employees of, and attorneys and accountants for, such
party) any proprietary financial statements, schedules, contracts, agreements,
instruments, papers, documents and other information relating to FFVA Financial
or One Valley (as the case may be) by which it may come to know or which may
come into its possession during the course of its investigation in connection
with the transaction contemplated hereby, of FFVA Financial or One Valley, as
the case may be, and, if the Merger contemplated hereby are not consummated for
any reason, One Valley agrees promptly to return to FFVA Financial (and FFVA
Financial to One Valley) all written proprietary material furnished in
connection with such investigation; and thereafter all such information shall
continue to not be disclosed by One Valley and FFVA Financial and their
directors, officers, employees, or advisors to third parties without One
Valley's or FFVA Financial's written consent, as the case may be.
SECTION 7
NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Other than Section 5.21 hereof, the representations and warranties
included or provided herein shall not survive the Closing Date.
SECTION 8
CONDITIONS PRECEDENT; CLOSING DATE
8.1 Conditions Precedent. The consummation of this Agreement and the
Merger is conditioned upon the following:
(a) The shareholders of FFVA Financial and One Valley shall
have approved this Agreement and any required charter amendments by such vote as
may be required by law or the rules of any stock exchange;
(b) No governmental authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
(c) The Federal Reserve, the State Corporation Commission of
the Commonwealth of Virginia, and the Board of Banking and Financial
Institutions of the State of West Virginia shall have approved the acquisition
of control of FFVA Financial and Subsidiary by One Valley;
(d) The Registration Statement shall have become effective
under the 1933 Act, no stop order suspending the effectiveness of such
Registration Statement shall be in effect and no proceedings for such purpose
shall have been initiated or threatened by or before the Securities and Exchange
Commission. All state
15
<PAGE>
securities and "blue sky" permits or approvals required (in the opinion of One
Valley) to carry out the transactions contemplated by this Agreement shall have
been received;
(e) All other consents, approvals and permissions and the
satisfaction of all the requirements prescribed by law which are necessary to
the carrying out of the transactions contemplated hereby shall have been
procured;
(f) All delay periods and all periods for review, objection or
appeal of or to any of the consents, approvals or permissions required with
respect to the consummation of the Merger and this Agreement shall have expired;
(g) Unless waived by One Valley, the approvals referred to in
subparagraphs (b), (c) and (d) hereof shall not have required the divestiture or
cessation of any significant part of the present operations conducted by One
Valley, FFVA Financial, and their respective subsidiaries, taken as a whole, and
shall not have imposed any other condition which One Valley reasonably deems to
be materially disadvantageous or burdensome;
(h) Unless waived by One Valley, the representations and
warranties of FFVA Financial contained in this Agreement shall be correct on and
as of the Closing Date in all material respects with the same effect as though
made on and as of such date, except as affected by the transactions contemplated
by this Agreement and except for changes which are not, in the aggregate,
material and adverse to the financial condition, businesses, properties or
operations of FFVA Financial, and FFVA Financial shall have performed in all
material respects all its obligations and agreements hereunder theretofore to be
performed by it; and One Valley shall have received on the Closing Date an
appropriate certificate to the foregoing effect dated the Closing Date and
executed on behalf of FFVA Financial by one or more appropriate executive
officers of FFVA Financial;
(i) Unless waived by FFVA Financial, the representations and
warranties of One Valley contained in this Agreement shall be correct on and as
of the Closing Date in all material respects with the same effect as though made
on and as of such date, except as affected by the transactions contemplated by
this Agreement and except for changes which are not, in the aggregate, material
and adverse to the financial condition, businesses, properties, results of
operations or prospects of One Valley, and One Valley shall have performed in
all material respects all of its obligations and agreements hereunder
theretofore to be performed by it; and FFVA Financial shall have received on the
Closing Date an appropriate certificate to the foregoing effect dated the
Closing Date and executed on behalf of One Valley by one or more appropriate
executive officers;
(j) One Valley shall have received from legal counsel to FFVA
Financial a written opinion pertaining to the transactions herein provided for,
dated the Closing Date, in form and substance acceptable to counsel for One
Valley, and FFVA Financial shall have received from legal counsel to One Valley
a customary written opinion pertaining to the transactions herein provided for,
dated the Closing Date, in form and substance acceptable to counsel for FFVA
Financial;
(k) Unless waived by One Valley, One Valley shall have
received an opinion of Sullivan & Cromwell, special counsel to One Valley, dated
the Closing Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
under Section 368 of the Internal Revenue Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from FFVA Financial, One Valley and shareholders of FFVA Financial;
(l) Unless waived by FFVA Financial, FFVA Financial shall have
obtained an opinion of counsel to the effect that, as to each holder of FFVA
Financial common stock who receives One Valley common stock in exchange for his
or her FFVA Financial common stock, no gain will be recognized by such
shareholder on such exchange; the basis of the One Valley common stock to be
received by such FFVA Financial shareholders will be the same as the basis of
the FFVA Financial common stock surrendered in exchange therefor; and the
holding period of the One Valley common stock to be received by such FFVA
Financial shareholders includes the holding period of the FFVA Financial common
stock surrendered in exchange therefor, provided their FFVA Financial common
stock was held as a capital asset at the time of the exchange;
(m) FFVA Financial shall have delivered to One Valley a list
of all persons known to FFVA Financial who may be deemed to be "affiliates" of
FFVA under Rule 145 of the Securities Act of 1933, as amended, and shall use its
best efforts to cause each affiliate to deliver to One Valley prior to the
Closing Date a letter substantially in the form attached hereto as Exhibit B;
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<PAGE>
(n) Unless waived by One Valley, FFVA Financial shall have
issued up to 750,000 shares of its common stock held as authorized but unissued
shares;
(o) The shares of One Valley common stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance; and
(p) The Board of Directors of FFVA Financial shall have
received an opinion at the time of the mailing of the proxy statement to the
FFVA Financial shareholders from Sandler O'Neill & Partners, L.P., to the effect
that as of the day of the mailing of such proxy statement that the consideration
to be received by the holders of FFVA Financial common stock in the Merger is
fair to such holders from a financial point of view.
8.2 Closing Date. The time and date of closing (the "Closing Date")
shall be selected by One Valley and shall be within thirty (30) days of
approvals of this Agreement by the shareholders of FFVA Financial or the receipt
of all of the approvals (including any statutory waiting periods) referred to in
Section 8.1(b), (c), (d), (e) and (f), whichever is later. One Valley shall
cause the Articles of Merger with respect to the Merger to be filed with the
Secretary of State of West Virginia and of the Commonwealth of Virginia.
SECTION 9
TERMINATION OF AGREEMENT
9.1 Grounds for Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date
either before or after the meeting of the shareholders of FFVA Financial:
(a) By mutual consent of FFVA Financial and One Valley;
(b) By One Valley if there has been a material
misrepresentation or breach of warranty in the representations and warranties of
FFVA Financial set forth herein, or by FFVA Financial if there has been a
material misrepresentation or breach of warranty in the representations and
warranties of One Valley set forth herein, which material misrepresentation or
breach of warranty has not been cured to the satisfaction of the non-breaching
party within 30 days thereof;
(c) By either FFVA Financial or One Valley upon written notice
to the other, if the Closing Date does not occur on or before midnight on
October 1, 1998;
(d) By either FFVA Financial or One Valley if the Merger shall
violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction;
(e) In the event that the Disclosure Schedule or One Valley's
investigation of FFVA Financial and Subsidiary discloses matters which One
Valley in good faith believes either (i) to be inconsistent in any material and
adverse respect with any of the representations or warranties of FFVA Financial
(without giving effect to the Disclosure Schedule) or (ii) in the reasonable
judgment of the Board of Directors of One Valley either (A) to be of such
significance as to materially and adversely affect the financial condition or
results of operations of FFVA Financial and the Subsidiary, taken as a whole, or
(B) to deviate materially and adversely from the financial statements for the
year ended December 31, 1996, of FFVA Financial, the Board of Directors of One
Valley may elect to terminate this Agreement by giving notice of termination to
FFVA Financial within or at the end of the 30 day period following the date of
the delivery by FFVA Financial to One Valley of the Disclosure Schedule;
provided, however, that actions taken by FFVA Financial as contemplated in this
Agreement concerning the FFVA ESOP, FFVA Retirement Plan, or the Stock Option
Plan shall not trigger One Valley's right to terminate hereunder or otherwise
violate any term of this Agreement and that matters or items disclosed in
material reviewed by One Valley prior to the execution hereof as listed in a
pre-signing disclosure letter may not serve as a basis for any right of One
Valley to terminate hereunder;
(f) In the event that FFVA Financial's investigation of One
Valley and its subsidiaries discloses matters which FFVA Financial in good faith
believes either (i) to be inconsistent in any material and adverse respect with
any of the representations or warranties of One Valley or (ii) in the reasonable
judgment of the Board of Directors of FFVA Financial either (A) to be of such
significance as to materially and adversely affect the financial condition or
results of operations of One Valley and its subsidiaries taken as a whole, or
(B) to deviate materially and adversely from the financial statements for the
year ended December 31, 1996, of One Valley, the Board of Directors of FFVA
Financial may elect to terminate this Agreement by giving notice of termination
to One Valley within or at the end of the 30 day period following the date of
this Agreement; provided, however that
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matters or items disclosed in material reviewed by FFVA Financial prior to the
execution hereof as listed in a pre-signing disclosure letter may not serve as a
basis for any right of FFVA Financial to terminate hereunder;
(g) By One Valley in accordance with the provisions of
Section 4.22(e);
(h) By One Valley in the event FFVA Financial fails to execute
the Option Agreement specified in ss.4.22(k) of this Agreement within
twenty-four hours following the execution of this Agreement;
(i) By FFVA Financial at any time during the five-day period
commencing after the Determination Date if both of the following conditions are
satisfied:
(1) the Converted Value shall be less than $36.54; and
(2) (i) the quotient obtained by dividing the
Closing Value by $40.94 (such number being
referred to herein as the "One Valley Ratio")
shall be less than (ii) 90% of the quotient
obtained by dividing the Index Price on the
Determination Date by the Index Price on the
Starting Date;
subject, however, to the following three sentences. If FFVA Financial determines
not to consummate the Merger pursuant to this Subsection, it shall give prompt
written notice of election to terminate to One Valley, which notice may be
withdrawn at any time prior to the close of the ten-day period commencing after
the Determination Date. During the five-day period commencing with its receipt
of such notice, One Valley shall have the option to elect to increase the Fixed
Exchange Ratio to a number such that the Converted Value is no less than $36.54.
The election contemplated by the preceding sentence shall be made by giving
notice to FFVA Financial of such election and the revised Fixed Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Subsection and
this Agreement shall remain in effect in accordance with its terms (except as
the Fixed Exchange Ratio shall have been so modified), and any references in
this Agreement to "Fixed Exchange Ratio" shall thereafter be deemed to refer to
the Fixed Exchange Ratio as adjusted pursuant to this Subsection. If the Closing
Date shall occur during the five-day period such option is in effect, the
Closing Date shall be extended until the fifth business day following the close
of such five-day period.
For purposes of this Subsection, the following terms shall have the
meanings indicated:
"Converted Value" shall mean the product of the Closing Value
multiplied by the Fixed Exchange Ratio of 1.05.
"Closing Value" shall mean the average of the closing prices per share
of the One Valley common stock on the NYSE Composite Transactions Tape (as
reported by The Wall Street Journal) for the ten trading days (determined by
excluding days on which the NYSE is closed) immediately preceding the
Determination Date (the tenth day to be determined by counting the day preceding
the Determination Date as the first day).
"Determination Date" shall mean the tenth calendar day preceding the
date designated by One Valley as the Closing Date.
"Index Group" shall mean the nineteen (19) bank holding companies
listed below, the common stocks of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquirior's market
capitalization. In the event that any such company or companies are removed from
the Index Group, the weights (which have been determined based upon the number
of shares of outstanding common stock) shall be redistributed proportionately
for purposes of determining the Index Price. The 19 bank holding companies and
the weights attributed to them as follows:
<TABLE>
<CAPTION>
- -------------- --------------------------------------------------------------------------- ---------------------------
Bank Holding Companies % Weighting
- -------------- --------------------------------------------------------------------------- ---------------------------
<S> <C> <C>
FMER FirstMerit Corp. 10.48%
- -------------- --------------------------------------------------------------------------- ---------------------------
FVB First Virginia Banks Inc. 8.26%
- -------------- --------------------------------------------------------------------------- ---------------------------
KSTN Keystone Financial Inc. 8.16%
- -------------- --------------------------------------------------------------------------- ---------------------------
NCBC National Commerce Bancorp. 8.00%
- -------------- --------------------------------------------------------------------------- ---------------------------
FULT Fulton Financial Corp. 7.56%
- -------------- --------------------------------------------------------------------------- ---------------------------
PFGI Provident Financial Group Inc. 6.92%
- -------------- --------------------------------------------------------------------------- ---------------------------
VLY Valley National Bancorp 6.66%
- -------------- --------------------------------------------------------------------------- ---------------------------
BNK CNB Bancshares Inc. 5.34%
- -------------- --------------------------------------------------------------------------- ---------------------------
18
<PAGE>
- -------------- --------------------------------------------------------------------------- ---------------------------
WILM Wilmington Trust Corp. 5.30%
- -------------- --------------------------------------------------------------------------- ---------------------------
RIGS Riggs National Corp. 4.79%
- -------------- --------------------------------------------------------------------------- ---------------------------
HUBC HUBCO Inc. 4.45%
- -------------- --------------------------------------------------------------------------- ---------------------------
OLDB Old National Bancorp 4.37%
- -------------- --------------------------------------------------------------------------- ---------------------------
CBC Centura Banks Inc. 4.17%
- -------------- --------------------------------------------------------------------------- ---------------------------
SUSQ Susquehanna Bancshares Inc. 3.55%
- -------------- --------------------------------------------------------------------------- ---------------------------
CCB CCB Financial Corp. 3.27%
- -------------- --------------------------------------------------------------------------- ---------------------------
FMBI First Midwest Bancorp Inc. 2.64%
- -------------- --------------------------------------------------------------------------- ---------------------------
FFBC First Financial Bancorp. 2.61%
- -------------- --------------------------------------------------------------------------- ---------------------------
FCNCA First Citizens BancShares Inc. 2.00%
- -------------- --------------------------------------------------------------------------- ---------------------------
PRK Park National Corp. 1.49%
- -------------- --------------------------------------------------------------------------- ===========================
Total 100.00%
- -------------- --------------------------------------------------------------------------- ===========================
</TABLE>
"Index Price" on a given date shall mean the weighted average (weighted
in accordance with the "% Weighting" listed above) of the closing sales prices
of the companies composing the Index Group (determined as provided with respect
to the Determination Value).
"Starting Date" shall mean the date prior to the date of this
Agreement.
If any company belonging to the Index Group or One Valley declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such company
or One Valley and any calculations hereunder shall be appropriately adjusted for
the purposes of applying this Subsection.
9.2 Effect of Termination; Right to Proceed. In the event this
Agreement shall be terminated pursuant to Section 9.1, all further obligations
of One Valley and FFVA Financial under this Agreement shall terminate (other
than this Section 9.2 and Sections 6.2, 9.3, 18.2, 18.3, and 18.4 hereof, all of
which shall remain in full force and effect) without further liability of the
parties to one another, except for any liability arising out of any uncured
willful breach of any covenant or other agreement contained in this Agreement or
any fraudulent breach of a representation or warranty.
9.3 Return of Documents in Event of Termination. In the event of the
termination of this Agreement for any reason, each party shall forthwith deliver
to the other all documents, work papers and other material obtained from it
relating to the transactions contemplated hereby, whether obtained before or
after the execution hereof, including information obtained pursuant to Section 6
hereof, and will take reasonable steps to have any information so obtained kept
confidential.
SECTION 10
MEETINGS OF SHAREHOLDERS
FFVA Financial and One Valley shall each take all steps necessary to
call and hold a special meeting of shareholders, in accordance with applicable
law and the respective Certificate of Incorporation, Restated Articles of
Incorporation, and Bylaws of each of them, as soon as practicable for the
purpose of submitting this Agreement and, in the case of FFVA Financial, the
Articles Amendment, to its shareholders for their consideration and approval.
FFVA Financial and One Valley will each prepare and send to its shareholders for
purposes of such meetings a proxy statement, which will be in the form contained
in the Registration Statement on Form S-4, or any amendments thereto, prepared
and filed by One Valley (the "Proxy Statement"). The Boards of Directors of FFVA
Financial and One Valley will each recommend shareholder approval of this
Agreement and will not withdraw such recommendation unless such Board of
Directors concludes (after receipt of legal advice from its counsel) that the
fiduciary duties such persons owe to the shareholders of FFVA Financial or One
Valley, respectively, require otherwise.
SECTION 11
OTHER AGREEMENTS
11.1 Post-Merger Operation of the Bank. Upon the Closing Date or as
soon thereafter as is practicable, it is anticipated that the Bank will be
merged into and become a part of One Valley Bank - Central Virginia, National
Association.
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11.2 Directors of the Bank. The directors of the Bank on the Closing
Date shall be elected to the Board of Directors of One Valley Bank - Central
Virginia, National Association, and shall hold office as prescribed in the
Bylaws and applicable law until their successors shall have been elected and
shall qualify. Directors' fees of those directors shall not be changed for the
first eighteen months following the Closing Date, but thereafter all policies
applicable to directors of One Valley generally (including board fees and
mandatory retirement) shall apply; provided, however, that the mandatory
retirement policy shall be implemented incrementally so as to require the
retirement of not more than two of the former FFVA Financial directors in any
one year.
11.3 Director of One Valley. Promptly after the Closing Date, One
Valley shall, by action of its Board of Directors, elect James L. Davidson, Jr.,
and one other additional person to be designated by FFVA Financial, as members
of the Board of Directors of One Valley, each for a term expiring on the date of
the next Annual Meeting of Shareholders of One Valley. In addition, at its
Annual Meeting of Shareholders to be held in April, 1999, One Valley shall
nominate and recommend James L. Davidson, Jr., and one other additional person
to be designated by FFVA Financial, each for a three-year term as members of the
Board of Directors of One Valley.
SECTION 12
BROKERS, ETC.
FFVA Financial represents and warrants to One Valley, that no broker,
or finder, or financial analyst except Sandler O'Neill & Partner, L.P., pursuant
to an agreement previously provided to One Valley, has been employed by FFVA
Financial or its Subsidiary, or is entitled to a fee, commission or other
compensation from FFVA Financial or its Subsidiary, with respect to this
Agreement or the transactions contemplated hereby. One Valley represents and
warrants to FFVA Financial, that no broker, or finder, or financial analyst
except Merrill Lynch, Pierce, Fenner & Smith, Incorporated, has been employed by
One Valley, or is entitled to a fee, commission or other compensation from One
Valley, with respect to this Agreement or the transactions contemplated hereby.
SECTION 13
GOVERNING LAW; SUCCESSORS AND ASSIGNS;
COUNTERPARTS; ENTIRE AGREEMENT
This Agreement (a) shall be governed by and construed under and in
accordance with the laws of the State of West Virginia; (b) shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns, provided, however, that this Agreement may not be
assigned by any party without the written consent of the other parties hereto;
(c) may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective and binding
when one or more counterparts shall have been signed and delivered; and (d)
embodies the entire agreements and understandings between FFVA Financial and One
Valley relating to the subject matter hereof. One Valley shall not enter into
any agreement providing for the acquisition of One Valley unless in connection
with such acquisition the entity effecting such acquisition agrees to assume One
Valley's obligations under this Agreement.
SECTION 14
EFFECT OF CAPTIONS
The captions in this Agreement are included for convenience only and
shall not in any way affect the interpretation or construction of any of the
provisions hereof.
SECTION 15
SEVERABILITY
The Parties expressly agree that it is not the intention of any party
to violate any public policy, law, rule, regulation, treaty or decision of any
government or agency thereof of any state or country. If any provision of this
Agreement is judicially or administratively interpreted to be in violation of
any such provision in any state or country, such provisions, sentences, words,
clauses or combination thereof shall be inoperative in each such state or
country; and the remainder of this Agreement shall remain binding upon the
parties hereto in each such state or country with this Agreement as a whole
unaffected elsewhere.
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SECTION 16
NOTICES
Any notices or other communications required or permitted hereunder
shall be sufficiently given if sent by registered mail, postage prepaid,
addressed as follows:
To FFVA Financial:
FFVA Financial Corporation
925 Main Street
Lynchburg, Virginia 24504
Attention: James L. Davidson, Jr., President and CEO
With a copy to:
Charles E. Sloane, Esquire
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K. Street, N.W., Suite 700 East
Washington, DC 20005
To One Valley:
One Valley Bancorp, Inc.
One Valley Square
P. O. Box 1793
Charleston, West Virginia 25326
Attention: J. Holmes Morrison
With a copy to:
Merrell S. McIlwain, Esquire
One Valley Bancorp of West Virginia, Inc.
One Valley Square
P. O. Box 1793
Charleston, West Virginia 25326
or such other addresses as shall be furnished in writing by either party to the
other party. Any such notice or communication shall be deemed to have been given
as of the date so mailed.
SECTION 17
AMENDMENTS
This Agreement may be amended by the written agreement of One Valley
and FFVA Financial and without the approval of the shareholders before or after
the meeting of shareholders at any time prior to the Closing Date with respect
to any of the terms contained herein; provided, however, that if amended after
such meeting of shareholders, no such amendment shall be materially adverse to
the shareholders of FFVA Financial.
SECTION 18
EXPENSES
18.1 General. Except as otherwise provided herein, each of the parties
hereto agrees to pay, without a right of reimbursement from the other party and
whether or not the transactions contemplated by this Agreement shall be
consummated, the costs incurred by it incident to the performance of its
obligations under this Agreement and to the consummation of the Merger and the
other transactions contemplated herein, including the fees and disbursements of
counsel, accountants and consultants employed by such party in connection
therewith; provided, however, that One Valley shall bear the full expense of the
printing and mailing of the proxy statement to be used in connection with the
special meeting of shareholders referenced in Section 10.
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18.2 Expenses of One Valley. FFVA Financial hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated by One Valley
pursuant to Sections 9.1(b) or 9.1(e) as a result of a willful breach by FFVA
Financial, FFVA Financial shall promptly (and in any event within ten (10)
business days after such termination) pay all Expenses of One Valley. "Expenses
of One Valley" as used in this Section 18.2 shall include all reasonable in
amount and reasonably incurred out-of-pocket expenses of One Valley (including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to One Valley and its Affiliates) incurred by it or on its behalf in
connection with its preparations regarding the transactions contemplated by this
Agreement.
18.3 Expenses of FFVA Financial. One Valley hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated by FFVA
Financial pursuant to Section 9.1(b) or 9.1(f) as a result of a willful breach
by One Valley, One Valley shall promptly (and in any event within ten (10)
business days after such termination) pay all Expenses of FFVA Financial. For
purposes of this Section 18.3, the "Expenses of FFVA Financial" shall include
all reasonable out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to FFVA
Financial and its Affiliates) incurred by it or on its behalf in connection with
its preparations regarding the transactions contemplated by this Agreement.
18.4 Termination Fee. (a) FFVA Financial hereby agrees to pay One
Valley and One Valley shall be entitled to payment of, a fee (the "Termination
Fee") of $3.5 million following the occurrence of a Fee Event (as defined
below), provided that One Valley shall have sent written notice of such
entitlement within 90 days after One Valley actually becomes aware of such
occurrence. Such payment shall be made in immediately available funds within
five business days after delivery of a notice from One Valley requesting such
payment. The right to receive the Termination Fee shall terminate if any of the
following (a "Fee Termination Event") occurs prior to a Fee Event: (i) the
Closing Date, (ii) termination of this Agreement in accordance with the
provisions hereof if such termination occurs prior to the occurrence of a
Preliminary Fee Event (as defined below), except termination by One Valley
pursuant to Section 9.1(b) or Section 9.1(g), (iii) termination of this
Agreement following the occurrence of a Preliminary Fee Event and the passage of
18 months after such termination; or (iv) termination of the Agreement by One
Valley pursuant to Section 9.1(b) or Section 9.1(g) and the passage of 18 months
after such termination.
(b) The term "Preliminary Fee Event" shall mean any of the
following events or transactions occurring after the date hereof:
(1) FFVA Financial or its Subsidiary without having received
One Valley's prior written consent, shall have entered into an agreement to
engage in any Acquisition Transaction (as defined below) with any person (the
term "person" for purposes of this Agreement having the meaning assigned thereto
in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")) other than One Valley or any of its subsidiaries or affiliates or the
Board of Directors of FFVA Financial shall have approved, recommended, publicly
proposed or publicly announced an intention to authorize, recommend, propose or
accept any Acquisition Transaction with any person other than One Valley or any
of its subsidiaries or affiliates. For purposes of this Agreement, "Acquisition
Transaction" shall mean (A) a merger or consolidation, or similar transaction,
involving FFVA Financial or the Bank, (B) a purchase, lease or other acquisition
of all or substantially all of the assets or deposits of FFVA Financial or the
Bank, (C) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of FFVA Financial or the Bank; provided that the term
"Acquisition Transaction" does not include any internal merger or consolidation
involving only FFVA Financial and its Subsidiary;
(2) (A) any person (other than One Valley or any of its
subsidiaries or affiliates) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding FFVA
Financial common stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the Securities
Exchange Act), or (B) any group (as such term "group" is defined in Section
13(d)(3) of the Securities Exchange Act), other than a group of which any of One
Valley or any of its subsidiaries or affiliates is a member, shall have been
formed that beneficially owns 10% or more of FFVA Financial common stock then
outstanding;
(3) any person other than One Valley or any of its
subsidiaries or affiliates shall have made a bona fide proposal to FFVA
Financial or its shareholders, by public announcement or written communication
that is or becomes the subject of public disclosure, to engage in a Acquisition
Transaction (including, without limitation, any situation in which any person
other than One Valley or any of its subsidiaries or affiliates shall have
commenced (as the term is defined in Rule 14d-2 under the Exchange Act) or shall
have filed a registration statement under the Securities Act of 1933, as
amended, with respect to, a tender offer or exchange offer to purchase any FFVA
Financial common stock such that, upon consummation of such offer, such person
would own or control
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10% or more of the then outstanding FFVA Financial common stock (such an
offering referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively);
(4) after a proposal is made by a third party to FFVA
Financial or its shareholders to engage in an Acquisition Transaction, or such
third party states its intention to FFVA Financial to make such a proposal if
this Agreement terminates, FFVA Financial shall have breached any
representation, covenant or obligation contained in this Agreement and such
breach would entitle One Valley to terminate this Agreement under Section 9.1(b)
(without regard to the cure period provided for therein unless such cure is
promptly effected without jeopardizing consummation of the Merger); or
(5) the holders of FFVA common stock shall not have approved
this Agreement at the meeting of shareholders set forth in Section 10 hereof or
the meeting of shareholders shall not have been held or shall have been canceled
prior to termination of this Agreement, in each case only after any person
(other than One Valley or any of its subsidiaries or affiliates) shall have (A)
made, or disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction or (B) commenced a Tender Offer or filed a registration
statement under the Securities Act of 1933, as amended, with respect to an
Exchange Offer.
(c) The term "Fee Event" shall mean either of the
following events or transactions occurring after the date hereof:
(1) the acquisition by any person, other than One
Valley or any of its subsidiaries or affiliates, alone or together with such
person's affiliates and associates, or group (as defined in Section 13(d)(3) of
the Securities Exchange Act), of beneficial ownership of 30% or more of the
outstanding shares of FFVA Financial common stock; or
(2) the occurrence of a Preliminary Fee Event
described in clause (b)(1) above, except that the percentage referred to in
clause (C) shall be 30% or more of the outstanding shares of FFVA Financial
common stock.
SECTION 19
AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS
FFVA Financial and One Valley each agree to use their reasonable best
efforts to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, One Valley and FFVA Financial have each caused this
Agreement to be executed on its behalf by its officers thereunto duly authorized
all as of the day and year first written above.
ONE VALLEY BANCORP, INC.
By /s/ J. Holmes Morrison
Its President and Chief Executive Officer
FFVA FINANCIAL CORPORATION
By /s/ James L. Davidson, Jr.
Its President and Chief Executive Officer
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Exhibit A
STOCK OPTION AGREEMENT
See Appendix V to this Joint Proxy Statement/Prospectus
<PAGE>
Exhibit B
[DATE]
One Valley Bancorp, Inc.
One Valley Square
P.O. Box 1793
Charleston, WV 25326
ATTN: General Counsel
Ladies and Gentlemen:
I have been advised that I might be considered an "affiliate" of FFVA
Financial Corporation ("FFVA Financial"), for purposes of paragraphs (c) and (d)
of Rule 145 of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act"), and as such term relates to
pooling of interests accounting treatment for certain business combinations
under generally accepted accounting principles and the interpretation of the SEC
or its staff, including, without limitation, Section 201.01 of the SEC's
Codification of Financial Reporting Policies and the SEC's Staff Accounting
Bulletin No. 65.
One Valley Bancorp, Inc. ("One Valley"), and FFVA Financial have
entered into an "Agreement and Plan of Merger", dated as of the 16th day of
December, 1997 (the "Merger Agreement"). Upon consummation of the transaction
contemplated by the Merger Agreement (the "Merger"), I will receive shares of
the Common Stock, par value $10.00 per share ("One Valley Common Stock"), of One
Valley, plus cash in lieu of fractional shares, for all shares of Common Stock,
par value $.10 per share ("FFVA Financial Common Stock"), of FFVA Financial that
I own or as to which I may have an interest. I understand that One Valley and
FFVA Financial will consummate the Merger in reliance on my entering into the
agreement set forth in this letter (the "Letter Agreement").
A. I represent and warrant to, and agree with, One Valley that:
1. I have read this Letter Agreement and the Merger Agreement and, to
the extent I have felt necessary, have discussed with my counsel or the counsel
to FFVA Financial the requirements of such agreements and other applicable
limitations upon my ability to sell, pledge, transfer or otherwise dispose of
any shares of FFVA Financial Common Stock or One Valley Common Stock.
2. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Act or the rules or regulations of the SEC under
the Act of the shares of One Valley Common Stock I receive pursuant to the
Merger.
3. Notwithstanding the foregoing and any other agreements to which I am
a party relating to any shares of FFVA Financial Common Stock or One Valley
Common Stock, I hereby agree that I will not sell or otherwise reduce my risk
relative to any shares of FFVA Financial Common Stock or One Valley Common Stock
during the period commencing on the date of this Letter Agreement and ending on
the date that financial results covering at least thirty days of combined
operations of One Valley and FFVA Financial are published following the
effective date of the Merger.
B. I understand and agree that:
1. I have been advised that any issuance of shares of One Valley Common
Stock to me pursuant to the Merger has been registered with the SEC. However, I
have also been advised that, since I may be or have been an "affiliate" of FFVA
Financial at the time the Merger will be or was submitted for a vote of the
stockholders of FFVA Financial and my disposition of shares has not been
registered under the Act, I must hold such shares indefinitely unless (i) such
disposition of shares is subject to an effective registration statement under
the Act, (ii) a sale of such shares is made in conformity with the provisions of
Rule 145(d) under the Act or (iii) in an opinion of counsel, in form and
substance reasonably satisfactory to One Valley, some other exemption from
registration is available with respect to any such proposed disposition of such
shares.
2. Stop transfer instructions in accordance with this Letter Agreement
will be given to the transfer agents of One Valley and FFVA Financial with
respect to the FFVA Financial Common Stock and One Valley Common Stock in
connection with the restrictions set forth herein, and there will be placed on
the certificate or certificates representing shares of One Valley Common Stock I
receive pursuant to the Merger, or any certificates delivered in substitution
therefor, a legend stating in substance:
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The shares represented by this certificate were issued in a transaction
to which Rule 145 under the Securities Act of 1933 applies. The shares
represented by this certificate may be transferred only in accordance with the
terms of an agreement between the registered holder hereof and One Valley
Bancorp, Inc., a copy of which agreement is on file at the principal offices of
One Valley Bancorp, Inc.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated
pursuant to its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect with respect to
One Valley Common Stock (and the legends and stock transfer restrictions
provided for herein shall be removed), immediately as of the later of (i) such
time as financial results covering at least thirty days of combined operations
following the effective date of the Merger have been published, and (ii)
delivery by the undersigned to One Valley of a copy of a letter from the staff
of the SEC, an opinion of counsel in form and substance reasonably satisfactory
to One Valley, or other evidence reasonably satisfactory to One Valley, to the
effect that my transfer of my shares of One Valley Common Stock will not violate
the Act or any of the rules and regulations of the SEC under the Act.
The Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very Truly Yours,
(name of affiliate)
Agreed to this day of
_______________, 199__
ONE VALLEY BANCORP, INC.
By:
Its:
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APPENDIX II
FFVA FINANCIAL CORPORATION
ARTICLES OF INCORPORATION
ARTICLE 10. RESTRICTION ON VOTING THE CORPORATION'S
COMMON STOCK
A. VOTING RESTRICTION. Unless otherwise indicated in this
Article, the definitions and other provisions set forth in Articles 9.A, 9.B and
9.C are also applicable to this Article 10. Notwithstanding any other provision
of these Articles of Incorporation, in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a Person who, as of any record date for the determination of stockholders
entitled to vote on any matter, beneficially owns in excess of 10% of the
then-outstanding shares of Common Stock (the "Limit"), be entitled, or permitted
to any vote in respect of the shares held in excess of the Limit. The number of
votes which may be cast by any record owner by virtue of the provisions hereof
in respect of Common Stock beneficially owned by such person owning shares in
excess of the Limit shall be a number equal to the total number of votes which a
single record owner of all Common Stock owned by such person would be entitled
to cast, multiplied by a fraction, the numerator of which is the number of
shares of such class or series which are both beneficially owned by such person
and owned of record by such record owner and the denominator of which is the
total number of shares of Common Stock beneficially owned by such person owning
shares in excess of the Limit. For a period of five years from the completion of
the conversion of First Federal Savings Bank of Lynchburg, from mutual to stock
form, no Person shall directly or indirectly Offer to Acquire or Acquire the
beneficial ownership of more than 10% of any class of an equity security of the
Corporation; provided, however, nothing in this Article 10, Section A shall
prohibit the merger of the Corporation with and into One Valley Bancorp, Inc.
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Appendix III
Investment Banking
Corporate and Institutional
Client Group
World Financial Center
North Tower
New York, New York 10281-1325
212 449 1000
(Merrill Lynch logo appears here)
January 29, 1998
Board of Directors
One Valley Bancorp, Inc.
One Valley Square
Charleston, WV 25326
Members of the Board:
We understand that One Valley Bancorp, Inc. ("One Valley") and FFVA
Financial Corporation ("FFVA") have entered into an Agreement and Plan of Merger
(the "Agreement") pursuant to which FFVA is to be merged with and into One
Valley in a transaction (the "Merger") in which each outstanding share of FFVA's
common stock, par value $0.10 per share (the "FFVA Shares"), will be converted
into the right to receive 1.05 shares (the "Exchange Ratio") of the common
stock, par value $10.00 per share, of One Valley (the "One Valley Shares"), all
as set forth more fully in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair
to One Valley from a financial point of view.
In arriving at the opinion set forth below, we have, among other
things:
(1) Reviewed certain publicly available business and financial
information relating to One Valley and FFVA that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the businesses, earnings, assets, liabilities and
prospects of FFVA and One Valley furnished to us by senior
management of One Valley, as well as the amount and timing of
the cost savings and related expenses and revenue enhancements
expected to result from the Merger furnished to us by the senior
management of One Valley (the "Expected Synergies");
(3) Conducted discussions with members of senior management of One
Valley concerning the foregoing, including the respective
businesses, prospects, regulatory condition and contingencies of
One Valley and FFVA before and after giving effect to the Merger
and the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the One
Valley Shares and FFVA Shares and compared the One Valley Shares
and the FFVA Shares with those of certain publicly-traded
companies which we deemed to be relevant;
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(5) Reviewed the results of operations of One Valley and FFVA and
compared them with those of certain publicly traded companies
which we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions which we deemed to
be relevant;
(7) Participated in certain discussions and negotiations among
representatives of One Valley and FFVA and their financial and
legal advisors;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed the Agreement;
(10) Reviewed the Registration Statement on Form S-4 relating to
the issuance of One Valley Shares in connection with the
Merger; and
(11) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed, with your consent, and
relied on the accuracy and completeness of all information supplied or otherwise
made available to us, discussed with or reviewed by or for us, or publicly
available, and we have not assumed responsibility for independently verifying
such information or undertaken an independent evaluation or appraisal of the
assets or liabilities of One Valley or FFVA, nor have we been furnished any such
evaluation or appraisal. We are not experts in the evaluation of allowances for
loan losses and we have neither made an independent evaluation of the adequacy
of the allowance for loan losses of One Valley or FFVA, nor reviewed any
individual credit files relating to One Valley or FFVA and, as a result, we have
assumed that the aggregate allowance for loan losses for both One Valley and
FFVA is adequate to cover such losses and will be adequate on a pro forma basis
for the combined entity. In addition, we have not assumed any obligation to
conduct, nor have we conducted, any physical inspection of the properties or
facilities of One Valley or FFVA. With respect to the financial forecast
information, including, without limitation, financial forecasts, evaluation of
contingencies and projections regarding under-performing and non-performing
assets, net charge-offs, adequacy of reserves and future economic conditions and
the Expected Synergies, furnished to or discussed with us by One Valley or FFVA,
we have assumed that they have been reasonably prepared and reflect the best
currently available estimates, allocations and judgements of the senior
management of One Valley and FFVA as to the expected future financial
performance of One Valley, FFVA or the combined entity, as the case many be, and
the Expected Synergies. We express no opinion as to such financial forecast
information or the Expected Synergies or the assumptions upon which they were
based. We have further assumed that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles and that it
will qualify as a tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other
conditions as in effect, and on the information made available to us as of, the
date hereof. For the purposes of rendering this opinion, we have assumed, in all
respects material to our analysis, that the representations and warranties of
each party in the Agreement and all related documents and instruments
(collectively, the "Documents") contained therein are true and correct, that
each party to the Documents will perform all of the covenants and agreements
required to be performed by such party under such Documents, and that all
conditions to the consummation of the Merger will be
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<PAGE>
satisfied without waiver thereof. We have also assumed that in the course of
obtaining the necessary regulatory or other consents or approvals (contractual
or otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendment or modifications, will be imposed that will have a
material adverse affect on the contemplated benefits of the Merger, including
the Expected Synergies.
We are acting as financial advisor to One Valley in connection with the
Merger and will receive a fee from One Valley for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
One Valley has agreed to indemnify us for certain liabilities arising out of our
engagement. We have in the past provided financial advisory, investment banking
and other services to One Valley, and may continue to do so, and have received,
and may receive, customary fees for the rendering of such services. In addition,
in the ordinary course of our business, we also may actively trade debt and/or
equity securities of One Valley and FFVA and their respective affiliates for our
own account and the accounts of our customers, and therefore we may from time to
time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of
One Valley. Our opinion does not address the merits of the underlying decision
by One Valley to engage in the Merger, and does not constitute a recommendation
to any stockholder as to how such stockholder should vote on the proposed
Merger.
We are not expressing any opinion herein as to the prices at which One
Valley shares will trade following the announcement or consummation of the
merger.
On the basis of and subject to the foregoing, we are of the opinion
that, as the date hereof, the Exchange Ratio is fair to One Valley from a
financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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APPENDIX IV
January 21, 1998
Board of Directors
FFVA Financial Corporation
925 Main Street
Lynchburg, VA 24504
Ladies and Gentlemen:
FFVA Financial Corporation ("FFVA") and One Valley Bancorp, Inc. ("One
Valley") have entered into an Agreement and Plan of Merger, dated as of December
16, 1997 (the "Agreement"), pursuant to which FFVA will be merged with and into
One Valley (the "Merger"). Upon the consummation of the Merger, each share of
FFVA common stock, par value $0.10 per share, issued and outstanding immediately
prior to the Merger (the "FFVA Shares"), other than certain shares specified in
the Agreement, will be converted into the right to receive 1.05 shares (the
"Exchange Ratio") of One Valley common stock, par value $10.00 per share,
together with the associated rights granted pursuant to the Shareholder
Protection Rights Agreement, dated as of October 18, 1995, between One Valley
and One Valley Bank, National Association (as rights agent). The terms and
conditions of the Merger are more fully set forth in the Agreement. You have
requested our opinion as to the fairness, from a financial point of view, of the
Exchange Ratio to the holders of the FFVA Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated as of December 16, 1997, by and between FFVA and One Valley; (iii) FFVA's
audited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations as contained in its
annual report to shareholders for the year ended December 31, 1996; (iv) One
Valley's audited consolidated financial statements and management's discussion
and analysis of financial condition and results of operations as contained in
its annual report to shareholders for the year ended December 31, 1996; (v)
FFVA's unaudited consolidated financial statements and management's discussion
and analysis of financial condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarters ended March 31, June 30, and
September 30,
IV-1
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Board of Directors
FFVA Financial Corporation
January 27, 1998
Page 2
1997, respectively; (vi) One Valley's unaudited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in its Quarterly Report on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 1997, respectively; (vii)
certain financial analyses and forecasts of FFVA prepared by and reviewed with
management of FFVA and the views of senior management of FFVA regarding FFVA's
past and current business operations, results thereof, financial condition and
future prospects; (viii) certain financial analyses and forecasts of One Valley
prepared by and reviewed with management of One Valley and the views of senior
management of One Valley regarding One Valley's past and current business
operations, results thereof, financial condition and future prospects; (ix) the
potential pro forma impact of the Merger on One Valley; (x) the publicly
reported historical price and trading activity for FFVA's and One Valley's
common stock, including a comparison of certain financial and stock market
information for FFVA and One Valley with similar publicly available information
for certain other companies the securities of which are publicly traded; (xi)
the financial terms of recent business combinations in the savings institution
industry, to the extent publicly available; (xii) the current market environment
generally and the banking environment in particular; and (xiii) such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as we considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability therefor. We did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities of FFVA or One Valley or any of their subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of FFVA and One Valley). With respect to the financial projections
reviewed with management, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the respective managements of the respective future financial
performances of FFVA and One Valley and that such performances will be achieved.
We have also assumed that there has been no material change in FFVA's or One
Valley's assets, financial condition, results of operations, business or
prospects since September 30, 1997, the date of the last financial statements
noted above. We have assumed that FFVA and One Valley will remain as going
concerns for all periods relevant to our analyses, that the Merger will be
accounted for as a pooling of interests and that the Merger will qualify as a
tax-free reorganization for federal income tax purposes. We have also assumed
that all of the representations and warranties contained in the Agreement are
true and correct, that all covenants required to be performed by the parties
will be performed and that the conditions precedent in the Agreement are not
waived.
IV-2
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Board of Directors
FFVA Financial Corporation
January 27, 1998
Page 3
Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the value of One Valley common stock
will be when issued to FFVA's shareholders pursuant to the Agreement or the
prices at which FFVA's or One Valley's common stock will trade at any time.
We have acted as FFVA's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. We may also provide certain investment banking services
to FFVA in the future, including in connection with the reissuance of certain
shares of FFVA common stock in connection with the Merger, and will receive
compensation for such services.
In the ordinary course of our business, we may actively trade the debt
and equity securities of FFVA and One Valley for our own account and for the
accounts of our customers and, accordingly, may at any time hold a long or short
position in such securities.
Our opinion is directed to the Board of Directors of FFVA in connection
with its consideration of the Merger and does not constitute a recommendation to
any stockholder of FFVA as to how such stockholder should vote at any meeting of
stockholders called to consider and vote upon the Merger. Our opinion is not to
be quoted or referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall this opinion be
used for any other purposes, without Sandler O'Neill's prior written consent;
provided, however, that we hereby consent to the inclusion of this opinion as an
exhibit to the Joint Proxy Statement/Prospectus of FFVA and One Valley dated the
date hereof.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of FFVA Shares.
Very truly yours,
/s/ SANDLER O'NEILL & PARTNERS, L.P.
IV-3
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APPENDIX V
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 16th day of December, 1997 (the
"Agreement"), by and between FFVA Financial Corporation ("FFVA Financial") and
One Valley Bancorp, Inc. ("One Valley").
WHEREAS, One Valley and FFVA Financial have entered into an Agreement
and Plan of Merger, dated as of the 16th day of December, 1997 (the "Merger
Agreement"), providing for, among other things, the merger of FFVA Financial
with and into One Valley, with One Valley as the surviving corporation; and
WHEREAS, as a condition and inducement to One Valley's execution of the
Merger Agreement, One Valley has required that FFVA Financial agree, and FFVA
Financial has agreed, to grant One Valley the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, FFVA Financial
and One Valley agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, FFVA Financial hereby grants to One Valley an irrevocable option (the
"Option") to purchase up to 490,000 shares (as adjusted as set forth herein)
(the "Option Shares", which shall include the Option Shares before and after any
transfer of such Option Shares) of Common Stock, par value $.10 per share ("FFVA
Financial Common Stock"), of FFVA Financial at a purchase price per Option Share
(the "Purchase Price") equal to the average closing bid and ask prices on the
next business day following the public announcement of the Merger.
3. Exercise of Option.
(a) One Valley may exercise the Option, in whole or in part, at any
time and from time to time following (but only following) the occurrence of a
Fee Event (as defined in the Merger Agreement); provided, however, that the
Option shall terminate and be of no further force and effect upon the occurrence
of a Fee Termination Event (as defined in the Merger Agreement); and provided,
further, that One Valley shall have sent the written notice of such exercise as
provided for below within six months following such Fee Event (or such later
period as provided in Section 12(k)). The rights set forth in Section 8 of this
Agreement shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein. This Option may not be exercised at any time when One Valley shall be in
material and willful breach of any of its covenants or agreements contained in
the Merger Agreement such that FFVA Financial shall be entitled to terminate the
Merger Agreement pursuant to Section 9.1(b) thereof.
(b) In the event One Valley wishes to exercise the option, it shall
send to FFVA Financial a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 15 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior notification to or approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") or any other regulatory authority
is required in connection with such purchase, FFVA Financial shall cooperate
with One Valley in the filing of the required notice or application for approval
and the obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, One Valley shall (i) pay to FFVA Financial,
in immediately available funds by wire transfer to a bank account designated by
FFVA Financial, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to FFVA Financial at the address of FFVA Financial
specified in Section 12(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a), (i)
FFVA Financial shall deliver to One Valley (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no preemptive rights, and (B) if the Option
is exercised in part only, an executed new agreement with the same terms as this
Agreement
<PAGE>
evidencing the right to purchase the balance of the shares of FFVA Financial
Common Stock purchasable hereunder, and (ii) One Valley shall deliver to FFVA
Financial a letter agreeing that One Valley shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable federal and state law
or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF DECEMBER 16, 1997. A COPY
OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY FFVA FINANCIAL OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if One Valley shall
have delivered to FFVA Financial a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to FFVA
Financial and its counsel, to the effect that such legend is not required under
the Securities Act.
5. Representations and Warranties of FFVA FINANCIAL. FFVA Financial
hereby represents and warrants to One Valley as follows:
(a) Due Authorization. FFVA Financial has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of FFVA Financial. This Agreement has been duly
executed and delivered by FFVA Financial.
(b) Authorized Stock. FFVA Financial has taken all necessary corporate
and other action to authorize and reserve and to permit it to issue, and, at all
times from the date hereof until the obligation to deliver FFVA Financial Common
Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, the number of shares of FFVA Financial
Common Stock necessary for One Valley to exercise the Option, and FFVA Financial
will take all necessary corporate action to authorize and reserve for issuance
all additional shares of FFVA Financial Common Stock or other securities which
may be issued pursuant to Section 7 upon exercise of the Option. The shares of
FFVA Financial Common Stock to be issued upon due exercise of the Option,
including all additional shares of FFVA Financial Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all liens, claims, charges and encumbrances
of any kind or nature whatsoever, including any preemptive rights of any
stockholder of FFVA Financial.
6. Representations and Warranties of One Valley. One Valley hereby
represents and warrants to FFVA Financial that:
(a) Due Authorization. One Valley has all requisite corporate power and
authority to enter into this Agreement and, subject to any required approvals or
consents, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of One Valley. This Agreement has been duly executed and delivered by One
Valley.
(b) Purchase Not for Distribution. This Option is not being, and any
Option Shares or other securities acquired by One Valley upon exercise of the
Option will not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in FFVA Financial Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that One Valley shall receive, upon exercise of
the Option, the number and class of shares or other securities or property that
One Valley would have received in respect of FFVA Financial Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of FFVA Financial Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a)), the number of shares of
FFVA Financial Common Stock subject to the Option shall be adjusted so that,
after
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<PAGE>
such issuance, it, together with any shares of FFVA Financial Common Stock
previously issued pursuant hereto, equals 9.9 % of the number of shares of FFVA
Financial Common Stock then issued and outstanding, after giving effect to any
shares subject to or issued pursuant to the Option.
(b) In the event that FFVA Financial or its Subsidiary shall enter into
an agreement: (i) to consolidate with or merge into any person, other than One
Valley or one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than One Valley or one of its subsidiaries, to merge into FFVA Financial and
FFVA Financial shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of FFVA Financial
Common Stock shall be changed into or exchanged for stock or other securities of
FFVA Financial or any other person or cash or any other property or the
outstanding shares of FFVA Financial Common Stock immediately prior to such
merger shall after such merger represent less than 50% of the outstanding shares
and share equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets or the assets of its subsidiary
to any person, other than One Valley or one of its subsidiaries, then, and in
each such case, the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
One Valley, of either (x) the Acquiring Corporation (as defined below), (y) any
person that controls the Acquiring Corporation, or (z) in the case of a merger
described in clause (ii), FFVA Financial (such person being referred to as the
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to One Valley. The Substitute Option Issuer shall also
enter into an agreement with the then holder or holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal to
the Assigned Value (as is hereinafter defined) multiplied by the number of
shares of FFVA Financial Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as is hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common Stock
(the "Substitute Purchase Price") shall be equal to the Purchase Price
multiplied by a fraction in which the numerator is the number of shares of FFVA
Financial Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares of the Substitute Common Stock for which the
Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(I) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with FFVA Financial (if other than FFVA
Financial), (ii) FFVA Financial in a merger in which FFVA Financial is the
continuing or surviving person, and (iii) the transferee of all or any
substantial part of FFVA Financial 's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(II) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(III) "Assigned Value" shall mean the highest of (i) the price per
share of FFVA Financial Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than One Valley), (ii) the price per
share of FFVA Financial Common Stock to be paid by any person (other than One
Valley) pursuant to an agreement with FFVA Financial, and (iii) the highest
closing sales price per share of FFVA Financial Common Stock quoted on the
NASDAQ/NMS (or if FFVA Financial Common Stock is not quoted on the NASDAQ/NMS,
the highest bid price per share on any day as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by One Valley) within the six-month period immediately
preceding the agreement; provided, however, that in the event of a sale of less
than all of FFVA Financial 's assets, the Assigned Value shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of FFVA Financial as determined by a nationally recognized
investment banking firm selected by One Valley (or by a majority in interest of
the grantees if there shall be more than one grantee (a "Grantee Majority")),
divided by the number of shares of FFVA Financial Common Stock outstanding at
the time of such sale. In the event that an exchange offer is made for FFVA
Financial Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for FFVA
Financial Common Stock shall be determined by a nationally recognized investment
banking firm selected by One Valley. (If there shall then be more than one
grantee, any such selection shall be made by a Grantee Majority.)
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(IV) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the agreement
referred to in subsection (b) of Section 7, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such agreement; provided that if FFVA Financial is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of common
stock issued by FFVA Financial, the person merging into FFVA Financial or by any
company which controls or is controlled by such person, as One Valley may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 9.9% of the aggregate of the
shares of the Substitute Common Stock outstanding after exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 9.9% of the aggregate of the shares of the Substitute Common Stock
but for this subsection (f), the Substitute Option Issuer shall make a cash
payment to One Valley equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this subsection (f) over (ii)
the value of the Substitute Option after giving effect to the limitation in this
subsection (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by One Valley (or a Grantee
Majority).
(g) FFVA Financial shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
FFVA Financial hereunder and take all other actions that may be necessary so
that the provisions of this Section 7 are given full force and effect
(including, without limitation, any action that may be necessary so that the
holders of the other shares of common stock issued by the Substitute Option
Issuer are not entitled to exercise any rights by reason of the issuance or
exercise of the Substitute Option and the shares of the Substitute Common Stock
are otherwise in no way distinguishable from or have lesser economic value than
other shares of common stock issued by the Substitute Option Issuer). In
addition, FFVA Financial shall not enter into any agreement of the type
described in Section 7(b) unless the other party thereto commits to provide the
funding required for FFVA Financial to pay the Section 8 Repurchase
Consideration.
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "FFVA Financial," "Option," "Purchase Price" and "FFVA Financial
Common Stock" shall be deemed to be references to "Substitute Option Issuer,"
"Substitute Option," "Substitute Purchase Price" and "Substitute Common Stock,"
respectively.
8. Repurchase at the Option of One Valley.
(a) Subject to the second last sentence of Section 3(a) hereof, at the
request of One Valley at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) below) and ending 12 months
immediately thereafter, FFVA Financial shall repurchase from One Valley (I) the
Option and (II) all shares of FFVA Financial Common Stock purchased by One
Valley pursuant hereto with respect to which One Valley then has beneficial
ownership. The date on which One Valley exercised its rights under this Section
8 is referred to as the "Request Date." Such repurchase shall be at an aggregate
price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by One Valley for any shares of
FFVA Financial Common Stock acquired pursuant to the option with respect to
which One Valley then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined below)
for each share of FFVA Financial Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of FFVA Financial Common Stock with respect to which the Option has not
been exercised; and
(iii) the excess, if any, of (x) the Applicable Price over (y) the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the
case of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by One Valley for each share of FFVA
Financial Common Stock with respect to which the Option has been exercised and
with respect to which One Valley then has beneficial ownership, multiplied by
the number of such shares.
(b) If One Valley exercises its rights under this Section 8, FFVA
Financial shall, within 10 business days after the Request Date, pay the Section
8 Repurchase Consideration to One Valley in immediately available funds, and
contemporaneously with such payment One Valley shall surrender to FFVA Financial
the Option and the certificates evidencing the shares of FFVA Financial Common
Stock purchased thereunder with respect to which One Valley then has beneficial
ownership, and One Valley shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. Notwithstanding the
foregoing, to the extent that prior notification to or approval of the Office of
Thrift Supervision or other regulatory authority is required in connection with
the payment of all or any portion of the Section 8 Repurchase Consideration, One
Valley shall have the ongoing option to revoke its request
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for repurchase pursuant to Section 8, in whole or in part, or to require that
FFVA Financial deliver from time to time that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from paying and
promptly file the required notice or application for approval and expeditiously
process the same (and each party shall cooperate with the other in the filing of
any such notice or application and the obtaining of any such approval). If the
Office of Thrift Supervision or any other regulatory authority disapproves of
any part of FFVA Financial 's proposed repurchase pursuant to this Section 8,
FFVA Financial shall promptly give notice of such fact to One Valley. If the
Office of Thrift Supervision or other agency prohibits the repurchase in part
but not in whole, then One Valley shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by the Office of Thrift
Supervision or other agency, require the repurchase of the Option and/or Option
Shares, and One Valley shall thereupon have the right to exercise the Option as
to the number of Option Shares for which the Option was exercisable at the
Request Date less the sum of the number of shares covered by the Option in
respect of which payment has been made pursuant to Section 8(a)(ii). One Valley
shall notify FFVA Financial of its determination under the preceding sentence
within five (5) business days of receipt of notice of partial disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of One Valley's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of FFVA Financial Common Stock paid
for any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of FFVA Financial Common Stock received by holders of FFVA
Financial Common Stock in connection with any merger or other business
combination transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or
(iii) the highest closing sales price per share of FFVA Financial Common Stock
quoted on the NASDAQ/NMS (or if FFVA Financial Common Stock is not quoted on the
NASDAQ/NMS, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by One Valley) during the 30 business days preceding
the Request Date; provided, however, that in the event of a sale of less than
all of FFVA Financial's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of FFVA Financial as determined by a nationally recognized
investment banking firm selected by One Valley, divided by the number of shares
of FFVA Financial Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by One Valley and reasonably
acceptable to FFVA Financial, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any person
(other than One Valley or any subsidiary of One Valley) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under
the Securities Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial ownership
of, 50% or more of the then outstanding shares of FFVA Financial Common Stock,
or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) shall be consummated.
9. Registration Rights. One Valley shall have the registration rights
set forth in Annex A hereto.
10. Quotation; Listing. If FFVA Financial Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the NASDAQ/NMS or any securities exchange,
FFVA Financial, upon the request of One Valley, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of FFVA Financial Common Stock or other securities to be acquired upon
exercise of the Option on the NASDAQ/NMS or such other securities exchange and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby)
is exchangeable, without expense, at the option of One Valley, upon presentation
and surrender of this Agreement at the principal office of FFVA Financial for
other Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of FFVA
Financial Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by FFVA
Financial of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, FFVA Financial will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement executed
and delivered shall constitute an additional contractual obligation on the part
of FFVA Financial, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
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12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 9, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement: No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between One Valley and FFVA
Financial (i) constitutes the entire agreement and supersedes all prior
agreements and understanding, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto (other than any parties indemnified under
Section 9 and transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 11(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state regulatory agency to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that the Option does not
permit One Valley to acquire, or does not require FFVA Financial to repurchase,
the full number of shares of FFVA Financial Common Stock as provided in Sections
3 and 8 (as adjusted pursuant to Section 7), it is the express intention of FFVA
Financial to allow One Valley to acquire or to require FFVA Financial to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of West Virginia without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
To FFVA Financial:
FFVA Financial Corporation
925 Main Street
Lynchburg, Virginia 24504
Attention: James L. Davidson, Jr., President and CEO
With a copy to:
Charles E. Sloane, Esquire
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K. Street, N.W., Suite 700 East
Washington, DC 20005
To One Valley:
One Valley Bancorp, Inc.
One Valley Square
P. O. Box 1793
Charleston, West Virginia 25326
Attention: J. Holmes Morrison
With a copy to:
Merrell S. McIlwain, Esquire
One Valley Bancorp, Inc.
One Valley Square
P. O. Box 1793
Charleston, West Virginia 25326
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(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that One Valley may assign this
Agreement to a wholly owned subsidiary of One Valley and One Valley may assign
its rights hereunder in whole or in part after the occurrence of a Fee Event;
provided, however, that until the Federal Reserve Board has approved an
application by One Valley to acquire the shares of FFVA Financial Common Stock
subject to the Option, One Valley may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of FFVA Financial, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on One Valley's behalf or (iv) any other manner approved by
the Federal Reserve Board. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Any such assignment shall be in
compliance with all applicable laws.
(i) Further Assurances. In the event of any exercise of the Option by
One Valley, FFVA Financial and One Valley shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
(k) Extension of Periods. Any period for the exercise of any right
hereunder shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights (for so long as the
relevant person is using commercially reasonable efforts to obtain such
regulatory approvals), and for the expiration of all statutory waiting periods;
and (ii) to the extent necessary to avoid liability under Section 16(b) of the
Securities Exchange Act of 1934 by reason of such exercise.
13. Other Provisions. (a)(i) Notwithstanding any other provision of
this Agreement, in no event shall One Valley's Total Profit (as hereinafter
defined) exceed $6 million and, if it otherwise would exceed such amount, One
Valley, as its sole election, shall either (a) reduce the number of shares of
Common Stock subject to this Option, (b) deliver to FFVA Financial for
cancellation Option Shares previously purchased by One Valley, (c) pay cash to
FFVA Financial, or (d) do any combination thereof, so that One Valley's actually
realized Total Profit shall not exceed $6 million after taking into account the
foregoing actions.
(ii) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of date of exercise,
result in a Notional Total Profit (as defined below) of more than $6 million,
provided that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.
(iii) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by One Valley
pursuant to FFVA Financial's repurchase of the Option (or any portion thereof)
pursuant to Section 8, (ii) (x) the amount received by One Valley pursuant to
FFVA Financial's repurchase of Option Shares pursuant to Section 8, less (y) One
Valley's purchase price for such Option Shares, (iii) (x) the net cash amounts
received by One Valley pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) One Valley's purchase price of such Option Shares,
(iv) any amounts received by One Valley on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any amount equivalent to the
foregoing with respect to the Substitute Option.
(iv) As used herein, the term "National Total Profit" with respect to
any number of shares as to which One Valley may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by One
Valley and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
(b) (i) One Valley may, at any time following a Repurchase Event and
prior to the occurrence of a Fee Termination Event (or such later period as
provided herein), relinquish the Option (together with any Option Shares issued
to and then owned by One Valley) to FFVA Financial in exchange for a cash fee
equal to the Surrender Price;
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provided, however, that One Valley may not exercise it rights pursuant to this
Section 13(b) if FFVA Financial has repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 8. The "Surrender Price" shall
be equal to $3.5 million (i) plus, if applicable, One Valley's purchase price
with respect to any Option Shares and (ii) minus, if applicable, the excess of
(B) the net cash amounts, if any, received by One Valley pursuant to the arms'
length sale of Option Shares (or any other securities into which such Option
Shares were converted or exchange) to any unaffiliated party, over (B) One
Valley's purchase price of such Option Shares.
(ii) One Valley may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 13(b) by surrendering to FFVA Financial,
at its principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that One
Valley elects to relinquish the Option and Option Shares, if any, in accordance
with the provisions of this Section 13(b) and (ii) the Surrender Price. The
Surrender Price shall be payable in immediately available funds on or before the
second business day following receipt of such notice by FFVA Financial.
(iii) To the extent that FFVA Financial is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from paying the
Surrender Price to One Valley in full, FFVA Financial shall immediately so
notify One Valley and thereafter deliver or cause to be delivered from time to
time, to One Valley, the portion of the Surrender Price that it is no longer
prohibited from paying, within five business days after the date on which FFVA
Financial is no longer so prohibited; provided, however, that if FFVA Financial
at any time after delivery of a notice of surrender pursuant to paragraph (ii)
of this Section 13(b) is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from paying to One Valley the Surrender
Price in full, (i) FFVA Financial shall (A) use its reasonable best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to make such payments, (B) within
five days of the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide One Valley with copies of the same, and
(c) keep One Valley advised of both the status of any such request for
regulatory and legal approvals, as well as any discussions with any relevant
regulatory or other third party reasonably related to the same and (ii) One
Valley may revoke such notice of surrender by delivery of a notice of revocation
to FFVA Financial and, upon delivery of such notice revocation, the Fee
Termination Date shall be extended to a date six months from the date on which
the Fee Termination Date would have occurred if not for the provisions of this
Section 13(b)(iii) (during which period One Valley may exercise any of its
rights hereunder, including any and all rights pursuant to this Section 13(b)).
IN WITNESS WHEREOF, FFVA Financial and One Valley have caused this
Stock Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
ONE VALLEY BANCORP, INC.
/s/ J. Holmes Morrison
By -----------------------
Its President and CEO
FFVA Financial Corporation
/s/ James L. Davidson, Jr.
By --------------------------
Its President and CEO
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Annex A
REGISTRATION RIGHTS
(1) Demand Registration Rights. FFVA Financial shall, subject to the
conditions of Section (3) below, if requested by One Valley (or, if applicable,
a Grantee Majority), as expeditiously as possible prepare and file a
registration statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of FFVA Financial Common Stock or other securities that have been acquired by or
are issuable to One Valley upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by One Valley in such
request, including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and FFVA Financial
shall use its best efforts to qualify such shares or other securities for sale
under any applicable state securities laws.
(2) Additional Registration Rights. If FFVA Financial at any time after
the exercise of the Option proposes to register any shares of FFVA Financial
Common Stock under the Securities Act in connection with an underwritten public
offering of such FFVA Financial Common Stock, FFVA Financial promptly will give
written notice to One Valley (and any permitted transferee) of its intention to
do so and, upon the written request of One Valley (or any such permitted
transferee of One Valley) given within 30 days after receipt of any such notice
(which request shall specify the number of shares of FFVA Financial Common Stock
intended to be included in such underwritten public offering by One Valley (or
such permitted transferee)), FFVA Financial will cause all such specified
shares, the holders of which shall have requested participation in such
registration, to be so registered and included in such underwritten public
offering; provided, however, that FFVA Financial may elect to not cause any such
shares to be so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration solely to
implement an employee benefit plan or a registration filed on Form S-4;
provided, further, however, that such election pursuant to (i) may only be made
one time. If some but not all the shares of FFVA Financial Common Stock, with
respect to which FFVA Financial shall have received requests for registration
pursuant to this section (2), shall be excluded from such registration, FFVA
Financial shall make appropriate allocation of shares to be registered among One
Valley and any such permitted transferee desiring to register their shares pro
rata in the proportion that the number of shares requested to be registered by
each such holder bears to the total number of shares requested to be registered
by all such holders then desiring to have FFVA Financial Common Stock registered
for sale.
(3) Conditions to Required Registration. FFVA Financial shall use all
reasonable efforts to cause each registration statement referred to in Section
(1) above to become effective and to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective; provided, however, that FFVA Financial may delay any registration of
Option Shares required pursuant to Section (1) above for a period not exceeding
90 days provided FFVA Financial shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering of
other securities by FFVA Financial. FFVA Financial shall not be required to
register Option Shares under the Securities Act pursuant to Section (1) above:
(i) on more than two occasions;
(ii) more than once during any calendar year;
(iii) within 90 days after the effective date of a
registration referred to in Section 2 above pursuant to which the holder or
holders of the Option Shares concerned were afforded the opportunity to register
such shares under the Securities Act and such shares were registered as
requested; and
(iv) unless a request therefor is made to FFVA Financial by
the holder or holders of at least 25% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, FFVA Financial shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine months from the effective date of such registration statement. FFVA
Financial shall use all reasonable efforts to make any filings, and take all
steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares; provided,
however, that FFVA Financial shall not be required to consent to general
jurisdiction or qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify to do business.
(4) Expenses. Except where applicable state law prohibits such
payments, FFVA Financial will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if FFVA Financial so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary
9
<PAGE>
special experts) in connection with each registration pursuant to Section (1) or
(2) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
Section (1) or (2) above.
(5) Indemnification. In connection with any registration under Section
(1) or (2) above, FFVA Financial hereby indemnifies the holder of the Option
Shares, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by FFVA Financial in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to FFVA Financial by such
indemnified party expressly for use therein, and FFVA Financial and each
officer, director and controlling person of FFVA Financial shall be indemnified
by such holder of the Option Shares, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement that was included by FFVA Financial in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to FFVA Financial by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section (5) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section (5), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section (5). In the event that notice of commencement of any such action shall
be given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section (5) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by FFVA
Financial, the selling shareholders and the underwriters from the offering of
the securities and also the relative fault of FFVA Financial, the selling
shareholders and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall One Valley or any
of its subsidiaries or affiliates be responsible, in the aggregate, for any
amount in excess of the net offering proceeds attributable to its Option Shares
included in the offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be several
and not joint with other holders.
In connection with any registration pursuant to Section (1) or (2)
above, FFVA Financial and each holder of any Option Shares (other than One
Valley) shall enter into an agreement containing the indemnification provisions
of this Section (5).
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(6) Miscellaneous Reporting. FFVA Financial shall comply with all
reporting requirements and will do all such other things as may be necessary to
permit the expeditious sale at any time of any Option Shares by the holder
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. FFVA Financial shall at its expense provide the holder of any Option
Shares with any information necessary in connection with the completion and
filing of any reports or forms required to be filed by them under the Securities
Act or the Exchange Act, or required pursuant to any state securities laws or
the rules of any stock exchange.
(7) Issue Taxes. FFVA Financial will pay all stamp taxes in connection
with the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save One Valley harmless, without limitation as
to time, against any and all liabilities, with respect to all such taxes.
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APPENDIX VI
WEST VIRGINIA CORPORATION ACT
Section 31-1-122.
RIGHT OF SHAREHOLDERS TO DISSENT.
Any shareholder of a corporation shall have the right to dissent from any of the
following corporate actions:
(a) Any plan of merger or consolidation to which the corporation is a
party; or
(b) Any sale or exchange of all or substantially all of the property and
assets of the corporation not made in the usual and regular course of its
business, including a sale in dissolution, but not including a sale pursuant to
an order of a court having jurisdiction in the premises or a sale for cash on
terms requiring that all or substantially all of the net proceeds of sale be
distributed to the shareholders in accordance with their respective interests
within one year after the date of sale.
A shareholder may dissent as to less than all of the shares registered
in his name. In that event, his rights shall be determined as if the shares as
to which he has dissented and his other shares were registered in the names of
different shareholders.
Section 31-1-123.
RIGHTS OF DISSENTING SHAREHOLDERS; PROCEDURE
FOR PURCHASING OF DISSENTING SHAREHOLDERS' SHARES;
CIVIL ACTION FOR DETERMINING VALUE OF SHARES;
PROCEDURE FOR TRANSFERRING OF SUCH SHARES TO
CORPORATION AND PAYMENT THEREFOR.
(a) Any shareholder electing to exercise his right to dissent, pursuant
to section one hundred twenty-two [Sec. 31-1-122] of this article, shall file
with the corporation, prior to or at the meeting of shareholders at which such
proposed corporate action is submitted to a vote, a written objection to such
proposed corporation action. If such proposed corporate action be approved by
the required vote and such shareholder shall not have voted in favor thereof,
such shareholder may, within ten days after the date on which the vote was taken
or if a corporation is to be merged without a vote of its shareholders into
another corporation, any of its shareholders may, within fifteen days after the
plan of such merger shall have been mailed to such shareholders, make written
demand on the corporation, or, in the case of a merger or consolidation, on the
surviving or new corporation, domestic or foreign, for payment of the fair value
of such shareholder's shares, and, if such proposed corporation action is
effected, such corporation shall pay to such shareholder, upon surrender of the
certificate or certificates representing such shares, the fair value thereof as
of the day prior to the date on which the vote was taken approving the proposed
corporate action, excluding any appreciation or depreciation in anticipation of
such corporate action. Any shareholder failing to make demand within the ten-
VI-1
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day period shall be bound by the terms of the proposed corporate action. Any
shareholder making such demand shall thereafter be entitled only to payment as
in this section provided and shall not be entitled to vote or to exercise any
other rights of a shareholder.
(b) No such demand may be withdrawn unless the corporation shall consent
thereto. If, however, such demand shall be withdrawn upon consent, or if the
proposed corporate action shall be abandoned or rescinded or the shareholders
shall revoke the authority to effect such action, or if, in the case of a
merger, on the date of the filing of the articles of merger the surviving
corporation, is the owner of all the outstanding shares of the other
corporations, domestic and foreign, that are parties to the merger, or if no
demand or petition for the determination of fair value by a court of general
civil jurisdiction have been made or filed within the time provided in
subsection (e) of this section, or if a court of general civil jurisdiction
shall determine that such shareholder is not entitled to the relief provided by
this section, then the right of such shareholder to be paid the fair value of
his shares shall cease and his status as a shareholder shall be restored,
without prejudice to any corporate proceedings which may have been taken during
the interim.
(c) Within ten days after such corporate action is effected, the
corporation, or, in the case of a merger or consolidation, the surviving or new
corporation, domestic or foreign, shall give written notice thereof to each
dissenting shareholder who has made demand as herein provided, and shall make a
written offer to each shareholder to pay for such shares at a specified price
deemed by such corporation to be fair value thereof. Such notice and offer shall
be accompanied by a balance sheet of the corporation the shares of which the
dissenting shareholder holds, as of the latest available date and not more than
twelve months prior to the making of such offer, and a profit and loss statement
of such corporation for the twelve months' period ended on the date of such
balance sheet.
(d) If within thirty days after the date on which such corporate action
is effected the fair value of such shares is agreed upon between any such
dissenting shareholder and the corporation, payment therefor shall be made
within ninety days after the date on which such corporate action was effected,
upon surrender of the certificate or certificates representing such shares. Upon
payment of the agreed value the dissenting shareholder shall cease to have any
interest in such shares.
(e) If within such period of thirty days, a dissenting shareholder and
the corporation do not so agree, then the corporation shall within thirty days
after receipt of written demand from any dissenting shareholder, which written
demand must be given within sixty days after the date on which such corporation
action was effected, file a complaint in a court of general civil jurisdiction
requesting that the fair value of such shares be found and determined, or the
corporation may file such complaint at any time within such sixty-day period at
its own election. Such complaint shall be filed in any court of general civil
jurisdiction in the county in which the principal office of the corporation is
situated, or, if there be no such office in this State, in the county in which
any dissenting shareholder resides or is found or in which the property of such
corporation, or any part of it, may be. If the corporation shall fail to
institute such proceedings, any dissenting shareholder may do so in the name of
the corporation. All dissenting shareholders wherever residing, may be made
parties to the proceedings as an action against their shares quasi in rem. A
copy of the complaint shall be served on each dissenting shareholder who is a
resident of this State in the same manner as in other civil actions. Dissenting
shareholders who are nonresidents of this State shall be served a copy of the
complaint by registered or certified mail, return receipt requested. In
addition, service upon such nonresident shareholders shall be made by
publication, as provided in Rule 4(e)(2) of the West Virginia Rules of Civil
Procedure. All shareholders who are parties to the proceeding
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shall be entitled to judgment against the corporation for the amount of the fair
value of their shares. The court may, if it so elects, appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have such power and authority as
shall be specified in the order of their appointment or any subsequent
appointment. The judgment shall be payable only upon and concurrently with the
surrender to the corporation of the certificate or certificates representing
such shares. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.
The judgment shall include an allowance for interest at such rate as the
court may find to be fair and equitable in all the circumstances, from the date
on which the vote was taken on the proposed corporate action to the date of
payment.
The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of such
costs and expenses may be apportioned and assessed as the court may deem
equitable against any or all of the dissenting shareholders who are parties to
the proceeding to whom the corporation shall have made an offer to pay for the
shares if the court shall find that the action of such shareholders in failing
to accept such offer was arbitrary or vexatious or not in good faith. Such
expenses shall include reasonable compensation for and reasonable expenses of
the appraisers, but shall exclude the fees and expenses of counsel for and
experts employed by any party; but if the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay therefor, or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court may determine to be
reasonable compensation to any expert or experts employed by the shareholder in
the proceeding. Any party to the proceeding may appeal any judgment or ruling of
the court as in other civil cases.
(f) Within twenty days after demanding payment for his shares, each
shareholder demanding payment shall submit the certificate or certificates
representing his shares to the corporation for notation thereon that such demand
has been made. His failure to do so shall, at the option of the corporation,
terminate his rights under this section unless a court of general civil
jurisdiction, for good and sufficient cause shown, shall otherwise direct. If
shares represented by a certificate on which notation has been so made shall be
transferred, each new certificate issued therefor shall bear similar notation,
together with the name of the original dissenting holder of such shares, and a
transferee of such shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting shareholder had after
making demand for payment of the fair value thereof.
(g) Shares acquired by a corporation pursuant to payment of the agreed
value therefor or to payment of the judgment entered therefor, as in this
section provided, may be held and disposed of by such corporation as in the case
of other treasury shares, except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
VI-3
<PAGE>
APPENDIX VII
ARTICLE VI
The amount of total authorized capital stock of the corporation shall be
Seventy-One Million shares, consisting of Seventy Million shares of Common Stock
with a par value of Ten Dollars ($10.00) per share and One Million shares of
Preferred Stock with a par value of Ten Dollars ($10.00) per share.
The Board of Directors shall have the power and authority at any time
and from time to time to issue, sell or otherwise dispose of any unissued but
authorized shares of any class or classes of stock presently provided for in the
Certificate of Incorporation, or that may hereafter be provided for by a
subsequent amendment to the Certificate of Incorporation, to such persons or
parties, including the holders of Common Stock of Preferred Stock or of any such
other class of stock, for such considerations (not less than the par value, if
any, thereof) and upon such terms and conditions as the Board of Directors in
its discretion may deem to be in the best interests of the Corporation. Except
as expressly provided to the contrary hereinafter, such issuance, sale or other
disposition may be made without offering such shares, or any part or class
thereof, to the holders of Common Stock or Preferred Stock or any such other
class of stock, and no such holder shall have any preemptive right to subscribe
for any such shares.
Each holder of Common Stock of the Corporation entitled to vote shall
have one vote for each share thereof held.
The voting powers, designations, preferences, limitations, restrictions
and relative rights of the Preferred Stock are as follows:
(1) Issuance in Series. Preferred stock may be issued from time to time
in one or more series. All shares of Preferred Stock shall be of equal rank and
shall be identical, except in respect of the particulars that are fixed in the
Certificate of Incorporation or may be pursuant to authority which is hereby
expressly vested in the Board of Directors; and each share of Preferred Stock,
whether of the same or a different series, shall be identical in all respects
with the other shares of Preferred Stock, except as to the following relative
rights and preferences, as to which there may be variations between different
series:
(a) the rate of dividends;
(b) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of
redemption;
(c) the amount payable upon shares in event of voluntary and
involuntary liquidation;
(d) sinking fund provisions, if any, for the redemption or
purchase of shares;
(e) the terms and conditions, if any, on which shares may be
converted; and
(f) voting rights, if any.
VII-1
<PAGE>
The Board of Directors of the Corporation shall have all the power and
authority with respect to the shares of Preferred Stock that the shareholders
may delegate to the Board of Directors pursuant to the terms and provisions of
Chapter 31, Article I, Sections 78 and 79 of the Code of West Virginia, as
amended, and shall exercise such power and authority by the adoption of a
resolution or resolutions as prescribed by law.
(2) Dividends. The holders of the Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of any funds
legally available therefor, cumulative preferential dividends in cash, at the
rate per annum fixed for such series, and no more. Dividends on shares of the
Preferred Stock shall accrue from the date of the initial issue of shares of
such series, or from such other date as may be fixed by the Board of Directors,
shall be cumulative, and shall be payable quarterly on the last day of March,
June, September and December in each year to shareholders of record on the
fifteenth day of the calendar month in which such dividends are payable, with
the first dividend on the Preferred Stock being payable on the respective
dividend date which follows the first full calendar quarter after the initial
issue of shares. Each share of Preferred Stock shall rank on a parity with each
other share of Preferred Stock, irrespective of series, with respect to
preferential dividends at the respective rates fixed for such series, and no
dividend shall be declared or paid or set apart for payment for the Preferred
Stock of any series unless at the same time a dividend in like proportion to the
accrued and unpaid dividends upon the Preferred Stock of each other series shall
be declared or paid or set apart for payment, as the case may be, on Preferred
Stock of each other series then outstanding. Accrued and unpaid dividends on the
Preferred Stock shall not bear interest.
(3) Dividend Restriction on Junior Stock. So long as any shares of
Preferred Stock are outstanding, the Corporation shall not pay or declare any
cash dividends whatsoever on the Common Stock or any other class of stock
ranking junior to the Preferred Stock unless (a) all dividends on the Preferred
Stock of all series for all past dividend periods shall have been paid, or
declared and a sum sufficient for the payment thereof set apart, and (b) there
shall exist no default in respect of any sinking fund or purchase fund for the
redemption or purchase of shares of Preferred Stock of any series or such
default shall have been waived by the holders of at least a majority of the then
issued and outstanding shares of Preferred Stock of such series by a vote at a
meeting called for such purpose or by written waiver with or without a meeting.
(4) Liquidation or Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, then, before any distribution or payment shall be made to the
holders of the Common Stock or any other class of stock of the corporation
ranking junior to the Preferred Stock in respect of dividends or distribution of
assets upon liquidation, the holders of the Preferred Stock shall be entitled to
be paid in full, in the event of a voluntary or involuntary liquidation,
dissolution or winding up, the respective amounts fixed for such series, plus in
each case a sum equal to accrued and unpaid dividends thereon to the date of
payment thereof. After such payment shall have been made in full to the holders
of the Preferred Stock, the remaining assets and funds of the Corporation shall
be distributed among the holders of the stock of the Corporation ranking junior
to the Preferred Stock in respect of dividends or distributions of assets upon
liquidation according to their respective rights and preferences and in each
case according to their respective shares. In the event that the assets of the
Corporation available for distribution to holders of Preferred Stock shall not
be sufficient to make the payment herein required to be made in full, such
assets shall be distributed to the holders of the respective shares of Preferred
Stock pro rata in proportion to the amounts payable upon such share thereof.
Neither the merger or consolidation of the Corporation into or with another
corporation nor the merger or consolidation of any other corporation into or
with the Corporation, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 4, but the
sale, lease or
VII-2
<PAGE>
conveyance of all or substantially all of its assets shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 4.
(5) Status of Shares Redeemed or Retired. Preferred Stock redeemed or
otherwise retired by the Corporation shall, upon the filing of such statement as
may be required by law, assume the status of authorized but unissued Preferred
Stock and may thereafter be reissued in the same manner as other authorized but
unissued Preferred Stock.
(6) Amendments. Subject to such requirements as may be prescribed by law
or as may be expressly set forth in the foregoing provisions of this Article VI
or in any amendment to these Articles establishing and designating a series of
shares of Preferred Stock, any of the foregoing terms and provisions of this
Article VI may be altered, amended or repealed or the application thereof
suspended or waived in any particular case and changes in any of the
designations, preferences, limitations and relative rights of the Preferred
Stock may be made with the affirmative vote, at a meeting called for that
purpose, or the written consent with or without a meeting, of the holders of at
least two-thirds of the then issued and outstanding shares of Preferred Stock;
provided that neither the rate of dividend nor the amount payable upon the
redemption or in the event of voluntary or involuntary liquidation on any share
of Preferred Stock may be reduced without the consent of all of the holders
thereof.
VII-3
<PAGE>
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 15. Indemnification of Directors and Officers
Article V of the Restated Articles of Incorporation of One Valley
contains the following indemnification provision:
ARTICLE V. Provisions for the Regulation of the Internal
Affairs of the Corporation
A. Indemnification. Each person who was or is a party
or is threatened to be made a party to or is involved
(including, without limitation, as a witness or deponent) in
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative,
investigative or otherwise in nature ("Proceeding"), by reason
of the fact that he or she, or a person of whom he or she is
the legal representative, is or was a director or officer of
the corporation or is or was serving at the written request of
the corporation's board of directors, president or their
delegate as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such Proceeding is alleged action
or omission in an official capacity as a director, officer,
trustee, employee or agent or in any other capacity, shall be
indemnified and held harmless by the corporation to the
fullest extent authorized by law, including but not limited to
the West Virginia Code, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide
broader indemnification rights than said Code permitted the
corporation to provide prior to such amendment), against all
expenses, liability and loss (including, without limitation,
attorneys' fees and disbursements, judgments, fines, ERISA or
other similar or dissimilar excise taxes or penalties and
amounts paid or to be paid in settlement) incurred or suffered
by such person in connection therewith; provided, however,
that the corporation shall indemnify any such person seeking
indemnity in connection with a Proceeding (or part thereof)
initiated by such person only if such Proceeding (or part
thereof) was authorized by the Board of Directors of the
corporation; provided, further, that the corporation shall not
indemnify any person for civil money penalties or other
matters, to the extent such indemnification is specifically
not permissible pursuant to federal or state statute or
regulation, or order or rule of a regulatory agency of the
federal or state government with authority to enter, make or
promulgate such order or rule. Such right shall include the
right to be paid by the corporation expenses, including,
without limitation, attorneys' fees and disbursements,
incurred in defending or participating in any such Proceeding
in advance of its final disposition; provided, however, that
the payment of such expenses in advance
PART II-1
<PAGE>
of the final disposition of such Proceeding shall be made only
upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, in which such director or
officer agrees to repay all amounts so advanced if it should
be ultimately determined that such person is not entitled to
be indemnified under this Article or otherwise. The
termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interest of the corporation, or that such person did have
reasonable cause to believe that his conduct was unlawful.
B. Right of Claimant to Bring Suit. If a claim under
this Article is not paid in full by the corporation within
thirty days after a written claim therefor has been received
by the corporation, the claimant may at any time thereafter
bring suit against the corporation to recover the unpaid
amount of the claim and, if successful, in whole or in part,
the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for
expenses incurred in defending or participating in any
Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation)
that the claimant has not met the standards of conduct which
make it permissible under the applicable law for the
corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the
corporation.
Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the
commencement of such action that indemnification or
reimbursement of the claimant is permitted in the
circumstances because he or she has met the applicable
standard of conduct, nor an actual determination by the
corporation (including its Board of Directors, independent
legal counsel, or its shareholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not
met the applicable standard of conduct.
C. Contractual Rights: Applicability. The right to be
indemnified or to the reimbursement or advancement of expenses
pursuant hereto (i) is a contract right based upon good and
valuable consideration, pursuant to which the person entitled
thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the corporation
and the director or officer, (ii) is intended to be
retroactive and shall be available with respect to events
occurring prior to the adoption hereof, and (iii) shall
continue to exist after the rescission or restrictive
modification hereof with respect to events occurring prior
thereto.
PART II-2
<PAGE>
D. Requested Service. Any director or officer of the
corporation serving, in any capacity, (i) another corporation
of which five percent (5%) or more of the shares entitled to
vote in the election of its directors is held by the
corporation, or (ii) any employee benefit plan of the
corporation or of any corporation referred to in clause (i),
shall be deemed to be doing so at the request of the
corporation.
E. Non-Exclusivity of Rights. The rights conferred on
any person hereunder shall not be exclusive of and shall be
in addition to any other right which such person may have or
may hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise.
F. Insurance. The corporation may purchase and
maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or
other enterprise against such expense, liability or loss,
whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss
under West Virginia law.
Item 16. Exhibits
2.1 Agreement and Plan of Merger dated as of December 16, 1997, by and
between One Valley Bancorp, Inc. and FFVA Financial Corporation
(attached as Appendix I to the Joint Proxy Statement/Prospectus filed
as a part of this Registration Statement).
2.2 Stock Option Agreement dated as of December 16, 1997, by and between
One Valley Bancorp, Inc. and FFVA Financial Corporation (attached as
Appendix V to the Joint Proxy Statement/Prospectus filed as part of
this Registration Statement).
3.1 Restated Articles of Incorporation of One Valley Bancorp, Inc., filed
as part of One Valley Bancorp, Inc.'s Form 10-Q for the Quarter Ended
June 30, 1996, and incorporated herein by reference.
3.7 Amendments to the Bylaws of One Valley Bancorp, Inc. dated June 20,
1990, and a complete copy of One Valley Bancorp, Inc.'s Bylaws as
amended, filed as part of One Valley Bancorp, Inc.'s 1990 Annual
Report on Form 10-K and incorporated herein by reference.
4.1 Shareholder Protection Rights Agreement, filed as part of One Valley
Bancorp, Inc.'s current report on Form 8-K, dated October 19, 1995,
and incorporated herein by reference.
5.1 Opinion of Jackson & Kelly as to the legality of the securities being
registered and the Merger.
8.1 Opinion of Sullivan & Cromwell concerning certain federal tax
consequences.
PART II-3
<PAGE>
10.1 Indemnity Agreement between Resolution Trust Corporation and One
Valley Bancorp, Inc., filed as part of One Valley Bancorp, Inc.'s
Registration Statement on Form S-2, Registration No. 33-43384, October
22, 1991, and incorporated herein by reference.
Executive Compensation Claims and Arrangements.
10.2 Agreement dated as of May 7, 1985, between One Valley Bancorp, Inc.
and Thomas E. Goodwin, filed as part of One Valley Bancorp, Inc.'s
Registration Statement on Form S-4, Registration No. 2-99417, August
5, 1985, and incorporated herein by reference.
10.3 Form of Change of Control Agreement between One Valley Bancorp, Inc.
and 7 of its Executive Officers, dated as of January 1, 1987, filed as
part of One Valley Bancorp, Inc.'s 1986 Annual Report on Form 10-K and
incorporated herein by reference.
10.4 One Valley Bancorp, Inc.'s, 1983 Incentive Stock Option Plan, as
amended, filed as Exhibit No. 4 to One Valley Bancorp, Inc.'s
Registration Statement on Form S-8, Registration No. 33-3570, July 2,
1990, and incorporated herein by reference.
10.5 One Valley Bancorp, Inc.'s, Management Incentive Compensation Plan, as
amended February, 1990, filed as part of One Valley Bancorp, Inc.'s
1992 Annual Report on Form 10-K and incorporated herein by reference.
10.6 One Valley Bancorp, Inc.'s, Supplemental Benefit Plan, as amended
April, 1990, filed as part of One Valley Bancorp, Inc.'s 1992 Annual
Report on Form 10-K and incorporated herein by this reference.
10.7 One Valley Bancorp, Inc.'s, 1993 Incentive Stock Option Plan filed as
part on One Valley Bancorp, Inc.'s Proxy Statement, Registration No.
0-10042 and incorporated herein by reference.
21. Subsidiaries of Registrant.
23.1 Consent of Cherry Bekaert & Holland, L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.4 Consent of Sandler O'Neill & Partners, L.P.
23.5 Consent of Jackson & Kelly (filed as part of the opinion of Jackson &
Kelly in Exhibit 5.1).
23.6 Consent of Sullivan & Cromwell (filed as part of the opinion of
Sullivan & Cromwell in Exhibit 8.1).
24. Power of Attorney.
PART II-4
<PAGE>
99.1 Form of One Valley Bancorp, Inc.'s Proxy.
99.2 Form of FFVA Financial Corporation's Proxy.
99.3 Opinion of Sandler O'Neill & Partners, L.P. (attached as Appendix IV
to the Joint Proxy Statement/Prospectus filed as a part of this
Registration Statement).
99.4 Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
(attached as Appendix III to the Joint Proxy Statement/Prospectus
filed as a part of this Registration Statement).
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The registrant hereby undertakes:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable
registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
PART II-5
<PAGE>
(2) That every prospectus: (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such
amendment is effective, and that, for purposes 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) 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 the question 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.
(4) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this form, within one business day of receipt of such
request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the registration statement through the date
of responding to the request.
(5) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information
concerning a transaction, and FFVA Financial Corporation
being acquired involved therein, that was not the subject of
and included in the registration statement when it became
effective.
PART II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, One Valley has
duly caused this registration statement to be signed on behalf of the
undersigned, thereunto in the City of Charleston, State of West Virginia, on the
21th day of January, 1998.
ONE VALLEY BANCORP, INC.
By: /s/ J. Holmes Morrison
J. HOLMES MORRISON,
President and Chief Executive Officer
By: /s/ Laurance G. Jones
LAURANCE G. JONES,
Senior Vice President and Treasurer
(Principal Financial Officer)
By: /s/ James A. Winter
JAMES A. WINTER,
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Director January 21, 1998
PHYLLIS H. ARNOLD
* Director January 21, 1998
CHARLES M. AVAMPATO
* Director January 21, 1998
ROBERT F. BARONNER
* Director January 21, 1998
C. MICHAEL BLAIR
PART II-7
<PAGE>
Signature Title Date
Director January 21, 1998
DENNIS M. BONE
* Director January 21, 1998
JAMES K. BROWN
* Director January 21, 1998
NELLE RATRIE CHILTON
Director January 21, 1998
H. RODGIN COHEN
* Director January 21, 1998
RAY MARSHALL EVANS, JR.
Director January 21, 1998
JAMES GABRIEL
Director January 21, 1998
PHILLIP H. GOODWIN
Director January 21, 1998
THOMAS E. GOODWIN
Director January 21, 1998
BOB M. JOHNSON
Director January 21, 1998
ROBERT E. KAMM, JR.
Director January 21, 1998
JOHN D. LYNCH
* Director January 21, 1998
EDWARD H. MAIER
/s/ J. Holmes Morrison President, Chief Executive January 21, 1998
J. HOLMES MORRISON Officer and Director
PART II-8
<PAGE>
Signature Title Date
Director January 21, 1998
CHARLES R. NEIGHBORGALL, III
* Director January 21, 1998
ROBERT O. ORDERS, SR.
* Director January 21, 1998
JOHN L. D. PAYNE
* Director January 21, 1998
ANGUS E. PEYTON
Director January 21, 1998
LACY I. RICE, JR.
* Director January 21, 1998
BRENT D. ROBINSON
Director January 21, 1998
JAMES W. THOMPSON
Director January 21, 1998
J. LEE VAN METRE, JR.
Director January 21, 1998
RICHARD B. WALKER
Director January 21, 1998
H. BERNARD WEHRLE, III
* Director January 21, 1998
JOHN H. WICK, III
* Director January 21, 1998
THOMAS D. WILKERSON
* /s/ Merrell S. McIlwain II
Attorney-in-Fact
</TABLE>
PART II-9
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Merger dated as of December 16, 1997, by and
between One Valley Bancorp, Inc. and FFVA Financial Corporation
(attached as Appendix I to the Joint Proxy Statement/Prospectus filed
as a part of this Registration Statement).
2.2 Stock Option Agreement dated as of December 16, 1997, by and between
One Valley Bancorp, Inc. and FFVA Financial Corporation (attached as
Appendix V to the Joint Proxy Statement/Prospectus filed as a part of
this Registration Statement).
3.1 Restated Articles of Incorporation of One Valley Bancorp, Inc., filed
as part of One Valley Bancorp, Inc.'s Form 10-Q for the Quarter Ended
June 30, 1996, and incorporated herein by reference.
3.7 Amendments to the Bylaws of One Valley Bancorp, Inc. dated June 20,
1990, and a complete copy of One Valley Bancorp, Inc.'s Bylaws as
amended, filed as part of One Valley Bancorp, Inc.'s 1990 Annual
Report on Form 10-K and incorporated herein by reference.
4.1 Shareholder Protection Rights Agreement, filed as part of One Valley
Bancorp, Inc.'s current report on Form 8-K, dated October 19, 1995,
and incorporated herein by reference.
5.1 Opinion of Jackson & Kelly as to the legality of the securities being
registered and the Merger.
8.1 Opinion of Sullivan & Cromwell concerning certain federal tax
consequences.
10.1 Indemnity Agreement between Resolution Trust Corporation and One
Valley Bancorp, Inc., filed as part of One Valley Bancorp, Inc.'s
Registration Statement on Form S-2, Registration No. 33-43384, October
22, 1991, and incorporated herein by reference.
Executive Compensation Claims and Arrangements.
10.2 Agreement dated as of May 7, 1985, between One Valley Bancorp, Inc.
and Thomas E. Goodwin, filed as part of One Valley Bancorp, Inc.'s
Registration Statement on Form S-4, Registration No. 2-99417, August
5, 1985, and incorporated herein by reference.
10.3 Form of Change of Control Agreement between One Valley Bancorp, Inc.
and 7 of its Executive Officers, dated as of January 1, 1987, filed as
part of One Valley Bancorp, Inc.'s 1986 Annual Report on Form 10-K and
incorporated herein by reference.
10.4 One Valley Bancorp, Inc.'s, 1983 Incentive Stock Option Plan, as
amended, filed as Exhibit No. 4 to One Valley Bancorp, Inc.'s
Registration Statement on Form S-8, Registration No. 33-3570, July 2,
1990, and incorporated herein by reference.
E-1
<PAGE>
10.5 One Valley Bancorp, Inc.'s, Management Incentive Compensation Plan, as
amended February, 1990, filed as part of One Valley Bancorp, Inc.'s
1992 Annual Report on Form 10-K and incorporated herein by reference.
10.6 One Valley Bancorp, Inc.'s, Supplemental Benefit Plan, as amended
April, 1990, filed as part of One Valley Bancorp, Inc.'s 1992 Annual
Report on Form 10-K and incorporated herein by this reference.
10.7 One Valley Bancorp, Inc.'s, 1993 Incentive Stock Option Plan filed as
part on One Valley Bancorp, Inc.'s Proxy Statement, Registration No.
0-10042 and incorporated herein by reference.
21. Subsidiaries of Registrant.
23.1 Consent of Cherry Bekaert & Holland, L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.4 Consent of Sandler O'Neill & Partners, L.P.
23.5 Consent of Jackson & Kelly (filed as part of the opinion of Jackson &
Kelly in Exhibit 5.1).
23.6 Consent of Sullivan & Cromwell (filed as part of the opinion of
Sullivan & Cromwell in Exhibit 8.1).
24. Power of Attorney.
99.1 Form of One Valley Bancorp, Inc.'s Proxy.
99.2 Form of FFVA Financial Corporation's Proxy.
99.3 Opinion of Sandler O'Neill & Partners, L.P. (attached as Appendix IV
to the Joint Proxy Statement/Prospectus filed as a part of this
Registration Statement).
99.4 Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
(attached as Appendix III to the Joint Proxy Statement/Prospectus
filed as a part of this Registration Statement).
E-2
<PAGE>
Exhibit 5.1
January 21, 1998
One Valley Bancorp, Inc.
One Valley Square
Summers & Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
Gentlemen:
Pursuant to the Agreement and Plan of Merger entered into by and
between One Valley Bancorp, Inc. ("One Valley") and FFVA Financial Corporation
dated December 16, 1997 (the "Merger Agreement"), proceedings for the issuance
of up to 6,171,635 shares (the "Shares") of common stock, par value $10.00 each,
of One Valley, and related stock purchase rights (the "Rights") to be issued
pursuant to the Shareholder Protection Rights Agreement dated October 18, 1995
(the "Rights Agreement") between One Valley and One Valley Bank, National
Association, as Rights Agent (the "Rights Agent"), have been taken with our
assistance as counsel for One Valley.
We have examined originals or copies certified to our satisfaction of
such corporate records of One Valley, agreements and other instruments,
certificates of public officials, certificates of officers or representatives of
One Valley, and other documents as we have deemed necessary to examine and to
require as the basis for the opinion hereinafter expressed. Upon the basis of
such examination, we advise you that:
1. We are of the opinion that the Shares which are issuable on
consummation of the Merger Agreement when issued as provided
therein will be duly and validly issued shares of One Valley,
fully paid and nonassessable.
2. We are also of the opinion that, assuming that the Rights
Agreement has been duly authorized, executed and delivered by
the Rights Agent, when the Shares have been issued and sold
as provided in the Merger Agreement, the Rights attributable
to the Shares will be validly issued.
In connection with our opinion set forth in paragraph (2) above, we
note that the question whether the Board of Directors of One Valley might be
required to redeem the Rights at some future time will depend upon the facts and
circumstances existing at that time and, accordingly, is beyond the scope of
such opinion.
E-3
<PAGE>
One Valley Bancorp, Inc.
January 21, 1998
Page 2
The foregoing opinion is limited to the Corporation Code of the State
of West Virginia, and we are expressing no opinion as to the effect of the laws
of any other jurisdiction.
This opinion is given as of the date hereof and is limited to the law
as now in effect and based on facts of which we have knowledge. We do not
undertake to advise you of any change in the law hereof. No person other than
you may rely on this opinion for any purpose, without our written consent.
We hereby consent to the inclusion of this opinion as an Exhibit to
the Registration Statement and all amendments thereto, and the references
therein to Jackson & Kelly and its opinions. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Jackson & Kelly
E-4
<PAGE>
Exhibit 8.1
SULLIVAN & CROMWELL
NEW YORK TELEPHONE: (212) 558-4000
TELEX: 62694 (INTERNATIONAL)
127816 (DOMESTIC) 125 Broad Street, New York 10004-2498
CABLE ADDRESS: LADYCOURT, NEW YORK -------------
FACSIMILE: (212) 558-3588 1701 PENNSYLVANIA AVE., N.W.,
WASHINGTON, D.C. 20006-5605
444 SOUTH FLOWER STREET,
LOS ANGELES 90071-2901
8, PLACE VENDOME, 75001 PARIS
ST. OLAVE'S HOUSE, 9A IRONMONGER LANE,
LONDON EC2V 8EY
101 COLLINS STREET, MELBOURNE 3000
2-1, MARUNOUCHI I-CHOME, CHIYODA-KU,
TOKYO 100
NINE QUEEN'S ROAD, CENTRAL, HONG KONG
OBERLINDAU 54-56, 60323 FRANKFURT
AM MAIN
January 20, 1998
One Valley Bancorp, Inc.,
Summers and Lee Streets,
P.O. Box 1793,
Charleston, West Virginia 25326.
Dear Sirs:
We have acted as tax counsel to One Valley Bancorp, Inc. ("One Valley") in
connection with the Registration Statement on Form S-4 of One Valley filed with
the Securities and Exchange Commission on January 21, 1998 (the "Registration
Statement") and hereby confirm to you our opinion as set forth under the
heading "Certain Federal Income Tax Consequences" in the Prospectus included in
the Registration Statement.
We hereby consent to the filing with the Securities and Exchange Commission
of this letter as an exhibit to the Registration Statement and the reference to
us under the heading "Certain Federal Income Tax Consequences". In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
Exhibit 21
SUBSIDIARIES OF REGISTRANT
1) One Valley Bank, National Association, a national banking association
organized under the laws of the United States of America.
2) One Valley Bank of Huntington, Inc., a West Virginia banking
corporation.
3) One Valley Bank of Mercer County, Inc., a West Virginia banking
corporation.
4) One Valley Bank-East, National Association, a national banking
association organized under the laws of the United States of America.
5) One Valley Bank of Oak Hill, Inc., a West Virginia banking
corporation.
6) One Valley Bank of Ronceverte, National Association, a national
banking association organized under the laws of the United States of
America.
7) One Valley Bank, Inc., a West Virginia banking corporation.
8) One Valley Bank of Summersville, Inc., a West Virginia banking
corporation.
9) One Valley Bank-North, Inc., a West Virginia banking corporation.
10) One Valley Bank of Clarksburg, National Association, a national
banking association organized under the laws of the United States of
America.
11) One Valley Square, Inc., a Texas corporation.
12) One Valley Thrift, Inc., a West Virginia Corporation.
13) One Valley-Central Virginia, National Association, a national banking
association organized under the laws of the United States of America.
E-6
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
FFVA Financial Corporation
925 Main Street
Lynchburg, Virginia 24504
We consent to the incorporation in this Registration Statement on Form
S-4 of our report on the consolidated statements of financial condition of FFVA
Financial Corporation and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996,
and to the reference made to us under the caption "Experts" in this Prospectus.
Very truly yours,
/s/ Cherry, Bekaert & Holland, L.L.P.
Lynchburg, Virginia
January 7, 1997
E-7
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4, 33-________) and related Prospectus of One
Valley Bancorp, Inc. and Subsidiaries for the registration of 6,171,635 shares
of its common stock and to the incorporation by reference therein of our report
dated January 21, with respect to the consolidated financial statements of One
Valley Bancorp, Inc. and Subsidiaries incorporated by reference in its Annual
Report on Form 10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Charleston, West Virginia
January 15, 1998
E-8
<PAGE>
Exhibit 23.3
January 21, 1998
One Valley Bancorp, Inc.
One Valley Square
Charleston, WV 25326
Members of the Board:
We hereby consent to the use of our opinion letter to the Board of
Directors of One Valley Bancorp, Inc. ("One Valley"), included as Appendix III
to the Proxy Statement/Prospectus that forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of FFVA Financial
Corporation with and into One Valley, and to the references to such opinion in
such Proxy Statement/Prospectus under the captions "SUMMARY--The
Merger--Opinions of Financial Advisors" and "THE MERGER--Opinions of Financial
Advisors--Opinion of One Valley's Financial Advisor". In giving such consent, we
do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended (the
"Securities Act"), or the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder, nor do we admit that we are experts
with respect to any part of such Registration Statement within the meaning of
the term "experts" as used in the Securities Act, or the rules and regulations
of the Commission thereunder.
Very truly yours,
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
/s/ John Chrin
-----------------------------------
Director
E-9
<PAGE>
Exhibit 23.4
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board
of Directors of FFVA Financial Corporation (the "Company") as Appendix IV to the
Joint Proxy Statement/Prospectus relating to the proposed merger of the Company
with and into One Valley Bancorp, Inc. contained in the Registration Statement
on Form S-4 dated the date hereof, and to the references to our firm and such
opinion in such Joint Proxy Statement/Prospectus. In giving such consent, we do
not admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended (the "Act"), or the
rules and regulations of the Securities and Exchange Commission thereunder (the
"Regulations"), nor do we admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "experts" as used in
the Act or the Regulations.
Sincerely,
/s/ Sandler O'Neill & Partners, L.P.
January 21, 1998
E-10
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned do hereby
constitute and appoint J. HOLMES MORRISON (whose address is 1512 Barberry Lane,
Charleston, West Virginia 25314) and MERRELL S. McILWAIN II (whose address is
1522 Mt. Vernon Road, Charleston, West Virginia 25314) and each of them
severally, the true and lawful agents and attorneys-in-fact (the "Agents" and,
severally, an "Agent") of the undersigned with full power to act, upon the terms
and conditions herein set forth, for and in the name, place and stead of the
undersigned in any way which the undersigned could do, if the undersigned were
personally present, to execute in their name, place and stead (in any such
capacity), all applications, certificates, letters, registration statements,
amendments to registration statements or other documents addressed to or filed
with the Securities and Exchange Commission which may be required in connection
with the registration under the Securities Act of 1933, as amended, of the
common stock of One Valley Bancorp, Inc., which may be issued to shareholders of
FFVA Financial Corporation, under the Agreement and Plan of Merger dated as of
December 16, 1997, by and between One Valley Bancorp, Inc., and FFVA Financial
Corporation, and to file the same with the Securities and Exchange Commission
and other appropriate agencies or departments, each of said attorneys and agents
to have power to act with or without the other, and to have full power and
authority to do and perform in the name and on behalf of each of the undersigned
directors every act whatsoever necessary or advisable to be done in the premises
as fully and to all intents and purposes as the undersigned may or could do in
person.
Dated this 16th day of December, 1997.
WITNESS the following signatures and seals:
E-11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ Phyllis H. Arnold (SEAL) /s/ Edward H. Maier (SEAL)
PHYLLIS H. ARNOLD EDWARD H. MAIER
/s/ Charles M. Avampato (SEAL) (SEAL)
CHARLES M. AVAMPATO J. HOLMES MORRISON
/s/ Robert F. Baronner (SEAL) (SEAL)
ROBERT F. BARONNER CHARLES R. NEIGHBORGALL, III
/s/ C. Michael Blair (SEAL) /s/ Robert O. Orders, Sr. (SEAL)
C. MICHAEL BLAIR ROBERT O. ORDERS, SR.
(SEAL) /s/ John L. D. Payne (SEAL)
DENNIS M. BONE JOHN L. D. PAYNE
/s/ James K. Brown (SEAL) /s/ Angus E. Peyton (SEAL)
JAMES K. BROWN ANGUS E. PEYTON
/s/ Nelle Ratrie Chilton (SEAL) (SEAL)
NELLE RATRIE CHILTON LACY I. RICE, JR.
(SEAL) /s/ Brent D. Robinson (SEAL)
H. RODGIN COHEN BRENT D. ROBINSON
/s/ Ray Marshall Evans, Jr. (SEAL) (SEAL)
RAY MARSHALL EVANS, JR. JAMES W. THOMPSON
(SEAL) (SEAL)
JAMES GABRIEL J. LEE VAN METRE, JR.
(SEAL) (SEAL)
PHILLIP H. GOODWIN RICHARD B. WALKER
(SEAL) (SEAL)
THOMAS E. GOODWIN H. BERNARD WEHRLE, III
(SEAL) /s/ John H. Wick, III (SEAL)
BOB M. JOHNSON JOHN H. WICK, III
(SEAL) /s/ Thomas D. Wilkerson (SEAL)
ROBERT E. KAMM, JR. THOMAS D. WILKERSON
(SEAL)
JOHN D. LYNCH
</TABLE>
E-12
<PAGE>
Exhibit 99.1
PROXY
One Valley Bancorp, Inc.
One Valley Square
Summers & Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
Michael A. Albert, John R. Lukens and Louis S. Southworth, II, or any one
of them, are hereby authorized to represent and to vote the stock of the
undersigned in One Valley Bancorp, Inc. at a Special Meeting of Shareholders to
be held March 11, 1998, and are authorized to vote upon such other business as
may properly come before the Special Meeting or any adjournment or postponement
thereof and to vote as specified in this Proxy all the shares of One Valley
Bancorp, Inc. which the undersigned would otherwise be entitled to vote if
personally present. The undersigned hereby revokes any previous proxies with
respect to the matters covered in this proxy.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Approve the Agreement and Plan of Merger dated
as of December 16, 1997, between One Valley |_| |_| |_|
Bancorp, Inc., and FFVA Financial Corporation
2. Approve the amendment to Increase the authorized
Common Stock of One Valley from forty million |_| |_| |_|
shares to seventy million shares
</TABLE>
E-13
<PAGE>
================================================================================
Unless otherwise specified on this Proxy, the shares represented by this
Proxy when properly executed will be voted "FOR" the propositions listed above
and described more fully in the Joint Proxy Statement/Prospectus of One Valley
Bancorp, Inc., and FFVA Financial Corporation, distributed in connection with
this Special Meeting.
Dated:
(Signature of Shareholder)
All joint owners must sign
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If more than one
trustee, all should sign.
The Board of Directors recommends a vote "FOR" the listed propositions.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
================================================================================
E-14
<PAGE>
Exhibit 99.2
PROXY
FFVA Financial Corporation
925 Main Street
Lynchburg, Virginia 24504
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
ON MARCH 10, 1998
The undersigned shareholder of FFVA Financial Corporation ("FFVA
Financial") hereby constitutes and appoints the Board of Directors, and each of
them, as the true and lawful proxies and attorneys-in-fact of the undersigned,
with full power of substitution in each of them, to represent and to vote, as
designated hereon, all shares of common stock, par value $.10 per share, of FFVA
Financial that the undersigned is entitled to vote at the Special Meeting of
Shareholders of FFVA Financial to be held at the Holiday Inn Select, 601 Main
Street, Lynchburg, Virginia, on March 10, 1998, at 10:00 a.m., local time, and
at any and all postponements and adjournments thereof. The undersigned hereby
revokes any Proxy previously given and acknowledges receipt of a copy of the
accompanying Joint Proxy Statement/Prospectus for the Special Meeting and Notice
of Special Meeting of Shareholders.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Approve the Agreement and Plan of Merger dated
as of December 16, 1997, between One Valley |_| |_| |_|
Bancorp, Inc., and FFVA Financial Corporation
2. Approve the provision to amend Article 10,
Section A of the Restated Articles of Incorporation
to provide for the merger of FFVA Financial |_| |_| |_|
Corporation with and into One Valley Bancorp,
Inc.
</TABLE>
E-15
<PAGE>
================================================================================
Unless otherwise specified on this Proxy, the shares represented by this
Proxy when properly executed will be voted "FOR" the propositions listed above
and described more fully in the Joint Proxy Statement/Prospectus of One Valley
Bancorp, Inc., and FFVA Financial Corporation, distributed in connection with
this Special Meeting.
Dated:
(Signature of Shareholder)
All joint owners must sign
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If more than one
trustee, all should sign.
The Board of Directors recommends a vote "FOR" the listed propositions.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
================================================================================
E-16
<PAGE>
