UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2020
Fauquier Bankshares, Inc.
(Exact name of registrant as specified in its charter)
Virginia | 000-25805 | 54-1288193 | ||
(State or other jurisdiction of incorporation) | (Commission file number) | (IRS Employer Identification No.) |
10 Courthouse Square, Warrenton, Virginia 20186
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (540) 347-2700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, Par value $3.13 per share | Fauquier | The NASDAQ Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement. |
Agreement and Plan of Reorganization
On September 30, 2020, Fauquier Bankshares, Inc., a Virginia corporation (“Fauquier”), entered into an Agreement and Plan of Reorganization (the “Agreement”) with Virginia National Bankshares Corporation, a Virginia corporation (“Virginia National”). Pursuant to the Agreement, Fauquier will merge with and into Virginia National, with Virginia National as the surviving corporation (the “Merger”). At or immediately following consummation of the Merger, The Fauquier Bank, the wholly-owned Virginia chartered commercial banking subsidiary of Fauquier, will be merged with and into Virginia National Bank, Virginia National’s wholly-owned national bank subsidiary, with Virginia National Bank as the surviving bank.
Upon completion of the Merger, each share of Fauquier common stock will be converted into the right to receive 0.6750 (the “exchange ratio”) shares of Virginia National common stock plus cash in lieu of any fractional shares (the “merger consideration”).
Except as provided in the next sentence, each Fauquier restricted stock award outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will vest fully and be converted into the right to receive the merger consideration payable under the Agreement with respect to such shares of Fauquier’s common stock. Each Fauquier restricted stock award issued after the date of the Agreement to a director of Fauquier who joins the board of directors of Virginia National at the Effective Time will be converted into a fully vested Virginia National restricted stock award based on the exchange ratio, and any transferability restrictions on such Fauquier restricted stock award prior to the Effective Time shall continue to apply after the Effective Time.
Each Fauquier restricted stock unit award outstanding 10 business days prior to the Effective Time will vest and convert into, at the election of the holder, either cash or shares of Fauquier common stock. Any shares of Fauquier common stock issued in settlement of a Fauquier restricted stock award will be converted at the Effective Time into the right to receive the merger consideration payable under the Agreement.
Upon completion of the Merger, the boards of Virginia National and the Bank will be fixed at 13 directors, consisting of seven directors to be designated by Virginia National (including William D. Dittmar, Jr., the current chairman of the board of directors of Virginia National, who will continue to serve as chairman of the board of directors of Virginia National following consummation of the Merger, and Glenn W. Rust, the current president and chief executive officer of Virginia National) and six directors to be designated by Fauquier (including John B. Adams, Jr., the current chairman of the board of directors of Fauquier, who will serve as vice chairman of the board of directors of Virginia National, and Marc J. Bogan, the current president and chief executive officer of Fauquier). In connection with the execution of the Agreement, each of the current directors of Fauquier and Virginia National, respectively, have entered into certain Affiliate Agreements (described in Item 8.01 below).
Mr. Rust will continue to serve as Virginia National’s president and chief executive officer following closing of the Merger. Mr. Bogan will be appointed president and chief executive officer of the Bank effective as of the closing of the Merger.
The Merger is intended to be a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
The boards of directors of each of Virginia National and Fauquier have unanimously approved the Agreement. The Agreement contains customary representations, warranties and covenants from both Virginia National and Fauquier. The consummation of the Merger is subject to various conditions, including (i) approval of the Agreement by shareholders of Virginia National and Fauquier, (ii) receipt of all required regulatory approvals without any burdensome condition, (iii) the absence of any law or order prohibiting the closing of the Merger, and (iv) the effectiveness of the registration statement to be filed by Virginia National with the Securities and Exchange Commission (“SEC”) with respect to Virginia National’s common stock to be issued in the Merger. Each party’s obligation to consummate the Merger is subject to certain other conditions, including the accuracy of the representations and warranties of the other party, compliance of the other party with its covenants, and receipt from the party’s legal counsel to the effect that the Merger will qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code. Subject to the satisfaction or waiver of the various conditions for closing, the parties anticipate completing the Merger in the first half of 2021.
The Agreement provides certain termination rights for both Virginia National and Fauquier, and further provides that a termination fee of $2,500,000 will be payable by either Virginia National or Fauquier, as applicable, in the event that the Agreement is terminated under certain circumstances.
The foregoing description of the Agreement is not complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
The representations, warranties and covenants contained in the Agreement were made only for purposes of the Agreement and as of specific dates, were solely for the benefit of the parties to the Agreement, will not survive consummation of the Merger unless otherwise specified in the Agreement, and are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, investors should not rely on the representations, warranties, and covenants or any description thereof as characterizations of the actual state of facts or conditions. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. Accordingly, the Agreement is included with this filing only to provide investors with information regarding the terms of the Agreement, and not to provide investors with any other factual information regarding Virginia National or Fauquier, their respective affiliates or their respective businesses. The Agreement should not be read alone, but should instead be read in conjunction with other information regarding Virginia National, Fauquier and their respective affiliates or their respective businesses, the Agreement and the Merger that will be contained in or incorporated by reference into the Registration Statement on Form S-4 of Virginia National that will include a prospectus of Virginia National and a joint proxy statement of Virginia National and Fauquier, as well as in the Forms 10-K, Forms 10-Q, Forms 8-K and other filings that Fauquier makes with the SEC.
Item 8.01 | Other Events. |
Affiliate Agreements
Simultaneous with the execution of the Agreement, Virginia National and Fauquier entered into Affiliate Agreements with each of the directors on the boards of Virginia National and Fauquier. Each director, as a shareholder party to an Affiliate Agreement, has agreed, among other things, to vote shares of Virginia National’s common stock or Fauquier’s common stock, as applicable, owned by such shareholder and over which such shareholder has sole voting and investment power in favor of the Merger and the Agreement (and related plan of merger), and against any competing acquisition proposal, any action, proposal, transaction or agreement which could reasonably be expected to result in a breach of the Agreement or the Affiliate Agreement, or other action, proposal or transaction that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger or the fulfillment of the parties’ respective conditions under the Agreement. The Affiliate Agreements will terminate in certain circumstances, including upon consummation of the Merger or the termination of the Agreement in accordance with its terms.
The foregoing description of the Affiliate Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Affiliate Agreements, forms of which are attached as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K and are incorporated by reference herein.
Important Information and Where to Find It:
This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the Merger. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.
In connection with the proposed Merger, Virginia National will file a registration statement on Form S-4 and other documents regarding the proposed Merger with the Securities and Exchange Commission (“SEC”) to register the shares of Virginia National’s common stock to be issued to the shareholders of Fauquier in the proposed Merger. The registration statement will include a joint proxy statement/prospectus, which will be sent to the shareholders of Virginia National and Fauquier in advance of each company’s respective shareholder meeting that will be held to consider the proposed Merger. Each of Fauquier and Virginia National may file with the SEC other relevant documents concerning the proposed Merger. Before making any voting or investment decision, investors and security holders are urged to read the joint proxy statement/prospectus and any other relevant documents to be filed with the SEC in connection with the proposed Merger because they contain important information about Fauquier, Virginia National and the proposed Merger. Shareholders are also urged to carefully review Fauquier’s public filings with the SEC, including, but not limited to, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and proxy statements. Investors and security holders may obtain free copies of the registration statement and the joint proxy statement/prospectus and other documents filed with the SEC by Fauquier and Virginia National through the website maintained by the SEC at www.sec.gov. These documents may also be obtained, without charge, from Fauquier at www.tfb.bank under the tab “About TFB – Investor Relations” or by directing a request to Fauquier Bankshares, Inc., 10 Courthouse Square, Warrenton, VA 20186, or by telephone at (540) 347-6751, or from Virginia National at www.vnb.com under the tab “Investor – Investor Relations” or by directing a request to Virginia National Bankshares Corporation, 404 People Place, Charlottesville, Virginia 22911, or by telephone at (434) 817-8587. The information on Virginia National’s website is not, and shall not be deemed to be, a part of this report or incorporated into other filings Virginia National makes with the SEC.
Fauquier, Virginia National and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Fauquier and Virginia National, respectively, in connection with the proposed Merger. Information about the directors and executive officers of Virginia National and their ownership of Virginia National’s common stock is set forth in Virginia National’s proxy statement in connection with its 2020 annual meeting of shareholders, as previously filed with the SEC on April 29, 2020. Information about the directors and executive officers of Fauquier and their ownership of Fauquier’s common stock is set forth in Fauquier’s proxy statement in connection with its 2020 annual meeting of shareholders, as previously filed with the SEC on April 17, 2020. Additional information regarding the interests of these participants and other persons who may be deemed participants in the solicitation of proxies may be obtained by reading the joint proxy statement/prospectus regarding the proposed Merger when it becomes available. Free copies of these documents may be obtained as described above.
Cautionary Note Regarding Forward-Looking Statements:
This Current Report on Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about (i) the benefits of the proposed Merger, including future financial and operating results, cost savings, enhancements to revenue and accretion to reported earnings that may be realized from the proposed Merger; (ii) Virginia National’s and Fauquier’s plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as “may”, “assumes”, “approximately”, “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “targets”, “projects”, or words of similar meaning generally intended to identify forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of the respective management of Virginia National and Fauquier and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Virginia National and Fauquier. In addition, these forward-looking statements are subject to various risks, uncertainties and assumptions with respect to future business strategies and decisions that are subject to change and difficult to predict with regard to timing, extent, likelihood and degree of occurrence. As a result, although Virginia National and Fauquier believe that its expectations with respect to forward-looking
statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, actual results may differ materially from any projected future results performance or achievements expressed or implied by such forward-looking statements.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in or implied by the forward-looking statements: (1) the businesses of Virginia National and Fauquier may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; (2) the expected growth opportunities or cost savings from the proposed Merger may not be fully realized or may take longer to realize than expected; (3) deposit attrition, operating costs, customer losses and business disruption following the proposed Merger, including adverse effects on relationships with employees and customers, may be greater than expected; (4) the regulatory approvals required for the proposed Merger may not be obtained on the proposed terms or on the anticipated schedule; (5) the shareholders of Virginia National or Fauquier may fail to approve the proposed Merger; (6) economic, legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which the Virginia National and Fauquier are engaged; (7) the interest rate environment may further compress margins and adversely affect net interest income; (8) results may be adversely affected by continued diversification of assets and adverse changes to credit quality; (9) competition from other financial services companies in Virginia National’s and Fauquier’s markets could adversely affect operations; (10) an economic slowdown could adversely affect credit quality and loan originations; (11) the ongoing COVID-19 pandemic is adversely affecting the Virginia National, Fauquier, and their respective customers, employees and third-party service providers; the adverse impacts of the pandemic on their respective business, financial position, operations and prospects have been material, and it is not possible to accurately predict the extent, severity or duration of the pandemic or when normal economic and operation conditions will return; and (12) other factors that may affect future results of Virginia National and Fauquier, including: changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Additional factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements are discussed in the Virginia National’s and Fauquier’s reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s website at http://www.sec.gov.
Readers are cautioned not to rely too heavily on the forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date they are made and neither Virginia National nor Fauquier undertakes an obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Fauquier Bankshares, Inc. | ||
(Registrant) | ||
By: | /s/ Christine E. Headly | |
Name: | Christine E. Headly | |
Title: | Executive Vice President and Chief Financial Officer |
Dated: October 2, 2020