Exhibit 8.1
March 1, 0000
Xxx Xxxxxx Xxxxxxx xx Xxxx Xxxxxxxx, Inc.
Xxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Re: Agreement and Plan of Merger by and among One Valley
Bancorp of West Virginia, Inc.,
One Valley Thrift, Inc., and CSB Financial Corporation
Gentlemen:
We have acted as counsel to One Valley Bancorp of West
Virginia, Inc., a West Virginia corporation ("One Valley"), in connection with
the proposed merger (the "Merger") of CSB Financial Corporation ("CSB
Financial"), a Delaware corporation and holder of 100 percent of the issued and
outstanding shares of stock of both Cooperative Savings Bank, F.S.B., and CSB
Financial Services, Inc., with and into One Valley Thrift, Inc., a West Virginia
corporation ("Thrift") and wholly owned subsidiary of One Valley, pursuant to
the terms of the Agreement and Plan of Merger dated January 26, 1996 (the
"Merger Agreement") between One Valley and CSB Financial as described in the
Registration Statement on Form S-4 to be filed by One Valley with the Securities
and Exchange Commission (the "Registration Statement"). You have asked our
opinion regarding (1) whether the proposed Merger will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Internal Revenue Code of 1986 ("Code") and (2) the Federal
income tax consequences of the Merger to One Valley, Thrift, CSB Financial, and
the shareholders of CSB Financial Common Stock ("CSB Financial Shareholders").
In connection with this opinion, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction of (i) the Merger Agreement and (ii) the Registration Statement. In
our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies. Furthermore, we have assumed CSB Financial
Shareholders will not have either dissenters or appraisal rights under Delaware
law.
We have not made an independent investigation of the facts set
forth in the Registration Statement. Consequently we have relied upon your
representation that the information presented in the Registration Statement or
otherwise furnished to us accurately and completely describes all material
relevant facts.
In addition to the facts stated in the Registration Statement
both you and CSB Financial have represented to us and we have relied on the
following representations:
1. The Merger will be consummated in compliance with the
material terms of the Merger Agreement and, none of
the material terms and conditions therein have been
waived or modified, and none of One Valley, Thrift,
or CSB Financial has any plan or intention to waive
or modify any material conditions of the Merger
Agreement.
2. The ratio for the exchange of shares of Common Stock
of One Valley, par value $10.00 per share ("One
Valley Common Stock"), to CSB Financial in exchange
for common stock of CSB Financial, par value, $0.01
per share ("CSB Financial Common Stock"), was
negotiated through arm's-length bargaining.
Accordingly, the cash, if any, and fair market value
of the One Valley Common Stock and other
consideration to be received by each CSB Financial
Shareholder will be approximately equal to the fair
market value of the CSB Financial Common Stock
surrendered in the exchange.
3. To the best of CSB Financial's knowledge,
there is no plan or intention by CSB
Financial Shareholders who own 1% or more of
the shares of CSB Financial Common Stock, and
to the best
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of the knowledge of the management of CSB
Financial and One Valley, there is no plan
or intention on the part of the remaining CSB
Financial Shareholders to sell, exchange, or
otherwise dispose of a number of shares of
the One Valley Common Stock received in
the Merger that would reduce the CSB
Financial Shareholders' ownership of One
Valley Common Stock to a number of shares
having a value, as of the effective date of
the Merger (the "Effective Date"), of less
than 50% of the value of all of the formerly
outstanding CSB Financial Common Stock on
the Effective Date. For purposes of this
representation (a) shares of CSB Financial
Common Stock exchanged for cash in lieu of
fractional shares of One Valley Common Stock
will be treated as outstanding CSB Financial
Common Stock on the Effective Date, and (b)
shares of CSB Financial Common Stock and
shares of One Valley Common Stock held by CSB
Financial Shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent
to the transaction were considered in
making this representation.
4. Thrift will acquire at least 90 percent of
the fair market value of the net assets and
at least 70 percent of the fair market value
of the gross assets held by CSB Financial
immediately prior to the Merger. For
purposes of this representation, amounts
paid by CSB Financial to shareholders who
receive cash, amounts used by CSB Financial
to pay its reorganization expenses, amounts
paid by CSB Financial for all benefits
accrued and vested under the CSB Financial
Corporation 1993 Incentive Stock Option Plan
(the "Option Plan"), and all redemptions and
distributions (except for regular, normal
dividends) made by CSB Financial immediately
preceding the transfer, will be included as
assets of CSB Financial held immediately
prior to the Merger.
5. Neither One Valley nor CSB Financial is aware of any
transfers of CSB Financial Common Stock by any holder
thereof prior to the Effective Date which were made
in contemplation of the Merger.
6. No liabilities of any person other than CSB Financial
will be assumed by Thrift in the Merger, and none of
the shares of CSB Financial to be surrendered in
exchange for One Valley Common Stock in the Merger
will be subject to any liabilities.
7. One Valley, Thrift, CSB Financial, and the CSB
Financial Shareholders will pay their respective
expenses, if any, incurred in connection with the
Merger.
8. There is no intercorporate indebtedness existing
between One Valley and CSB Financial or between
Thrift and CSB Financial that was issued, acquired,
or will be settled at a discount.
9. No two parties to the transaction are
investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
10. The fair market value of the assets of CSB Financial
transferred to Thrift will exceed the sum of its
liabilities to be assumed by Thrift plus the amount
of liabilities, if any, to which the transferred
assets are subject.
11. Neither the Co-operative Savings Bank,
F.S.B. Recognition and Retention Plan for
Outside Directors nor the Co-operative
Savings Bank, F.S.B. Recognition and
Retention Plan for Officers and Employees
will continue after the Merger.
12. The payment of cash in lieu of fractional
shares of One Valley Common Stock was not
separately bargained for consideration and
is being made for the purpose of saving One
Valley the expense and inconvenience of
issuing fractional shares. The total cash
consideration that One Valley will pay to CSB
Financial's Shareholders instead of issuing
fractional shares of One Valley Common Stock
will not exceed one percent of the total
consideration that will be issued as a result
of the Merger to CSB Financial's Shareholders
in exchange for their shares of CSB Financial
Common Stock. The fractional share
interests of each CSB Financial Shareholder
will be aggregated, and no CSB Financial
Shareholder will receive cash in an amount
equal to or greater than the value of one
full share of One Valley Common Stock.
13. None of the compensation received by any
shareholder-employee of CSB Financial
pursuant to any employment, consulting or
similar arrangement is or will be separate
consideration for, or
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allocable to, any of such shareholder's
shares of CSB Financial Common Stock. None
of the shares of One Valley Common Stock to
be received by any shareholder-employee of
CSB Financial pursuant to the Merger is or
will be separate consideration for, or
allocable to, any such employment, consulting
or similar arrangement. The compensation
paid to any shareholder-employee of CSB
Financial pursuant to any such employment,
consulting or similar arrangement is or will
be for services actually rendered and will
be commensurate with amounts paid to third
parties bargaining at arm's-length for
similar services.
In addition to the facts stated in the Registration Statement
and in the joint representations both you and CSB Financial have made to us, you
have represented to us and we have relied on the following representations:
1. Prior to the Merger, One Valley will be in control of
Thrift within the meaning of Section 368(c) of the
Code. Under Code Section 368(c), control "means the
ownership of stock possessing at least 80 percent of
the total combined voting power of all classes of
stock entitled to vote and at least 80 percent of the
total number of shares of all other classes of stock
of the corporation."
2. Following the Merger, Thrift will not issue
additional shares of its stock that would result in
One Valley losing control of Thrift within the
meaning of Section 368(c) of the Code.
3. No stock of Thrift will be issued in the Merger.
4. One Valley has no plan or intention to reacquire any
of its common stock to be issued in the Merger,
except for shares of One Valley Common Stock that may
be purchased in the open market in the ordinary
course under One Valley's existing stock repurchase
plan. Such plan was not established for the purpose
of affording holders of One Valley Common stock to be
issued in the Merger the opportunity to sell such
shares back to One Valley following the Merger, and
such One Valley Shareholders will not be offered any
preferred right to sell, vis a vis other One Valley
Shareholders, following the Merger.
5. One Valley presently owns no stock of CSB Financial
and has no plan or intention to acquire stock of CSB
Financial prior to consummation of the merger.
6. Thrift has no plan or intention after the Merger to
sell or otherwise dispose of any material portion of
CSB Financial's assets acquired in the Merger, except
for dispositions made in the ordinary course of
business.
7. One Valley has no plan or intention to liquidate
Thrift; to merge Thrift with and into another
corporation; or to cause Thrift to sell or otherwise
dispose of any of the assets of CSB Financial
acquired in the transaction, except for dispositions
made in the ordinary course of business, conversions
mandated by Federal banking laws, or transfers
described in Section 368(a)(2)(C) of the Code.
8. Following the Merger, Thrift intends to continue the
historic business of CSB Financial or use a
significant portion of the historic business assets
of CSB Financial in a business.
9. The assumption by Thrift of the liabilities of CSB
Financial pursuant to the Merger is for a bona fide
business purpose, and the principal purpose of such
assumption is not the avoidance of federal income tax
on the transfer of assets of CSB Financial to One
Valley.
10. Neither One Valley nor Thrift is under the
jurisdiction of a court in a case under Title 11 of
the United States Code or similar case, nor is it in
receivership, foreclosure, or similar proceeding in a
Federal or State Court.
11. The options for One Valley Common Stock that will be
exchanged for the outstanding options for CSB
Financial Common Stock as part of the Merger will
have no readily ascertainable fair market value
within the meaning of Section 1.83-7(b) of the
Treasury Regulations when granted.
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12. One Valley Shareholder Rights under the Shareholder
Protection Rights Plan adopted October 18, 1995,
cannot be transferred separately from the underlying
One Valley Common Stock, nor are they represented by
any certificate other than the underlying stock
certificate itself.
In addition to the facts stated in the Registration Statement
the joint representations both you and CSB Financial have made to us and your
individual representations to us, CSB Financial has represented to us and we
have relied on the following representations:
1. No dividends will be paid by CSB Financial prior to
consummation of the Merger, other than regular,
periodic dividends consistent in amount and effect
with prior dividend distributions.
2. CSB Financial has not redeemed any CSB Financial
Common Stock, has not made any distribution with
respect to any CSB Financial Common Stock, or has not
disposed of any of its assets in anticipation of or
as a part of a plan for the acquisition of CSB
Financial by One Valley.
3. To the best of the knowledge of the management of CSB
Financial, the assumption by Thrift of the
liabilities of CSB Financial pursuant to the Merger
is for a bona fide business purpose, and the
principal purpose of such assumption is not the
avoidance of federal income tax on the transfer of
assets of CSB Financial to Thrift pursuant to the
Merger.
4. The liabilities of CSB Financial assumed by Thrift
and the liabilities to which the transferred assets
of CSB Financial are subject were incurred by CSB
Financial in the ordinary course of its business.
5. CSB Financial is not under the jurisdiction of a
court in a case under Title 11 of the United States
Code or similar case, nor is it in receivership,
foreclosure, or similar proceeding in a Federal or
State Court.
6. All outstanding options for CSB Financial Common
Stock granted under the Option Plan, as of the
Effective Date, had no readily ascertainable fair
market value within the meaning of Section 1.83-7(b)
of the Treasury Regulations when granted.
7. No more than 200,000 shares of CSB Financial Common
Stock are available under the Option Plan for which
"limited rights" exist.
In rendering our opinion, we have considered the applicable
provisions of the Code, Treasury Regulations, pertinent judicial authorities,
interpretive rulings of the Internal Revenue Service and such other authorities
as we have considered relevant, all of which are subject to change at any time,
possibly with retroactive effect.
Based upon the foregoing, we are of the opinion that the
Merger will, under current law, constitute a tax-free reorganization under
Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Code, and One Valley,
Thrift, and CSB Financial will each be a party to the reorganization within the
meaning of Section 368(b) of the Code.
As a tax-free reorganization, the Merger will, in our opinion,
have the following Federal income tax consequences for One Valley, Thrift, CSB
Financial, and CSB Financial Shareholders:
1. No gain or loss will be recognized by CSB
Financial as a result of the Merger.
2. No gain or loss will be recognized by either One
Valley or Thrift as a result of the Merger.
3. The basis of the assets of CSB Financial acquired by
Thrift in the Merger will be the same as the basis of
such assets in the hands of CSB Financial immediately
prior to the Merger.
4. The holding period of the assets of CSB Financial in
the hands of Thrift will include, in each instance,
the holding period during which such assets were held
by CSB Financial.
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5. Except as provided in (6) below, no gain or loss will
be recognized by CSB Financial's shareholders upon
their receipt of One Valley Common Stock solely in
exchange for CSB Financial Common Stock.
6. 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 will be treated as having been
received as distributions in full payment in
exchange for the stock redeemed as provided
in Section 302(a) of the Code. See, Rev.
Rul. 66-365, 1966-2 C.B. 116; Rev. Proc.
77-41, 1977-2 C.B. 574.
7. The basis of the One Valley Common Stock to be
received by CSB Financial Shareholders will be, in
each instance, the same as the basis of the CSB
Financial Common Stock surrendered in exchange
therefor decreased by the amount of cash, if any,
received by the Shareholder and increased by the
amount of gain, if any, recognized by such
Shareholder with respect to any cash received
pursuant to the Merger.
8. The holding period of the One Valley Common Stock
received by CSB Financial Shareholders will include
the period during which the CSB Financial Common
Stock surrendered in exchange therefor was held by
the CSB Financial Shareholders, provided that the CSB
Financial Common Stock was a capital asset in the
hands of the CSB Financial Shareholder on the date of
the Merger.
9. Thrift will succeed to and take into account those
attributes of CSB Financial described in Section
381(c) of the Code, and Thrift will be the "acquiring
corporation" within the meaning of Section
1.381(a)-1(b)(2) of the Treasury Regulations. These
items will be taken into account by Thrift subject to
the conditions and limitations specified in Sections
381, 382, 383 and 384 of the Code and regulations
thereunder.
Except as set forth above, we express no opinions as to the
tax consequences to any party, whether Federal, state, local or foreign, of the
Merger or of any transactions related to the Merger or contemplated by the
Merger Agreement, including without limitation, (i) the tax consequences, if
any, to those CSB Financial Shareholders who acquired shares of CSB Financial
Common Stock pursuant to the exercise of stock options or otherwise as
compensation, and (ii) the tax consequences to special classes of CSB Financial
Shareholders, if any, including without limitation, foreign persons, insurance
companies, tax-exempt entities, retirement plans, and dealers in securities.
If any statements of facts, assumptions or representations
contained herein are subsequently determined to be incorrect in whole or in part
such that they would have a material effect upon the tax treatment of the issues
addressed herein, then no opinion is expressed as to the tax treatment of the
proposed transaction.
The opinions given herein are as of the date hereof. We assume
no obligation to update or supplement these opinions to reflect any facts or
circumstances that may hereafter come to our attention or any changes in law
that may hereafter occur.
The opinions expressed herein are solely for your benefit and
are being furnished only to you in connection with the Merger and solely for
your benefit in connection therewith and may not be used or relied upon in any
manner or for any purpose by any other person nor any copies published,
communicated, quoted or otherwise made available in whole or in part to any
other person or entity without our express prior written consent.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to Xxxxxxx &
Xxxxx under the heading "Certain Federal Income Tax Consequences" in the
Registration Statement.
Very truly yours,
/s/ Xxxxxxx & Xxxxx
Xxxxxxx & Xxxxx
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