As filed with the Securities and Exchange Commission on June 18, 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)
West Virginia 6711 55-0609408
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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
CHARLES D. DUNBAR MARK J. MENTING
ELIZABETH OSENTON LORD SULLIVAN & CROMWELL
JACKSON & KELLY 125 Broad Street
1600 Laidley Tower New York, New York 10004
P. O. Box 553
Charleston, West Virginia 25322
MERRELL S. MCILWAIN II W. WAYNE HESLEP
ONE VALLEY BANCORP, INC. HESLEP & KEARNEY, P.C.
One Valley Square 210 S. Randolph Street
Summers and Lee Streets Lexington, Virginia 24450
P. O. Box 1793
Charleston, West Virginia 25326
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
====================================================================================================================================
Proposed Maximum Offering Proposed Maximum Amount of
Title of Securities to be Registered Amount to be Price Per Share (1) Aggregate Offering Registration Fee(1)
Common Stock, par value $10 per share Registered Price (1)
(including associated rights issued under the
Shareholder Protection Rights Plan)............. 1,913,941 $16.21 $31,024,983 $9,152
====================================================================================================================================
(1) Based upon the book value in the amount of $16.21 per share of the common stock of Summit Bankshares, Inc. as of June 11, 1998.
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.
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<PAGE>
SUMMIT BANKSHARES, INC.
2134 Raphine Road
Raphine, Virginia 24472
June 25, 1998
To the Shareholders of
Summit Bankshares, Inc.
You are cordially invited to attend the Special Meeting of
Shareholders of Summit Bankshares, Inc. ("Summit"), which will be held at The
Days Inn Hotel, 584 Oakland Circle, Raphine, Virginia, on July 24, 1998, at 1:00
p.m., local time.
At the Special Meeting, you will be asked to consider and vote
upon an Amended and Restated Agreement and Plan of Merger and the related Plan
of Merger (the "Merger Agreement"), pursuant to which Summit will be merged (the
"Merger") with and into a wholly owned subsidiary of One Valley Bancorp, Inc.
("One Valley"). At the effective time of the Merger, each share of issued and
outstanding common stock, par value $1.00 per share, of Summit ("Summit Common
Stock") will cease to be outstanding and will be converted into One Valley
common stock, par value $10.00 per share ("One Valley Common Stock"). The
exchange ratio of shares of One Valley Common Stock to be issued for shares of
Summit Common Stock will vary according to the average of One Valley's Common
Stock price determined as of a specified period.
Enclosed with this letter are a Notice of Special Meeting of
Summit's shareholders and a Proxy Statement/Prospectus, which describes in
detail the proposed Merger, the background of the Merger, and other related
information. Also enclosed is a proxy solicited by Summit's Board of Directors
in connection with the Special Meeting.
The Board of Directors has unanimously approved the Merger
Agreement and the proposed Merger as being in the best interests of Summit and
its shareholders and recommends that shareholders vote their shares "FOR" the
Merger Agreement. The affirmative vote of more than two-thirds of Summit's
outstanding shares entitled to vote is necessary to approve the Merger
Agreement. 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.
We urge you to consider carefully all of the materials in the
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,
W. Lowrie Tucker, III
Raphine, Virginia President and Chief Executive Officer
June 25, 1998
<PAGE>
SUMMIT BANKSHARES, INC.
Raphine, Virginia
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 24, 1998
The Special Meeting of Shareholders of Summit Bankshares, Inc.
("Summit") will be held on July 24, 1998, at The Days Inn Hotel, 584 Oakland
Circle, Raphine, Virginia, at 1:00 p.m., local time, for the purpose of
considering and voting upon the following:
1. To approve the Amended and Restated Agreement and Plan of
Merger and the related Plan of Merger (the "Merger Agreement"), dated as of May
7, 1998, as amended as of June 3, 1998, between Summit and One Valley Bancorp,
Inc. ("One Valley"), which agreement provides for the merger of Summit with and
into OV Subsidiary, Inc., a wholly owned subsidiary of One Valley (the
"Merger"). The Merger Agreement provides for the conversion of each share of
common stock of Summit into shares of common stock of One Valley. The exchange
ratio of shares of One Valley Common Stock to be issued for shares of Summit
Common Stock will vary according to the average of One Valley's Common Stock
price determined as of a specified period. The Merger Agreement is attached as
Appendix I to and is described in the accompanying Proxy Statement/Prospectus.
2. To act upon such other matters as may properly come before
the meeting or any adjournment or adjournments thereof.
Pursuant to the Virginia Stock Corporation Act (the "VSCA"),
holders of Summit Common Stock entitled to vote on approval of the Merger
Agreement have the right to dissent from the Merger and to demand payment of the
fair value of each such holder's shares of Summit Common Stock in the event the
Merger is consummated. A holder of Summit Common Stock who wishes to assert such
holder's dissenters' rights must (i) deliver to Summit, before such vote is
taken on the Merger Agreement, written notice of such holder's intent to demand
payment for such shares if the Merger is consummated, (ii) not vote such shares
in favor of approval of the Merger Agreement, and (iii) comply with the further
provisions of the VSCA in order to be entitled to receive in cash, if the Merger
is consummated, the fair value of such holder's Summit Common Stock. A vote
against approval of the Merger Agreement will not constitute written notice of
an intent to demand payment nor will a failure to vote against such approval
constitute a waiver of dissenters' rights unless the shareholder votes for the
merger or delivers a Proxy which does not vote against the Merger or to abstain.
A copy of the applicable provisions of the VSCA referred to above is set forth
in Appendix IV to the accompanying Proxy Statement/Prospectus, and a summary of
such provisions is set forth in the accompanying Proxy Statement/Prospectus
under "RIGHTS OF DISSENTING SHAREHOLDERS."
Only shareholders of record at the close of business on the
record date, June 19, 1998, are entitled to notice of and to vote at the Special
Meeting and any adjournments thereof. The affirmative vote of more than
two-thirds of Summit's outstanding shares of Common Stock entitled to vote is
necessary to approve the Merger Agreement. 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 at the Special
Meeting, Summit's Board of Directors may
<PAGE>
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 Proxy Statement/Prospectus at any time
before it has been voted at the Special Meeting.
By Order of the Board of Directors
W. Lowrie Tucker, III
President and Chief Executive Officer
Raphine, Virginia
June 25, 1998
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THE PROPOSALS TO ADOPT AND APPROVE THE MERGER AGREEMENT. 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>
Proxy Statement/Prospectus
PROXY STATEMENT
OF
SUMMIT BANKSHARES, INC.
FOR SPECIAL MEETING OF SHAREHOLDERS
-------------
ONE VALLEY BANCORP, INC.
PROSPECTUS
-------------
This Proxy Statement/Prospectus is being furnished to the
shareholders of Summit Bankshares, Inc. ("Summit") in connection with the
solicitation of proxies by the Board of Directors of Summit for use at the
Special Meeting of Shareholders of Summit to be held on July 24, 1998, at The
Days Inn Hotel, 584 Oakland Circle, Raphine, Virginia, at 1:00 p.m., local time.
At the Special Meeting, the shareholders will consider and vote upon the Amended
and Restated Agreement and Plan of Merger and related Plan of Merger dated May
7, 1998, as amended as of June 3, 1998 (the "Merger Agreement"), which provides
for the merger (the "Merger") of Summit with and into OV Subsidiary, Inc., a
wholly owned subsidiary of One Valley Bancorp, Inc. ("One Valley"). The Merger
Agreement provides for the conversion of each share of common stock of Summit
into shares of common stock, par value $10.00 per share, of One Valley ("One
Valley Common Stock"). The exchange ratio of shares of One Valley Common Stock
to be issued for shares of Summit Common Stock will vary according to the
average of One Valley's Common Stock price determined as of a specified period.
See "SUMMARY INFORMATION - The Merger" and "THE MERGER - General." This 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.
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 Proxy Statement/Prospectus and the accompanying form of
proxy are being mailed to shareholders of Summit on June 25, 1998.
The date of this Proxy Statement/Prospectus is June 25, 1998.
<PAGE>
No persons have been authorized to give any information or to
make any representations other than those contained in this 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 Summit. This 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 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
Summit since the date of this 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 Proxy
Statement/Prospectus relating to Summit and its subsidiaries has been supplied
by Summit and all information contained in this Proxy Statement/Prospectus
relating to One Valley and its subsidiaries has been supplied by One Valley.
AVAILABLE INFORMATION
One Valley is 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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by One Valley are hereby
incorporated by reference into this Proxy Statement/Prospectus:
1. One Valley's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
2. One Valley's Report on Form 10-Q filed May 15, 1998, with the Commission.
<PAGE>
3. One Valley's Reports on Form 8-K dated January 22, 1998,
March 11, 1998, March 16, 1998, March 26, 1998, March 30, 1998, May 26, 1998,
June 16, 1998, and June 17, 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
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 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 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 Proxy Statement/Prospectus or in any document
incorporated by reference in this 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 Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
of this Proxy Statement/Prospectus to the extent that a statement contained
herein or any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement/Prospectus.
This 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 July
17, 1998.
This 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, Summit and, assuming the
consummation of the Merger, a combined One Valley/Summit 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 Summit 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>
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TABLE OF CONTENTS
INTRODUCTION....................................................................................... 1
SUMMARY INFORMATION................................................................................ 2
The Merger.................................................................................... 2
The Parties................................................................................... 3
The Special Meeting of
Shareholders............................................................................. 3
Effective Date................................................................................ 4
Recommendation of Summit's
Board of Directors....................................................................... 4
Opinion of Summit's Financial
Advisor.................................................................................. 4
Federal Income Tax Consequences............................................................... 5
Accounting Treatment.......................................................................... 5
Conditions; Regulatory Approvals;
Termination.............................................................................. 5
Effect of the Merger on
Shareholders' Rights..................................................................... 6
Dissenters' Rights of Appraisal............................................................... 6
No Solicitation............................................................................... 6
Stock Option Agreement........................................................................ 6
Expenses...................................................................................... 7
Interests of Certain Persons in
the Merger............................................................................... 7
Market Value of Securities.................................................................... 7
Market Price and Dividend
Information.............................................................................. 7
Comparative Per Share Information............................................................. 7
SELECTED FINANCIAL DATA............................................................................ 10
One Valley Bancorp, Inc....................................................................... 10
Summit Bankshares, Inc........................................................................ 11
Pro Forma Selected Financial
Information.............................................................................. 12
THE SPECIAL MEETING OF
SHAREHOLDERS....................................................................................... 13
Matters to be Considered at
the Special Meeting...................................................................... 13
Record Date; Vote Required.................................................................... 13
Voting of Proxies; Revocability
of Proxies; Solicitation of
Proxies.................................................................................. 14
Dissenters' Rights of Appraisal............................................................... 14
THE MERGER......................................................................................... 14
General....................................................................................... 15
Operations and Management
After the Merger......................................................................... 16
Background of the Merger...................................................................... 16
Summit's Reasons for the
Merger................................................................................... 18
One Valley's Reasons for the
Merger................................................................................... 20
Opinion of Financial Advisor to
Summit................................................................................... 20
Conditions to Consummation of the
Merger; Waiver........................................................................... 22
No Solicitation of Transactions............................................................... 23
Stock Option Agreement........................................................................ 23
Termination................................................................................... 27
Certain Federal Income Tax
Consequences............................................................................. 28
Accounting Treatment.......................................................................... 29
Exchange of Certificates...................................................................... 29
Interests of Certain Persons in the
Merger.............................................................................. 30
Resales by Affiliates......................................................................... 30
Regulatory Approvals.......................................................................... 31
Acquisitions Generally........................................................................ 32
RIGHTS OF DISSENTING
SHAREHOLDERS....................................................................................... 32
EFFECT OF THE MERGER ON
SHAREHOLDERS' RIGHTS............................................................................... 35
General....................................................................................... 35
Antitakeover Provisions in
One Valley's Restated
Articles and Bylaws...................................................................... 35
Shareholder Protection Rights
Plan..................................................................................... 38
HISTORICAL COMPARATIVE
STOCK PRICES AND DIVIDENDS......................................................................... 39
One Valley.................................................................................... 39
Summit........................................................................................ 40
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i
<PAGE>
SUMMIT BANKSHARES, INC................................................... 41
Description of Business and
Properties..................................................... 41
Competition......................................................... 42
Employees........................................................... 42
Legal Proceedings................................................... 42
Voting Securities and Beneficial
Ownership...................................................... 42
Management's Discussion and
Analysis of Financial Condition
and Results of Operation....................................... 44
EXPERTS.................................................................. 55
VALIDITY OF SECURITIES................................................... 55
OTHER MATTERS............................................................ 55
SUMMIT BANKSHARES, INC.'S
FINANCIAL STATEMENTS
APPENDIX I -
AMENDED AND RESTATED
AGREEMENT AND PLAN OF
MERGER AND PLAN OF MERGER
APPENDIX II -
OPINION OF SCOTT &
STRINGFELLOW, INC.
APPENDIX III -
STOCK OPTION AGREEMENT
APPENDIX IV -
VIRGINIA CODE ss.ss. 13.1-728.8 TO
13.1-741
ii
<PAGE>
SUMMIT BANKSHARES, INC.
PROXY STATEMENT/PROSPECTUS
INTRODUCTION
This Proxy Statement/Prospectus and the accompanying proxy
(the "Proxy") are being furnished to the shareholders of Summit Bankshares, Inc.
("Summit") in connection with the solicitation of proxies by the Board of
Directors of Summit for a Special Meeting of Shareholders to be held at 1:00
p.m., local time, on July 24, 1998, at The Days Inn Hotel, 584 Oakland Circle,
Raphine, Virginia, and any postponements or adjournments thereof (the "Special
Meeting"), to consider and vote upon a proposal to approve the Amended and
Restated Agreement and Plan of Merger and related Plan of Merger (the "Merger
Agreement"), dated as of May 7, 1998, as amended as of June 3, 1998, by and
between One Valley Bancorp, Inc. ("One Valley") and Summit. The Merger Agreement
provides for the merger of Summit with and into OV Subsidiary, Inc., a wholly
owned subsidiary of One Valley (the "Merger").
This Proxy Statement/Prospectus and the Proxy will be first
sent or given to Summit shareholders on June 25, 1998.
The shares of Summit Common Stock represented by a Proxy will
be voted as directed if the Proxy is properly signed and received by Summit
prior to the Special Meeting. The Proxy will be voted "FOR" the approval of the
Merger Agreement 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 Special Meeting or any adjournment
or postponement thereof including, among other things, a motion to adjourn or
postpone the 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 Summit if any such
matters properly come before the Special Meeting. A person giving a Proxy may
revoke it any time before it is voted by notifying Summit in person, by giving
written notice to Summit of the revocation of the Proxy, by submitting to Summit
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 Summit at the close of business on
June 19, 1998 (the "Record Date") will be entitled to vote at the Special
Meeting.
1
<PAGE>
SUMMARY INFORMATION
The following is a brief summary of the matters to be
considered at the Special Meeting. 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 Proxy Statement/Prospectus.
Shareholders are urged to read carefully the entire Proxy Statement/Prospectus,
including the appendices hereto. The terms "One Valley" and "Summit" 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 Summit with
and into OV Subsidiary, Inc., a Virginia corporation being formed as a wholly
owned subsidiary of One Valley for purposes of the Merger. After the Merger, OV
Subsidiary, Inc., will be merged with and into One Valley. Upon consummation of
the Merger, Bank of Rockbridge (the "Bank"), a wholly owned subsidiary of
Summit, will become a wholly owned subsidiary of One Valley. After the Merger,
the name of the Bank will be changed to "One Valley Bank of Rockbridge."
At the effective time of the Merger, each share of issued and
outstanding common stock, par value $1.00 per share, of Summit ("Summit Common
Stock") will cease to be outstanding and will be converted into shares of One
Valley common stock ("One Valley Common Stock"). The exchange ratio (the
"Exchange Ratio") of shares of One Valley Common Stock to be issued for shares
of Summit Common Stock will vary according to One Valley's average Common Stock
price, based upon the closing price per share (the "Average Price") for the ten
trading days prior to the tenth calendar date prior to closing (the
"Determination Date"). The Exchange Ratio of One Valley Common Stock for each
share of Summit Common Stock will be as follows:
<TABLE>
<CAPTION>
<S> <C>
One Valley
Common Stock
Average Price Exchange Ratio
---------------------- ----------------------------
Less Than $33.88 1.425 to 1
$33.88 to $35.49 ($48.28 / Average Price) to 1
$35.50 to $40.50 1.36 to 1
$40.51 to $42.53 ($55.08 / Average Price) to 1
Greater Than $42.53 1.295 to 1
</TABLE>
Holders of fractional interests will receive cash 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 more than
two-thirds of the outstanding shares of Summit Common Stock is required to
approve the Merger Agreement. See "THE MERGER - Conditions to Consummation of
the Merger; Waiver."
2
<PAGE>
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 114 offices. Its other subsidiary is a real estate
management company that owns and operates the building housing One Valley's
headquarters. At March 31, 1998, One Valley reported total assets of
approximately $5.5 billion, loans of $3.5 billion, deposits of $4.3 billion, and
equity of $540 million. In addition to providing commercial and retail banking
services, One Valley provides trust services to its customers.
For more information about One Valley, reference is made to
One Valley's Form 10-K for the fiscal year ended 1997 and One Valley's Form 10-Q
for the three months ended March 31, 1998, 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.
Summit. Summit, a Virginia corporation, is a bank holding
company formed in 1996 for the purpose of acquiring all of the issued and
outstanding common stock of the Bank. The Bank, a Virginia banking corporation
headquartered in Raphine, Virginia, is in the principal business of attracting
retail deposits from the general public and investing those deposits, together
with funds generated from operations. Summit operates nine full service branches
in central Virginia. At March 31, 1998, Summit reported total assets of
approximately $199 million, loans of approximately $141 million and total
deposits of approximately $176 million.
Summit's executive offices are located at 2134 Raphine Road,
Raphine, Virginia 24472. Its telephone number is (540) 377-2355.
The Special Meeting of Shareholders
At the Special Meeting, holders of Summit Common Stock will be
asked to approve the Merger Agreement. If the Merger is consummated, each share
of Summit Common Stock will be converted into 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, cash will be paid for fractional shares,
which amount will be determined by multiplying such fraction by the last sale
price of One Valley Common Stock, as reported by the New York Stock Exchange
("NYSE") for the NYSE trading day immediately preceding the Effective Date.
Summit's Board of Directors has unanimously approved the Merger Agreement and
recommends that the shareholders of Summit vote "FOR" the Merger Agreement. See
"THE MERGER - Background of the Merger" and "- Summit's Reasons for the Merger."
Shareholders of record of Summit at the close of business on
the Record Date will be entitled to notice of and to vote at the Special
Meeting. Summit's shareholders are entitled to cast one vote for each share of
Summit Common Stock they own on the Record Date. To approve the Merger
Agreement, the affirmative vote
3
<PAGE>
of more than two-thirds of the issued and outstanding shares of Summit Common
Stock is required. As of the Record Date, the directors, executive officers and
affiliates of Summit owned 19.6% of the issued and outstanding Common Stock of
Summit. The directors and executive officers of Summit have entered into an
agreement with One Valley whereby they have agreed to vote their shares in favor
of the Merger Agreement. Accordingly, the management of Summit expects that such
shares will be voted "FOR" the approval of the Merger Agreement.
A Proxy for use by Summit's shareholders in connection with
the Special Meeting is enclosed with this Proxy Statement/Prospectus which was
mailed to shareholders on or about June 25, 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 in the discretion of the individuals named as proxies as to any
other matter that may come before the Special Meeting or any adjournment or
postponement thereof including, among other things, a motion to adjourn or
postpone the 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 Proxy
Statement/Prospectus, Summit is not aware of any business to be acted on at the
Special Meeting other than consideration of the Merger Agreement.
A person giving a Proxy may revoke it at any time before it is
voted by notifying Summit in person, by giving written notice to Summit of the
revocation of the Proxy, by submitting to Summit a subsequently dated Proxy or
by attending the Special Meeting and withdrawing the Proxy before it is voted at
the Special Meeting. See "THE SPECIAL MEETING OF 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 last of the conditions set forth in the Merger
Agreement have been satisfied or waived or such other date to which the parties
may agree in writing. Subject to the foregoing, it is currently anticipated that
the Merger will be consummated in the third quarter of 1998, although there can
be no assurances as to satisfaction of these conditions or the timing thereof.
Recommendation of Summit's Board of Directors
The Board of Directors of Summit, which has approved the
Merger Agreement by unanimous vote, believes it is in the best interests of
Summit and its shareholders and unanimously recommends its approval by Summit's
shareholders. See "THE MERGER-Background of the Merger" and "- Summit's Reasons
for the Merger."
Opinion of Summit's Financial Advisor
Scott & Stringfellow, Inc. ("Scott"), Summit's financial
advisor, has rendered its opinion to Summit's Board of Directors that as of May
7, 1998, an Exchange Ratio of 1.36 shares of One Valley Common Stock for each
share of Summit Common Stock is fair to Summit's shareholders from a financial
point of view. As
4
<PAGE>
discussed in "THE MERGER - Summit's Reasons for the Merger," Scott's opinion and
presentations were among the factors considered by Summit's Board in reaching
the determination to approve the Merger Agreement. On June 6, 1998, Scott
updated its opinion which is attached hereto as Appendix II and should be read
in its entirety with respect to the assumptions made, matters considered and
qualifications and limitations on the review undertaken by Scott in rendering
its opinion. See "THE MERGER - Opinion of Financial Advisor to Summit."
Federal Income Tax Consequences
It is anticipated that the Merger will constitute a
reorganization under Section 368(a) of the Internal Revenue Code, as amended,
and no gain or loss will be recognized by Summit's shareholders upon their
receipt of One Valley Common Stock solely in exchange for Summit Common Stock.
Upon receipt of cash for fractional shares of Summit Common Stock, Summit's
shareholders may recognize gain. 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 more than two-thirds
of the shares entitled to be voted by Summit'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 June 12, 1998. On June 12, 1998, One Valley filed an application seeking
approval of the Virginia Corporation Commission. See "THE MERGER - Regulatory
Approvals."
Under certain circumstances, Summit may notify One Valley of
an election to terminate the transaction contemplated by the Merger Agreement
during the five-day period commencing after the Determination Date if (i) the
Average Price is less than $28.00 and (ii) the quotient obtained by dividing the
Average Price by $35.00 shall be less than 90% of the quotient obtained by
dividing the SNL Southeast Bank Index on the Determination Date by the SNL
Southeast Bank Index on June 3, 1998. In this event, One Valley may either allow
termination of the transaction or increase the consideration to be received by
Summit's shareholders by increasing the Exchange Ratio to a number equal to
$40.61 divided by the Average Price. If One Valley elects to increase the
Exchange Ratio, the transaction will not terminate on account of Summit's
earlier election.
One Valley and Summit anticipate that the Merger will be
completed during the third 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 Meeting before the Merger is consummated, and if
any of the conditions of the Merger Agreement is not satisfied or
5
<PAGE>
waived, the Merger would not be consummated. See "THE MERGER - Conditions to
Consummation of the Merger; Waiver" and "- 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, Summit'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.
If the Merger Agreement is approved, Summit 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 Summit's shareholders are currently governed by the Virginia
Corporation Code and by Summit's Articles of Incorporation and Bylaws. See
"EFFECT OF THE MERGER ON SHAREHOLDERS' RIGHTS."
Dissenters' Rights of Appraisal
Holders of Summit Common Stock entitled to vote on approval of
the Merger Agreement have the right to dissent from the Merger and, upon
consummation of the Merger and the satisfaction of certain specified procedures,
to receive cash in respect of the fair value of each such holder's shares of
Summit Common Stock in accordance with the applicable provisions of the VSCA.
The procedures to be followed by dissenting shareholders are summarized under
"RIGHTS OF DISSENTING SHAREHOLDERS," and a copy of the applicable provisions of
the VSCA is set forth in Appendix IV to this Proxy Statement/Prospectus. Failure
to follow these provisions precisely may result in loss of a shareholder's
dissenters' rights.
In general, any dissenting shareholder who perfects statutory
dissenters' rights to be paid in cash the fair value of such holder's Summit
Common Stock will recognize gain or loss for federal income tax purposes.
No Solicitation
Summit 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 Summit or any of its subsidiaries. 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 Summit have entered into a Stock
Option Agreement (the "Option Agreement"), whereby Summit granted One Valley an
option (the "Option") to purchase, under certain circumstances, up to 440,000
shares of Summit Common Stock at a price of $45.00 per share representing up to
24.9% of the outstanding Summit Common Stock. None of the circumstances has
occurred as of the date of this Proxy Statement/Prospectus. See "THE MERGER -
Stock Option Agreement" and the Stock Option Agreement attached as Appendix III
hereto.
6
<PAGE>
Expenses
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, except that One Valley shall
bear the printing and mailing expenses of the Proxy materials.
Interests of Certain Persons in the Merger
Certain members of Summit'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 Summit Common Stock and
the equivalent market value per share of Summit Common Stock on May 6, 1998, the
last business day preceding public announcement of the signing of the Merger
Agreement and June 11, 1998. The equivalent market value per share of Summit
Common Stock indicated in the table is based upon an Exchange Ratio of 1.36
shares of One Valley Common Stock for each share of Summit Common Stock.
The market values per share of One Valley Common Stock and
Summit Common Stock are the per share closing prices on May 6, 1998, and for One
Valley Common Stock the per share closing price on June 11, 1998, as reported on
the NYSE. The market values per share of Summit Common Stock are based upon
transactions known to Summit involving the sale of Summit Common Stock. Summit
may not be aware of the terms and conditions of all of the sales of shares of
Summit Common Stock, and no assurances can be made that the prices reported
below are reflective of all such shares.
<TABLE>
<CAPTION>
<S> <C>
Summit
Equivalent Market
One Valley Summit Value Per Share
---------- ------ ---------------
May 6, 1998..................................................... $37.31 $35.00 $50.75
June 11, 1998................................................... $34.06 $ * $46.32
* Management of Summit is not aware of any trades since May 6, 1998.
</TABLE>
Shareholders are advised to obtain current market quotations
for One Valley Common Stock. It is expected that the market price of One Valley
Common Stock will fluctuate between the date of this Proxy Statement/Prospectus
and the date on which the Merger is consummated and thereafter.
Market Price and Dividend Information
For information concerning cash dividends paid by One Valley
and Summit, see "HISTORICAL COMPARATIVE STOCK PRICES AND DIVIDENDS."
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 Summit. The
7
<PAGE>
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 Proxy Statement/Prospectus, and with the separate financial
statements of both One Valley and Summit, including applicable notes, included
elsewhere, or incorporated by reference, in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
<S> <C>
ONE VALLEY
Pro Forma
Historical (1) Equivalent (2)
--------------------- ---------------
Book Value at Period End:
March 31, 1998 $16.50 $16.25
March 31, 1997 17.89 17.39
December 31, 1997 15.75 15.52
December 31, 1996 14.82 14.56
December 31, 1995 15.32 14.93
Cash Dividends Declared:
For the Three Months Ended
March 31, 1998 $ 0.21 $ 0.21
March 31, 1997 0.19 0.19
For the Year Ended
December 31, 1997 0.80 0.80
December 31, 1996 0.74 0.74
December 31, 1995 0.66 0.66
Earnings Per Share:
For the Three Months Ended
March 31, 1998 $ 0.52 $ 0.52
March 31, 1997 0.51 0.50
For the Year Ended
December 31, 1997 2.00 1.99
December 31, 1996 1.80 1.80
December 31, 1995 1.69 1.67
</TABLE>
(1) Restated to reflect the acquisition of FFVA Financial Corporation by One
Valley which occurred on March 30, 1998.
(2) Based on the pro forma information of One Valley and Summit combined, an
Exchange Ratio of 1.36 and the issuance of 1,826,638 shares of One Valley Common
Stock to acquire all of the outstanding common shares of Summit. The number of
shares to be issued as well as the Exchange Ratio may vary depending upon the
Average Price of One Valley Common Stock for the ten days prior to the tenth
calendar date prior to closing. See "THE MERGER - General."
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT
Pro Forma
Historical (1) Equivalent (2)
-------------------- ---------------
Book Value at Period End:
March 31, 1998 $ 15.92 $ 21.65
March 31, 1997 13.78 18.74
December 31, 1997 15.67 21.31
December 31, 1996 13.52 18.39
December 31, 1995 11.68 15.88
Cash Dividends Declared:
For the Three Months Ended
March 31, 1998 $ .40 $ 0.29
March 31, 1997 .30 0.26
For the Year Ended
December 31, 1997 .62 1.09
December 31, 1996 .50 1.01
December 31, 1995 .33 0.90
Earnings Per Share:
For the Three Months Ended
March 31, 1998 $ .70 $ 0.95
March 31, 1997 .60 0.82
For the Year Ended
December 31, 1997 2.60 3.54
December 31, 1996 2.37 3.22
December 31, 1997 1.83 2.49
</TABLE>
(1) Summit pays dividends on a semi-annual basis in January and July. The
information reflected herein is adjusted to reflect a 100% stock dividend
declared by Summit's Board of Directors in January 1997.
(2) Based on the assumed exchange ratio of one (1) share of Summit Common Stock
for 1.36 shares of One Valley Common Stock. Pro forma equivalent per share
information is calculated by multiplying the One Valley pro forma combined
information by the Exchange Ratio of 1.36 shares of One Valley Common Stock for
one share of Summit Common Stock except for cash dividends declared, which is
assumed to be the historical dividend rate of One Valley. The Exchange Ratio may
increase or decrease depending upon the Average Price of One Valley Common Stock
based upon the closing price per share of One Valley Common Stock for the ten
days prior to the tenth calendar date prior to closing. See "THE MERGER -
General."
9
<PAGE>
SELECTED FINANCIAL DATA
The following pages present selected financial information for
the years 1993 to 1997 and for the three months ended March 31, 1998 and 1997,
for One Valley and Summit which will be merged with and into One Valley pursuant
to the Merger Agreement. The following summary regarding One Valley and Summit
should be read in conjunction with the consolidated financial statements of One
Valley and Summit and notes thereto, respectively. Consolidated historical
financial and other data regarding One Valley and Summit at or for the three
months ended March 31, 1998 and 1997, have been prepared by One Valley and
Summit respectively without audit. In the opinion of management of One Valley
and Summit, 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 Summit at
and for the three months ended March 31, 1998, may not be indicative of results
as of and for the fiscal year ending December 31, 1998.
<TABLE>
<CAPTION>
<S> <C>
ONE VALLEY BANCORP, INC.
SELECTED FINANCIAL DATA
(Dollars in thousands except per share data)
3 Months Ended 3 Months Ended Year Ended Year Ended Year Ended
3/31/98 3/31/97 12/31/97 12/31/96 12/31/95
-----------------------------------------------------------------------------------------
Summary of Operations
Interest income 100,086 91,657 376,760 353,146 320,055
Interest expense 48,113 42,177 176,910 160,467 140,292
Net interest income 51,973 49,480 199,850 192,679 179,763
Provision for loan losses 2,594 1,458 7,531 5,264 5,887
Non-interest income 14,344 11,180 48,854 42,113 38,628
Non-interest expense 38,267 34,342 144,319 140,984 128,675
Net income 16,511 16,365 63,800 58,618 55,580
Per Share Data
Net income 0.52 0.51 2.00 1.80 1.69
Cash dividends 0.21 0.19 0.80 0.74 0.66
Book value 16.51 17.89 15.75 14.82 15.32
Average Balance Sheet Summary
Net loans 3,348,874 3,080,405 3,135,152 2,958,161 2,674,893
Investement securities 1,637,082 1,430,064 1,467,907 1,345,501 1,174,001
Total assets 5,342,897 4,847,761 4,945,505 4,625,907 4,168,873
Deposits 4,040,871 3,790,908 3,846,583 3,656,587 3,361,721
Long-term borrowings 47,057 49,889 52,315 21,951 19,026
Shareholders' equity 516,671 483,071 487,598 471,443 438,814
Selected Ratios
Average equity to assets 9.67% 9.96% 9.86% 10.19% 10.53%
Return on average assets 1.24% 1.35% 1.29% 1.27% 1.33%
Return on average equity 12.78% 13.55% 13.08% 12.43% 12.67%
Dividends declared as a % of net income 40.38% 37.25% 40.00% 41.11% 39.05%
<CAPTION>
Year Ended Year Ended
12/31/94 12/31/93
-------------------------------------
Summary of Operations
Interest income 280,763 276,129
Interest expense 109,680 114,512
Net interest income 171,083 161,617
Provision for loan losses 5,388 6,688
Non-interest income 37,474 41,005
Non-interest expense 127,652 132,284
Net income 50,914 43,301
Per Share Data
Net income 1.54 1.61
Cash dividends 0.60 0.54
Book value 13.81 12.43
Average Balance Sheet Summary
Net loans 2,462,509 2,293,436
Investement securities 1,164,445 1,162,499
Total assets 3,942,948 3,840,341
Deposits 3,272,721 3,228,528
Long-term borrowings 22,931 36,088
Shareholders' equity 359,966 321,403
Selected Ratios
Average equity to assets 9.13% 8.37%
Return on average assets 1.29% 1.13%
Return on average equity 14.14% 13.47%
Dividends declared as a % of net income 38.96% 33.54%
10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)
3 Months Ended 3 Months Ended Year Ended Year Ended Year Ended
3/31/98 3/31/97 12/31/97 12/31/96 12/31/95
-----------------------------------------------------------------------------
Summary of Operations
Interest income 3,902 3,614 15,112 13,985 12,386
Interest expense 1,759 1,667 7,012 6,530 6,056
Net interest income 2,143 1,947 8,100 7,455 6,330
Provision for loan losses 20 56 234 204 146
Non-interest income 422 291 1,378 1,137 999
Non-interest expense 1,214 1,031 4,379 4,025 3,083
Net income 941 812 3,486 3,178 2,453
Per Share Data
Net income 0.70 0.60 2.60 2.37 1.83
Cash dividends 0.40 0.30 0.62 0.50 0.33
Book value 15.92 13.78 15.67 13.52 11.68
Average Balance Sheet Summary
Net loans 138,932 127,532 132,173 117,734 108,651
Investement securities 45,908 43,709 45,575 46,446 40,491
Total assets 195,927 182,048 188,095 172,734 157,193
Deposits 173,412 162,632 167,748 154,695 140,905
Long-term borrowings 105 95 118 99 109
Shareholders' equity 21,218 18,334 19,461 16,723 14,562
Selected Ratios
Average equity to assets 10.83% 10.07% 10.35% 9.68% 9.26%
Return on average assets 1.92% 1.78% 1.85% 1.84% 1.56%
Return on average equity 17.74% 17.72% 17.91% 19.00% 16.85%
Dividends declared as a % of net income 57.17% 49.88% 23.87% 21.11% 17.81%
</TABLE>
11
<PAGE>
ONE VALLEY BANCORP, INC. AND SUMMIT BANKSHARES, INC.
Pro Forma Selected Financial Data
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
<S> <C>
3 Months Ended 3 Months Ended Year Ended Year Ended Year Ended
3/31/98 3/31/97 12/31/97 12/31/96 12/31/95
------------------------------------------------------------------------------------------
Summary of Operations
Interest income 103,988 95,271 391,872 367,131 332,441
Interest expense 49,872 43,844 183,922 166,997 146,348
Net interest income 54,116 51,427 207,950 200,134 186,093
Provision for loan losses 2,614 1,514 7,765 5,468 6,033
Non-interest income 14,766 11,471 50,232 43,250 39,627
Non-interest expense 39,481 35,373 148,698 145,009 131,758
Net income 17,452 17,177 67,286 61,796 58,033
Per Share Data
Net income 0.52 0.50 1.99 1.80 1.67
Cash dividends 0.21 0.19 0.80 0.74 0.66
Book value 16.25 17.39 15.52 14.56 14.93
Average Balance Sheet Summary
Net loans 3,487,806 3,207,937 3,267,325 3,075,895 2,783,544
Investement securities 1,682,990 1,473,773 1,513,482 1,391,947 1,214,492
Total assets 5,538,824 5,029,809 5,133,600 4,798,641 4,326,066
Deposits 4,214,283 3,953,540 4,014,331 3,811,282 3,502,626
Long-term borrowings 47,162 49,984 52,433 22,050 19,135
Shareholders' equity 537,889 501,405 507,059 488,166 453,376
Selected Ratios
Average equity to assets 9.71% 9.97% 9.88% 10.17% 10.48%
Return on average assets 1.26% 1.37% 1.31% 1.29% 1.34%
Return on average equity 12.98% 13.70% 13.27% 12.66% 12.80%
Dividends declared as a % of net income 40.38% 38.00% 40.20% 41.11% 39.52%
</TABLE>
12
<PAGE>
THE SPECIAL MEETING OF SHAREHOLDERS
Matters to be Considered at the Special Meeting
This Proxy Statement/Prospectus is being furnished by Summit
to its shareholders in connection with the solicitation of proxies by the Board
of Directors of Summit for use at the Special Meeting to be held at 1:00 p.m.,
local time, on July 24, 1998, at The Days Inn Hotel, 584 Oakland Circle,
Raphine, Virginia, and any adjournment or postponement thereof, to consider and
vote upon a proposal to approve the Merger Agreement and any other business as
may properly come before the Special Meeting.
THE BOARD OF DIRECTORS OF SUMMIT HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND BELIEVES THIS PROPOSAL TO BE IN THE BEST INTERESTS OF
SUMMIT AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS ITS APPROVAL BY SUMMIT'S
SHAREHOLDERS. SEE "THE MERGER - BACKGROUND OF THE MERGER" AND "- SUMMIT'S
REASONS FOR THE MERGER."
Record Date; Vote Required
The Board of Directors of Summit has fixed the close of
business on June 19, 1998, as the Record Date for determining shareholders
entitled to notice of and to vote at the Special Meeting, and accordingly, only
holders of record of Summit Common Stock at the close of business on that day
will be entitled to notice of and to vote at the Special Meeting. The number of
shares of Summit Common Stock outstanding on the Record Date was 1,343,116, each
of such shares being entitled to one vote.
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 more than two-thirds of the outstanding shares of Summit 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.
The directors and executive officers of Summit (including
certain of their related interests) beneficially own, as of the Record Date, and
are entitled to vote at the Special Meeting 19.6% of the outstanding shares of
Summit Common Stock. These individuals entered into an agreement with One Valley
whereby they have agreed to vote their shares "FOR" approval of the Merger
Agreement.
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.
13
<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 Summit
in person; (ii) giving written notice to Summit of the revocation of the Proxy;
(iii) by submitting to Summit 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 in the discretion of the
individuals named as Proxies will be voted as to any other matter that may come
before the Special Meeting or any adjournment or postponement thereof including,
among other things, a motion to adjourn or postpone the 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 Summit. Directors, officers
and employees of Summit may solicit Proxies from Summit'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 Summit except that
One Valley shall bear the printing and mailing expenses of the proxy materials.
Dissenters' Rights of Appraisal
Holders of Summit Common Stock entitled to vote on approval of
the Merger Agreement have the right to dissent from the Merger and, upon
consummation of the Merger and the satisfaction of certain specified procedures,
to receive cash in respect of the fair value of each dissenting holder's shares
of Summit Common Stock in accordance with the applicable provisions of the VSCA.
The procedures to be followed by dissenting shareholders are summarized under
"RIGHTS OF DISSENTING SHAREHOLDERS," and a copy of the applicable provisions of
the VSCA is set forth in Appendix IV to this Proxy Statement/Prospectus. Failure
to follow these provisions precisely may result in loss of a shareholder's
dissenters' rights.
In general, any dissenting shareholder who perfects statutory
dissenters' rights to be paid in cash the fair value of such holder's Summit
Common Stock will recognize gain or loss for federal income tax purposes.
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 PROXY STATEMENT/PROSPECTUS.
14
<PAGE>
General
On May 7, 1998, One Valley and Summit entered into the Merger
Agreement which provides for the merger of Summit with and into OV Subsidiary,
Inc., a wholly owned subsidiary of One Valley. On June 3, 1998, One Valley and
Summit amended the Merger Agreement to provide for an increase or decrease in
the Exchange Ratio based upon the average of One Valley's stock price over a
certain period of time and to provide for Summit's termination of the
transaction contemplated by the Merger Agreement in the event the average of One
Valley's stock price declines below a certain level and subject to One Valley's
election to increase the consideration to be paid for each share of Summit
Common Stock.
At the effective time of the Merger, each share of issued and
outstanding Summit Common Stock will cease to be outstanding and will be
converted into shares of One Valley Common Stock. The Exchange Ratio of shares
of One Valley Common Stock to be issued for shares of Summit Common Stock will
vary according to One Valley's average Common Stock price, based upon the
Average Price for the ten trading days prior to the tenth calendar date prior to
the Determination Date. The Exchange Ratio of One Valley Common Stock for each
share of Summit Common Stock will be as follows:
<TABLE>
<CAPTION>
<S> <C>
One Valley
Common Stock
Average Price Exchange Ratio
----------------------- ----------------------------
Less Than $33.88 1.425 to 1
$33.88 to $35.49 ($48.28 / Average Price) to 1
$35.50 to $40.50 1.36 to 1
$40.51 to $42.53 ($55.08 / Average Price) to 1
Greater Than $42.53 1.295 to 1
</TABLE>
In lieu of fractional shares, each shareholder of Summit, 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 NYSE on the business day immediately prior to the Effective Date of the
Merger.
The affirmative vote of more than two-thirds of the
outstanding shares of Summit Common Stock entitled to vote is required to
approve the Merger Agreement.
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 0.2%, 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
3.0% of Summit's operating expenses. During the second quarter of 1998, One
Valley recognized non-recurring expenses of $.1 million related to the
consolidation and growth of its expanding banking operations.
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<PAGE>
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 third 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 continue to operate the Bank under the name, "One Valley Bank of
Rockbridge."
After the Merger, the Bank's current directors and officers
shall continue as the Bank's directors and officers and shall hold office as
prescribed in the Bank's bylaws and under applicable law until their successors
are elected and qualified. In addition, Laurance G. Jones and William M. Kidd,
who are officers of One Valley, will be added to the Bank's Board of Directors.
After the Effective Date of the Merger, One Valley shall, by action of its Board
of Directors, elect W. Lowrie Tucker, III, President and Chief Executive Officer
of Summit, as a member of One Valley's Board of Directors. Additionally, at its
Annual Meeting of Shareholders in April, 1999, management of One Valley shall
nominate and recommend Mr. Tucker for a three-year term as a member of One
Valley's Board of Directors. See "- Interests of Certain Persons in the Merger."
After the Effective Date, One Valley intends to integrate the
benefit plans of the Bank with those of One Valley and eventually make available
to all employees and officers of the Bank coverage under the benefit plans
generally available to One Valley's employees and officers (including pension,
401(k), and health and hospitalization) on the terms and conditions available to
similarly situated employees and officers of One Valley.
Background of the Merger
The Bank, organized in 1933, is a Virginia banking corporation
headquartered in Raphine, Virginia, and generally operates as a traditional
bank. The Bank also has one location in and one location near the City of
Lexington, Virginia, and locations at Brownsville, Buena Vista, Fairfield,
Glasgow and Greenville, Virginia. The Bank also has a loan office in Covington,
Virginia. The Bank's primary market area includes the cities of Lexington and
Buena Vista and all or a portion of Augusta and Rockbridge Counties in Virginia.
The Bank offers all services traditionally offered by
full-service commercial banks, including commercial and individual demand and
time deposit accounts, commercial and individual loans, credit card and drive-in
banking services.
During 1996 and 1997, Summit engaged in various discussions
relating to possible acquisitions of other financial institutions by Summit. 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. For a
variety of reasons, no final agreements were reached with such other
institutions.
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The Board of Directors and management of Summit recognized
that due to the Bank's substantial market share in its market area, growth
opportunities could be maximized by affiliating with another banking
organization such as One Valley. The Board of Directors and management of Summit
assessed the foregoing and other developments and their significance to Summit
and its shareholders.
In light of the foregoing, the Board of Directors, in February
1998, decided to undertake a comprehensive study of Summit's future and the
strategic options available to Summit. In March 1998, the Board of Directors
employed Scott to provide business and financial advice regarding the strategic
future of Summit. With the assistance of Scott, the Board of Directors reviewed
the economic and competitive conditions in the market areas of the Bank, changes
in the banking 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 stock prices in coming years. The Board
of Directors also analyzed the history and market performance of Summit since it
was formed in 1996.
The Board of Directors considered several options for the
future of Summit, including: (i) remaining independent and seeking to generate
growth and added profits by expanding and diversifying Summit'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 holding company. The Board reviewed
each option and concluded, in light of current business conditions, Summit'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 Summit 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 Summit Board directed Scott to assist in identifying
financial institutions that it believed would have an interest in a business
combination with Summit as well as have the financial resources necessary to
successfully complete such a transaction. On March 25, 1998, Scott met with the
Summit Board and identified and analyzed several companies it believed met such
conditions. Scott also reviewed with the Summit Board potential terms and
structures of acquisition transactions. Scott was instructed to open discussions
with One Valley regarding a possible merger. The Summit Board felt that One
Valley was the best merger partner based upon the information supplied by Scott.
Throughout the foregoing process, management advised and
informed the Board of Directors of Summit of developments and was directed by
the Board to pursue discussions.
On April 29 and May 1, 1998, the Board of Directors and Scott
reviewed the proposal of One Valley and met with Scott and Summit's legal
counsel to discuss and review the final proposal and terms of the Merger
Agreement. Scott presented a detailed analysis of the final proposal to the
Board of Directors and provided its oral opinion that an Exchange Ratio of 1.36
was fair to Summit's shareholders from a financial point of view.
On the basis of the independent judgment of the members of the
Board of Directors of Summit, and the opinion of Scott that the One Valley
proposal was fair to Summit's shareholders from a financial point of view, the
Board of Directors concluded that One Valley's offer was in the best interests
of Summit and its shareholders. Accordingly, for all of the reasons discussed
above, on May 7, 1998, Summit's Board of Directors accepted
17
<PAGE>
One Valley's offer and authorized execution of the Merger Agreement. After May
7, 1998, the Summit Board became concerned with fluctuations of stock prices of
bank holding companies generally, including the price of One Valley's Common
Stock. As a result, on June 3, 1998, One Valley and Summit amended the Merger
Agreement to provide for an increase or decrease in the Exchange Ratio depending
upon the Average Price of One Valley Common Stock. Additionally, the amendment
allows Summit to terminate the Merger Agreement in certain circumstances. See
"THE MERGER - General."
One Valley's strategic plan contemplates expansion through
acquisition, with a particular focus on central Virginia. At a meeting on April
28, 1998, the possible acquisition of Summit was discussed at a special meeting
of the Merger and Acquisition Committee of the One Valley Board of Directors.
Summit was regarded as an attractive acquisition that advances One Valley's
strategic plan and was consistent with One Valley's financial goals.
Accordingly, on May 7, 1998, the Board of Directors of One Valley, after
consideration of presentations by management and counsel, and after discussion
of the transaction, approved the Merger Agreement as in the best interests of
One Valley and its shareholders.
Summit's Reasons for the Merger
In reaching its conclusion to approve the Merger Agreement,
the Summit Board considered a number of factors. The Summit Board did not assign
any relative or specific weights to the factors considered. Among other things,
the Summit Board considered: (i) the Merger consideration in relation to the
book value, assets and earnings of Summit and One Valley; (ii) information
concerning the financial condition, results of operations and prospects of
Summit 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 Scott as to the fairness of the 1.36 exchange
ratio to Summit's shareholders from a financial point of view.
The Summit Board believes that the terms of the Merger
Agreement, which are the product of arms-length negotiations between One Valley
and Summit, are in the best interests of Summit and its shareholders. In the
course of reaching its determination, the Summit 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 Summit employees, customer service
and depth of One Valley management.
In reaching its determination to approve the Merger Agreement,
the Summit Board considered various factors it deemed material, including:
(a) The Summit Board analyzed information with respect to the
financial condition, results of operations, businesses and prospects of Summit
and One Valley. In this regard, the Summit Board analyzed the options of having
Summit 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 Summit shares on a stand-alone basis under business
strategies which could be reasonably implemented by Summit.
(b) The Summit Board considered the oral opinion (which was
subsequently confirmed in writing) of Scott that, as of May 7, 1998, the 1.36
exchange ratio was fair to Summit's shareholders from a financial point of view.
See "- Opinion of Financial Advisor to Summit."
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<PAGE>
(c) The Summit 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 Summit Board at its regular
board meetings and was also discussed between the Summit Board and Summit's
various advisors.
(d) The Summit Board considered the other terms of the Merger
Agreement, including the tax-free nature of the transaction.
(e) The Summit Board considered the detailed financial
analyses and other information with respect to Summit and One Valley discussed
by Scott, as well as the Summit Board's own knowledge of Summit, One Valley and
their respective businesses. In this regard, the latest publicly-available
financial and other information for Summit and One Valley were analyzed,
including a comparison to publicly-available financial and other information for
other similar institutions.
(f) The Summit Board considered the value of Summit Common
Stock continuing as a stand-alone entity compared to the effect of Summit
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 Summit and Scott and various third parties and the belief of the Summit
Board and management that the Merger offered the best transaction available to
Summit and its shareholders.
(g) The Summit 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.
Upon completion of the Merger, former shareholders of Summit
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
March 31, 1998, One Valley had $5.5 billion in total assets, and operated 10
affiliate banks with 78 locations in West Virginia and one affiliate bank with
36 locations in Virginia. When the Merger is consummated, shareholders of Summit
will receive, in the aggregate (assuming an Exchange Ratio of 1.36), 1,826,638
shares of One Valley Common Stock. If the Merger had been completed on March 31,
1998, and assuming an Exchange Ratio of 1.36, Summit's shareholders would have
received 5.3% of the 34,565,513 shares of One Valley Common Stock that would
have been outstanding. Based upon financial data as of March 31, 1998, on a pro
forma consolidated basis 3.5% of assets, 4.0% of deposits, 5.4% of net income,
and 3.8% of shareholders' equity will be attributable to Summit. If the Merger
had been completed on March 31, 1998, One Valley would have had approximately
$5.7 billion in total assets, approximately $4.4 billion in total deposits and
approximately $3.7 billion in total loans.
The foregoing discussion of the information and factors
considered by the Summit Board is not intended to be exhaustive, but constitutes
the material factors considered by the Summit Board. In reaching its
determination to approve and recommend the Merger Agreement, the Summit 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 Scott referred to above, the
19
<PAGE>
Summit Board approved and adopted the Merger Agreement and the transactions
contemplated thereby as being in the best interests of Summit 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, the acquisition of 15 additional
branches in February 1998, from Wachovia Corporation, and the acquisition of
FFVA Financial Corporation in central 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 Summit; (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
Summit and One Valley; (vi) the financial terms of other recent business
combinations in the banking industry; and (vii) the regulatory approval process.
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 Merger Agreement, considering, among other things, the matters discussed
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 Summit
In developing its Opinion, Scott reviewed and analyzed: (i)
the Merger Agreement; (ii) the Registration Statement and this Proxy Statement /
Prospectus; (iii) Summit's audited financial statements for the three years
ended December 31, 1997; (iv) Summit's unaudited financial statements for the
quarters ended March 31, 1998 and 1997, and other internal information relating
to Summit prepared by Summit's management; (v) information regarding the trading
market for Summit Common Stock and One Valley Common Stock and the price ranges
within which the respective stocks have traded; (vi) the relationship of prices
paid to relevant financial data such as net worth, earnings, deposits and assets
in certain community bank and bank holding company mergers and acquisitions in
Virginia in recent years; (vii) One Valley's annual reports to shareholders and
its audited financial statements for the three years ended December 31, 1997;
and (viii) One Valley's unaudited financial statements for the quarters ended
March 31, 1998 and 1997 and other internal information relating to One Valley
prepared by One Valley's management. Scott has discussed with members of the
Summit's and One Valley's management past and current business operations, the
background of the Merger, the reasons and basis for the Merger, results of
regulatory examinations, and the business and future prospects of Summit and One
Valley individually and as a combined entity, as well as other matters relevant
to its inquiry. Scott has conducted such other studies, analysis and
investigations particularly of the banking industry, and considered such other
information as it deemed appropriate, the material portion of which is described
below. Finally, Scott also took into account its
20
<PAGE>
assessment of general economic, market and financial conditions and its
experience in other transactions, as well as its experience in securities
valuations and knowledge of the commercial banking industry generally.
Scott relied without independent verification upon the
accuracy and completeness of all of the financial and other information reviewed
by it and discussed with it for purposes of its Opinion. With respect to
financial forecasts reviewed by Scott in rendering its Opinion, Scott assumed
that such financial forecasts were reasonably prepared on the basis reflecting
the best currently available estimates and judgment of the managements of Summit
and One Valley as to the future financial performance of Summit and One Valley,
respectively. Scott did not make an independent evaluation or appraisal of the
assets or liabilities of Summit and One Valley nor was it furnished with any
such appraisal.
Scott evaluated the financial terms of the transaction using
standard valuation methods, including a discounted cash flow analysis, a market
comparable analysis, a comparable acquisition analysis, and a dilution analysis.
Discounted Cash Flow Analysis. Scott performed a discounted
cash flow analysis under various projections to estimate the fair market value
of Summit Common Stock. Among other things, Scott considered a range of asset
and earnings growth for Summit of between 4.00% and 6.00% and a required equity
capital level of 8.00% of total assets. A range of discount rates from 10.21% to
12.21% was applied to the cash flows resulting from the projections during the
first five years and the residual values. The residual values were estimated by
capitalizing the projected final year earnings by the discount rates, less the
projected long-term growth rate of Summit's earnings. The discount rates, growth
rates and capital levels were chosen based on what Scott, in its judgment,
considered to be appropriate taking into account, among other things, Summit's
past and current financial performance and conditions, the general level of
inflation, rates of return for fixed income and equity securities in the
marketplace generally and particularly in the banking industry. The discounted
cash flow analysis indicated a reference range of $30.63 to $38.68 per share for
Summit Common Stock. These values compare to the value of $50.75 per share of
consideration for each share of Summit Common Stock as of May 6, 1998.
Accordingly, the present value of Summit Common Stock was calculated at less
than the value of the consideration to be received from One Valley pursuant to
the Merger Agreement.
Comparable Acquisition Analysis. Scott compared the
relationship of prices paid to relevant financial data such as tangible net
worth, assets, deposits and earnings in 16 community bank and bank holding
company mergers and acquisitions in Virginia since January 1, 1996, representing
all such transactions known to Scott to have occurred during this period with
the proposed Merger and found the consideration to be received from One Valley
to be within the relevant pricing ranges acceptable for such recent
transactions. Specifically, based upon the most recent transactions announced in
Virginia since January 1, 1996, other than the Merger, the average price to
tangible book value in these transactions was 2.40x, compared with 3.29x for the
Merger; the average price to earnings ratio was 21.47x, compared with 19.83x for
the Merger; the average deal price to deposits was 28.42%, compared with 40.06%
for the Merger; the average deal price to assets was 24.54%, compared with
35.19% for the Merger; and the average tangible book premium to core deposits
was 19.07%, compared to 31.02% for the Merger. For purposes of computing the
information with respect to the Summit Merger, $50.75 per share of consideration
for each share of Summit Common Stock was used.
Analysis of One Valley Peer Group. Scott analyzed the
performance and financial condition of One Valley relative to the Bank Peer
Group consisting of CCB Financial Corporation, Centura Banks, Inc.,
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<PAGE>
City Holding Company, Crestar Financial Corporation, F&M National Corporation.,
First Citizens BancShares, Inc., First Virginia Banks, Inc., MainStreet
BankGroup, Inc., Mercantile Bankshares Corporation, United Bankshares, Inc., and
WesBanco, Inc. Certain financial information compared included, among other
things, information relating to tangible equity to assets, loans to deposits,
net interest margin, nonperforming assets, total assets, and efficiency ratio.
Additional valuation information compared for the trailing twelve month period
ended March 31, 1998, and closing stock prices as of May 6, 1998, was (i) price
to book value ratio which was 2.26x for One Valley, compared to an average of
2.71x for the Bank Peer Group, (ii) price to last twelve months earnings ratio
which was 17.94x for One Valley, compared to an average of 20.90x for the Bank
Peer Group; (iii) return on average assets which was 1.28% for One Valley,
compared to an average of 1.33% for the Bank Peer Group; (iv) return on average
equity which was 13.50% for One Valley, compared to an average of 14.00% for the
Bank Peer Group; and (v) a dividend yield of 2.10% for One Valley, compared to
an average of 1.95% for the Bank Peer Group.
Dilution/Accretion Analysis. Based upon publicly available
financial information on Summit and One Valley, Scott considered the effect of
the transaction on One Valley and Summit. The immediate effect on One Valley was
to decrease earnings per share by $0.01 or 0.60% and to decrease book value per
share by $0.26 or 1.65%. The effect on Summit under the same assumptions is to
increase dividends per share to $1.14 and to increase the May 6, 1998 market
value of Summit of $35.00 per share to $50.75. This dilution analysis does not
take into account the long-term benefits for the combined companies resulting
from the combination. Scott concluded from this analysis that the transaction
would have a positive effect on Summit and Summit Common Stock shareholders in
that historical dividends per share and market value per share of One Valley
Common Stock to be received by Summit shareholders would represent an increase
after giving effect of the exchange ratio.
The summary set forth above includes the material factors
considered, but does not purport to be a complete description of the
presentation by Scott to the Summit Board or of the analyses performed by Scott.
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 summary description. Accordingly, notwithstanding
the separate factors discussed above, Scott believes that its analyses must be
considered as a whole and that selecting portions of its analysis and of the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying its Opinion. As a
whole, these various analyses contributed to Scott's opinion that the terms of
the Merger Agreement are fair from a financial point of view to Summit's
shareholders.
Pursuant to an engagement letter dated May 7, 1998 between
Summit and Scott, in exchange for its services, Scott will receive a fee equal
to 0.50% of the total market value of the consideration received by Summit
shareholders, which equates to a fee of approximately $350,000 and is payable at
closing.
Conditions to Consummation of the Merger; Waiver
The Merger will occur only if holders of more than two-thirds
of the issued and outstanding shares of Summit Common Stock approve the Merger
Agreement. 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 Summit contained in the Merger
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<PAGE>
Agreement being true and correct in all material respects on the Effective Date;
(iii) receipt of a legal opinion from counsel regarding certain federal tax
aspects of the Merger; (iv) 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; and (v)
One Valley's receipt of an opinion from Ernst & Young, LLP, that the Merger will
be accounted for under the "pooling of interests" method of accounting.
One Valley and Summit 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 Commonwealth of 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 third quarter of 1998. The
Board of Directors of either One Valley or Summit may terminate the Merger
Agreement if the Effective Date does not occur on or before midnight on January
31, 1999. See "- Exchange of Certificates" and "- Termination."
No Solicitation of Transactions
Pursuant to the Merger Agreement, Summit and its directors,
officers, representatives or agents may not, directly or indirectly, take any
action to solicit or encourage any inquiries or proposals with respect to, or
engage in any negotiations concerning, or provide any confidential information
to, or have any discussions with any person relating to, any acquisition
proposal.
Stock Option Agreement
In connection with the Merger Agreement, One Valley and Summit
entered into a Stock Option Agreement, dated as of May 8, 1998 (the "Option
Agreement"). Pursuant to the Option Agreement, Summit granted One Valley an
option (the "Option") to purchase, subject to adjustments in certain
circumstances, up to 440,000 fully paid and non-assessable shares of Summit
Common Stock (the "Option Shares") at a price per share equal to $45.00.
Subject to applicable law and regulatory restrictions, One
Valley may exercise the Option, in whole or in part, but only if both an
Initial Triggering Event and a Subsequent Triggering Event (both as defined
below) have occurred prior to the occurrence of an Exercise 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 Subsequent
Triggering 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
is in material or willful breach of any of its covenants or agreements in
the Merger Agreement.
As used in the Option Agreement, "Exercise Termination Event"
means each of the following: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the terms of the Stock
Option Agreement if such termination occurs prior to the occurrence of an
Initial Triggering Event (except for termination in certain circumstances as
provided in the Merger Agreement, a "Listed Termination") or (iii) the passage
of 14 months (or such longer period as provided in
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<PAGE>
the Stock Option Agreement) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a Listed
Termination.
As used in the Option Agreement, "Initial Triggering Event"
means any of the following events or transactions occurring on or after the date
of signing the Option Agreement:
(i) Summit or the 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 Summit 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 consolidation, or any similar transaction involving Summit or the
Bank, (B) a purchase, lease or other acquisition of all or substantially all of
the assets or deposits of Summit or the 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 Summit
or the Bank, provided that the term "Acquisition Transaction" does not include
any internal merger or consolidation involving only Summit and the Bank;
(ii) 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
Summit Common Stock;
(iii) The holders of Summit Common Stock shall not have
approved the Merger Agreement at the Special Meeting or the 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 made, or disclosed an
intention to make, a bona fide proposal to engage in an Acquisition Transaction;
(iv) The Summit Board of Directors shall have withdrawn or
modified (or publicly announced an intention to withdraw or modify) in any
manner adverse in any respect to One Valley its recommendations that the
shareholders of Summit approve the transactions contemplated by the Merger
Agreement, or Summit or the Bank shall have authorized, recommended, proposed
(or publicly announced an intention to do so) an agreement to engage in an
Acquisition Transaction with any person other than One Valley or any of its
subsidiaries or affiliates;
(v) Any person other than One Valley or any One Valley
subsidiary shall have made a proposal to Summit or its shareholders to engage in
an acquisition transaction, and the proposal has been publicly announced;
(vi) Any person other than One Valley or any One Valley
subsidiary or affiliate shall have filed with the SEC a registration statement
or tender offer materials with respect to a potential exchange or tender offer
that would constitute an Acquisition Transaction or have filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an exchange
offer;
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<PAGE>
(vii) Summit shall have wilfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, and following such breach One Valley would be entitled
to terminate the Merger Agreement (whether immediately or after giving notice or
passage of time or both); or
(viii) Any person other than One Valley or any One Valley
subsidiary or affiliate shall have filed an application or notice with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") or
other federal or state bank regulatory or antitrust authority, if the
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
As used in the Option Agreement, "Subsequent Triggering 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 20%
or more of the then outstanding shares of Summit Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) except that the percentage referred to in the definition of
Acquisition Transaction shall be 20%.
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 Summit a written notice (the date of which being hereinafter referred to as
the "Notice Date") specifying (i) the total number of shares of Summit 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 60 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,
Summit 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 Summit Common Stock. Certain other regulatory
approvals may also be required before such an acquisition could be completed.
In addition, any shares of Summit 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 Summit Common Stock by reason of stock dividends, splits, 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 Summit 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 Summit 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 Summit
Common Stock subject to the Option shall be adjusted so that, after such
issuance,
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it equals 24.9% of the number of shares of Summit Common Stock then issued and
outstanding, after giving effect to any shares subject to or issued pursuant to
the Option.
At any time within 12 months after the occurrence of a
Repurchase Event (as defined below) at the request of One Valley, Summit (or any
successor thereto) must repurchase from One Valley (i) the Option and (ii) all
shares of Summit 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 Summit 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 Summit 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 Summit
or be acquired by Summit and Summit is the continuing or surviving or acquiring
corporation, but, in connection with such merger, the then outstanding shares of
Summit 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 Summit 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
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, Summit.
One Valley may, at any time following a Repurchase Event and
prior to the occurrence of a Exercise 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 Summit in exchange for
a cash fee equal to the Surrender Price; provided, however, that One Valley may
not exercise such right if Summit has repurchased the Option (or any portion
thereof) or any Option Shares as described above. The "Surrender Price" will be
equal to $4 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.
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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 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
Summit prior to the Merger, even if such persons were prepared to offer to pay
consideration to Summit's 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 Summit and One Valley, no event
giving rise to the right to exercise the Option has occurred as of the date of
this Proxy Statement/Prospectus.
Termination
The Merger Agreement may be terminated at any time prior to
the Effective Date, whether before or after its approval by the shareholders of
Summit or One Valley: (i) at any time prior to the Effective Time by the mutual
consent of One Valley and Summit if the Board of Directors of each so determines
by vote of a majority of the members of its entire Board; (ii) at any time prior
to the Effective Time by One Valley or Summit if its Board of Directors so
determines by vote of a majority of the members of its entire Board in the event
of either (a) a breach by the other party of any representation or warranty
contained therein, which breach cannot be or has not been cured within 30 days
after giving written notice to the breaching party of such breach; or (b) a
breach by the other party of any of the covenants or agreements contained
therein, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach, provided that
any such breach would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect; (iii) by either
Summit or One Valley upon written notice to the other if the closing date does
not occur before midnight on January 31, 1999; (iv) by Summit or One Valley if
its Board of Directors so determines by a vote of a majority of the members of
its entire Board in the event (a) the approval of any governmental authority
required for consummation of the Merger and the other transactions contemplated
by this Merger Agreement shall have been denied by final nonappealable action of
such governmental authority or (b) any required shareholder approval is not
obtained; and (v) at any time prior to the Special Meeting by One Valley if the
Summit Board shall have failed to make its recommendation to shareholders.
Under certain circumstances, Summit may notify One Valley of
an election to terminate the transaction contemplated by the Merger Agreement
made during the five-day period commencing after the Determination Date if (i)
the Average Price is less than $28.00 and (ii) the quotient obtained by dividing
the Average Price by $35.00 shall be less than 90% of the quotient obtained by
dividing the SNL Southeast Bank Index on the Determination Date by the SNL
Southeast Bank Index on June 3, 1998.
In this event, One Valley may either allow termination of the
transaction or increase the consideration to be received by Summit's
shareholders by increasing the Exchange Ratio to a number equal to $40.61
divided by the Average Price. If One Valley elects to increase the Exchange
Ratio, the transaction will not terminate on account of Summit's earlier
election.
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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.
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 or in the opinion of Sullivan &
Cromwell set forth below may be applicable to particular categories of
taxpayers, such as broker-dealers, insurance companies, financial institutions,
tax exempt organizations, persons who hold shares of Summit as part of a
straddle, hedging or conversion transaction, or to any shareholder who acquired
his or her Summit Common Stock through the exercise of an employee stock option
or otherwise as compensation. This discussion and the opinion of Sullivan &
Cromwell does not address the effect of any applicable foreign, state, local or
other tax laws and applies only to holders of shares of Summit Common Stock who
hold their shares as capital assets and who are (i) citizens or residents of the
United States, (ii) domestic corporations, (iii) estates, the income of which is
subject to United States federal income tax without regard to source; or (iv)
trusts, if a United States court can exercise primary supervision over the
administration of such trust and one or more United States persons have the
right to control all substantial decisions of such trust. SHAREHOLDERS OF SUMMIT
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) of the Code, and Summit 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 Summit's shareholders upon their receipt of One Valley Common
Stock solely in exchange for Summit 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 of
the Code.
4. The basis of the One Valley Common Stock to be received by
Summit's shareholders will be, in each instance, the same as the basis of the
Summit 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.
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5. The holding period of the One Valley Common Stock received
by Summit's shareholders (including any fractional shares of One Valley Common
Stock for which cash is received) will include the period during which the
Summit Common Stock surrendered in exchange therefor was held by the Summit
shareholder, provided that the Summit Common Stock was a capital asset in the
hands of the Summit 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 Summit. 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 Summit of an opinion of Sullivan &
Cromwell to the effect that, for U.S. federal income tax purposes, (a) holders
of Summit 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 Summit's shareholders will be the same as the basis of
the Summit Common Stock surrendered in exchange therefor, and (c) the holding
period of the One Valley Common Stock to be received by the Summit shareholders
will include the holding period of the Summit Common Stock surrendered in
exchange therefor, provided the Summit 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, Summit, and certain principal shareholders of Summit.
Accounting Treatment
It is a condition to closing that the Merger will be accounted
for as a "pooling-of-interests" under generally accepted accounting principles.
The unaudited pro forma financial information included in this Proxy
Statement/Prospectus reflects the Merger using the "pooling-of-interests" method
of accounting.
Exchange of Certificates
As soon as practicable after the Effective Date of the Merger,
the certificates representing the outstanding shares of Summit 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 Summit Common Stock should not be
forwarded to the Exchange Agent until after receipt of a letter of transmittal
and should not be returned to Summit with the enclosed Proxy.
Certificates representing shares of Summit 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 Summit
Common Stock will have been converted. No dividends or distributions payable to
holders of record of One Valley Common Stock will be paid to former Summit
shareholders who have not surrendered their certificates formerly representing
shares of Summit Common Stock, until they have exchanged their certificates
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representing their Summit 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
Summit 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
operate the Bank under the name "One Valley Bank of Rockbridge" and with the
same officers and directors except that Laurance G. Jones and William J. Kidd,
officers of One Valley, will be added to the Board of Directors of the Bank.
After the Effective Date, One Valley shall, by action of its Board of Directors,
elect W. Lowrie Tucker, III, as a member of the Board of Directors of One
Valley. Additionally, at its Annual Meeting of Shareholders in 1999, One Valley
will nominate and recommend Mr. Tucker for a three-year term as a member of One
Valley's Board of Directors. Promptly after the Effective Date, One Valley, as
the sole shareholder of One Valley Bank-Central Virginia, National Association,
will elect W. Wayne Heslep to serve as a member of the Board of Directors of One
Valley Bank-Central Virginia, National Association. As chief executive officer
of One Valley Bank of Rockbridge, Mr. Tucker will be included in the One Valley
Bancorp, Inc. Executive Incentive Compensation Plan and will be a party to the
One Valley Bancorp, Inc. Change of Control Agreement. Additionally, David Grist,
Mary Frances Chittum and Duaine Fitzgerald will be included in the One Valley
Bancorp, Inc. Management Incentive Plan. Mr. Tucker, Mr. Grist, Ms. Chittum and
Mr. Fitzgerald will enter into three-year employment contracts which include
minimum salary and non-competition clauses.
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 Summit and its subsidiaries in
accordance with and subject to the requirements and other provisions of Virginia
law and Summit Articles of Incorporation and Bylaws in effect on the date of the
Merger Agreement.
Other than as described herein and under "- Operations and
Management After the Merger," no director or officer of Summit or One Valley has
any direct or indirect material interest in the Merger, except in the case of
such persons insofar as ownership of Summit Common Stock might be deemed to
constitute an interest.
Resales by Affiliates
The shares of One Valley Common Stock issued to Summit's
shareholders upon consummation of the Merger have been registered under the
Securities Act, but such registration does not cover resales by affiliates of
Summit ("Affiliates"). One Valley Common Stock received and beneficially owned
by those Summit 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 Summit at the time the Merger Agreement is submitted for approval
by a vote of the holders of Summit Common Stock. Generally, this definition
includes executive officers, directors and 10% shareholders of Summit. 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
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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, is exempt from the registration
requirements of the Securities Act.
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 Summit 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 shares 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.
Summit has agreed to provide One Valley with a list of those
persons who may be deemed Affiliates at the time of the 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 Summit, 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 Summit 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.
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 30-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 considers whether
such acquisition and operation of a 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
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regulatory agency has the authority to deny an application 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 June 12, 1998. Also, on June 12, 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
Holders of Summit Common Stock entitled to vote on approval of
the Merger Agreement will be entitled to have the fair value of each such
holder's shares of Summit Common Stock immediately prior to consummation of the
Merger paid to such holder in cash, together with interest, if any, by complying
with the provisions of Article 15 of the VSCA ("Article 15"). Under Article 15,
the determination of the fair value of a dissenter's shares would exclude an
appreciation or depreciation in the value of such shares in anticipation of the
Merger, unless such exclusion would be inequitable.
A holder of Summit Common Stock who desires to exercise such
holder's dissenters' rights must satisfy all of the following conditions. A
written notice of such holder's intent to demand payment for such holder's
Summit Common Stock must be delivered to Summit before the taking of the vote on
approval of the Merger. This written notice must be in addition to and separate
from voting against, abstaining from voting, or failing to vote on approval of
the Merger Agreement. Voting against, abstaining from voting or failing to vote
on approval of the Merger Agreement will not constitute written notice of an
intent to demand payment within the meaning of Article 15.
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A holder of Summit Common Stock electing to exercise such
holder's dissenters' rights under Article 15 must not vote for approval of the
Merger Agreement. Voting for the approval of the Merger Agreement, or delivering
a Proxy in connection with the Special Meeting (unless the Proxy specifies a
vote against, or affirmatively abstaining from voting on, approval of the Merger
Agreement), will constitute a waiver of such holder's dissenters' rights and
will nullify any written notice of an intent to demand payment submitted by such
holder.
A holder of record of Summit Common Stock may assert
dissenters' rights as to less than all of the shares registered in such holder's
name only if such holder dissents with respect to all shares beneficially owned
by any one person and notifies Summit in writing of the name and address of each
person on whose behalf such holder is asserting dissenters' rights. The rights
of a partial dissenter under Article 15 are determined as if the shares as to
which the holder dissents and the holder's other shares were registered in the
names of different shareholders.
A beneficial holder of Summit Common Stock may assert
dissenters' rights as to shares held on such holder's behalf only if such
holder: (i) submits to Summit the record holder's written consent to the dissent
not later than the time the beneficial holder asserts dissenters' rights; and
(ii) does so with respect to all shares of which such holder is the beneficial
holder or over which such holder has the power to direct the vote.
If the Merger is consummated, One Valley will, within ten days
after the Effective Date of the Merger, deliver a dissenters' notice to all
holders who satisfied the foregoing requirements, which will: (i) state where
payment demand is to be sent and where and when certificates for dissenting
shares are to be deposited; (ii) supply a form for demanding payment that
includes the date (May 7, 1998) of the first announcement to news media of the
terms of the Merger, and requires that the person asserting dissenters' rights
certify whether or not such person acquired beneficial ownership of such
person's dissenting shares before or after such date; (iii) set a date by which
One Valley must receive the payment demand, which date may not be less than 30
nor more than 60 days after the date of delivery of the dissenters' notice; and
(iv) be accompanied by a copy of Article 15.
A shareholder sent a dissenters' notice shall demand payment,
certify that such holder acquired beneficial ownership of such holder's
dissenting shares before, on or after May 7, 1998, and deposit the certificates
representing such holder's dissenting shares in accordance with the dissenters'
notice. A shareholder who deposits such holder's shares as described in the
dissenters' notice retains all other rights as a holder of Summit Common Stock
except to the extent such rights are canceled or modified by the consummation of
the Merger. A shareholder who does not demand payment and deposit his share
certificates where required, each by the date set forth in the dissenters'
notice, is not entitled to payment for such holder's shares under Article 15.
Except as provided below with respect to after-acquired
shares, within 30 days after receipt of a payment demand, One Valley shall pay
the dissenter the amount that One Valley estimates to be the fair value of the
dissenter's shares, plus accrued interest. The obligation to make such payment
may be enforced: (i) by the Circuit Court for the City of Lynchburg, Virginia;
or (ii) at the election of any dissenter residing or having its principal office
in Virginia, by the circuit court in the city or county where the dissenter
resides or has such office. The payment by One Valley will be accompanied by:
(i) One Valley's balance sheet as of the end of a fiscal year ended not more
than 16 months before the Effective Date of the Merger, an income statement for
that year, a statement of changes in shareholders' equity for that year and the
latest available interim financial statements, if any; (ii) an explanation of
how One Valley estimated the fair value of the dissenting shares and of how the
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interest was calculated; (iii) a statement of the dissenter's right to demand
payment as described below; and (iv) a copy of Article 15.
One Valley may elect to withhold payment from a dissenter
unless the dissenter was the beneficial owner of the dissenting shares on May 7,
1998, in which case One Valley will estimate the fair value of such
after-acquired shares, plus accrued interest, and will offer to pay such amount
to each dissenter who agrees to accept it in full satisfaction of such
dissenter's demand. One Valley will send with such offer an explanation of how
it estimated the fair value of the shares and of how the interest was
calculated, and a statement of the dissenter's right to demand payment as
described below.
Within 30 days after One Valley makes or offers payment as
described above, a dissenter may notify One Valley in writing of the dissenter's
own estimate of the fair value of the dissenting shares and the amount of
interest due, and demand payment of such estimate (less any payment by One
Valley) or reject One Valley's offer and demand payment of such estimate.
If any such demand for payment remains unsettled, within 60
days after receiving the payment demand One Valley will petition the Circuit
Court for the City of Lynchburg, Virginia, to determine the fair value of the
shares and the accrued interest and make all dissenters whose demands remain
unsettled parties to such proceeding, or pay each dissenter whose demand remains
unsettled the amount demanded. Each dissenter made a party to such proceeding is
entitled to a judgment for: (i) the amount, if any, by which the court finds
that the fair value of the dissenting shares, plus interest, exceeds the amount
paid; or (ii) the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which payment was elected to be withheld. The court
will determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court and assess the
costs against One Valley, or against all or some of the dissenters to the extent
the court finds the dissenters did not act in good faith in demanding payment.
The foregoing is only a summary of the rights of a dissenting
holder of Summit Common Stock. Any holder of Summit Common Stock who intends to
dissent from the Merger should carefully review the text of the applicable
provisions of the VSCA set forth in Appendix IV to this Proxy
Statement/Prospectus and should also consult with such holder's attorney. The
failure of a holder of Summit Common Stock to follow precisely the procedures
summarized above, and set forth in Appendix IV, may result in loss of
dissenters' rights. No further notice of the events giving rise to dissenters'
rights or any steps associated therewith will be furnished to holders of Summit
Common Stock, except as indicated above or otherwise required by law.
In general, any dissenting shareholder who perfects such
holder's right to be paid the fair value of such holder's Summit Common Stock in
cash will recognize taxable gain or loss for federal income tax purposes upon
receipt of such cash.
34
<PAGE>
EFFECT OF THE MERGER ON SHAREHOLDERS' RIGHTS
General
Although One Valley is a West Virginia corporation and Summit
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. One Valley shareholders
and Summit 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 Summit, 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 Summit'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 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.
35
<PAGE>
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.
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.
36
<PAGE>
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); (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
37
<PAGE>
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.
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
38
<PAGE>
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.
HISTORICAL COMPARATIVE STOCK PRICES AND DIVIDENDS
One Valley
One Valley Common Stock is traded on the NYSE under the symbol
"OV." As of June 11, 1998, there were approximately 10,843 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>
<S> <C>
Price Range Cash Dividends
High Low Paid Per Share
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.............................................................. 38.94 35.44 0.21
Second Quarter (through June 11, 1998)..................................... 40.25 33.88 0.21
</TABLE>
On May 6, 1998, the day prior to the public announcement of
the Merger, the closing price of One Valley's Common Stock on the NYSE was
$37.31 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
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<PAGE>
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.
Summit
Summit's Common Stock is not traded on any national or
regional exchange. The prices shown below are based on transactions of which
Summit is aware. Summit is not necessarily aware of the prices paid for its
shares in private transactions, and there can be no assurances that the prices
shown below are reflective of all transactions in Summit Common Stock. The
following table sets forth the price range and the cash dividends paid per share
for the periods indicated below.
<TABLE>
<CAPTION>
<S> <C>
Price Range Cash Dividends
High Low Paid Per Share
Fiscal 1995
First Quarter................................................................ $16.50 $16.00 $ .15
Second Quarter............................................................... 16.50 16.00 _
Third Quarter................................................................ 17.00 16.00 .18
Fourth Quarter............................................................... 17.75 16.50 _
Fiscal 1996
First Quarter................................................................ 19.00 18.00 .23
Second Quarter............................................................... 20.50 19.00 _
Third Quarter................................................................ 22.75 21.00 .27
Fourth Quarter............................................................... 23.00 21.50 _
Fiscal 1997
First Quarter................................................................ 28.00 25.00 .30
Second Quarter............................................................... 31.00 27.50 -
Third Quarter................................................................ 32.00 30.00 .32
Fourth Quarter .............................................................. 36.00 32.00 -
Fiscal 1998
First Quarter................................................................ 36.00 34.00 .40
Second Quarter (through May 6, 1998)......................................... _ _ _
</TABLE>
As of June 15, 1998, Summit had approximately 461 shareholders
of record.
40
<PAGE>
SUMMIT BANKSHARES, INC.
Description of Business and Properties
Summit is a one-bank holding company that owns the Bank of
Rockbridge (the "Bank") headquartered in Raphine, Virginia. The Bank was formed
in 1933 when the Bank of Fairfield, the Bank of Brownsburg and the Bank of
Raphine, three small community banks, merged. The Bank operates nine
full-service branches in the cities of Lexington and Buena Vista and the
counties of Rockbridge and Augusta, Virginia. The Bank also operates a loan
production office in the City of Covington, Virginia. Summit owns and operates
Valley Security Insurance Company, a title insurance agency ("Valley Security"),
which operates out of the Nelson Street branch of the Bank of Lexington,
Virginia.
The Bank's main office, a two-story 1920's era building
remodeled in the early 1980's, is located in Raphine which is in Rockbridge
County, Virginia. The Fairfield office, also in Rockbridge County, is a
one-story 5,000 square foot structure built in 1977 which also houses the Bank's
operations center. The Brownsburg office, a very small one-story structure,
serves the southwestern section of Rockbridge County. The Bank operates its
largest branch in terms of deposits in the College Square Shopping Center
located in Rockbridge County on U.S. Route 11, just north of the City of
Lexington. This 2,000 square foot building is owned by the Bank, and the real
estate is occupied by means of a long-term ground lease that expires in 2004 and
can be renewed until 2024.
The Nelson Street branch in the City of Lexington is the
second largest branch in terms of deposits and is a 4,000 square foot building
purchased and extensively renovated and expanded in 1992. This building also
houses Valley Security, the Bank's fixed-rate mortgage loan operation, the
marketing department and its non- insured investment sales office. Under
construction on land adjacent to the Nelson Street office is a 11,400 square
foot office building which is due to be finished by year end 1998. It is
expected that Valley Security, the fixed-rate loan program offices, the
non-insured product sales offices, the marketing department and perhaps other
operational functions will be relocated to this building upon completion.
The branch at 1002 Magnolia Avenue in the City of Buena Vista
was opened in 1987 and extensively renovated. It serves residents of the city
and some areas of southern Rockbridge County. The Glasgow branch, located in
southern Rockbridge County, was purchased from First Union Bank in August 1993,
and serves the Bank's customers in southern Rockbridge County. The Bank's
Augusta County branch is in Greenville, Virginia, and serves southern Augusta
County. This one-story building has been recently renovated and expanded. The
newest branch, opened May 15, 1998, is located in the Lexington, Virginia Super
Wal-Mart store and has two on-site ATM machines.
The Bank operates a total of 12 ATM machines, five of which
are located off site from branch offices. A loan production office is located at
236 North Court in the City of Covington. The Bank also owns a site suitable for
a branch operation located on Craig Street in Covington and has entered into an
agreement to operate a branch in a to-be-expanded Kroger Super Store in
Covington subject to certain conditions.
The Bank is a state chartered bank seeking deposits from the
general public and providing banking services including, but not limited to,
consumer lending, residential mortgages, commercial loans, student and
41
<PAGE>
small business loans. The Bank is regulated by the State Corporation Commission
and the Federal Deposit Insurance Corporation and is subject to examination by
both.
Competition
The Bank's service and market area is also served by three
super regional banks: First Union Bank, Nationsbank, and Wachovia Bank; two
large Virginia banks: Crestar and First Virginia Bank; and several credit unions
including Dupont Credit Union, Burlington Credit Union and Westvaco Credit Union
which are major competitors, as well as several consumer finance companies.
Employees
The Bank employs 76 full-time and 15 part-time employees at
its various offices.
Legal Proceedings
There are various claims and lawsuits in which Summit and the
Bank are periodically involved. However, in the opinion of Summit's management,
no material loss is expected from any such pending claims or lawsuits.
Voting Securities and Beneficial Ownership
The following tabulation sets forth the number of shares of
Summit Common Stock beneficially owned by each of the officers and directors and
the officers and directors as a group as of June 11, 1998, and indicates the
percentages of Summit Common Stock so owned. There is no other class of voting
securities issued and outstanding.
<TABLE>
<CAPTION>
<S> <C>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
M. M. Sterrett, Jr 25,400 1.89%
Chairman of the Board and Director
W. Wayne Heslep 95,981 7.15
Vice Chairman, General Counsel and Director
W. Lowrie Tucker, III 26,620(1) 1.98
President, Chief Executive Officer and Director
J. E. Williams, Jr 10,390 *
Director
Edward N. Patterson 13,316(1) *
Director
Dr. Edward Showalter 14,280 1.06
Betty Jo Bishop 15,982 1.18
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Name of Beneficial Owner Amount and Nature of
Beneficial Ownership Percent of Class
Ronald O. Mays 5,025(1) *
Walter Joe Mynes 39,900(1) 2.97
Mary Frances Chittum 4,766 *
Senior Vice President, Cashier and Chief Operating Officer
T. David Grist 8,220 *
Executive Vice President
P. Duaine Fitzgerald 4,655 *
Vice President
All Directors and Executive Officers as a Group 264,535 19.6
(12 Individuals)
</TABLE>
* Beneficial ownership does not exceed one percent of the class.
1 Includes shares owned jointly with other persons and/or shares controlled by
the Officer or Director.
43
<PAGE>
SUMMIT BANKSHARES, INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion addresses the significant changes in
financial condition and results of operations for the calendar year 1997
compared with 1996 and the first quarter of 1998 compared with the first quarter
of 1997. (All amounts are in thousands of dollars except for per share data.)
SUMMARY
Net income for 1997 was $3,486 compared with $3,178 in 1996, an
increase of 9.70%. Net income per share was $2.60 for 1997 compared with $2.37
for 1996. The growth in earnings was largely due to an increase in earning
assets of 9.61%.
Net income for the quarter ended March 31, 1998 was $941 compared
with $812 for the quarter ended March 31, 1997, an increase of 15.88%. Net
income per share was $.70 for March 31, 1998 compared with $.60 for March 31,
1997. The increase was largely due to an increase in earning assets and an
increase in loan origination fees.
NET INTEREST MARGIN
The net interest margin decreased slightly from 4.82% in 1996 to
4.74% in 1997, however, average earning assets increased from $165,414 in 1996
to $180,139 in 1997 resulting in an increase of $645 in net interest income.
The net interest margin increased from 4.73% for March 31, 1997 to
4.85% for March 31, 1998 and average earning assets increased from $172,818 for
March 31, 1997 to $186,156 for March 31, 1998. This resulted in an increase in
net interest income of $196.
A complete analysis of the changes in the net interest margin is
presented in Schedule A and Schedule B.
OTHER OPERATING INCOME
For 1997, other operating income increased 21% over the prior year.
The increase was due to increases in ATM fees of $64 and mortgage loan
origination fees of $56.
For March 31, 1998, other operating income increased 45% over March
31, 1997. The increase was due to increases in mortgage loan origination fees of
$76 and investment commissions of $20.
The company originates fixed rate mortgage loans which are sold in
the secondary market. Origination fees were $279 in 1997 compared with $223 in
1996. Origination fees for the first quarter of 1998 were $115 compared with $37
for the first quarter of 1997.
The Company has hired a full time investment advisor to promote
discount brokerage service. Commission income for the first quarter of 1998 was
$22 compared with $2 for the first quarter of 1997.
44
<PAGE>
OTHER OPERATING EXPENSES
Other operating expenses have increased proportionately to the
growth in average assets. Other operating expenses divided by average assets
were 2.3% for 1996, 1997 and March 31, 1997. The percentage increased slightly
to 2.5% for March 31, 1998. The increase was the result of expenses associated
with the Company's expanding ATM network. The Company continues to have an
efficient expense structure.
BALANCE SHEET
During 1997, loans increased $14,205 and investment securities
increased $2,638. The increases in earning assets were funded by increases in
deposits of $12,695, federal funds purchased of $1,469 and retained income of
$2,653.
During the quarter ended March 31, 1998, cash increased $1,782,
federal funds sold increased $2,855, loans increased $756 and federal funds
purchased decreased $2,031. The changes were funded by a decrease in investment
securities of $2,545 and an increase in deposits of $3,735. Although loan growth
was slow in the first quarter of 1998, the demand for loans has been strong
during the second quarter of 1998.
Average balance sheets for the Company are included in Schedule A.
LOANS
The composition of the Company's loan portfolio has remained
consistent and is shown in Schedule C. Major classifications of the loan
portfolio are, loans secured by real estate (76%), consumer loans (18%), and
commercial and agricultural loans not secured by real estate (6%).
Non-performing assets and loans past due over 90 days are immaterial and are
shown in Schedule E.
ALLOWANCE FOR LOAN LOSSES
Allocations of the allowance for loan losses are shown in Schedule
D, and an analysis of the activity in the allowance for loan losses is shown in
Schedule E. The allowance is adjusted at the end of each quarter based on the
Company's internal risk-rating system and consideration of current economic
conditions effecting loan collectibility. In management's opinion, the allowance
is adequate to absorb losses in the current loan portfolio.
INVESTMENT SECURITIES
An analysis of investment securities by type and maturity is
included in Schedule F. Twenty-four percent of the Company's debt securities
mature within one year or less and 81% mature within five years. The Company
does not have any securities, of one issuer, for which the book value or market
value exceeds 10% of stockholders equity.
45
<PAGE>
DEPOSITS
The composition of the Company's deposits has remained very
consistent. The Company does not rely on brokered deposits, however, time
deposits of $100M or more represent approximately 10% of total deposits. The
composition of deposits is shown in Schedule G along with large time deposits
that mature within one year.
LIQUIDITY AND INTEREST SENSITIVITY
Liquidity has been more than adequate during 1996, 1997 and 1998.
Liquid assets composed of cash, available for sale securities and federal funds
sold as a percentage of total assets equaled 22% at December 31, 1997 and 1996
and 23% at March 31, 1998. The Company has established a line of credit for the
purchase of federal funds of $8,000 and has established a line of credit of
$36,000 with the Federal Home Loan Bank for intermediate term borrowings. The
ratio of earning assets to interest bearing deposit liabilities that reprice or
mature within one year has improved from approximately 100% at December 31, 1997
to 111% as shown in the following table:
<TABLE>
<CAPTION>
<S> <C>
March 31 December 31
1998 1997
Financial instruments that are repriceable
or mature within one year
Earning assets $ 76,640 $ 74,428
Interest bearing deposit liabilities 69,286 74,246
Percentage 111% 100%
COMMITMENTS
At March 31, 1998, the Company had commitments to extend credit as
follows:
Home equity lines $ 3,138
Credit card lines 844
Other commitments 8,311
--------------
Total Commitments $ 12,293
==============
</TABLE>
In addition, the Company is committed to build a branch in
Lexington, VA with an estimated cost of $700,000.
STOCKHOLDERS EQUITY
Stockholder's equity increased from $18,160 at December 31, 1996 to
$21,048 at December 31, 1997 and to $21,389 at March 31, 1998. The changes are
shown in the Consolidated Statements of Changes in Stockholder's Equity included
in the financial statements.
The Company is considered well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table.
46
<PAGE>
STOCKHOLDERS EQUITY (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Actual Regulatory Requirements
March 31, December 31, Adequately Well
1998 1997 1996 Capitalized Capitalized
Total risk-based ratio 17.16% 16.88% 13.13% 8.00% 10.00%
Tier I risk-based ratio 15.99% 15.72% 12.19% 4.00% 6.00%
Total assets leverage ratio 10.75% 10.66% 9.88% 3.00% 5.00%
</TABLE>
47
<PAGE>
Schedule A
Summit Bankshares, Inc.
Average Balance Sheets And Net Interest Margin Analysis
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1997 Year Ended December 31, 1996
--------------------------------- ----------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------- ------- ---- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans (1) ........................................ $133,641 $12,334 9.23% $119,050 $11,179 9.39%
Less: Allowance for Loan Losses ................ 1,468 1,316
-------
Net Loans ........................................ 132,173 117,734
Investment Securities (2)
Taxable ........................................ 28,486 1,792 6.29% 28,356 1,717 6.06%
Tax-exempt (3) ................................. 17,089 1,283 7.51% 18,090 1,547 8.55%
-------- ------- ---- -------- ------- ----
Total investment securities .................. 45,575 3,075 6.75% 46,446 3,264 7.03%
Federal Funds Sold ............................... 2,391 139 5.81% 1,234 68 5.51%
-------- ------- ---- -------- ------- ----
Total Earning Assets ........................... 180,139 15,548 8.63% 165,414 14,511 8.77%
Other Assets ..................................... 7,956 7,320
-------- --------
Total Assets ................................... 188,095 172,734
======== ========
Liabilities And Equity
Interest Bearing Liabilities
Interest bearing demand
and savings deposits ........................... 52,633 1,568 2.98% 50,659 1,544 3.05%
Time deposits .................................. 98,861 5,429 5.49% 88,712 4,948 5.58%
-------- ------- ---- -------- ------- ----
Total interest
bearing deposits ............................. 151,494 6,997 4.62% 139,371 6,492 4.66%
Short-term borrowings .......................... 94 6 6.38% 535 29 5.42%
Long-term borrowings ........................... 118 9 7.63% 99 9 9.09%
-------- ------- ---- -------- ------- ----
Total interest bearing
liabilities .................................. 151,706 7,012 4.62% 140,005 6,530 4.66%
Demand deposits .................................. 16,254 15,324
Other liabilities ................................ 674 682
Shareholder's Equity ............................. 19,461 16,723
-------- --------
Total Liabilities & Equity ..................... $188,095 $172,734
======== ========
Net interest earnings ............................ $ 8,536 $ 7,981
======= =======
Net yield on earning assets ...................... 4.74% 4.82%
===== =====
</TABLE>
(1) Loan fees, which are immaterial, are included in interest income
(2) Includes certificates of deposit in other banks
(3) The taxable equivalent yield is computed using an effective tax rate of 34%
48
<PAGE>
Schedule A
Summit Bankshares, Inc.
Average Balance Sheets And Net Interest Margin Analysis
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998 Three Months Ended March 31, 1997
----------------------------------- ----------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------- ------ ---- -------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans (1) .................................... $140,491 $3,208 9.13% $128,948 $2,991 9.28%
Less: Allowance for Loan Losses ............ 1,559 1,416
-------- --------
Net Loans .................................... 138,932 127,532
Investment Securities (2)
Taxable .................................... 29,057 457 6.29% 26,303 417 6.34%
Tax-exempt ................................. 16,851 333 7.91% 17,406 283 6.50%
-------- ------ ---- -------- ------ ----
Total investment securities .............. 45,908 790 6.89% 43,709 700 6.41%
Federal Funds Sold ........................... 1,316 17 5.17% 1,577 19 4.82%
-------- ------ ---- -------- ------ ----
Total Earning Assets ..................... 186,156 4,015 8.63% 172,818 3,710 8.59%
Other Assets ................................. 9,771 9,230
-------- -------
Total Assets ............................... 195,927 182,048
======== =======
Liabilities And Equity
Interest Bearing Liabilities
Interest bearing demand
and savings deposits ....................... 53,373 377 2.83% 51,783 373 2.88%
Time deposits .............................. 103,141 1,375 5.33% 95,036 1,288 5.42%
-------- ------ ---- -------- ------ ----
Total interest
bearing deposits ......................... 156,514 1,752 4.48% 146,819 1,661 4.53%
Short-term borrowings ...................... 283 5 6.36% 243 4 6.58%
Long-term borrowings ....................... 105 2 7.62% 95 2 8.42%
Total interest bearing
liabilities .............................. 156,902 1,759 4.48% 147,157 1,667 4.53%
Demand deposits .............................. 16,898 15,813
Other liabilities ............................ 909 744
Shareholder's Equity ......................... 21,218 18,334
-------- --------
Total Liabilities & Equity ................. $195,927 $182,048
Net interest earnings ........................ $2,256 $2,043
====== ======
Net yield on earning assets .................. 4.85% 4.73%
===== =====
</TABLE>
(1) Loan fees, which are immaterial, are included in interest income
(2) Includes certificates of deposit in other banks
(3) The taxable equivalent yield is computed using an effective tax rate of 34%
49
<PAGE>
Schedule B
Summit Bankshares, Inc.
Rate Volume Analysis of Changes in Interest Income and Expense
(In thousands)
<TABLE>
<CAPTION>
1997 vs 1996 Increase ( Decrease) 3/31/98 vs 3/31/97 Increase
In Net Interest Income (Decrease) In Net Interest Income
---------------------------------------- --------------------------------
Volume Rate Total Volume Rate Total
------- ----- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Earning Assets
Loans ....................................... $ 1,347 $(192) $ 1,155 $ 403 $(186) $ 217
Investment Securities
Taxable ................................... 8 67 75 53 (13) 40
Tax-exempt ................................ (76) (188) (264) (195) 245 50
------- ----- ------- ----- ----- -----
Total investment securities ............. (68) (121) (189) (142) 232 90
Federal Funds Sold .......................... 67 4 71 (7) 5 (2)
------- ----- ------- ----- ----- -----
Total earning assets ...................... 1,346 (309) 1,037 254 51 305
------- ----- ------- ----- ----- -----
Interest Bearing Liabilities
Interest bearing demand
and savings deposits ...................... 59 (35) 24 33 (29) 4
Time deposits ............................. 557 (76) 481 171 (84) 87
Short-term borrowings ..................... (28) 5 (23) 2 (1) 1
Long-term borrowings ...................... 1 (1) -- 1 (1) --
----- ------- ----- ----- -----
Total interest bearing
liabilities ............................. 589 (107) 482 207 (115) 92
------- ----- ------- ----- ----- -----
Net interest earnings ....................... $ 757 $(202) $ 555 $ 47 $ 166 $ 213
======= ===== ======= ===== ===== =====
</TABLE>
The change in interest due to both rate and volume has been determined by
isolating the effect of changes in rates on a constant volume for the rate
change, with the residual effect assigned to the change in volume.
50
<PAGE>
SCHEDULE C LOAN PORTFOLIO
(Dollars in Thousands)
The composition of the loan portfolio is shown on the following schedule:
Years Ended
March 31, December 31,
1998 1997 1996
---------------- --------------- ---------------
Amount % Amount % Amount %
Real Estate
1-4 family residential $ 66,501 47% $ 66,942 48% $ 63,420 50%
Agricultural 2,434 2 2,456 2 2,835 2
Commercial 38,254 27 37,678 26 30,580 24
Consumer 25,894 18 25,586 18 23,587 19
Commercial 6,883 5 6,630 5 5,012 4
Agricultural 1,209 1 1,127 1 780 1
-------- ---- -------- ---- -------- ----
Total Loans $ 141,175 100% $ 140,419 100% $ 126,214 100%
======== ===== ======== ===== ======== ====
SCHEDULE D ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
(Dollars in Thousands)
The allocation of the allowance for loan losses is shown in the following
schedule:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997 1996
---------------------- ---------------------- ----------------------
Percent Percent Percent
of Loans of Loans of Loans
in Each in Each in Each
Allowance Category Allowance Category Allowance Category
<S> <C> <C> <C> <C> <C> <C>
Real estate $ 1,126 76% $ 1,087 75% $ 968 75%
Consumer 242 18 220 19 223 20
Commercial & Agricultural 108 6 84 6 85 5
Unallocated 97 154 112
-------- ---- -------- ---- -------- ----
Total
$ 1,573 100% 1,545 $ 100% $ 1,388 100%
======== ===== ======== ===== ======== ====
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE E ANALYSIS OF LOAN LOSSES AND NON-PERFORMING ASSETS
(Dollars in Thousands)
Three Months Ended Years Ended
March 31, December 31,
1998 1997 1997 1996
Allowance for Loan Losses
<S> <C> <C> <C> <C>
Balance, Beginning of Period $ 1,545 $ 1,388 $ 1,388 $ 1,245
----------- ----------- ----------- -----------
Charge-Offs
Commercial 4 7 44 36
Real estate 0 0 9
Consumer loans 8 7 79 58
----------- ----------- ----------- -----------
12 14 132 94
----------- ----------- ----------- -----------
Recoveries
Commercial 6 7 22 14
Real estate 0 0 2 2
Consumer loans 14 6 31 17
----------- ----------- ----------- -----------
Net Charge-Offs 20 13 55 33
----------- ----------- ----------- -----------
Provision for loan losses 20 56 234 204
----------- ----------- ----------- -----------
Balance, End of Period $ 1,573 $ 1,443 $ 1,545 $ 1,388
=========== =========== =========== ===========
Allowance for Loan Losses as a
Percentage of Total Loans 1.12% 1.11% 1.11% 1.11%
Non-Performing Assets, End of Period
Non-Accrual Loans $ 0 $ 0 $ 0 $ 0
Foreclosed properties 26 0 0 0
----------- ----------- ----------- -----------
Total Non-Performing Assets $ 26 $ 0 $ 0 $ 0
=========== =========== =========== ===========
Non-Performing Assets as a
Percentage of Total Loans .02% .00% .00% .00%
Loans past due over 90 days $ 1,097 $ 1,466 $ 1,400 $ 931
Loans past due over 90 days as a
percentage of total loans .78% 1.11% 1.00% .74%
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE F INVESTMENT SECURITIES
(Dollars in Thousands)
The book value of investment securities are shown in the following schedule:
March 31, December 31,
1998 1997 1996
------------------- ----------------------- -----------------
Available for sale
<S> <C> <C> <C>
U.S. Treasury and Agency $ 14,587 $ 16,322 $ 15,581
State and Municipal 14,511 14,801 12,039
Corporate obligations 4,619 5,115 6,026
Equity securities 510 309 309
----------------- ----------------- -----------------
34,227 36,547 33,955
----------------- ----------------- -----------------
Held to Maturity
U.S. Treasury and Agency 997 997 995
State and Municipal 8,675 8,907 9,592
FHLB stock 736 729 -
----------------- ----------------- -----------------
10,408 10,633 10,587
----------------- ----------------- -----------------
Total Investment Securities $ 44,635 $ 47,180 $ 44,542
================= ================= =================
</TABLE>
<TABLE>
<CAPTION>
The remaining maturity of debt securities at March 31, 1998 is shown in the
following schedule:
Amount Percentage
<S> <C> <C>
One year and less $ 10,537 24%
Over one year to five years 24,702 57
Over five years 8,150 19
----------------- --------------
Total debt securities 43,389 100%
===============
Equity securities 1,246
Total Securities $ 44,635
=================
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE G DEPOSITS
(Dollars in Thousands)
March 31, December 31,
1998 1997 1996
----------------------- --------------------- ---------------
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 17,798 10% $ 15,998 9% $ 15,357 10%
NOW, ATS and other
transaction accounts 23,603 13 22,870 13 21,682 14
Money market deposits
and other saving accounts 31,447 18 30,837 18 29,936 17
Time deposits of less than $100M 85,872 49 85,386 49 78,908 49
Time deposits of $100M or more 17,667 10 17,561 11 14,074 10
-------------- --- ------------ ------ -------------- -----
Total Deposits $ 176,387 100% $ 172,652 100% $ 159,957 100%
============== === ============ ======== ============== =====
Time deposits of $100M or
more with a remaining
maturity of one year or less $ 11,796 $ 11,969 $ 8,952
Percentage of deposits 6% 7% 6%
</TABLE>
54
<PAGE>
EXPERTS
The consolidated financial statements of Summit for the year
ended December 31, 1997, have been audited by S. B. Hoover & Company, 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, included
in One Valley's current Annual Report (Form 8-K) dated June 17, 1998, for the
year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference, which is based on the reports of
Cherry,Bekaert & Holland, L.L.P. 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
Summit's 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 Proxy Statement/Prospectus, management
of One Valley and Summit know of no other business that will come before the
Special Meeting. 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 Board of Directors of Summit.
55
<PAGE>
<TABLE>
<S> <C>
Page
Financial Statements
Independent Auditors' Report F1
Consolidated Balance Sheets
March 31, 1998 (Unaudited) F2
December 31, 1997 F2
December 31, 1996 F2
Statements of Income
For the three month periods ended
March 31, 1998 and 1997 (Unaudited) F3
For the years ended December 31, 1997 and 1996 F3
Statements of Changes in Stockholders' Equity
For the three month periods ended
March 31, 1998 and 1997 (Unaudited) F4
For the years ended December 31, 1997 and 1996 F4
Statements of Cash Flows
For the three month periods ended
March 31, 1998 and 1997 (Unaudited) F5
For the years ended December 31, 1997 and 1996 F5
Notes to Financial Statements F6
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Summit Bankshares, Inc.
We have audited the consolidated balance sheets of Summit Bankshares, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Summit Bankshares,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ S. B. Hoover & Company, L.L.P.
Harrisonburg, VA
January 23, 1998
June 11, 1998 with respect to
Notes 16 and 18
F1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, December 31,
ASSETS 1998 1997 1996
(Unaudited)
Cash and cash equivalents $ 7,678 $ 5,896 $ 4,556
Certificates of deposit in other banks 1,010
Investment securities:
Available for sale 34,227 36,547 33,955
Held to maturity 10,408 10,633 10,587
Federal funds sold 2,855 -- --
Loans less unearned interest 141,175 140,419 126,214
Less allowance for loan losses 1,573 1,545 1,388
-------- -------- --------
Net Loans 139,602 138,874 124,826
Bank premises and equipment, net 2,437 2,438 2,233
Interest receivable 1,453 1,534 1,455
Other assets 625 567 637
-------- -------- --------
Total Assets $199,285 $196,489 $179,261
======== ======== ========
LIABILITIES
Deposits
Demand deposits
Interest bearing $ 35,205 $ 35,015 $ 32,554
Noninterest bearing 17,798 16,043 15,357
Savings deposits 19,845 18,889 19,064
Time deposits 103,539 102,705 92,982
-------- -------- --------
Total Deposits 176,387 172,652 159,957
-------- -------- --------
Federal funds purchased -- 2,031 562
Other liabilities 1,264 510 487
Long-term debt 245 248 95
-------- -------- --------
Total Liabilities 177,896 175,441 161,101
-------- -------- --------
STOCKHOLDERS' EQUITY
Common stock - $1 par value, authorized - 1,500,000 shares, issued and
outstanding - 1,343,116 shares
in 1997 and 671,558 in 1996 1,343 1,343 672
Surplus 1,760 1,760 2,431
Retained earnings 18,061 17,657 15,004
Net unrealized gains on securities available for sale 225 288 53
-------- -------- --------
Total Stockholders' Equity 21,389 21,048 18,160
-------- -------- --------
Total Liabilities and Stockholders' Equity $199,285 $196,489 $179,261
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
F2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
Three Months Ended Year Ended
March 31, December 31,
(Unaudited)
1998 1997 1997 1996
INTEREST INCOME:
Loans $ 3,208 $ 2,991 $ 12,334 $ 11,179
Federal funds sold 17 19 139 68
Certificates of deposit in other banks 17 28 71
Investment securities
Taxable 457 400 1,764 1,646
Nontaxable 220 187 847 1,021
-------- -------- -------- --------
Total Interest Income 3,902 3,614 15,112 13,985
-------- -------- -------- --------
INTEREST EXPENSE:
Demand and savings deposits 377 373 1,568 1,544
Time deposits 1,375 1,288 5,429 4,948
Federal funds purchased 5 4 6 29
Long-term debt 2 2 9 9
-------- -------- -------- --------
Total Interest Expense 1,759 1,667 7,012 6,530
-------- -------- -------- --------
NET INTEREST INCOME 2,143 1,947 8,100 7,455
PROVISION FOR LOAN LOSSES 20 56 234 204
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,123 1,891 7,866 7,251
-------- -------- -------- --------
OTHER OPERATING INCOME:
Service charge and fee income 184 164 747 656
Other 238 127 623 482
Net security gains (losses) 0 0 8 (1)
-------- -------- -------- --------
Total Other Operating Income 422 291 1,378 1,137
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Salaries and benefits 589 554 2,408 2,209
Occupancy expenses 236 195 672 658
Other expenses 389 282 1,299 1,158
-------- -------- -------- --------
Total Other Operating Expenses 1,214 1,031 4,379 4,025
-------- -------- -------- --------
Income before Income Taxes 1,331 1,151 4,865 4,363
INCOME TAX EXPENSE 390 339 1,379 1,185
-------- -------- -------- --------
NET INCOME $ 941 $ 812 $ 3,486 $ 3,178
======== ======== ======== ========
Net Income per Share $ .70 $ .60 $ 2.60 $ 2.37(1)
======== ======== ======== ========
Weighted Average Shares Outstanding 1,343 1,343 1,343 1,343
======== ======== ======== ========
</TABLE>
(1) (Adjusted to reflect 100% stock dividend declared in January 1997)
The accompanying notes are an integral part of this statement.
F3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Unrealized
Gains
(Losses)
on Securities Total
Common Retained Available Stockholders'
Stock Surplus Earnings for Sale Equity
BALANCE DECEMBER 31, 1995 $ 671 $ 2,432 $ 12,497 $ 88 $ 15,688
Net income 3,178 3,178
Decrease in market value, net
of taxes (35) (35)
Cash dividends (671) (671)
--------- ---------- ---------- -------- ------------
BALANCE DECEMBER 31, 1996 671 2,432 15,004 53 18,160
Stock dividend effected in the
form of a split 672 (672)
Net income 3,486 3,486
Increase in market value, net
of taxes 234 234
Cash dividends (832) (832)
--------- ---------- ---------- -------- ------------
BALANCE DECEMBER 31, 1997 $ 1,343 $ 1,760 $ 17,658 $ 287 $ 21,048
========= ========== ========== ======== ============
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
BALANCE DECEMBER 31, 1996 $ 671 $ 2,432 $ 15,004 $ 53 $ 18,160
Stock dividend effected in the
form of a split 672 (672)
Net income 812 812
Decrease in market value, net
of taxes (60) (60)
Cash dividends (405) (405)
--------- ---------- --------- --------- -----------
BALANCE MARCH 31, 1997 $ 1,343 $ 1,760 $ 15,411 $ (7) $ 18,507
========= ========== ========= ========= ===========
BALANCE DECEMBER 31, 1997 $ 1,343 $ 1,760 $ 17,658 $ 287 $ 21,048
Net income 941 941
Decrease in market value, net
of taxes (62) (62)
Cash dividends (538) (538)
--------- ---------- --------- --------- -----------
BALANCE MARCH 31, 1998 $ 1,343 $ 1,760 $ 18,061 $ 225 $ 21,389
========= ========== ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Three Months Ended Year Ended
March 31, December 31
1998 1997 1997 1996
(Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 941 $ 812 $ 3,486 $ 3,178
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses 20 56 234 204
Depreciation 65 66 293 242
Amortization of deposit premium 5 8 33 33
Deferred income tax benefit N/A N/A (64) (14)
Net security gains (losses) 0 0 (8) 1
Changes in other assets and liabilities:
Interest receivable and other assets 18 (28) (97) (238)
Accrued expenses 786 546 20 (95)
-------- -------- -------- --------
Net Cash Provided by Operating Activities 1,835 1,460 3,897 3,311
-------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net change in certificates of deposit in
other banks 6 1,010 24
Purchase of securities available for sale (415) (994) (13,086) (12,068)
Purchase of securities held to maturity (1,516) (4,209)
Proceeds from maturities of securities
held to maturity 225 460 1,472 525
Proceeds from sales of securities available
for sale 117 2,041
Proceeds from maturities of securities
available for sale 2,640 4,126 10,743 12,919
Net increase in loans (748) (5,468) (14,283) (13,113)
Net change in federal funds sold (2,855) (2,471)
Purchase of bank premises and equipment (64) (35) (338) (659)
-------- -------- -------- --------
Net Cash Used in Investing Activities (1,217) (4,376) (15,881) (14,540)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net change in demand and savings deposits 2,901 1,697 2,972 5,021
Net increase in time deposits 834 3,652 9,723 7,283
Net change in federal funds purchased (2,031) (561) 1,469 264
Curtailments on notes payable (2) (1) (8) (7)
Cash dividends paid (538) (405) (832) (671)
-------- -------- -------- --------
Net Cash Provided by Financing Activities 1,164 4,382 13,324 11,890
-------- -------- -------- --------
Net Change in Cash and Cash Equivalents 1,782 1,466 1,340 661
Cash and Cash Equivalents, Beginning
of Year 5,896 4,556 4,556 3,895
-------- -------- -------- --------
Cash and Cash Equivalents, End of Year $ 7,678 $ 6,022 $ 5,896 $ 4,556
======== ======== ======== ========
Supplemental Disclosures of Cash Flow
Information
Interest paid $ 1,644 $ 1,526 $ 6,977 $ 6,544
Income taxes paid $ 0 $ 0 $ 1,466 $ 1,237
</TABLE>
The accompanying notes are an integral part of this statement.
F5
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS:
Summit Bankshares ("Company") was formed as a bank holding company effective
October 1, 1996. The Company subsequently acquired all outstanding common stock
of the Bank of Rockbridge ("Bank") by issuing its own common stock on a
share-for-share basis. The combination has been accounted for on a pooling of
interests basis, with no effect on previously reported income.
The Company, through its subsidiary bank, operates under a charter issued by the
Commonwealth of Virginia and provides commercial banking services. As a state
chartered bank, the Bank is subject to regulation by the Virginia Bureau of
Financial Institutions and the Federal Deposit Insurance Corporation. The Bank
provides services to customers located mainly in Rockbridge County, Virginia,
including the cities of Lexington and Buena Vista and the adjacent southern
portion of Augusta County. Services are provided at eight branch offices.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting and reporting policies used by the Company and subsidiary conform
to generally accepted accounting principles and practices within the banking
industry.
Consolidation Policy
The consolidated financial statements include Summit Bankshares, Inc., the Bank
of Rockbridge, which is a wholly-owned subsidiary of Summit Bankshares, and
Valley Security Insurance Company, which is also a wholly-owned subsidiary of
Summit Bankshares. All significant intercompany balances and transactions have
been eliminated.
Use of Estimates in the Preparation of Financial Statements
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts in those statements; actual
results could differ significantly from those estimates. A material estimate
that is particularly susceptible to significant changes is the determination of
the allowance for loan losses, which is sensitive to changes in local economic
conditions.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and deposits at other financial
institutions whose initial maturity is ninety days or less.
Investment Securities
Management determines the appropriate classification of securities at the time
of purchase. If management has the intent and the Company has the ability at the
time of purchase to hold securities until maturity, they are classified as held
to maturity and carried at amortized historical cost. Securities not intended to
be held to maturity are classified as available for sale and carried at fair
value. Securities available for sale are intended to be used as part of the
Company's asset and liability management strategy and may be sold in response to
changes in interest rates, prepayment risk or other similar factors.
F6
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Investment Securities (Continued)
Realized gains and losses on dispositions are based on the net proceeds and the
adjusted book value of the securities sold, using the specific identification
method. Unrealized gains and losses on investment securities available for sale
are based on the difference between book value and fair value of each security.
These gains and losses are credited or charged to shareholders' equity, whereas
realized gains and losses flow through the Company's current earnings.
Loans
Loans are carried on the balance sheets net of any unearned interest and the
allowance for loan losses. Interest income on loans is based generally on the
daily amount of principal outstanding except where serious doubt exists as to
collectibility of the loan, in which case the accrual of income is discontinued.
Loan fees and costs are included in income or expenses in the year received or
incurred.
Allowance for Loan Losses
The allowance for loan losses represents an amount which, in management's
judgement, will be adequate to absorb possible losses on existing loans that may
become uncollectible. Management's judgement in determining the adequacy of the
allowance is based on evaluations of the collectibility of loans. These
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, current economic conditions that may affect the
borrowers' ability to pay, overall portfolio quality, and review of specific
problem loans.
Bank Premises and Equipment
Bank premises and equipment are stated at cost, less any accumulated
depreciation. Depreciation expense is computed using straight-line and
accelerated methods.
Income Taxes
Amounts provided for income tax expense are based on income reported for
financial statement purposes rather than amounts currently payable under income
tax laws. Deferred taxes, which arise from temporary differences between the
period in which certain income and expenses are recognized for financial
accounting purposes and the period in which they affect taxable income, are
included in the amounts provided for income taxes.
Unaudited Financial Information
All information as of March 31, 1998 and for the three month periods ended March
31, 1998 and 1997 is unaudited. The unaudited information furnished reflects all
adjustments, which consist solely of normal recurring accruals, which are, in
the opinion of management, necessary for a fair presentation of the financial
position at March 31, 1998 and the results of operations and cash flows for the
three-month periods ended March 31, 1998 and 1997. The results of the
three-month periods are not necessarily indicative of the results of the Bank
which may be expected for the entire year.
F7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENT SECURITIES:
The amortized cost and fair values of investment securities are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 1997
Available for Sale
U. S. Treasury
and Agency $ 16,229,766 $ 99,593 $ (7,939) $ 16,321,420
State and Municipal 14,507,437 293,930 14,801,367
Corporate obligations 5,060,548 54,491 5,115,039
Equity securities 309,250 309,250
-------------- ------------ ----------- -------------
36,107,001 448,014 (7,939) 36,547,076
-------------- ------------ ----------- -------------
Held to Maturity
State and Municipal 8,907,282 446,957 (4,472) 9,349,767
U. S. Treasury
and Agency 996,073 15,303 (4,386) 1,006,990
Federal Home Loan Bank
Stock-Restricted 729,300 729,300
-------------- ------------ ----------- -------------
10,632,665 462,260 (8,858) 11,086,057
-------------- ------------ ----------- -------------
Total Investment
Securities $ 46,739,656 $ 910,274 $ (16,797) $ 47,633,133
============== ============ ===========- =============
December 31, 1996
Available for Sale
U. S. Treasury
and Agency $ 15,600,645 $ 45,246 $ 65,135 $ 15,580,756
State and Municipal 11,974,825 138,621 74,852 12,038,594
Mortgage backed 15,141 681 15,822
Corporate obligations 5,973,508 38,931 1,585 6,010,854
Equity securities 309,250 309,250
-------------- ------------ ----------- -------------
33,873,369 223,479 141,572 33,955,276
-------------- ------------ ----------- -------------
Held to Maturity
State and Municipal 9,593,672 112,425 145,288 9,560,809
U. S. Treasury
and Agency 995,093 11,390 11,003 995,480
-------------- ------------ ----------- -------------
10,588,765 123,815 156,291 10,556,289
-------------- ------------ ----------- -------------
Total Investment
Securities $ 44,462,134 $ 347,294 $ 297,863 $ 44,511,565
============== ============ =========== =============
</TABLE>
F8
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENT SECURITIES (CONTINUED):
The amortized cost and fair values of investment securities available for sale
and held to maturity at December 31, 1997, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call obligations prior to maturity.
<TABLE>
<CAPTION>
Securities Available Securities Held
for Sale to Maturity
-------- -----------
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one year or less $ 8,838,859 $ 8,859,354 $ 264,023 $ 269,380
Due after one year
through 5 years 25,521,490 25,862,056 4,261,577 4,345,818
Due after 5 years
through 10 years 1,284,396 1,359,857 4,865,180 5,197,383
Due after 10 years 153,006 156,559 512,575 544,176
------------- -------------- -------------- --------------
35,797,751 36,237,826 9,903,355 10,356,757
------------- -------------- -------------- --------------
Equity securities 309,250 309,250 729,300 729,300
------------- -------------- -------------- --------------
Total $ 36,107,001 $ 36,547,076 $ 10,632,655 $ 11,086,057
============= ============== ============== ==============
Proceeds from the sale of available for sale securities, gross realized gains,
gross realized losses and the related income taxes on net realized gains were as
follows:
1997 1996
Proceeds from sales $ 116,931 $ 2,041,043
Gross realized gains 7,782
Gross realized losses 86 943
Applicable income tax (benefit) expense
on net realized gains 2,617 (321)
</TABLE>
In response to a statement from the Financial Accounting Standards Board
permitting banks to reassess their classification of investments, the Bank
transferred securities with a carrying value of $14,216,688 and net unrealized
gain of $36,169 from held to maturity to available for sale in December 1996.
The carrying value (which approximates market value) of securities pledged by
the Bank to secure deposits and for other purposes amounted to $2,029,179 and
$1,757,779 at December 31, 1997 and 1996, respectively.
F9
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LOANS:
Following is a summary of loans:
December 31,
1997 1996
Real estate
Secured by 1 - 4 family residential $ 66,942,378 $ 63,420,894
Secured by agricultural real estate 2,456,346 2,834,012
Other real estate loans 37,678,306 30,580,298
Consumer 27,191,528 25,148,673
Commercial 6,629,549 5,012,884
Other agricultural loans 1,126,615 778,730
--------------- ----------------
Total Loans 142,024,722 127,775,491
Less unearned interest 1,605,291 1,561,404
--------------- ----------------
$ 140,419,431 $ 126,214,087
=============== ================
Nonaccrual loans and impaired loans were immaterial at December 31, 1997 and
1996.
5. ALLOWANCE FOR LOAN LOSSES:
A summary of the changes in the allowance for loan losses is shown in the
following schedule:
December 31,
1997 1996
Balance, beginning of year $ 1,388,417 $ 1,245,135
Provision charged to operating expenses 234,000 204,000
Loan recoveries 55,337 33,626
Loans charged off (132,840) (94,344)
--------------- ----------------
Balance, End of Year $ 1,544,914 $ 1,388,417
=============== ================
6. BANK PREMISES AND EQUIPMENT:
Bank premises and equipment are summarized as follows:
December 31,
1997 1996
Buildings and land $ 2,687,372 $ 2,395,152
Furniture and fixtures 2,087,978 1,882,127
Automobiles 46,899 46,899
--------------- ----------------
4,822,249 4,324,178
Less - Accumulated depreciation 2,383,904 2,090,865
--------------- ----------------
$ 2,438,345 $ 2,233,313
=============== ================
The depreciation expense for 1997 and 1996 was $293,038
and $242,478, respectively.
F10
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. DEPOSITS:
The aggregate amount of short-term jumbo time deposits, each with a minimum
denomination of $100,000, was approximately $17,564,544 and $14,073,744 in 1997
and 1996, respectively.
At December 31, 1997, scheduled maturities of time deposits are as follows (in
thousands):
1998 $ 72,018
1999 18,052
2000 7,725
After 2000 4,910
--------------------
$ 102,705
====================
8. STOCK DIVIDEND:
In January 1997, the Company authorized a 100% stock dividend reflected in the
form of a split to shareholders of record on January 15, 1997. Earnings per
share reported for 1996 have been adjusted to reflect the dividend.
9. PENSION EXPENSE:
The Bank has a defined contribution pension plan which covers substantially all
full time employees. Contributions to the plan are made at the discretion of the
Board of Directors. For the years ended December 31, 1997 and 1996, the Bank
incurred cost of $168,706 and $154,611, respectively, for the plan.
10. INCOME TAXES:
The components of income tax expense are as follows:
<TABLE>
1997 1996
<S> <C> <C>
Current expense $ 1,442,926 $ 1,199,160
Increase in deferred income tax benefit (63,809) (14,036)
-------------- ---------------
Income Tax Expense $ 1,379,117 $ 1,185,124
============== ===============
The deferred tax effects of temporary differences are as follows:
1997 1996
Deferred tax assets $ 477,853 $ 420,691
Deferred tax liabilities (170,099) (52,749)
-------------- ---------------
Deferred Income Tax Benefit $ 307,754 $ 367,942
============== ===============
</TABLE>
F11
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. INCOME TAXES (CONTINUED):
Deferred tax assets consist primarily of temporary differences between the
allowance for loan losses computed for book and tax purposes. Deferred tax
liabilities relate primarily to net unrealized gains on securities available for
sale.
A reconciliation between the amount of income tax expense and the amount
computed by multiplying income by the applicable federal income tax rate of 34%
is as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 1996
Income taxes computed at the applicable
federal income tax rate $ 1,654,285 $ 1,483,593
Increase (decrease) resulting from:
Tax exempt municipal income (294,697) (347,265)
Non-deductible interest expense 44,588 45,113
Other - Net (25,059) 3,683
-------------- ----------------
Income Tax Expense $ 1,379,117 $ 1,185,124
============== ================
11. RELATED PARTY TRANSACTIONS:
During the year, executive officers, directors and principal stockholders were
customers of and had transactions with the Bank in the ordinary course of
business. These transactions were made on substantially the same terms as those
prevailing for other customers for comparable transactions and did not involve
more than normal risks.
Loan transactions to such related parties are shown in the following schedule:
1997 1996
Total loans, beginning of year $ 2,380,342 $ 1,828,015
New loans 437,715 1,096,791
Payments made (360,300) (544,464)
-------------- ----------------
Total Loans, End of Year $ 2,457,757 $ 2,380,342
============== ================
</TABLE>
12. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:
In the normal course of business, to meet the credit needs of its customers, the
Bank has made commitments to extend credit of $12,321,614 and $10,690,695 as of
December 31, 1997 and 1996, respectively. These commitments represent a credit
risk which is not recognized in the Bank's balance sheets. The contractual
amounts shown above represent the amounts of potential accounting loss should
the contract be fully drawn upon, the customer default, and the value of any
existing collateral become worthless. The Bank uses the same credit policies in
making commitments as it does for the loans reflected in the balance sheets.
Commitments to extend credit are generally made for a period of one year and
interest rates are determined when funds are disbursed. Collateral and other
security for the loans are determined on a case-by-case basis. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
distribution of commitments to extend credit approximates the distribution of
loans outstanding.
F12
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. CONCENTRATION OF CREDIT RISK:
Practically all of the Bank's loans are made to customers in the Bank's trade
area and a substantial portion of the loans are secured by real estate.
Accordingly, the ultimate collectibility of the Bank's loan portfolio is
susceptible to changes in local economic conditions and the real estate market.
In addition, the Bank had real estate loans and investment securities relating
to the local motel and lodging industry of approximately $5,800,000 at December
31, 1997. A summary of loans by type is shown in Note 4. Collateral required by
the Bank is determined on an individual basis depending on the nature of the
loan and the financial condition of the borrower. Investment in state and
municipal securities also include governmental entities within the Bank's market
area.
The Bank had deposits in other commercial banks totaling $3,596,975 and
$3,593,015 at December 31, 1997 and 1996, respectively.
14. CONTINGENCIES:
In addition, the Bank is a defendant in certain claims and legal actions arising
in the ordinary course of business. In the opinion of management, after
consultation with legal counsel, the ultimate disposition of these matters is
not expected to have a material adverse effect on the consolidated financial
condition of the Company.
15. REGULATORY MATTERS:
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
F13
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. REGULATORY MATTERS (CONTINUED):
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the Bureau of
Financial Institutions categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institution's category.
The Company's actual capital ratios are presented in the following table:
<TABLE>
<CAPTION>
Actual Regulatory Requirements
December 31, Adequately Well
1997 1996 Capitalized Capitalized
<S> <C> <C> <C> <C>
Total risk-based ratio 16.88% 13.13% 8.00% 10.00%
Tier 1 risk-based ratio 15.72% 12.19% 4.00% 6.00%
Total assets leverage ratio 10.66% 9.88% 3.00% 5.00%
</TABLE>
16. PROPOSED MERGER:
As of May 7, 1998, the Board of Directors of Summit Bankshares, Inc. ("Summit")
entered into an Agreement and Plan of Merger (amended June 3, 1998) with One
Valley Bancorp, Inc. ("One Valley"). Under the terms of the agreement, Summit
will be merged into a subsidiary of One Valley and Summit common stock will be
exchanged for One Valley common stock. The exchange rate will vary depending on
the market price of One Valley common stock. To be effective, the agreement must
be approved by a two-thirds majority of the shareholders of Summit and the Bank
regulatory authorities.
F14
<PAGE>
SUMMIT BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107 (SFAS 107) "Disclosures
About the Fair Value of Financial Statements" defines the fair value of a
financial instrument as the amount at which a financial instrument could be
exchanged in a current transaction between willing parties, other than in a
forced liquidation sale. As the majority of the Bank's financial instruments
lack an available trading market, significant estimates, assumptions and present
value calculations are required to determine estimated fair value.
Estimated fair value and the carrying value of financial instruments at December
31, 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
Estimated
Fair Value Carrying Value
Assets Assets
(Liabilities) (Liabilities)
<S> <C> <C>
Cash and cash equivalents $ 6,871 $ 6,871
Securities available for sale 36,547 36,547
Securities held to maturity 11,087 10,633
Loans less unearned interest 138,359 140,419
Deposits with no stated maturities (70,913) (70,913)
Deposits with stated maturities (102,855) (102,705)
Short-term borrowings (2,031) (2,031)
Long-term debt (248) (248)
Estimated fair value and the carrying value of financial instruments at December
31, 1996, are as follows (in thousands):
Estimated
Fair Value Carrying Value
Assets Assets
(Liabilities) (Liabilities)
Cash and cash equivalents $ 4,556 $ 4,556
Certificates of deposit in other banks 1,010 1,010
Securities available for sale 33,955 33,955
Securities held to maturity 10,556 10,589
Loans less unearned interest 123,575 126,214
Deposits with no stated maturities (66,975) (66,975)
Deposits with stated maturities (93,141) (92,982)
Short-term borrowings (562) (562)
Long-term debt (98) (98)
</TABLE>
The carrying value of cash and cash equivalents, deposits with no stated
maturities and short-term borrowings approximates fair value. The fair value of
securities was calculated using a pricing model which takes into consideration
maturity, yields and quality. The remainder of the financial instruments was
valued based on the present value of estimated future cash flows, discounted at
various rates in effect for similar instruments during the month of December
1997 and 1996, respectively.
F15
<PAGE>
18. PARENT ONLY FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
SUMMIT BANKSHARES, INC.
(PARENT COMPANY ONLY)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS 1997 1996
<S> <C> <C>
Current Assets
Cash $ 1,028,111 $ 14,778
Interest receivable 59,939 59,005
-------------------- --------------------
Total Current Assets 1,088,050 73,783
-------------------- --------------------
Investment in Subsidiaries 16,071,777 14,646,656
-------------------- --------------------
Investment Securities
Available for sale 2,074,635 1,766,560
Held to maturity 1,835,640 1,682,525
Other Assets 6,249 2,520
-------------------- --------------------
Total Assets $ 21,076,351 $ 18,172,044
==================== ====================
LIABILITIES
Accrued expenses $ $ 4,838
Deferred income tax liability 28,580 7,305
-------------------- --------------------
Total Liabilities 28,580 12,143
-------------------- --------------------
STOCKHOLDERS' EQUITY
Common stock 1,343,116 671,558
Surplus 1,759,960 2,431,518
Retained earnings 17,657,226 15,003,528
Unrealized holding gains 287,469 53,297
-------------------- --------------------
Total Stockholders' Equity 21,047,771 18,159,901
-------------------- --------------------
Total Liabilities and Stockholders' Equity $ 21,076,351 $ 18,172,044
==================== ====================
</TABLE>
F16
<PAGE>
18. PARENT ONLY FINANCIAL STATEMENTS (CONTINUED):
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FROM JUNE 13, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
1997 1996
Income
Interest and dividends from securities $ 184,908 $
Dividends from subsidiaries 2,082,732 3,530,000
--------------- --------------------
Total Income 2,267,640 3,530,000
--------------- --------------------
Expenses
Reorganization costs 550 28,424
Office supplies 4,345 297
Amortization of Organization costs 530 133
Miscellaneous 2,364
--------------- --------------------
Total Expenses 7,789 28,854
--------------- --------------------
Income before Income Tax Benefit and Decrease in
Undistributed Equity of Subsidiary 2,259,851 3,501,146
Income Tax Benefit (855) (162)
--------------- --------------------
Income before Decrease in Undistributed Equity
of Subsidiary 2,260,706 3,501,308
--------------- --------------------
Increase (Decrease) in Undistributed Equity of Subsidiary 1,225,721 (2,664,340)
--------------- --------------------
Net Income $ 3,486,427 $ 836,968
=============== ====================
</TABLE>
F17
<PAGE>
18. PARENT ONLY FINANCIAL STATEMENTS (CONTINUED):
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FROM JUNE 13, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
Unrealized
Common Retained Gains
Stock Surplus Earnings (Losses) Total
BALANCE, JUNE 13, 1996 $ 0 $ 0 $ 0 $ 0 $ 0
Transfer of 100% ownership of
Bank of Rockbridge to Summit
Bankshares 671,558 2,431,518 14,166,560 (123,179) 17,146,457
Net income for 1996 836,968 836,968
Increase in market value 176,476 176,476
------------ ------------- -------------- ----------- -------------
BALANCE, DECEMBER 31, 1996 671,558 2,431,518 15,003,528 53,297 18,159,901
Stock dividend effect in the form
of a split 671,558 (671,558)
Net income 3,486,427 3,486,427
Increase in market value, net
of taxes 234,172 234,172
Cash dividends (832,729) (832,729)
------------ ------------- -------------- ----------- -------------
BALANCE DECEMBER 31, 1997 $ 1,343,116 $ 1,759,960 $ 17,657,226 $ 287,469 $ 21,047,771
============ ============= ============== =========== =============
</TABLE>
F18
<PAGE>
18. PARENT ONLY FINANCIAL STATEMENTS (CONTINUED):
<TABLE>
<CAPTION>
<S> <C>
SUMMIT BANKSHARES, INC.
(PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FROM JUNE 13, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
1997 1996
Cash Flows From Operating Activities
Net income $ 3,486,427 $ 836,968
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 530 138
Dividends received in the form of marketable
securities (3,488,852)
(Increase) decrease in undistributed subsidiary
earnings (1,225,721) 2,664,340
(Increase) in other assets (5,195) (2,654)
(Increase) decrease in accrued expenses (4,838) 4,838
-------------------- --------------
Net Cash Provided by Operating Activities 2,251,203 14,778
-------------------- --------------
Cash Flows From Investing Activities
Purchase of securities held to maturity (153,115)
Purchase of securities available for sale (252,026)
Net Cash Used in Investing Activities (405,141)
--------------------
Cash Flows From Financing Activities
Advances from subsidiary 8,000
Repayment of advances from subsidiary (8,000)
Cash dividends paid (832,729)
--------------------
Net Cash Used in Financing Activities (832,729)
--------------------
Cash and Cash Equivalents
Net increase in cash and cash equivalents 1,013,333 14,778
Cash and cash equivalents, beginning of year 14,778
--------------------
Cash and Cash Equivalents, End of Year $ 1,028,111 $ 14,778
==================== ==============
Supplemental Disclosures:
Cash paid during the year for:
Interest $ 0 $ 0
Taxes 2,243 0
</TABLE>
Noncash Investing and Financing Activities:
In January 1997, the Company authorized a 100% stock dividend, effected in
the form of a split, to shareholders of record on January 15, 1997. On
October 1, 1996 the Company acquired a 100% interest in Bank of Rockbridge
by exchanging 671,558 shares of common stock with Bank of Rockbridge
shareholders on a share for share basis.
F19
<PAGE>
APPENDIX I
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
dated as of
May 7, 1998
by and between
One Valley Bancorp, Inc.
and
Summit Bankshares, Inc.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
RECITALS............................................................................................................1
ARTICLE 1
Certain definitions.................................................................................................2
1.01 Certain Definitions.............................................................2
ARTICLE II
The Merger..........................................................................................................6
2.01 The Merger......................................................................6
2.02 Effective Date and Effective Time...............................................7
2.03 Plan of Merger..................................................................7
ARTICLE III
Consideration; Exchange Procedures..................................................................................7
3.01 Merger Consideration............................................................7
3.02 Rights as Stockholders; Stock Transfers.........................................8
3.03 Fractional Shares...............................................................8
3.04 Exchange Procedures.............................................................9
3.05 Anti-Dilution Provisions.......................................................10
3.06 Dissenting Shareholders........................................................10
3.07 Escrow Account for Payment of Dissenters' Demands..............................10
ARTICLE IV
Actions Pending Acquisition........................................................................................11
4.01 Forebearances of Summit........................................................11
4.02 Forebearances of One Valley....................................................13
ARTICLE V
Representations and Warranties.....................................................................................13
5.01 Disclosure Schedules...........................................................13
5.02 Standard.......................................................................14
5.03 Representations and Warranties of Summit.......................................14
5.04 Representations and Warranties of One Valley...................................24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
Covenants.............................................................................................29
6.01 Reasonable Best Efforts...........................................29
6.02 Stockholder Approvals.............................................29
6.03 Registration Statement............................................29
6.04 Press Releases....................................................30
6.05 Access; Information...............................................30
6.06 Acquisition Proposals.............................................31
6.07 Affiliate Agreements..............................................31
6.08 Takeover Laws.....................................................32
6.09 Certain Policies..................................................32
6.10 NYSE Listing......................................................32
6.11 Regulatory Applications...........................................32
6.12 Indemnification...................................................33
6.13 Benefit Plans.....................................................33
6.14 Notification of Certain Matters...................................34
6.15 Dividend Coordination.............................................34
6.16 Other Transactions................................................34
6.17 Directors.........................................................34
ARTICLE VII
Conditions to Consummation of the Merger..............................................................34
7.01 Conditions to Each Party's Obligation to Effect the Merger........34
7.02 Conditions to Obligation of Summit................................35
7.03 Conditions to Obligation of One Valley............................36
ARTICLE VIII
Termination...........................................................................................37
8.01 Termination.......................................................37
8.02 Effect of Termination and Abandonment.............................38
ARTICLE IX
Miscellaneous.........................................................................................39
9.01 Survival..........................................................39
9.02 Waiver; Amendment.................................................39
9.03 Counterparts......................................................39
9.04 Governing Law.....................................................39
9.05 Expenses..........................................................39
9.06 Notices...........................................................39
9.07 Entire Understanding; No Third Party Beneficiaries................40
9.08 Interpretation; Effect............................................40
9.09 Waiver of Jury Trial..............................................40
</TABLE>
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EXHIBIT A Form of Stock Option Agreement
EXHIBIT A-1 Plan of Merger
EXHIBIT B Form of Summit Affiliate Agreement
EXHIBIT C Form of Shareholder Agreement
ANNEX A Form of Supplement for Merger Sub
Accession to Merger Agreement
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
May 7, 1998, as amended as of June 3, 1998 ("Agreement"), by and between One
Valley Bancorp, Inc. ("One Valley"), and Summit Bankshares, Inc. ("Summit").
RECITALS
A. Summit. Summit is a Virginia corporation, having its
principal place of business in Raphine, Virginia.
B. One Valley. One Valley is a West Virginia corporation,
having its principal place of business in Charleston, West Virginia.
C. Stock Option Agreement. As an inducement to the willingness
of One Valley to continue to pursue the transactions contemplated by this
Agreement, Summit expects (but is not obligated) to grant to One Valley an
option pursuant to a stock option agreement, in substantially the form of
Exhibit A.
D. Shareholder Agreement. As a further condition and
inducement to the willingness of One Valley to enter into this Agreement,
shareholders of Summit who are also directors of Summit and who hold, in the
aggregate in excess of 20% of the outstanding shares of Summit Common Stock have
entered into an agreement with One Valley, in the form of Exhibit C hereto (the
"Shareholder Agreement"), under which each such shareholder has agreed to vote
in favor of this Agreement.
E. Intentions of the Parties. It is the intention of the
parties to this Agreement that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method and treated as
a "reorganization" under Section 368 of the Internal Revenue Code of 1986 (the
"Code").
F. Board Action. The respective Boards of Directors of each of
One Valley and Summit have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements contained herein
the parties agree as follows:
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ARTICLE I
Certain Definitions
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange
offer, proposal for a merger, consolidation or other business
combination involving Summit or any of its Subsidiaries or any
proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets or
deposits of, Summit or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified
from time to time in accordance with Section 9.02.
"Code" means the Internal Revenue Code of
1986, as amended.
"Compensation and Benefit Plans" has the
meaning set forth in Section 5.03(m).
"Consultants" has the meaning set forth in
Section 5.03(m).
"Corporation Commission" has the meaning set
forth in Section 2.01(c).
"Costs" has the meaning set forth in Section
6.12(a).
"Directors" has the meaning set forth in
Section 5.03(m).
"Disclosure Schedule" has the meaning set
forth in Section 5.01.
"Effective Date" means the date on which the
Effective Time occurs.
"Effective Time" means the effective time of
the Merger, as provided for in Section 2.02.
"Employees" has the meaning set forth in
Section 5.03(m).
"Environmental Law" means all applicable
local, state and federal environmental, health and safety laws
and regulations, including, without limitation, the Resource
Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Clean Water
Act, the Federal Clean Air Act, and the Occupational Safety
and Health Act, each as amended, regulations promulgated
thereunder, and state counterparts.
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"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" has the meaning set forth
in Section 5.03(m).
"Escrow Account," "Escrow Agent," and
"Escrow Agreement" each have the meaning set forth in Section
3.07.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations
thereunder.
"Exchange Agent" has the meaning set forth
in Section 3.04.
"Exchange Ratio" has the meaning set forth
in Section 3.01.
"Governmental Authority" means any court,
administrative agency or commission or other federal, state or
local governmental authority or instrumentality.
"Indemnified Party" has the meaning set
forth in Section 6.12(a).
"Lien" means any charge, mortgage, pledge,
security interest, restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with
respect to One Valley or Summit, any effect that (i) is
material and adverse to the financial position, results of
operations or business of One Valley and its Subsidiaries
taken as a whole or Summit and its Subsidiaries taken as a
whole, respectively, or (ii) would materially impair the
ability of either One Valley or Summit to perform its
obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the Merger
and the other transactions contemplated by this Agreement;
provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and
similar laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory
accounting requirements applicable to banks and their holding
companies generally and (c) any modifications or changes to
valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger,
in each case in accordance with generally accepted accounting
principles.
"Merger" has the meaning set forth in
Section 2.01.
"Merger Consideration" has the meaning set
forth in Section 2.01.
"Merger Sub" means a corporation to be
organized under the VSCA by One Valley prior to the Effective
Time.
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"Multiemployer Plan" has the meaning set
forth in Section 5.03(m).
"New Certificate" has the meaning set forth
in Section 3.04.
"NYSE" means The New York Stock Exchange,
Inc.
"Old Certificate" has the meaning set forth
in Section 3.04.
"One Valley" has the meaning set forth in
the preamble to this Agreement.
"One Valley Board" means the Board of
Directors of One Valley.
"One Valley Common Stock" means the common
stock, par value $10.00 per share, of One Valley.
"PBGC" means the Pension Benefit Guaranty
Corporation.
"Person" means any individual, bank,
corporation, partnership, association, joint-stock company,
business trust or unincorporated organization.
"Pension Plan" has the meaning set forth in
Section 5.03(m).
"Plan of Merger" has the meaning set forth
in Section 2.03.
"Plans" has the meaning set forth in Section
5.03(m).
"Previously Disclosed" by a party shall mean
information set forth in its Disclosure Schedule.
"Proxy Statement" has the meaning set forth
in Section 6.03.
"Registration Statement" has the meaning set
forth in Section 6.03.
"Regulatory Authority" has the meaning set
forth in Section 5.03(i).
"Representatives" means, with respect to any
Person, such Person's directors, officers, employees, legal or
financial advisors or any representatives of such legal or
financial advisors.
"Rights" means, with respect to any Person,
securities or obligations convertible into or exercisable or
exchangeable for, or giving any person any right to subscribe
for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other
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instrument the value of which is determined in whole or in
part by reference to the market price or value of, shares of
capital stock of such person.
"SEC" means the Securities and Exchange
Commission.
"SEC Documents" has the meaning set forth in
Section 5.04(g).
"Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations thereunder.
"Stock Option Agreement" has the meaning set
forth in Recital C.
"Subsidiary" and "Significant Subsidiary"
have the meanings ascribed to them in Rule 1-02 of Regulation
S-X of the SEC.
"Summit" has the meaning set forth in the
preamble to this Agreement.
"Summit Affiliate" has the meaning set forth
in Section 6.07(a).
"Summit Board" means the Board of Directors
of Summit.
"Summit By-Laws" means the By-laws of
Summit.
"Summit Certificate" means the Restated
Articles of Incorporation of Summit, as amended.
"Summit Common Stock" means the common
stock, par value $1.00 per share, of Summit.
"Summit Meeting" has the meaning set forth
in Section 6.02.
"Surviving Corporation" has the meaning set
forth in Section 2.01.
"Takeover Laws" has the meaning set forth in
Section 5.03 (o).
"Tax" and "Taxes" means all federal, state,
local or foreign taxes, charges, fees, levies or other
assessments, however denominated, including, without
limitation, all net income, gross income, gains, gross
receipts, sales, use, ad valorem, goods and services, capital,
production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health,
excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties,
fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax
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or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"Tax Returns" means any return, amended
return or other report (including elections, declarations,
disclosures, schedules, estimates and information returns)
required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Summit
Stock held by Summit or any of its Subsidiaries or by One
Valley or any of its Subsidiaries, in each case other than in
a fiduciary capacity or as a result of debts previously
contracted in good faith.
"VSCA" means the Virginia Stock Corporation
Act.
ARTICLE II
The Merger
2.01 The Merger. (a) Prior to the Effective Time, One Valley
shall take any and all action necessary (i) to duly organize the Merger Sub for
the purpose of consummating the Merger; (ii) to cause Merger Sub to become a
party to this Agreement, to be evidenced by the execution by Merger Sub of a
supplement to this Agreement in substantially the form of Annex A , and delivery
thereof to Summit; and (iii) to cause Merger Sub to take all actions necessary
or proper to comply with the obligations of One Valley and Merger Sub to
consummate the transactions contemplated hereby.
(b) At the Effective Time, Summit shall merge with and into
Merger Sub (the "Merger"), the separate corporate existence of Summit shall
cease and Merger Sub shall survive and continue to exist as a Virginia
corporation (Merger Sub, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation"). One Valley may at any
time prior to the Effective Time change the method of effecting the combination
with Summit (including, without limitation, the provisions of this Article II)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
amount or kind of consideration to be issued to holders of Summit Stock as
provided for in this Agreement (the "Merger Consideration"), (ii) adversely
affect the tax treatment of Summit's stockholders as a result of receiving the
Merger Consideration or the Merger qualifying for "pooling of interests"
accounting treatment or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(c) Subject to the satisfaction or waiver of the conditions
set forth in Article VII, the Merger shall become effective upon the occurrence
of the filing in the office of the Virginia State Corporation Commission (the
"Corporation Commission") of articles of merger in accordance with Section
13.1720 of the VSCA or such later date and time as may be set forth in such
articles and the
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issuance of a certificate of merger by the Corporation Commission under the
VSCA. The Merger shall have the effects prescribed in the VSCA.
2.02 Effective Date and Effective Time. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall cause the effective date of the Merger (the "Effective Date") to occur (i)
within thirty days after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (the exact date to be determined by One Valley), or (ii) such other
date to which the parties may agree in writing. The time on the Effective Date
when the Merger shall become effective is referred to as the "Effective Time."
2.03 Plan of Merger. The plan of merger included in this
Agreement is separately stated in the Plan of Merger (the "Plan of Merger")
attached hereto as Exhibit A-1. The parties agree that subject to the provisions
of this Agreement, including the approval of the Plan of Merger by the requisite
vote of stockholders of Summit, the Plan of Merger shall be incorporated into
the articles of merger to be filed with the Corporation Commission to effect the
Merger.
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Outstanding Summit Common Stock. Each
share, excluding Treasury Stock, of Summit Common Stock issued
and outstanding immediately prior to the Effective Time shall
become and be converted in the Merger into a number of shares
of One Valley Common Stock equal to the Exchange Ratio as
provided for herein. The "Exchange Ratio" shall equal the
following number:
(i) if the One Valley
Average Common Stock Price is equal to or
greater than $35.50 but less than or equal
to $40.50, the Exchange Ratio shall be 1.36;
(ii) if the One Valley
Average Common Stock Price is greater than
$40.50 but less than or equal to $42.53, the
Exchange Ratio shall be equal to $55.08
divided by the One Valley Average Common
Stock Price;
(iii) if the One Valley
Average Common Stock Price is equal to or
greater than $33.88 but less than $35.50,
the Exchange Ratio shall be equal to $48.28
divided by the One Valley Average Common
Stock Price;
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(iv) if the One Valley
Average Common Stock Price is less than
$33.88, the Exchange Ratio shall be 1.425;
and
(v) if the One Valley
Average Common Stock Price is greater than
$42.53, the Exchange Ratio shall be 1.295.
"One Valley Average Common Stock Price"
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 Effective Date (the tenth day
to be determined by counting the day preceding the Effective
Date as the first day). The Exchange Ratio shall be subject to
adjustment as provided in Section 3.05 and Section 8.01(g).
(b) Outstanding One Valley Stock and Merger
Sub Stock. Each share of One Valley Stock issued and
outstanding immediately prior to the Effective Time shall
remain issued and outstanding and unaffected by the Merger.
Each share of Merger Sub common stock issued and outstanding
immediately prior to the Effective Time shall remain issued
and outstanding at the Effective Time.
(c) Treasury Shares. Each share of Summit
Common Stock held as Treasury Stock immediately prior to the
Effective Time shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Summit Stock shall cease to be, and shall have no rights as,
stockholders of Summit, other than to receive any dividend or other distribution
with respect to such Summit Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III. After the
Effective Time, there shall be no transfers on the stock transfer books of
Summit or the Surviving Corporation of shares of Summit Stock.
3.03 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of One Valley Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, One Valley shall pay to each holder of Summit Common Stock who
would otherwise be entitled to a fractional share of One Valley Common Stock
(after taking into account all Old Certificates delivered by such holder) an
amount in cash (without interest) determined by multiplying such fraction by the
last sale price of One Valley Common Stock, as reported by the NYSE (as reported
in The Wall Street Journal or, if not reported therein, in another authoritative
source), for the NYSE trading day immediately preceding the Effective Date.
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3.04 Exchange Procedures. (a) At or prior to the Effective
Time, One Valley shall deposit, or shall cause to be deposited, with Harris
Trust and Savings Bank (in such capacity, the "Exchange Agent"), for the benefit
of the holders of certificates formerly representing shares of Summit Common
Stock ("Old Certificates"), for exchange in accordance with this Article III,
certificates representing the shares of One Valley Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date occurring after
the Effective Date with respect thereto (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "Exchange
Fund") to be paid pursuant to this Article III in exchange for outstanding
shares of Summit Common Stock.
(b) As promptly as practicable after the Effective Date, One
Valley shall send or cause to be sent to each former holder of record of shares
of Summit Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such stockholder's Old Certificates for the
consideration set forth in this Article III. One Valley shall cause the New
Certificates into which shares of a stockholder's Summit Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Summit Common
Stock (or indemnity reasonably satisfactory to One Valley and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to be paid in lieu of
fractional share interests or in respect of dividends or distributions which any
such person shall be entitled to receive pursuant to this Article III upon such
delivery. Old Certificates surrendered for exchange by any Summit Affiliate
shall not be exchanged for New Certificates until One Valley has received a
written agreement from such person in the form attached hereto as Exhibit B.
(c) Notwithstanding the foregoing, neither the Exchange Agent,
nor any party hereto shall be liable to any former holder of Summit Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to One
Valley Common Stock with a record date occurring after the Effective Time shall
be paid to the holder of any unsurrendered Old Certificate representing shares
of Summit Common Stock converted in the Merger into shares of such One Valley
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04, and, following 90 days after the Effective Date, no such
shares of Summit Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming entitled to receive
dividends or distributions in accordance with this Section 3.04, the record
holder thereof also shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of One Valley Common Stock such holder had the
right to receive upon surrender of the Old Certificates.
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(e) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of Summit for six months after the Effective Time shall be paid
to One Valley. Any stockholders of Summit who have not theretofore complied with
this Article III shall thereafter look only to One Valley for payment of the
shares of One Valley Common Stock, cash in lieu of any fractional shares and
unpaid dividends and distributions on One Valley Common Stock deliverable in
respect of each share of Summit Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 Anti-Dilution Provisions. In the event One Valley changes
(or establishes a record date for changing) the number of shares of One Valley
Common Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding One Valley Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.06 Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, shares of Summit Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
shareholders who did not vote in favor of the adoption of this Agreement, who
are entitled to demand the fair value of such shares of Summit Common Stock
under Article 15 of the VSCA, and who comply with all of the relevant provisions
of such Article (the "Dissenting Shares") shall not remain outstanding (unless
and until such holders shall have failed to perfect or shall have effectively
withdrawn or lost their dissenters' rights under the VSCA), but shall instead be
entitled to all applicable dissenters' rights as are prescribed by the VSCA. If
any such holder shall have failed to perfect or shall have effectively withdrawn
or lost such dissenters' rights, such holder's shares of Summit Common Stock
shall thereupon remain outstanding. Summit shall give One Valley (i) prompt
notice of any written demands for payment for any Summit Common Stock under
Article 15 of the VSCA, attempted withdrawals of such demands, and any other
instruments served pursuant to the VSCA and received by Summit relating to
dissenters' rights, and (ii) the opportunity to participate in all negotiations
and proceedings with respect to the exercise of dissenters' rights under the
VSCA. Summit shall not, except with the prior written consent of One Valley,
voluntarily make any payment with respect to any demands for payment for Summit
Common Stock under Article 15 of the VSCA, offer to settle or settle any such
demands or approve and withdrawals of any such demands.
3.07 Escrow Account for Payment of Dissenters' Demands.
Pursuant to an escrow agreement to be entered into by Summit with an escrow
agent selected by mutual agreement of Summit and One Valley (the "Escrow
Agent"), in a form reasonably acceptable to One Valley (the "Escrow Agreement"),
Summit shall, immediately prior to the Effective Time, deposit in an account
with the Escrow Agent (the "Escrow Account") funds sufficient in the aggregate
to pay all amounts payable with respect to any Dissenting Shares (including any
required interest or other amounts with respect to such amounts, as provided for
in Article 15 of the VSCA). The funds in the Escrow Account will not be
provided, directly or indirectly, by One Valley, and shall be released only (i)
to pay any amounts properly payable with respect to any Dissenting Shares or
(ii) after the Effective
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Time, upon the determination by One Valley that all amounts payable with respect
to any Dissenting Shares have been paid.
ARTICLE IV
Actions Pending Acquisition
4.01 Forebearances of Summit. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of One Valley, Summit will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of
Summit and its Subsidiaries other than in the ordinary and
usual course or fail to use reasonable efforts to preserve
intact their business organizations and assets and maintain
their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or
take any action reasonably likely to have an adverse affect
upon Summit's ability to perform any of its material
obligations under this Agreement.
(b) Capital Stock. (i) Issue, sell or
otherwise permit to become outstanding, or authorize the
creation of, any additional shares of Summit Stock or any
Rights, (ii) enter into any agreement with respect to the
foregoing, or (iii) permit any additional shares of Summit
Stock to become subject to new grants of employee or director
stock options, other Rights or similar stock-based employee
rights.
(c) Dividends, Etc. (a) Make, declare, pay
or set aside for payment any dividend (other than (A)
semiannual cash dividends on Summit Stock in an amount not to
exceed 44(cent) per share with record and payment dates
consistent with past practice, and (B) dividends from wholly
owned Subsidiaries to Summit or another wholly owned
Subsidiary of Summit) on or in respect of, or declare or make
any distribution on any shares of Summit Stock or (b) directly
or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital
stock.
(d) Compensation; Employment Agreements;
Etc. Enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any
director, officer or employee of Summit or its Subsidiaries,
or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments).
(e) Benefit Plans. Enter into, establish,
adopt or amend (except (i) as may be required by applicable
law or (ii) to satisfy Previously Disclosed contractual
obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, bonus, group
insurance or other employee
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benefit, incentive or welfare contract, plan or arrangement,
or any trust agreement (or similar arrangement) related
thereto, in respect of any director, officer or employee of
Summit or its Subsidiaries, or take any action to accelerate
the vesting or exercisability of compensation or benefits
payable thereunder.
(f) Dispositions. Sell, transfer, mortgage,
encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the
ordinary course of business and in a transaction that is not
material to it and its Subsidiaries taken as a whole.
(g) Acquisitions. Acquire (other than by way
of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or
any portion of, the assets, business, deposits or properties
of any other entity.
(h) Governing Documents. Amend the Summit
Certificate, Summit By-laws or the certificate of
incorporation or by-laws (or similar governing documents) of
any of Summit's Subsidiaries.
(i) Accounting Methods. Implement or adopt
any change in its accounting principles, practices or methods,
other than as may be required by generally accepted accounting
principles.
(j) Contracts. Except in the ordinary course
of business consistent with past practice, enter into or
terminate any material contract (as defined in Section
5.03(k)) or amend or modify in any material respect any of its
existing material contracts.
(k) Claims. Except in the ordinary course of
business consistent with past practice, settle any claim,
action or proceeding, except for any claim, action or
proceeding which does not involve precedent for other claims,
actions or proceedings and which involves solely money damages
in an amount, individually or in the aggregate for all such
settlements, that is not material to Summit and its
Subsidiaries, taken as a whole.
(l) Adverse Actions. (a) Take any action if
such action is reasonably likely to prevent or impede the
Merger from qualifying (i) for "pooling of interests"
accounting treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code; or (b) knowingly take any
action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time, (ii)
any of the conditions to the Merger set forth in Article VII
not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be
required by applicable law or regulation.
(m) Risk Management. Except in the ordinary
course of business consistent with past practice, or as
required by applicable law or regulation, (i) implement or
adopt any
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material change in its interest rate and other risk management
policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use
commercially reasonable means to avoid any material increase
in its aggregate exposure to interest rate risk.
(n) Indebtedness. Incur any indebtedness for
borrowed money other than in the ordinary course of business.
(o) Commitments. Agree or commit to do any
of the foregoing.
4.02 Forebearances of One Valley. From the date hereof until
the Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of Summit, One Valley will not, and will cause each of
its Subsidiaries not to:
(a) Preservation. Fail to use reasonable
efforts to preserve intact in any material respect their
business organizations and assets and maintain their rights,
franchises and existing relations with customers, suppliers,
employees and business associates.
(b) Extraordinary Dividends. Make, declare,
pay or set aside for payment any extraordinary dividend.
(c) Adverse Actions. (a) Take any action
while knowing that such action would, or is reasonably likely
to, prevent or impede the Merger from qualifying (i) for
"pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code;
or (b) knowingly take any action that is intended or is
reasonably likely to result in (i) any of its representations
and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set
forth in Article VII not being satisfied or (iii) a material
violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation;
provided, however, that nothing contained herein shall limit
the ability of One Valley to exercise its rights under the
Stock Option Agreement.
(d) Commitments. Agree or commit to do any
of the foregoing.
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof,
Summit has delivered to One Valley a schedule (its "Disclosure Schedule")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement
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contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03 or to one or more of its
covenants contained in Article IV; provided, that (a) no such item is required
to be set forth in a Disclosure Schedule as an exception to a representation or
warranty if its absence would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item represents a material exception or
fact, event or circumstance or that such item is reasonably likely to result in
a Material Adverse Effect on the party making the representation. Summit's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue or breached as a result of effects arising solely from
actions taken in compliance with a written request of One Valley.
5.02 Standard. No representation or warranty of Summit or One
Valley contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, circumstance or event, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 5.03 or 5.04 has had or is reasonably likely to
have a Material Adverse Effect (other than the representations and warranties in
Section 5.03 (b), (c)(i) and (ii), (d), (e), (g), (i), (k), (l), (m)(i) (as it
relates to the list), (o), and (u), and Section 5.04 (b), (e), (g), (k), and
(p), which shall be true and correct in all material respects). For purposes of
this Agreement, "knowledge" shall mean, with respect to a party hereto, actual
knowledge of any officer of that party with the title not less than vice
president and that party's internal counsel, if any.
5.03 Representations and Warranties of Summit. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Summit hereby
represents and warrants to One Valley:
(a) Organization, Standing and Authority.
Summit is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of
Virginia. Summit is duly qualified to do business and is in
good standing therein and in any foreign jurisdictions where
its ownership or leasing of property or assets or the conduct
of its business requires it to be so qualified.
(b) Summit Stock. As of the date hereof, the
authorized capital stock of Summit consists solely of
10,000,000 shares of Summit Common Stock, of which 1,343,116
shares were outstanding as of the date hereof. As of the date
hereof, no shares of Summit Common Stock were held in treasury
by Summit or otherwise owned by Summit or its Subsidiaries.
The outstanding shares of Summit Stock have been duly
authorized and are validly issued and outstanding, fully paid
and nonassessable, and subject to no preemptive rights (and
were not issued in violation of any preemptive rights). There
are no shares of Summit Stock authorized and reserved for
issuance, Summit does not have any Rights issued or
outstanding with respect to Summit Common Stock, and Summit
does not have any commitment to authorize,
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issue or sell any Summit Common Stock or Rights, except
pursuant to this Agreement and the Stock Option Agreement.
(c) Subsidiaries. (i)(A) Summit has
Previously Disclosed a list of all of its Subsidiaries
together with the jurisdiction of organization of each such
Subsidiary, (B) except as Previously Disclosed, it owns,
directly or indirectly, all the issued and outstanding equity
securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become
required to be issued (other than to it or its wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there
are no contracts, commitments, understandings or arrangements
by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such
Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote
or to dispose of such securities and (F) all the equity
securities of each Subsidiary held by Summit or its
Subsidiaries are fully paid and nonassessable (except pursuant
to 12 U.S.C. ss.55) and are owned by Summit or its
Subsidiaries free and clear of any Liens.
(ii) Summit does not own beneficially,
directly or indirectly, any equity securities or similar
interests of any Person, or any interest in a partnership or
joint venture of any kind, other than its Subsidiaries.
(iii) Each of Summit's Subsidiaries has been
duly organized and is validly existing in good standing under
the laws of the jurisdiction of its organization, and is duly
qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified.
(d) Corporate Power. Each of Summit and its
Subsidiaries has the corporate power and authority to carry on
its business as it is now being conducted and to own all its
properties and assets; and Summit has the corporate power and
authority to execute, deliver and perform its obligations
under this Agreement and the Stock Option Agreement.
(e) Corporate Authority. Subject in the case
of this Agreement to receipt of the requisite approval of this
Agreement and the Plan of Merger by the holders of more than
two-thirds of the outstanding shares of Summit Common Stock
entitled to vote thereon (which is the only shareholder vote
required thereon), this Agreement, the Plan of Merger, the
Stock Option Agreement and the transactions contemplated
hereby and thereby have been authorized by all necessary
corporate action of Summit and the Summit Board prior to the
date hereof. This Agreement is a valid and legally binding
obligation of Summit, enforceable in accordance with its terms
(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity
principles). The Summit Board of Directors has received the
written opinion of Scott & Stringfellow, Inc., to the effect
that as of the date hereof the consideration to be received by
the holders of
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Summit Common Stock in the Merger is fair to the holders of
Summit Common Stock from a financial point of view.
(f) Regulatory Filings; No Defaults. (i) No
consents or approvals of, or filings or registrations with,
any Governmental Authority or with any third party are
required to be made or obtained by Summit or any of its
Subsidiaries in connection with the execution, delivery or
performance by Summit of this Agreement or the Stock Option
Agreement or to consummate the Merger except for (A) filings
of applications or notices with federal and state banking
authorities, (B) filings with the SEC and state securities
authorities, and (C) the filing of articles of merger with the
Corporation Commission pursuant to the VSCA and the issuance
of a certificate of merger in connection therewith. As of the
date hereof, Summit is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received
without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory
approvals referred to in the preceding paragraph, and
expiration of related waiting periods, and required filings
under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Stock
Option Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Summit or of any of its
Subsidiaries or to which Summit or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the Summit Certificate or
the Summit By-Laws, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or
instrument.
(g) Certain Financial Information. (i)
Summit has provided One Valley with its audited financial
statements as of December 31, 1995, 1996, and 1997, consisting
of its consolidated balance sheets, consolidated statements of
income, consolidated statements of shareholders' equity and
consolidated statements of cash flows and the related notes
thereto (the "Audited Financial Statements"), and each of the
balance sheets contained in the Audited Financial Statements
(including any related notes) fairly presents the financial
position of Summit and its subsidiaries as of its date, and
each of the statements of income and changes in stockholders'
equity and cash flows contained in the Audited Financial
Statements (including any related notes) fairly presents the
results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of Summit and its
Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except in each case as may be noted therein. Summit has
provided One Valley with its unaudited consolidated balance
sheet as of March 31, 1998, and its unaudited consolidated
statement of income for the period ended March 31, 1998 (the
"1998 Unaudited Financial Statements") and such balance sheet
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fairly presents the financial position of Summit and its
Subsidiaries as of March 31, 1998, and such statement of
income fairly presents the results of operations of Summit and
its Subsidiaries for the period ended March 31, 1998, in each
case in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except in each case as may be noted therein and except that
such balance sheet and statement of income do not have any
footnotes. Summit will provide One Valley with similar balance
sheets and income statements with regard to June 30, September
30, and December 31, 1998, which will satisfy the foregoing
standard with regard thereto.
(ii) Since December 31, 1997, Summit and its
Subsidiaries have not incurred any liability other than in the
ordinary course of business consistent with past practice.
(iii) Since December 31, 1997, (A) Summit
and its Subsidiaries have conducted their respective
businesses in the ordinary and usual course consistent with
past practice (excluding matters related to this Agreement and
the transactions contemplated hereby) and (B) no event has
occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events
(described in any paragraph of Section 5.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with
respect to Summit.
(h) Litigation. No litigation, claim or
other proceeding before any court or governmental agency is
pending against Summit or any of its Subsidiaries and, to
Summit's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Summit
nor any of its Subsidiaries or properties is a party to or is
subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment
letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of
financial institutions (or their holding companies) or issuers
of securities or engaged in the insurance of deposits
(including, without limitation, the Office of the Comptroller
of the Currency, the Federal Reserve System, the State
Corporation Commission of the Commonwealth of Virginia, and
the Federal Deposit Insurance Corporation) or the supervision
or regulation of it or any of its Subsidiaries (collectively,
the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries
has been advised by any Regulatory Authority that such
Regulatory Authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or
similar submission.
(j) Compliance with Laws. Each of Summit and
its Subsidiaries:
(i) is in compliance with
all applicable federal, state, local and
foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or
decrees applicable
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thereto or to the employees conducting such
businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other
laws relating to discriminatory business
practices;
(ii) has all permits,
licenses, authorizations, orders and
approvals of, and has made all filings,
applications and registrations with, all
Governmental Authorities that are required
in order to permit them to own or lease
their properties and to conduct their
businesses as presently conducted; all such
permits, licenses, certificates of
authority, orders and approvals are in full
force and effect and, to Summit's knowledge,
no suspension or cancellation of any of them
is threatened; and
(iii) has received, since
December 31, 1996, no notification or
communication from any Governmental
Authority (A) asserting that Summit or any
of its Subsidiaries is not in compliance
with any of the statutes, regulations, or
ordinances which such Governmental Authority
enforces or (B) threatening to revoke any
license, franchise, permit, or governmental
authorization (nor, to Summit's knowledge,
do any grounds for any of the foregoing
exist).
(k) Material Contracts; Defaults. Except for
this Agreement, the Stock Option Agreement and those
agreements and other documents referred to in the Disclosure
Schedule, neither it nor any of its Subsidiaries is a party
to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (whether written or
oral) (i) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
restricts or limits in any way the conduct of business by it
or any of its Subsidiaries or includes a provision not to
compete in a line of business or in a geographic area. Neither
it nor any of its Subsidiaries is in default under any
contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which
its respective assets, business, or operations may be bound or
affected in any way, or under which it or its respective
assets, business, or operations receive benefits, and there
has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
(l) No Brokers. No action has been taken by
Summit that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other
like payment with respect to the transactions contemplated by
this Agreement, excluding a Previously Disclosed fee to be
paid to Scott & Stringfellow, Inc.
(m) Employee Benefit Plans. (i) Section
5.03(m)(i) of Summit's Disclosure Schedule contains a complete
and accurate list of all existing employee compensation and
benefit plans, agreements and all similar practices, policies
and arrangements in which any employee or former employee (the
"Employees"), consultant or former consultant (the
"Consultants") or director or former director (the
"Directors") of Summit or any of its
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Subsidiaries participates or to which any such Employees,
Consultants or Directors are a party (the "Compensation and
Benefit Plans"). Neither Summit nor any of its Subsidiaries
has any commitment to create any additional Compensation and
Benefit Plan or to modify or change any existing Compensation
and Benefit Plan.
(ii) Each Compensation and Benefit Plan has
been operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all filings,
disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely
made. Each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter (including a determination that the
related trust under such Compensation and Benefit Plan is
exempt from tax under Section 501(a) of the Code) from the
Internal Revenue Service ("IRS"), and Summit is not aware of
any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending
or, to the knowledge of Summit, threatened legal action, suit
or claim relating to the Compensation and Benefit Plans.
Neither Summit nor any of its Subsidiaries has engaged in a
transaction, or omitted to take any action, with respect to
any Compensation and Benefit Plan that would reasonably be
expected to subject Summit or any of its Subsidiaries to a tax
or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA, assuming for purposes of Section 4975 of
the Code that the taxable period of any such transaction
expired as of the date hereof.
(iii) No liability (other than for payment
of premiums to the PBGC which have been made or will be made
on a timely basis) under Title IV of ERISA has been or is
expected to be incurred by Summit or any of its Subsidiaries
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 any
of them, or any single-employer plan of any entity (an "ERISA
Affiliate") which is considered one employer with Summit under
Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the
Code (an "ERISA Affiliate Plan"). None of Summit, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has
been obligated to contribute, to a multiemployer plan under
Subtitle E of Title IV of ERISA at any time since September
26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Compensation and Benefit Plan or by any
ERISA Affiliate Plan within the 12-month period ending on the
date hereof, and no such notice will be required to be filed
as a result of the transactions contemplated by this
Agreement. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to
Summit's knowledge, no condition exists that presents a
material risk that such proceedings will be instituted. To the
knowledge of Summit, there is no pending investigation or
enforcement action by the PBGC, the Department of Labor (the
"DOL") or IRS or any other
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governmental agency with respect to any Compensation and
Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation
performed prior to the date of this Agreement, 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 such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither an adverse change in the financial
condition of such Pension Plan or ERISA Affiliate Plan nor any
amendment or other change to such Pension Plan or ERISA
Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such
result.
(iv) All contributions required to be made
under the terms of any Compensation and Benefit Plan or ERISA
Affiliate Plan or any employee benefit arrangements under any
collective bargaining agreement to which Summit or any of its
Subsidiaries is a party have been timely made or have been
reflected on Summit's financial statements. Neither any
Pension Plan nor any ERISA Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension
Plan or ERISA Affiliate Plan have been made on or before their
due dates. None of Summit, any of its Subsidiaries or any
ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension
Plan or to any ERISA Affiliate Plan pursuant to Section
401(a)(29) of the Code, and (y) has taken any action, or
omitted to take any action, that has resulted, or would
reasonably be expected to result, in the imposition of a lien
under Section 412(n) of the Code or pursuant to ERISA.
(v) Neither Summit nor any of its
Subsidiaries has any obligations to provide retiree health and
life insurance or other retiree death benefits under any
Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code, and each such Compensation and
Benefit Plan may be amended or terminated without incurring
liability thereunder. There has been no communication to
Employees by Summit or any of its Subsidiaries that would
reasonably be expected to promise or guarantee such Employees
retiree health or life insurance or other retiree death
benefits on a permanent basis.
(vi) Summit and its Subsidiaries do not
maintain any Compensation and Benefit Plans covering foreign
employees.
(vii) With respect to each Compensation and
Benefit Plan, if applicable, Summit has provided or made
available to One Valley, true and complete copies of existing:
(A) Compensation and Benefit Plan documents and amendments
thereto; (B) trust instruments and insurance contracts; (C)
two most recent Forms 5500 filed with the IRS; (D) most recent
actuarial report and financial statement; (E) the most recent
summary plan description; (F) forms filed with the PBGC (other
than for premium payments); (G) most recent determination
letter issued by the IRS; (H) any Form 5310 or Form 5330 filed
with the
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IRS; and (I) most recent nondiscrimination tests performed
under ERISA and the Code (including 401(k) and 401(m) tests).
(viii) Except as disclosed on Section
5.03(m)(viii) of Summit's Disclosure Schedule, the
consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including,
without limitation, as a result of any termination of
employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any Employee, Consultant
or Director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in
the vesting or acceleration of any benefits under any
Compensation and Benefit Plan or (C) result in any material
increase in benefits payable under any Compensation and
Benefit Plan.
(ix) Except as disclosed on Section
5.03(m)(ix) of Summit's Disclosure Schedule, neither Summit
nor any of its Subsidiaries maintains any compensation plans,
programs or arrangements the payments under which would not
reasonably be expected to be deductible as a result of the
limitations under Section 162(m) of the Code and the
regulations issued thereunder.
(x) Except as disclosed on Section
5.03(m)(x) of Summit's Disclosure Schedule, as a result,
directly or indirectly, of the transactions contemplated by
this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the
Effective Time), none of One Valley, Summit or the Surviving
Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an
"excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in
Section 280G of the Code), without regard to whether such
payment is reasonable compensation for personal services
performed or to be performed in the future.
(n) Labor Matters. Neither Summit nor any of
its Subsidiaries is a party to or is bound by any collective
bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is
Summit or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an
unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel Summit or any such
Subsidiary to bargain with any labor organization as to wages
or conditions of employment, nor is there any strike or other
labor dispute involving it or any of its Subsidiaries pending
or, to Summit's knowledge, threatened, nor is Summit aware of
any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) Takeover Laws; Dissenters Rights. Summit
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 are exempt from, the
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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 Summit'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
(p) Environmental Matters. To Summit's
knowledge, neither the conduct nor operation of Summit or its
Subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds a Lien, violates or
violated Environmental Laws and to Summit's knowledge, no
condition has existed or event has occurred with respect to
any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To Summit's knowledge,
neither Summit nor any of its Subsidiaries has received any
notice from any person or entity that Summit or its
Subsidiaries or the operation or condition of any property
ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of
or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup
or other remediation of any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at, on,
beneath, or originating from any such property.
(q) Tax Matters. (i) All Tax Returns that
are required to be filed by or with respect to Summit and its
Subsidiaries have been duly filed, (ii) all Taxes shown to be
due on the Tax Returns referred to in clause (i) have been
paid in full, (iii) the Tax Returns referred to in clause (i)
have been examined by the Internal Revenue Service or the
appropriate state, local or foreign taxing authority or the
period for assessment of the Taxes in respect of which such
Tax Returns were required to be filed has expired, (iv) all
deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (v) no issues that have
been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in
clause (i) are currently pending, and (vi) no waivers of
statutes of limitation have been given by or requested with
respect to any Taxes of Summit or its Subsidiaries. Summit has
made available to One Valley true and correct copies of the
federal income Tax Returns filed by Summit and its
Subsidiaries for each of the three most recent fiscal years
ended on or before December 31, 1996. Neither Summit nor any
of its Subsidiaries has any liability with respect to income,
franchise or similar Taxes that accrued on or before March
30,1998, in excess of the amounts accrued with respect thereto
that are reflected in Summit's Audited Financial Statements or
its 1998 Unaudited Financial Statements. As of the date
hereof, neither Summit nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent
or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
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(ii) No Tax is required to be withheld
pursuant to Section 1445 of the Code as a result of the
transfer contemplated by this Agreement.
(iii) Summit and its Subsidiaries will not
be liable for any taxes as a result of any transactions
contemplated by this Agreement.
(r) Risk Management Instruments. All
interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management
arrangements, whether entered into for Summit's own account,
or for the account of one or more of Summit's Subsidiaries or
their customers (all of which are listed on Summit's
Disclosure Schedule), were entered into (i) in accordance with
prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the
time; and each of them constitutes the valid and legally
binding obligation of Summit or one of its Subsidiaries,
enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles),
and is in full force and effect. Neither Summit nor its
Subsidiaries, nor to Summit's knowledge any other party
thereto, is in breach of any of its obligations under any such
agreement or arrangement.
(s) Books and Records. The books and records
of Summit and its Subsidiaries have been fully, properly and
accurately maintained in all material respects, and there are
no material inaccuracies or discrepancies of any kind
contained or reflected therein and they fairly reflect the
substance of events and transactions included therein.
(t) Insurance. Summit's Disclosure Schedule
sets forth all of the insurance policies, binders, or bonds
maintained by Summit or its Subsidiaries. Summit and its
Subsidiaries are insured with reputable insurers against such
risks and in such amounts as the management of Summit
reasonably has determined to be prudent in accordance with
industry practices. All such insurance policies are in full
force and effect; Summit and its Subsidiaries are not in
material default thereunder; and all claims thereunder have
been filed in due and timely fashion.
(u) Accounting Treatment. As of the date
hereof, it is aware of no reason why the Merger will fail to
qualify for "pooling of interests" accounting treatment.
(v) Disclosure. The representations and
warranties contained in this Section 5.03 do not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
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5.04 Representations and Warranties of One Valley. Subject to
Sections 5.01 and 5.02, One Valley hereby represents and warrants to Summit as
follows (in the case of Section 5.04 (r), however, as of the date on which the
Merger Sub becomes a party to this Agreement):
(a) Organization, Standing and Authority.
One Valley is a corporation duly organized, validly existing
and in good standing under the laws of the State of West
Virginia. One Valley is duly qualified to do business and is
in good standing in the states where its ownership or leasing
of property or assets or the conduct of its business requires
it to be so qualified.
(b) One Valley Stock. (i) As of April
30,1998, the authorized capital stock of One Valley consists
solely of seventy million shares of One Valley Common Stock,
of which no more than 32,738,875 shares were outstanding, and
one million shares of preferred stock, par value $10 per
share, none of which is issued. As of the date hereof, except
for the preferred share purchase Rights created by One Valley
pursuant to the Shareholder Protection Rights Agreement, dated
as of October 18, 1995, and shares of One Valley Common Stock
to be issued pursuant to various stock option plans of One
Valley, One Valley does not have any Rights issued or
outstanding with respect to One Valley Stock and One Valley
does not have any commitment to authorize, issue or sell any
One Valley Stock or Rights, except pursuant to this Agreement.
The outstanding shares of One Valley Common Stock have been
duly authorized and are validly issued and outstanding, fully
paid and nonassessable, and subject to no preemptive rights
(and were not issued in violation of any preemptive rights).
(ii) The shares of One Valley Common Stock
to be issued in exchange for shares of Summit Common Stock in
the Merger, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and subject to no preemptive rights.
(c) Subsidiaries. Each of One Valley's
Subsidiaries has been duly organized and is validly existing
in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and is in
good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it
to be so qualified and it owns, directly or indirectly, all
the issued and outstanding equity securities of each of its
Significant Subsidiaries.
(d) Corporate Power. Each of One Valley and
its Subsidiaries has the corporate power and authority to
carry on its business as it is now being conducted and to own
all its properties and assets; and One Valley has the
corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated
hereby and thereby.
(e) Corporate Authority. This Agreement, the
Stock Option Agreement and the transactions contemplated
hereby and thereby have been authorized by all necessary
corporate
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action of One Valley and the One Valley Board prior to the
date hereof. This Agreement is a valid and legally binding
agreement of One Valley, enforceable in accordance with its
terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity
principles).
(f) Regulatory Approvals; No Defaults. (i)
No consents or approvals of, or filings or registrations with,
any Governmental Authority or with any third party are
required to be made or obtained by One Valley or any of its
Subsidiaries in connection with the execution, delivery or
performance by One Valley of this Agreement or to consummate
the Merger except for (A) the filing of applications and
notices, as applicable, with federal and state banking
authorities; (B) the filing and declaration of effectiveness
of the Registration Statement; (C) the filing of articles of
merger with the Corporation Commission pursuant to the VSCA
and the issuance of the related certificate of merger; (D)
such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of One
Valley Stock in the Merger; and (E) receipt of the approvals
set forth in Section 7.01(b). As of the date hereof, One
Valley is not aware of any reason why the approvals set forth
in Section 7.01(b) will not be received without the imposition
of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to the satisfaction of the
requirements referred to in the preceding paragraph and
expiration of the related waiting periods, and required
filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not
and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or instrument of One
Valley or of any of its Subsidiaries or to which One Valley or
any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws (or similar governing
documents) of One Valley or any of its Subsidiaries, or (C)
require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents;
Material Adverse Effect. (i) One Valley's Annual Reports of
Form 10-K for the fiscal years ended December 31, 1995, 1996,
and 1997 and all other reports, registration statements,
definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to
December 31, 1995, under the Securities Act, or under Section
13(a), 3(c), 14, or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, One Valley's "SEC
Documents"), as of the date filed, (A) complied or will comply
in all material respects with the applicable requirements
under the Securities Act or the Exchange Act, as the case may
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be, and (B) did not and will not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by
reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly
present, the financial position of One Valley and its
Subsidiaries as of its date, and each of the statements of
income or results of operations and changes in stockholders'
equity and cash flows or equivalent statements in such SEC
Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and cash flows, as
the case may be, of One Valley and its Subsidiaries for the
periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in
the case of unaudited statements.
(ii) Since December 31, 1997, no event has
occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events
(described in any paragraph of Section 5.04 or otherwise), is
reasonably likely to have a Material Adverse Effect with
respect to One Valley.
(h) Litigation; Regulatory Action. (i) No
litigation, claim or other proceeding before any Governmental
Authority is pending against One Valley or any of its
Subsidiaries and, to the best of One Valley's knowledge, no
such litigation, claim or other proceeding has been
threatened.
(ii) Neither One Valley nor any of its
Subsidiaries or properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from a
Regulatory Authority, nor has One Valley or any of its
Subsidiaries been advised by a Regulatory Authority that such
agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of One Valley
and its Subsidiaries:
(i) is in compliance with
all applicable federal, state, local and
foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or
decrees applicable thereto or to the
employees conducting such businesses,
including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws
relating to discriminatory business
practices; and
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(ii) has all permits,
licenses, authorizations, orders and
approvals of, and has made all filings,
applications and registrations with, all
Governmental Authorities that are required
in order to permit them to conduct their
businesses substantially as presently
conducted; all such permits, licenses,
certificates of authority, orders and
approvals are in full force and effect and,
to the best of its knowledge, no suspension
or cancellation of any of them is
threatened; and
(iii) has received, since
December 31, 1996, no notification or
communication from any Governmental
Authority (A) asserting that One Valley or
any of its Subsidiaries is not in compliance
with any of the statutes, regulations, or
ordinances which such Governmental Authority
enforces or (B) threatening to revoke any
license, franchise, permit, or governmental
authorization (nor, to One Valley's
knowledge, do any grounds for any of the
foregoing exist).
(j) No Brokers. No action has been taken by
One Valley that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other
like payment with respect to the transactions contemplated by
this Agreement.
(k) Takeover Laws. One Valley 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 are exempt from, the requirements of any
Takeover Laws applicable to One Valley.
(l) Environmental Matters. To One Valley's
knowledge, neither the conduct nor operation of One Valley or
its Subsidiaries nor any condition of any property presently
or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds a Lien, violates or
violated Environmental Laws and to Summit's knowledge no
condition has existed or event has occurred with respect to
any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To One Valley's knowledge,
neither One Valley nor any of its Subsidiaries has received
any notice from any person or entity that One Valley or its
Subsidiaries or the operation or condition of any property
ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of
or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup
or other remediation of any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at, on,
beneath, or originating from any such property.
(m) Tax Matters. (i) All Tax Returns that
are required to be filed by or with respect to One Valley and
its Subsidiaries have been duly filed, (ii) all Taxes shown to
be due on the Tax Returns referred to in clause (i) have been
paid in full, (iii) the Tax Returns
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<PAGE>
referred to in clause (i) have been examined by the Internal
Revenue Service or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed
has expired, (iv) all deficiencies asserted or assessments
made as a result of such examinations have been paid in full,
(v) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax
Returns referred to in clause (i) are currently pending, and
(vi) no waivers of statutes of limitation have been given by
or requested with respect to any Taxes of One Valley or its
Subsidiaries. Neither One Valley nor any of its Subsidiaries
has any liability with respect to income, franchise or similar
Taxes that accrued on or before the end of the most recent
period covered by One Valley's SEC Documents filed prior to
the date hereof in excess of the amounts accrued with respect
thereto that are reflected in the financial statements
included in One Valley's SEC Documents filed on or prior to
the date hereof.
(n) Books and Records. The books and records
of One Valley and its Subsidiaries have been fully, properly
and accurately maintained in all material respects, and there
are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the
substance of events and transactions included therein.
(o) Insurance. One Valley and its
Subsidiaries are insured with reputable insurers against such
risks and in such amounts as the management of One Valley
reasonably has determined to be prudent in accordance with
industry practices. All such insurance policies are in full
force and effect; One Valley and its Subsidiaries are not in
material default thereunder; and all claims thereunder have
been filed in due and timely fashion.
(p) Accounting Treatment. As of the date
hereof, it is aware of no reason why the Merger will fail to
qualify for "pooling of interests" accounting treatment.
(q) Disclosure. The representations and
warranties contained in this Section 5.04 do not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
(r) Representations and Warranties of One
Valley with Respect to Merger Sub.
(i) Organization, Standing
and Authority. Merger Sub has been duly
organized and is validly existing in good
standing under the laws of the State of its
organization, and is duly qualified to do
business and in good standing in the
jurisdictions where its ownership or leasing
of property or the conduct of its business
requires it to be so qualified.
(ii) Power. Merger Sub has
the power and authority to execute, deliver
and perform its obligations under this
Agreement and to consummate the transactions
contemplated hereby.
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<PAGE>
(iii) Authority. This
Agreement and the transactions contemplated
hereby have been authorized by all requisite
action on the part of Merger Sub. This
Agreement is a valid and legally binding
agreement of Merger Sub enforceable in
accordance with its terms (except as
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar
laws of general applicability relating to or
affecting creditors' rights or by general
equity principles).
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of Summit and One Valley agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end (it being understood that any amendments to the
Registration Statement (as hereinafter defined) or a resolicitation of proxies
as a consequence of an acquisition agreement by One Valley or any of its
subsidiaries shall not violate this covenant).
6.02 Stockholder Approvals. Summit agrees to take, in
accordance with applicable law and its articles of incorporation and by-laws,
all action necessary to convene an appropriate meeting of its stockholders to
consider and vote upon the approval of this Agreement, the Plan of Merger and
any other matters required to be approved by Summit's stockholders for
consummation of the Merger (including any adjournment or postponement, the
"Summit Meeting"), as promptly as practicable after the Registration Statement
is declared effective. The Summit Board shall recommend such approval and shall
take all reasonable lawful action to solicit such approval by its stockholders.
6.03 Registration Statement. (a) One Valley agrees to prepare
a registration statement on Form S-4 (the "Registration Statement") to be filed
by One Valley with the SEC in connection with the issuance of One Valley Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Summit constituting a part thereof (the "Proxy
Statement") and all related documents). Summit agrees to cooperate, and to cause
its Subsidiaries to cooperate, with One Valley, its counsel and its accountants,
in preparation of the Registration Statement and the Proxy Statement; and
provided that Summit and its Subsidiaries have cooperated as required above, One
Valley agrees to file the Registration Statement with the SEC as soon as
reasonably practicable. Each of Summit and One Valley agrees to use all
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as reasonably practicable after filing
thereof. One Valley also agrees to use all reasonable efforts to obtain, prior
to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky"
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<PAGE>
permits and approvals required to carry out the transactions contemplated by
this Agreement. Summit agrees to furnish to One Valley all information
concerning Summit, its Subsidiaries, officers, directors and stockholders as may
be reasonably requested in connection with the foregoing.
(b) Each of Summit and One Valley agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the Summit Meeting, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or any statement which, in the light of the circumstances
under which such statement is made, will be false or misleading with respect to
any material fact, or which will omit to state any material fact necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier statement in the Proxy Statement or any
amendment or supplement thereto. Each of Summit and One Valley further agrees
that if it shall become aware prior to the Effective Date of any information
furnished by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take the necessary
steps to correct the Proxy Statement.
(c) One Valley agrees to advise Summit, promptly after One
Valley receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of One Valley Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
6.04 Press Releases. Each of Summit and One Valley agrees that
it will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or NYSE rules.
6.05 Access; Information. (a) Each of Summit and One Valley
agrees that upon reasonable notice and subject to applicable laws relating to
the exchange of information, it shall afford the other party and the other
party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as any party may reasonably request and,
during such period, it shall furnish promptly to such other party (i) a copy of
each material report, schedule and other document filed by it pursuant to the
requirements of federal or state
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<PAGE>
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of it as the other may reasonably request.
(b) Each agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to another party hereto to be returned to the party which furnished the
same. No investigation by either party of the business and affairs of the other
shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies of all
monthly and other interim financial statements produced in the ordinary course
of business as the same shall become available.
6.06 Acquisition Proposals. Summit agrees that it shall not,
and shall cause its Subsidiaries and its and its Subsidiaries' officers,
directors, agents, advisors and affiliates not to, solicit or encourage
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any discussions
with, any person relating to, any Acquisition Proposal. It shall immediately
cease and cause to be terminated any activities, discussions or negotiations
conducted prior to the date of this Agreement with any parties other than One
Valley with respect to any of the foregoing and shall use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. Summit shall promptly (within 24 hours) advise One Valley
following the receipt by Summit of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition Proposal),
and advise One Valley of any developments with respect to such Acquisition
Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. (a) Not later than the 15th day
prior to the mailing of the Proxy Statement, Summit shall deliver to One Valley
a schedule of each person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the Summit Meeting, deemed to be an
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"affiliate" of Summit (each, a "Summit Affiliate") as that term is used in Rule
145 under the Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Summit shall use its reasonable best efforts to cause each
person who may be deemed to be a Summit Affiliate to execute and deliver to One
Valley on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit B.
6.08 Takeover Laws. No party hereto shall take any action that
would cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Summit
shall, consistent with generally accepted accounting principles and on a basis
mutually satisfactory to it and One Valley, modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of One Valley; provided, however, that Summit shall not be
obligated to take any such action pursuant to this Section 6.09 unless and until
One Valley acknowledges that all conditions to its obligation to consummate the
Merger have been satisfied and certifies to Summit that One Valley's
representations and warranties, subject to Section 5.02, are true and correct as
of such date and that One Valley is otherwise material in compliance with this
Agreement. Summit's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 6.09.
6.10 NYSE Listing. One Valley agrees to use its reasonable
best efforts to list, prior to the Effective Date, on the NYSE, subject to
official notice of issuance, the shares of One Valley Common Stock to be issued
to the holders of Summit Common Stock in the Merger.
6.11 Regulatory Applications. (a) One Valley and Summit and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. Each of One Valley and Summit shall have the
right to review in advance, and to the extent practicable each will consult with
the other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions
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contemplated by this Agreement and each party will keep the other party apprised
of the status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
6.12 Indemnification. (a) Following the Effective Date and for
a period of six years thereafter, One Valley shall indemnify, defend and hold
harmless the present directors, officers and employees of Summit and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that Summit
is permitted to indemnify (and advance expenses to) its directors and officers
under the laws of the Commonwealth of Virginia, the Summit Certificate and the
Summit By-Laws as in effect on the date hereof; provided that any determination
required to be made with respect to whether an officer's, director's or
employee's conduct complies with the standards set forth under Virginia law, the
Summit Certificate and the Summit By-Laws shall be made by independent counsel
(which shall not be counsel that provides material services to One Valley)
selected by One Valley and reasonably acceptable to such officer or director.
(b) Any Indemnified Party wishing to claim indemnification
under Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify One Valley thereof;
provided that the failure so to notify shall not affect the obligations of One
Valley under Section 6.12(a) unless and to the extent that One Valley is
actually prejudiced as a result of such failure.
(c ) If One Valley or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of One Valley shall
assume the obligations set forth in this Section 6.12.
6.13 Benefit Plans. Within a reasonable period of time
following the Effective Time, (a) One Valley will provide employees of the
Surviving Corporation with employee benefit plans substantially similar in the
aggregate to those provided to similarly situated employees of One Valley, (b)
any such employees will receive credit for years of service with Summit or any
of its Subsidiaries prior to the Effective Time for the purpose of eligibility
and vesting and (c) One Valley shall cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under the Compensation and Benefit Plans) and eligibility waiting
periods under group health plans to be waived with respect to such participants
and their eligible dependents.
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6.14 Notification of Certain Matters. Each of Summit and One
Valley shall give prompt notice to the other of any fact, event or circumstance
known to it that (i) is reasonably likely, individually or taken together with
all other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Dividend Coordination. Summit shall pay its regular
semi-annual dividend for the first half of 1998. In the event the Effective Time
has not occurred on or before the record date for the payment of One Valley's
regular third or fourth quarterly 1998 dividend, Summit may, immediately prior
to the Effective Time, declare and pay a special dividend at its historical
rate, but pro rated for the period between the date of its last dividend and the
Effective Time; provided, however, that the payment of such special dividend
shall not be made if it is reasonably likely to preclude accounting for the
Merger under the "pooling of interests" accounting method.
6.16 Other Transactions. One Valley has had, and will continue
to have, negotiations for the acquisition of other organizations. Subject to
Section 4.02 (b), nothing contained herein shall in any manner limit the ability
of One Valley to acquire additional financial institutions or other corporations
or entities, either before or after the Effective Time, for such consideration
(cash, notes, common or preferred stock) and upon such terms and conditions as
One Valley deems appropriate.
6.17 Directors. Promptly after the Effective Date, One Valley
shall, by action of its Board of Directors, elect W. Lowrie Tucker, III, as a
member of the Board of Directors of One Valley, for a term expiring on the date
of the next Annual Meeting of the Shareholders of One Valley. In addition, at
its Annual Meeting of Shareholders to be held in April 1999, One Valley shall
nominate and recommend W. Lowrie Tucker, III, for a three-year term as a member
of the Board of Directors of One Valley. Promptly after the Effective Date, One
Valley, as the sole shareholder of One Valley Bank - Central Virginia, National
Association, shall elect W. Wayne Heslep to serve as a member of the Board of
Directors of One Valley Bank - Central Virginia, National Association.
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each of One Valley and Summit to
consummate the Merger is subject to the fulfillment or written waiver by One
Valley and Summit prior to the Effective Time of each of the following
conditions:
(a) Stockholder Approvals. This Agreement
and the Plan of Merger shall have been duly approved by the
requisite vote of the stockholders of Summit.
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(b) Regulatory Approvals. All regulatory
approvals required to consummate the transactions contemplated
hereby shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect
thereof shall have expired and no such approvals shall contain
(i) any conditions, restrictions or requirements which the One
Valley Board reasonably determines would either before or
after the Effective Time have a Material Adverse Effect on One
Valley and its Subsidiaries taken as a whole or the Surviving
Corporation and its Subsidiaries taken as a whole or (ii) any
conditions, restrictions or requirements that are not
customary and usual for approvals of such type and which the
One Valley Board reasonably determines would either before or
after the Effective Date be unduly burdensome.
(c) No Injunction. 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.
(d) Registration Statement. The Registration
Statement shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Blue Sky Approvals. All permits and
other authorizations under state securities laws necessary to
consummate the transactions contemplated hereby and to issue
the shares of One Valley Common Stock to be issued in the
Merger shall have been received and be in full force and
effect.
(f) Listing. To the extent required, 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.
7.02 Conditions to Obligation of Summit. The obligation of
Summit to consummate the Merger is also subject to the fulfillment or written
waiver by Summit prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of One Valley set forth in this
Agreement shall be true and correct, subject to Section 5.02,
as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true
and correct as of such date), and Summit shall have received a
certificate, dated the Effective Date, signed on behalf of One
Valley by the Chief Executive Officer and the Chief Financial
Officer of One Valley to such effect.
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(b) Performance of Obligations of One
Valley. One Valley shall have performed in all material
respects all obligations required to be performed by them
under this Agreement at or prior to the Effective Time, and
Summit shall have received a certificate, dated the Effective
Date, signed on behalf of One Valley by the Chief Executive
Officer and the Chief Financial Officer of One Valley to such
effect.
(c) Opinion of Counsel. Summit shall have
received an opinion of Sullivan & Cromwell, special counsel to
One Valley, dated the Effective Date, to the effect that, on
the basis of facts, representations and assumptions set forth
in such opinion, (i) the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code and (ii) no gain
or loss will be recognized by stockholders of Summit who
receive shares of One Valley Common Stock in exchange for
shares of Summit Common Stock, except that gain or loss may be
recognized as to cash received in lieu of fractional share
interests. In rendering its opinion, Sullivan & Cromwell may
require and rely upon representations contained in letters
from Summit and others.
7.03 Conditions to Obligation of One Valley. The obligation of
One Valley to consummate the Merger is also subject to the fulfillment or
written waiver by One Valley prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Summit set forth in this
Agreement shall be true and correct, subject to Section 5.02,
as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true
and correct as of such date) and One Valley shall have
received a certificate, dated the Effective Date, signed on
behalf of Summit by the Chief Executive Officer and the
Cashier of Summit to such effect.
(b) Performance of Obligations of Summit.
Summit shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and One Valley
shall have received a certificate, dated the Effective Date,
signed on behalf of Summit by the Chief Executive Officer and
the Cashier of Summit to such effect.
(c) Opinion of One Valley's Counsel. One
Valley shall have received an opinion of Sullivan & Cromwell,
special counsel to One Valley, dated the Effective 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 Code. In rendering
its opinion, Sullivan & Cromwell may require and rely upon
representations contained in letters from One Valley, Summit
and others.
(d) Accounting Treatment. One Valley shall
have received from Ernst & Young, One Valley's independent
auditors, letters, dated the date of or shortly prior to each
of the
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mailing date of the Proxy Statement and the Effective Date,
stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment. In rendering its
opinion, Ernst & Young may require and rely upon
representations contained in letters from One Valley, Summit
and others.
ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the
Merger may be abandoned:
(a) Mutual Consent. At any time prior to the
Effective Time, by the mutual consent of One Valley and
Summit, if the Board of Directors of each so determines by
vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the
Effective Time, by One Valley or Summit, if its Board of
Directors so determines by vote of a majority of the members
of its entire Board, in the event of either: (i) a breach by
the other party of any representation or warranty contained
herein (subject to the standard set forth in Section 5.02),
which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of
such breach; or (ii) a breach by the other party of any of the
covenants or agreements contained herein, which breach cannot
be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach, provided
that such breach (whether under (i) or (ii)) would be
reasonably likely, individually or in the aggregate with other
breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the
Effective Time, by One Valley or Summit, if its Board of
Directors so determines by vote of a majority of the members
of its entire Board, in the event that the Merger is not
consummated by January 31, 1999, except to the extent that the
failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party
seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By Summit or One Valley, if
its Board of Directors so determines by a vote of a majority
of the members of its entire Board, in the event (i) the
approval of any Governmental Authority required for
consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii)
any stockholder approval required by Section 7.01(a) herein is
not obtained at the Summit Meeting.
(e) Failure to Recommend, Etc. At any time
prior to the Summit Meeting, by One Valley if the Summit Board
shall have failed to make its recommendation referred to in
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Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect
to the interests of One Valley.
(f) Failure to Execute and Deliver Stock
Option Agreement. At any time prior to the close of business
on May 11, 1998, by One Valley if Summit shall not have
executed and delivered the Stock Option Agreement to One
Valley.
(g) By Summit at any time during the
five-day period commencing after the Determination Date if
both of the following conditions are satisfied:
(1) the One Valley Average
Common Stock Price shall be less than
$28.00; and
(2) (i) the quotient
obtained by dividing the One Valley Average
Common Stock Price by $35.00 (such number
being referred to herein as the "One Valley
Ratio") shall be less than (ii) 90% of the
quotient obtained by dividing the SNL
Southeast Bank Index on the Determination
Date by the SNL Southeast Bank Index on June
3, 1998;
subject, however, to the following three sentences. If Summit
determines not to consummate the Merger pursuant to this
subsection, it shall give prompt written notice of its
election to terminate to One Valley, which notice may be
withdrawn at any time prior to the close of the ten-day period
commending 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 Exchange Ratio
to a number equal to $40.61 divided by the One Valley Average
Common Stock Price. The election contemplated by the preceding
sentence shall be made by giving notice to Summit of such
election and the revised 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 Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange
Ratio as adjusted pursuant to this subsection. If the
Effective Time shall otherwise occur during the five-day
period such option is in effect, the Effective Time shall be
extended until the fifth business day following the close of
such five-day period.
If One Valley declares or effects a stock
dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction
between June 3, 1998 and the Determination Date, the prices
for the common stock of One Valley and any calculations
hereunder shall be appropriately adjusted for the purposes of
applying this subsection.
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set
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forth in Section 9.01 and (ii) that termination will not relieve a breaching
party from liability for any willful breach of this Agreement giving rise to
such termination.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Section 3.07, Section 6.12 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 8.02, and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be (i) waived by the party benefitted by the
provision, or (ii) amended or modified at any time, by an agreement in writing
between the parties hereto executed in the same manner as this Agreement, except
that after the Summit Meeting, this Agreement may not be amended if it would
violate the VSCA.
9.03 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of West Virginia
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the VSCA
are applicable).
9.05 Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that printing expenses and SEC fees shall be paid by
One Valley.
9.06 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Summit, to:
Summit Bankshares, Inc.
P. O. Box 5
Raphine, Virginia 24472
Attn: W. Lowrie Tucker, III, President and CEO
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With a copy to:
W. Wayne Heslep
210 S. Randolph Street
Lexington, Virginia 24450
If to One Valley, to:
One Valley Bancorp, Inc.
Lee & Summers Streets
Charleston, WV 25301
Attn: J. Holmes Morrison, President and CEO
With a copy to:
Merrell S. McIlwain II
P. O. Box 1793
Charleston, WV 25326
9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement and any Stock Option Agreement entered into represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made (other than any such Stock Option
Agreement). Except for Section 6.12, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall require Summit, One Valley or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
9.09 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized officers, all
as of the day and year first above written.
SUMMIT BANKSHARES, INC.
By: /s/ W. Lowrie Tucker, III
Name: W. Lowrie Tucker, III
Title: President and CEO
ONE VALLEY BANCORP, INC.
By: /s/ J. Holmes Morrison
Name: J. Holmes Morrison
Title: President and CEO
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EXHIBIT A-1
PLAN OF MERGER
PLAN OF MERGER (this "Plan") of Summit Bankshares, Inc., a Virginia
corporation ("Summit"), and OV Subsidary, Inc., a Virginia corporation ("OV
Holding Company") and wholly owned subsidiary of One Valley Bancorp, Inc. ("One
Valley").
ARTICLE I
Definitions
1.1 Certain Definitions. The following terms are used in
this Plan with the meanings set forth below:
"Code" means the Internal Revenue Code of 1986, as amended.
"Effective Date" means the effective date of the Merger.
"Effective Time" means the effective time of the Merger.
"One Valley Common Stock" means the common stock, par value
$10.00 per share, of One Valley.
"One Valley Preferred Stock" means the preferred stock, par
value $10.00 per share, of One Valley.
"One Valley Stock" means, collectively, One Valley Common
Stock and One Valley Preferred Stock.
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of May 7, 1998, by and between One Valley and Summit.
"NYSE" means the New York Stock Exchange, Inc.
"Subsidiary" has the meaning ascribed to it in Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission.
"Treasury Stock" means shares of Summit Stock held by One
Valley or any of its Subsidiaries or by Summit or any of its Subsidiaries, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted in good faith
"Summit Common Stock" means the common stock, par value
$1.00 per share, of Summit.
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"VSCA" means the Virginia Stock Corporation Act.
1.2 Certain Definitions. Terms used and not otherwise
defined herein have the meanings specified in the Merger Agreement.
ARTICLE II
Terms of the Merger
2.1 The Merger. The names of the corporations to be merged
are OV Holding Company and Summit. At the Effective Time, Summit shall merge
with and into OV Holding Company (the "Merger"), the separate corporate
existence of Summit shall cease and OV Holding Company shall survive and exist
as a Virginia corporation and wholly owned subsidiary of One Valley (OV Holding
Company, as the surviving corporation in the Merger, sometimes being referred to
herein as the "Surviving Corporation").
2.2 Effect of the Merger. Subject to the satisfaction or
waiver of the conditions set forth in Article IV of this Plan, the Merger shall
become effective upon the occurrence of the filing in the office of the Virginia
State Corporation Commission (the "Corporation Commission") of articles of
merger in accordance with Section 13.1-720 of the VSCA or such later date and
time as may be set forth in such articles and the issuance of a certificate of
merger by the Corporation Commission under the VSCA. The Merger shall have the
effects prescribed in the VSCA.
2.3 Articles of Incorporation and By-Laws. The articles of
incorporation and by-laws of OV Holding Company immediately after the Merger
shall be those of OV Holding Company as in effect immediately prior to the
Effective Time.
2.4 Directors and Officers of OV Holding Company. The
directors and officers of OV Holding Company immediately prior to the Merger
shall continue as the directors and officers of OV Holding Company immediately
after the Effective Time, until such time as their successors shall be duly
elected and qualified.
ARTICLE III
Manner and Basis of
Converting Shares
3.1 Merger Consideration. At the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
person:
(a) Outstanding Summit Common Stock. Each share, excluding
Treasury Stock, of Summit Common Stock issued and outstanding immediately prior
to the Effective Time shall become and be converted into _____ of a share of One
Valley Common Stock (the "Exchange Ratio"). In the event One Valley changes (or
establishes a record date for changing) the number of shares of One Valley
Common Stock issued and outstanding prior to the Effective Date as a result
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of a stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding One Valley Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
(b) Summit Shares. Each share of Summit Common Stock held
as Treasury Stock immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
(c) OV Holding Company Shares. Each share of common stock
of OV Holding Company issued and outstanding immediately prior to the Effective
Time shall remain issued and outstanding at the Effective Time.
3.2 Rights as Stockholders; Stock Transfers. At the
Effective Time, holders of Summit Common Stock shall cease to be, and shall have
no rights as, stockholders of Summit, other than to receive any dividend or
other distribution with respect to such Summit Common Stock with a record date
occurring prior to the Effective Time and the consideration provided herein.
After the Effective Time, there shall be no transfers on the stock transfer
books of Summit or the Surviving Corporation of shares of Summit Common Stock.
3.3 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Summit Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, One Valley shall pay to each holder of Summit Common Stock who would
otherwise be entitled to a fractional share of One Valley Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the last sale price of One Valley Common Stock, as reported by NYSE (as
reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the NYSE trading day immediately preceding the
Effective Date.
3.4 Exchange Procedures. (a) At or prior to the Effective
Time, One Valley shall deposit, or shall cause to be deposited, with Harris
Trust and Savings Bank (in such capacity, the "Exchange Agent"), for the benefit
of the holders of certificates formerly representing shares of Summit Common
Stock ("Old Certificates"), for exchange in accordance with this Article III,
certificates representing the shares of One Valley Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date occurring after
the Effective Date with respect thereto (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "Exchange
Fund") to be paid pursuant to this Article III in exchange for outstanding
shares of Summit Common Stock.
(b) As promptly as practicable after the Effective Date,
One Valley shall send or cause to be sent to each former holder of record of
shares of Summit Common Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old Certificates
for the consideration set forth in this Article III. Summit shall cause the New
Certificates into which shares of a stockholder's Summit Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or
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distributions which such person shall be entitled to receive to be delivered to
such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Summit Common Stock (or indemnity reasonably
satisfactory to One Valley and the Exchange Agent, if any of such certificates
are lost, stolen or destroyed) owned by such stockholder. No interest will be
paid on any such cash to be paid in lieu of fractional share interests or in
respect of dividends or distributions which any such person shall be entitled to
receive pursuant to this Article III upon such delivery. Old Certificates
surrendered for exchange by any Summit Affiliate shall not be exchanged for New
Certificates until One Valley has received a written agreement from such person
in the form attached to the Merger Agreement.
(c) Notwithstanding the foregoing, neither the Exchange
Agent, if any, nor any party hereto shall be liable to any former holder of One
Valley Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to One
Valley Common Stock with a record date occurring after the Effective Time shall
be paid to the holder of any unsurrendered Old Certificate representing shares
of Summit Common Stock converted in the Merger into shares of such One Valley
Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.4, and, following 90 days after the Effective Date, no such
shares of One Valley Common Stock shall be eligible to vote until the holder of
Old Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.4. After becoming so entitled to receive
dividends or distributions in accordance with this Section 3.4, the record
holder thereof also shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Summit Common Stock such holder had the right
to receive upon surrender of the Old Certificates.
(e) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of Summit for six months after the Effective
Time shall be paid to One Valley. Any stockholders of Summit who have not
theretofore complied with this Article III shall thereafter look only to One
Valley for payment of the shares of One Valley Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on One Valley Common
Stock deliverable in respect of each share of One Valley Common Stock such
stockholder holds as determined pursuant to the Merger Agreement and this Plan,
in each case, without any interest thereon.
(f) Shares of Summit Common Stock held by shareholders
who did not vote in favor of the adoption of the Merger Agreement, who
are entitled to demand the fair value of such shares under Article XV of the
VSCA, and who comply with all of the relevant provisions of the VSCA shall not
remain outstanding, but shall instead be entitled to all applicable dissenters'
rights as are prescribed by the VSCA. If any such holder shall have failed to
perfect or shall have effectively withdrawn or lost such dissenters' rights,
such holder's shares of Summit Common Stock shall thereupon remain outstanding.
(g) An escrow account shall be established prior to the
Effective Time by Summit, and Summit shall deposit therein funds
sufficient in the aggregate to pay all amounts payable with respect to any
shares held by dissenting shareholders, if any.
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ARTICLE IV
Conditions to the Merger
4.1 Consummation of the Merger is conditioned upon the
following:
(a) Approval of the Merger Agreement and this Plan by the
affirmative vote of more than two-thirds of the outstanding shares of Summit
Common Stock;
(b) Receipt of required regulatory approvals;
(c) Absence of governmental action prohibiting
consummation;
(d) An effective Registration Statement under the
Securities Act of 1933 and no orders or other action suspending such
effectiveness;
(e) Receipt of all required permits and authorizations
under state securities laws;
(f) To the extent required, approval of the shares of One
Valley Common Stock issued in the Merger for listing on the NYSE, subject to
notice of issuance;
(g) All representations and warranties made by the
respective parties are true and correct as of the Effective Time as contemplated
by the Merger Agreement and receipt by the parties of appropriate officers'
certificates to such effect; and
(h) Performance of all required obligations by the
respective parties and receipt by the parties of appropriate officers'
certificates to such effect.
(i) Receipt by Summit of the opinion of Scott &
Stringfellow, Inc., to the effect that as of the day of the mailing of the proxy
statement to shareholders of Summit that the consideration is fair to such
holders from a financial point of view.
(j) Receipt by One Valley of the opinion of Ernst & Young
to the effect that the Merger qualifies for pooling-of-interest accounting
treatment.
ARTICLE V
Termination
5.1 This Plan may be terminated prior to the Effective Time
as provided in Article VIII of the Merger Agreement and shall terminate at the
same time as the Merger Agreement.
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APPENDIX II
June 6, 1998
The Board of Directors
Summit Bankshares, Inc.
Raphine, Virginia 24472
Gentlemen:
You have asked us to render our opinion relating to the fairness, from
a financial point of view, to the shareholders of Summit Bankshares, Inc.
("Summit") of the terms of an Agreement and Plan of Merger by and between One
Valley Bancorp, Inc. ("One Valley") and Summit dated May 7, 1998 (the "Merger
Agreement"). The Merger Agreement provides for the merger of Summit with and
into One Valley (the "Merger") and further provides that each share of Common
Stock of Summit which is issued and outstanding immediately prior to the
Effective Date of the Merger shall be exchanged for 1.36 shares of One Valley
Common Stock (the "Exchange Ratio").
In developing our opinion, we have, among other things, reviewed and
analyzed: (1) the Merger Agreement; (2) Summit's financial statements for the
three years ended December 31, 1997; (3) Summit's unaudited financial statements
for the three months ended March 31, 1998, and other internal information
relating to Summit prepared by Summit's management; (4) information regarding
the trading market for the common stocks of Summit and One Valley and the price
ranges within which the respective stocks have traded; (5) the relationship of
prices paid to relevant financial data such as net worth, assets, deposits and
earnings in certain bank and bank holding company mergers and acquisitions in
Virginia in recent years; (6) One Valley's annual reports to shareholders and
its financial statements for the three years ended December 31, 1997; and (7)
One Valley's unaudited financial statements for the three months ended March 31,
1998, and other internal information relating to One Valley prepared by One
Valley's management. We have discussed with members of management of Summit and
One Valley the background to the Merger, reasons and basis for the Merger and
the business and future prospects of Summit and One Valley individually and as a
combined entity. Finally, we have conducted such other studies, analyses and
investigations, particularly of the banking industry, and considered such other
information as we deemed appropriate.
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The Board of Directors
Summit Bankshares, Inc.
Raphine, Virginia 24472
Page 2
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of the information furnished to
us by or on behalf of Summit and One Valley. We have not attempted independently
to verify such information, nor have we made any independent appraisal of the
assets of Summit or One Valley. We have taken into account our assessment of
general economic, financial market and industry conditions as they exist and can
be evaluated at the date hereof, as well as our experience in business valuation
in general.
On the basis of our analyses and review and in reliance on the accuracy
and completeness of the information furnished to us and subject to the
conditions noted above, it is our opinion that, as of the date hereof the terms
of the Merger Agreement are fair from a financial point of view to the
shareholders of Summit Common Stock.
Very truly yours,
SCOTT & STRINGFELLOW, INC.
By:s/ Gary S. Penrose
-------------------------
Gary S. Penrose
Managing Director
Financial Institutions Group
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Appendix III
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 8, 1998, between One Valley
Bancorp, Inc., a West Virginia corporation ("Grantee"), and Summit Bankshares,
Inc., a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as an inducement to the willingness of Grantee to continue to
pursue the transactions contemplated by the Merger Agreement, Issuer has agreed
to grant Grantee the Option (as hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 440,000
fully paid and nonassessable shares of the common stock, par value $1.00 per
share, of Issuer ("Common Stock") at a price per share equal to $45.00;
provided, however, that in the event Issuer issues or agrees to issue any shares
of Common Stock (other than shares of Common Stock issued pursuant to stock
options granted pursuant to any employee benefit plan prior to the date hereof)
at a price less than such price per share (as adjusted pursuant to subsection
(b) of Section 5), such price shall be equal to such lesser price (such price,
as adjusted if applicable, the "Option Price"); provided, further, that in no
event shall the number of shares for which this Option is exercisable exceed
24.9% of the issued and outstanding shares of Common Stock. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 24.9% of the
number of shares of Common Stock then issued and outstanding with giving effect
to any shares subject or issued pursuant to the Option. Nothing contained in
this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach any provision of the Merger Agreement.
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<PAGE>
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e) of the
Merger Agreement or by Grantee or Issuer pursuant to Section 8.01(d)(ii) of the
Merger Agreement (each, a "Listed Termination"); or (iii) the passage of
fourteen (14) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a Listed Termination. The term "Holder"
shall mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, (i) the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof and (ii) this
Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 8.01(b) thereof as a result of
the material breach by Grantee of its covenants or agreements contained in the
Merger Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or its Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (the "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction
other than as contemplated by the Merger Agreement. For purposes of
this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger
or consolidation, or any similar transaction, involving Issuer or the
Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, provided, any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of
the assets or deposits of Issuer or the Issuer Subsidiary, or (z) 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 Issuer or the
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Issuer Subsidiary and (b) "Subsidiary" shall have the meaning set forth
in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act,
and the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or
such meeting shall not have been held in violation of the Merger
Agreement or shall have been cancelled prior to termination of the
Merger Agreement if, prior to such meeting (or if such meeting shall
not have been held or shall have been cancelled, prior to such
termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of
Issuer approve the transactions contemplated by the Merger Agreement,
or Issuer or the Issuer Subsidiary shall have authorized, recommended,
proposed (or publicly announced its intention to authorize, recommend
or propose) an agreement to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its shareholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction (or filed a preliminary
proxy statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, and following such breach
Grantee would be entitled to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both);
or
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<PAGE>
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application or notice with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") or other
federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 20% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof
shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option .
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<PAGE>
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of ________,
199_, between the registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Issuer and
will be provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets,
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<PAGE>
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by Issuer; (iii) promptly to take all action as may from
time to time be required (including (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in
Bank Control Act of 1978, as amended, or any state or other federal banking law,
prior approval of or notice to the Federal Reserve Board or to any state or
other federal regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the Federal Reserve Board or such
state or other federal regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer 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, Issuer 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 Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect of,
the 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 of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and
proper provision shall be made so that, in the event that any
additional shares of Common Stock are to be issued or otherwise become
outstanding as a result of any such change (other than pursuant to an
exercise of the Option), the number of shares of Common Stock that
remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued
pursuant to the exercise of the Option (as adjusted on account of any
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<PAGE>
of the foregoing changes in the Common Stock), it equals 19.9% of the
number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Common
Stock purchasable prior to the adjustment and the denominator of which
shall be equal to the number of shares of Common Stock purchasable
after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such
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shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall the
number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price
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therefor or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to 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 accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall 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 Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee
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<PAGE>
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall be
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 Common Stock shall
after such merger or plan of exchange 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 Issuer
Subsidiary's assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision 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 the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other
than Issuer), (ii) the acquiring person in a plan of exchange in which
Issuer is acquired, (iii) the Issuer in a merger or plan of exchange in
which Issuer is the continuing or surviving or acquiring person, and
(iv) the transferee of all or a substantial part of Issuer's assets or
deposits (or the assets or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by the
person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(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 the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option
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in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 24.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 24.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
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(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have
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occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, 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 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Issuer Board prior to the date hereof and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Common Stock equal to the maximum number of
shares of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant thereto, will be
duly authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee 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 Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a
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widely dispersed public distribution on Grantee's behalf or (iv) any other
manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender
Price" shall be equal to $4 (four) million (i) plus, if applicable, Grantee'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 Grantee 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)
Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, 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 Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 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 Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer 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 Grantee
with copies of the same, and (c) keep Grantee 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
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related to the same and (ii) Grantee may revoke such notice of surrender by
delivery of a notice of revocation to Issuer and, upon delivery of such notice
of revocation, the Exercise Termination Date shall be extended to a date six
months from the date on which the Exercise Termination Date would have occurred
if not for the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of West Virginia, without regard to the conflict of
law principles thereof (except to the extent that mandatory provisions of
Federal law or of the VSCA are applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and
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be binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
SUMMIT BANKSHARES, INC.
By /s/ W. Lowrie Tucker, III
-------------------------
Name: W. Lowrie Tucker, III
Title: President and CEO
ONE VALLEY BANCORP, INC.
By /s/ J. Holmes Morrison
------------------------
Name: J. Holmes Morrison
Title: President and CEO
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Appendix IV
CHAPTER 15
VIRGINIA STOCK CORPORATIONS ACT
ss. 13.1-728.8
Dissenters' rights
A. Unless otherwise provided in a corporation's articles of
incorporation or bylaws before a control share acquisition has occurred, in the
event shares acquired in a control share acquisition are accorded full voting
rights and the acquiring person has beneficial ownership of shares entitled to
cast a majority of the votes which could be cast in an election of directors,
all shareholders of the issuing public corporation other than the acquiring
person have the right to dissent from the granting of voting rights and to
demand payment of the fair value of their shares under Article 15 (ss. 13.1-729
et seq.) of this chapter as though such granting of voting rights were a
corporate action described in subsection A of ss. 13.1-730, except that the
provisions of subsection C of ss. 13.1-730 shall not be applicable and the
failure to vote in favor of the granting of voting rights shall be deemed to
constitute compliance with the requirements of subsection A of ss. 13.1-733.
B. For the purposes of this section "fair value" shall in no event be
less than the highest price per share paid in the control share acquisition, as
adjusted for any subsequent share dividends or reverse share splits or similar
changes.
ss. 13.1-728.9
Nonexclusivity
Except as expressly provided in this article, neither the provisions of
this article nor their application to any acquiring person shall limit actions
that may be taken, or require the taking of any action, by the board of
directors or shareholders with respect to any potential changes in control of
any issuing public corporation. In the case of any action taken or not taken by
directors, the provisions of ss. 13.1-690 shall apply, and, in determining the
best interests of the corporation, a director may consider the possibility that
those interests may best be served by the continued independence of the
corporation.
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ss. 13.1-729
Definitions
In this article:
"Corporation" means the issuer of the shares held by a dissenter before
the corporate action, except that (i) with respect to a merger, "corporation"
means the surviving domestic or foreign corporation or limited liability company
by merger of that issuer, and (ii) with respect to a share exchange,
"corporation" means the acquiring corporation by share exchange, rather than the
issuer, if the plan of share exchange places the responsibility for dissenters'
rights on the acquiring corporation.
"Dissenter" means a shareholder who is entitled to dissent from
corporate action under ss. 13.1-730 and who exercises that right when and in the
manner required by ss.ss. 13.1-732 through 13.1-739.
"Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
"Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
"Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
"Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
"Shareholder" means the record shareholder or the beneficial
shareholder.
ss. 13.1-730
Right to dissent
A. A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
1. Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by
ss. 13.1-718 or the articles of incorporation and the
shareholder is entitled to vote on the merger or (ii) if the
corporation is a subsidiary that is merged with its parent
under ss. 13.1-719;
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2. Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan;
3. Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation if the shareholder was
entitled to vote on the sale or exchange or if the sale or
exchange was in furtherance of a dissolution on which the
shareholder was entitled to vote, provided that such
dissenter's rights shall not apply in the case of (i) a sale or
exchange pursuant to court order, or (ii) a sale for cash
pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
4. Any corporate action taken pursuant to a shareholder vote to
the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
B. A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
C. Notwithstanding any other provision of this article, with respect to
a plan of merger or share exchange or a sale or exchange of property there shall
be no right of dissent in favor of holders of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting at which the plan of merger or
share exchange or the sale or exchange of property is to be acted on, were (i)
listed on a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or (ii) held by at least
2,000 record shareholders, unless in either case:
1. The articles of incorporation of the corporation issuing such
shares provide otherwise;
2. In the case of a plan of merger or share exchange, the holders
of the class or series are required under the plan of merger or
share exchange to accept for such shares anything except:
a. Cash;
b. Shares or membership interests, or shares or membership
interests and cash in lieu of fractional shares (i) of the
surviving or acquiring corporation or limited liability
company or (ii) of any other corporation or limited
liability company which, at the record date fixed to
determine the shareholders entitled to receive notice of
and to vote at the meeting at which the plan of merger or
share exchange is to be acted on, were either listed
subject to notice of issuance on a national securities
exchange or held of record by at least 2,000 record
shareholders or members; or
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c. A combination of cash and shares or membership interests as
set forth in subdivisions 2 a and 2 b of this subsection;
or
3. The transaction to be voted on is an "affiliated transaction"
and is not approved by a majority of "disinterested directors" as such
terms are defined in ss. 13.1-725.
D. The right of a dissenting shareholder to obtain payment of the fair
value of his shares shall terminate upon the occurrence of any one of the
following events:
1. The proposed corporate action is abandoned or rescinded;
2. A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
3. His demand for payment is withdrawn with the written consent of the
corporation.
ss. 13.1-731
Dissent by nominees and beneficial owners
A. A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
B. A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
2. He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the
vote.
ss. 13.1-732
Notice of dissenters' rights
A. If proposed corporate action creating dissenters' rights under ss.
13.1-730 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
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B. If corporate action creating dissenters' rights under ss. 13.1-730
is taken without a vote of shareholders, the corporation, during the ten-day
period after the effectuation of such corporate action, shall notify in writing
all record shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in ss. 13.1-734.
ss. 13.1-733
Notice of intent to demand payment
A. If proposed corporate action creating dissenters' rights under ss.
13.1-730 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (i) shall deliver to the corporation before
the vote is taken written notice of his intent to demand payment for his shares
if the proposed action is effectuated and (ii) shall not vote such shares in
favor of the proposed action.
B. A shareholder who does not satisfy the requirements of subsection A
of this section is not entitled to payment for his shares under this article.
ss. 13.1-734
Dissenters' notice
A. If proposed corporate action creating dissenters' rights under ss.
13.1-730 is authorized at a shareholders' meeting, the corporation, during the
ten-day period after the effectuation of such corporate action, shall deliver a
dissenters' notice in writing to all shareholders who satisfied the requirements
of ss. 13.1-733.
B. The dissenters' notice shall:
1. State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
2. Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is
received;
3. Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the
terms of the proposed corporate action and requires that the
person asserting dissenters' rights certify whether or not he
acquired beneficial ownership of the shares before or after
that date;
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4. Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than
sixty days after the date of delivery of the dissenters'
notice; and
5. Be accompanied by a copy of this article.
ss. 13.1-735
Duty to demand payment
A. A shareholder sent a dissenters' notice described in ss. 13.1-734
shall demand payment, certify that he acquired beneficial ownership of the
shares before or after the date required to be set forth in the dissenters'
notice pursuant to subdivision 3 of subsection B of ss. 13.1-734, and, in the
case of certificated shares, deposit his certificates in accordance with the
terms of the notice.
B. The shareholder who deposits his shares pursuant to subsection A of
this section retains all other rights of a shareholder except to the extent that
these rights are canceled or modified by the taking of the proposed corporate
action.
C. A shareholder who does not demand payment and deposits his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
ss. 13.1-736
Share restrictions
A. The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received.
B. The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder except to the
extent that these rights are canceled or modified by the taking of the proposed
corporate action.
ss. 13.1-737
Payment
A. Except as provided in ss. 13.1-738, within thirty days after receipt
of a payment demand made pursuant to ss. 13.1-735, the corporation shall pay the
dissenter the amount the corporation estimates to be the fair
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value of his shares, plus accrued interest. The obligation of the corporation
under this paragraph may be enforced (i) by the circuit court in the city or
county where the corporation's principal office is located, or, if none in this
Commonwealth, where its registered office is located or (ii) at the election of
any dissenter residing or having its principal office in the Commonwealth, by
the circuit court in the city or county where the dissenter resides or has its
principal office. The court shall dispose of the complaint on an expedited
basis.
B. The payment shall be accompanied by:
1. The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the effective date
of the corporate action creating dissenters' rights, an income
statement for that year, a statement of changes in
shareholders' equity for that year, and the latest available
interim financial statements, if any;
2. An explanation of how the corporation estimated the fair value
of the shares and of how the interest was calculated;
3. A statement of the dissenters' right to demand payment under
ss. 13.1-739; and
4. A copy of this article.
ss. 13.1-738
After-acquired shares
A. A corporation may elect to withhold payment required by ss. 13.1-737
from a dissenter unless he was the beneficial owner of the shares on the date of
the first publication by news media or the first announcement to shareholders
generally, whichever is earlier, of the terms of the proposed corporate action,
as set forth in the dissenters' notice.
B. To the extent the corporation elects to withhold payment under
subsection A of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
offer to pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares and of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under ss. 13.1-739.
ss. 13.1-739
Procedure if shareholder dissatisfied with payment or offer
A. A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under ss. 13.1-737),
IV-7
<PAGE>
or reject the corporation's offer under ss. 13.1-738 and demand payment of the
fair value of his shares and interest due, if the dissenter believes that the
amount paid under ss. 13.1-737 or offered under ss. 13.1-738 is less than the
fair value of his shares or that the interest due is incorrectly calculated.
B. A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection A
of this section within thirty days after the corporation made or offered payment
for his shares.
ss. 13.1-740
Court action
A. If a demand for payment under ss. 13.1-739 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the circuit court in the city or county described in
subsection B of this section to determine the fair value of the shares and
accrued interest. If the corporation does not commence the proceeding within the
sixty-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
B. The corporation shall commence the proceeding in the city or county
where its principal office is located, or, if none in this Commonwealth, where
its registered office is located. If the corporation is a foreign corporation
without a registered office in this Commonwealth, it shall commence the
proceeding in the city or county in this Commonwealth where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
C. The corporation shall make all dissenters, whether or not residents
of this Commonwealth, whose demands remain unsettled parties to the proceeding
as in an action against their shares and all parties shall be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.
D. The corporation may join as a party to the proceeding any
shareholder who claims to be a dissenter but who has not, in the opinion of the
corporation, complied with the provisions of this article. If the court
determines that such shareholder has not complied with the provisions of this
article, he shall be dismissed as a party.
E. The jurisdiction of the court in which the proceeding is commenced
under subsection B of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
IV-8
<PAGE>
F. Each dissenter made a party to the proceeding is entitled to
judgment (i) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation or (ii)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under ss. 13.1-738.
ss. 13.1-741
Court costs and counsel fees
A. The court in an appraisal proceeding commenced under ss. 13.1-740
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters did not act in good faith in demanding
payment under ss. 13.1-739.
B. The court may also assess the reasonable fees and expenses of
experts, excluding those of counsel, for the respective parties, in amounts the
court finds equitable:
1. Against the corporation and in favor of any or all dissenters
if the court finds the corporation did not substantially comply
with the requirements of ss.ss. 13.1-732 through 13.1-739; or
2. Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the
fees and expenses are assessed did not act in good faith with
respect to the rights provided by this article.
C. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, the court
may award to these counsel reasonable fees to be paid out of the amounts awarded
the dissenters who were benefited.
D. In a proceeding commenced under subsection A of ss. 13.1-737 the
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
IV-9
<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 Amended and Restated Agreement and Plan of Merger, dated as of May 7,
1998, as amended as of June 3, 1998, by and between One Valley Bancorp,
Inc., and Summit Bankshares, Inc. (attached as Appendix I to the Proxy
Statement/Prospectus filed as part of the Registration Statement).
2.2 Stock Option Agreement dated as of May 8, 1998, by and between One
Valley Bancorp, Inc., and Summit Bankshares, Inc. (attached as Appendix
III to the 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.
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 S. B. Hoover & Company, L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Scott & Stringfellow, Inc.
23.4 Consent of Jackson & Kelly (filed as part of the opinion of Jackson &
Kelly in Exhibit 5.1).
23.5 Consent of Sullivan & Cromwell (filed as part of the opinion of
Sullivan & Cromwell in Exhibit 8.1).
23.6 Consent of Cherry, Bekaert & Holland, L.L.P
24. Power of Attorney.
PART II-4
<PAGE>
99.1 Form of Summit Bankshares, Inc.'s Proxy.
99.2 Opinion of Scott & Stringfellow, Inc. (attached as Appendix II to the
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.
(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
PART II-5
<PAGE>
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 Summit Bankshares, Inc. 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 15th day of
June, 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>
<S> <C>
Signature Title Date
/s/ Phyllis H. Arnold Director June 15, 1998
- -----------------------
PHYLLIS H. ARNOLD
/s/ Charles M. Avampato Director June 15, 1998
- -----------------------
CHARLES M. AVAMPATO
/s/ Robert F. Baronner Director June 15, 1998
- -----------------------
ROBERT F. BARONNER
/s/ Dennis M. Bone Director June 15, 1998
- -----------------------
DENNIS M. BONE
</TABLE>
PART II-7
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ James K. Brown Director June 15, 1998
- --------------------------------
JAMES K. BROWN
/s/ Nelle Ratrie Chilton Director June 15, 1998
- --------------------------------
NELLE RATRIE CHILTON
- -------------------------------- Director June __, 1998
H. RODGIN COHEN
/s/ Ray Marshall Evans, Jr. Director June 15, 1998
- --------------------------------
RAY MARSHALL EVANS, JR.
/a/ James Gabriel Director June 15, 1998
- --------------------------------
JAMES GABRIEL
/s/ Phillip H. Goodwin Director June 15, 1998
- --------------------------------
PHILLIP H. GOODWIN
/s/ Thomas E. Goodwin Director June 15, 1998
- --------------------------------
THOMAS E. GOODWIN
/s/ Bob M. Johnson Director June 15, 1998
- --------------------------------
BOB M. JOHNSON
/s/ Robert E. Kamm, Jr. Director June 15, 1998
- --------------------------------
ROBERT E. KAMM, JR.
/s/ John D. Lynch Director June 15, 1998
- --------------------------------
JOHN D. LYNCH
/s/ Edward H. Maier Director June 15, 1998
- --------------------------------
EDWARD H. MAIER
/s/ J. Holmes Morrison President, Chief Executive Officer June 15, 1998
- --------------------------------
J. HOLMES MORRISON and Director
/s/ Charles R. Neighborgall, III Director June 15, 1998
- --------------------------------
CHARLES R. NEIGHBORGALL, III
PART II-8
</TABLE>
<PAGE>
Signature Title Date
/s/ John L. D. Payne Director June 15, 1998
- --------------------------------
JOHN L. D. PAYNE
/s/ Angus E. Peyton Director June 15, 1998
- --------------------------------
ANGUS E. PEYTON
/s/ Lacy I. Rice, Jr. Director June 15, 1998
- --------------------------------
LACY I. RICE, JR.
/s/ Brent D. Robinson Director June 15, 1998
- --------------------------------
BRENT D. ROBINSON
/s/ James W. Thompson Director June 15, 1998
- --------------------------------
JAMES W. THOMPSON
/s/ J. Lee Van Metre, Jr. Director June 15, 1998
- --------------------------------
J. LEE VAN METRE, JR.
/s/ Richard B. Walker Director June 15, 1998
- --------------------------------
RICHARD B. WALKER
/s/ H. Bernard Wehrle, III Director June 15, 1998
- --------------------------------
H. BERNARD WEHRLE, III
/s/ John H. Wick, III Director June 15, 1998
- --------------------------------
JOHN H. WICK, III
/s/ Thomas D. Wilkerson Director June 15, 1998
- --------------------------------
THOMAS D. WILKERSON
PART II-9
<PAGE>
EXHIBIT INDEX
2.1 Amended and Restated Agreement and Plan of Merger, dated as of May 7,
1998, as amended as of June 3, 1998, by and between One Valley Bancorp,
Inc., and Summit Bankshares, Inc. (attached as Appendix I to the Proxy
Statement/Prospectus filed as part of the Registration Statement).
2.2 Stock Option Agreement dated as of May 8, 1998, by and between One
Valley Bancorp, Inc., and Summit Bankshares, Inc. (attached as Appendix
III to the 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.
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 S. B. Hoover & Company, L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Scott & Stringfellow, Inc.
23.4 Consent of Jackson & Kelly (filed as part of the opinion of Jackson &
Kelly in Exhibit 5.1).
23.5 Consent of Sullivan & Cromwell (filed as part of the opinion of
Sullivan & Cromwell in Exhibit 8.1).
23.6 Consent of Cherry, Bekaert & Holland, L.L.P
24. Power of Attorney.
99.1 Form of Summit Bankshares, Inc.'s Proxy.
99.2 Opinion of Scott & Stringfellow, Inc. (attached as Appendix II to the
Proxy Statement/Prospectus filed as a part of this Registration
Statement).
E-2
June 18, 1998
One Valley Bancorp, Inc.
One Valley Square
Summers & Lee Streets
P. O. Box 1793
Charleston, West Virginia 25326
Gentlemen:
Pursuant to the Amended and Restated Agreement and Plan of Merger
entered into by and between One Valley Bancorp, Inc. ("One Valley") and Summit
Bankshares, Inc., dated as of May 7, 1998 (the "Merger Agreement"), as amended
as of June 3, 1998, proceedings for the issuance of up to 1,913,941 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.
June 18, 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
Jackson & Kelly
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June 18, 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 June 18, 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 subject to the limitations set forth thereunder.
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
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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 Bank-Central Virginia, National Association, a national
banking association organized under the laws of the United States
of America.
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement of our report,
dated January 23, 1998 and June 11, 1998, on the financial statements of Summit
Bankshares, Inc. as of December 31, 1997 and 1996, and for each of the two years
in the period ended December 31, 1997. We also consent to the reference made to
us under the caption "Experts" in the Proxy Statement/Prospectus constituting a
part of this Registration Statement.
/s/ S. B. Hoover & Company, L.L.P.
Harrisonburg, Virginia
June 18, 1998
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CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4, 333-________) and related Prospectus of
One Valley Bancorp, Inc. and Subsidiaries for the registration of 1,913,941
shares of its common stock and to the incorporation by reference therein of our
report dated January 21, 1998, (except Notes A, D and M, as to which the
date is June 15, 1998) with respect to the consolidated financial statements of
One Valley Bancorp, Inc. and Subsidiaries included in the current Report on Form
8-K dated June 17, 1998, for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Charleston, West Virginia
June 18, 1998
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CONSENT OF SCOTT & STRINGFELLOW, INC.
June 11, 1998
Merrell S. McIlwain, II, Esquire
One Valley Bancorp, Inc.
One Valley Square
Charleston, West Virginia 25301
CONSENT OF INVESTMENT BANKERS
-----------------------------
Gentlemen:
We consent to the use, quotation and summarization in the Registration
Statement on Form S-4 of our fairness opinion dated June 6, 1998 rendered to the
Board of Directors of Summit Bankshares, Inc. in connection with its merger with
One Valley Bancorp, Inc. and the use of our name, and the statements with
respect to us, appearing in the Registration Statement.
Sincerely,
SCOTT & STRINGFELLOW, INC.
/s/ Gary S. Penrose
Managing Director
Financial Institutions Group
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(logo)
Exhibit 23.6
INDEPENDENT AUDITOR'S CONSENT
One Valley Bancorp, Inc.
Summers and Lee Streets
P.O. Box 1793
Charleston, West Virginia 25326
We consent to the incorporation in this Registration Statement on Form S-4 of
our report dated January 30, 1998, on the consolidated statements of financial
condition of FFVA Financial Corporation and subsidiaries as of December 31, 1997
and 1996 and the related consolidated statements of income, changes in
stockholders' equity, and cash flows of each of the three years in the period
ended December 31, 1997, as filed with the Securities and Exchange Commission on
June 19, 1998.
Cherry, Bekaert & Holland, L.L.P.
June 18, 1998
Lynchburg, Virginia
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
Summit Bankshares, Inc., under the Agreement and Plan of Merger dated as of May
7, 1998, by and between One Valley Bancorp, Inc., and Summit Bankshares, Inc.,
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 11th day of June, 1998.
WITNESS the following signatures and seals:
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<TABLE>
<S> <C>
/s/ Phyllis H. Arnold (SEAL) /s/ J. Holmes Morrison (SEAL)
- -------------------------- -----------------------------------
PHYLLIS H. ARNOLD J. HOLMES MORRISON
/s/ Charles M. Avampato (SEAL) /s/ Charles R. Neighborgall, III (SEAL)
- -------------------------- -----------------------------------
CHARLES M. AVAMPATO CHARLES R. NEIGHBORGALL, III
/s/ Robert F.Baronner (SEAL)
/s/ John L. D. Payne (SEAL) ------------------------------------
- ------------------------- ROBERT F.BARONNER
JOHN L. D. PAYNE
/s/ Dennis M. Bone (SEAL) /s/ Angus E. Peyton (SEAL)
- -------------------------- -----------------------------------
DENNIS M. BONE ANGUS E. PEYTON
/s/ James K. Brown (SEAL) /s/ Lacy I. Rice, Jr. (SEAL)
- -------------------------- -----------------------------------
JAMES K. BROWN LACY I. RICE, JR.
/s/ Nelle Ratrie Chilton (SEAL) /s/ Brent D. Robinson (SEAL)
- -------------------------- -----------------------------------
NELLE RATRIE CHILTON BRENT D. ROBINSON
(SEAL) /s/ James W. Thompson (SEAL)
- -------------------------- -----------------------------------
H. RODGIN COHEN JAMES W. THOMPSON
Ray Marshall Evans, Jr. (SEAL) /s/ J. Lee Van Metre, Jr. (SEAL)
- --------------------------- -----------------------------------
RAY MARSHALL EVANS, JR. J. LEE VAN METRE, JR.
/s/ James Gabriel (SEAL) /s/ Richard B. Walker (SEAL)
- --------------------------- -----------------------------------
JAMES GABRIEL RICHARD B. WALKER
/s/ Phillip H. Goodwin (SEAL) s/ H. Bernard Wehrle, III (SEAL)
- --------------------------- -----------------------------------
PHILLIP H. GOODWIN H. BERNARD WEHRLE, III
/s/ Thomas E. Goodwin (SEAL) /s/ John H. Wick, III (SEAL)
- --------------------------- -----------------------------------
THOMAS E. GOODWIN JOHN H. WICK, III
/s/ Bob M. Johnson (SEAL) /s/ Thomas D. Wilkerson (SEAL)
- --------------------------- -----------------------------------
BOB M. JOHNSON THOMAS D. WILKERSON
/s/ Robert E. Kamm, Jr. (SEAL)
- ---------------------------
ROBERT E. KAMM, JR.
/s/ John D. Lynch (SEAL)
- ---------------------------
JOHN D. LYNCH
/s/ Edward H. Maier (SEAL)
- ---------------------------
EDWARD H. MAIER
</TABLE>
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PROXY
Summit Bankshares, Inc.
2134 Raphine Road
Raphine, Virginia 24472
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
ON JULY 24, 1998
The undersigned shareholder of Summit Bankshares, Inc. ("Summit")
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 $1.00 per share, of Summit that
the undersigned is entitled to vote at the Special Meeting of Shareholders of
Summit to be held at The Days Inn Hotel, 584 Oakland Circle, Raphine, Virginia,
on July 24, 1998, at 1.00 p.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 Proxy
Statement/Prospectus for the Special Meeting and Notice of Special Meeting of
Shareholders.
FOR AGAINST ABSTAIN
1. Approve the Amended and Restated
Agreement and Plan of Merger and
related Plan of Merger,
dated as of May 7, 1998, as |_| |_| |_|
amended as of June 3, 1998,
between One Valley Bancorp,
Inc., and Summit Bankshares, Inc.
2. To act on such other matters as
may properly come before the
Special Meeting or any adjournment
or adjornments thereof. |_| |_| |_|
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<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 Proxy Statement/Prospectus of One Valley
Bancorp, Inc., and Summit Bankshares, Inc., 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.
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