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 AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): June 9, 2008
GREATER ATLANTIC FINANCIAL CORP.
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
--------
(State or other jurisdiction of incorporation)
0-26467 54-1873112
- ------------------------ ----------
(Commission File Number) (IRS Employer
Identification
Number)
10700 Parkridge Boulevard, Suite P50 Reston, Virginia 20191
- ----------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(703) 391-1300
--------------
(Registrant's telephone number, including area code)
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)
[X] 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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 9, 2008, Greater Atlantic Financial Corp. ("GAFC"), the
holding company for Greater Atlantic Bank ("GAB"), and Summit Financial Group,
Inc. ("Summit") entered into an Agreement and Plan of Reorganization providing
for the merger of GAFC with and into Summit.
As previously announced, GAFC and Summit had entered into a definitive
merger agreement on April 12, 2007, but GAFC received notice from Summit in
April of this year that Summit had exercised its right to terminate that
agreement.
Under the terms of the merger agreement, each holder of a share of GAFC
common stock is entitled to receive, subject to the limitations and adjustments
set forth in the merger agreement, the number of shares of Summit common stock
equal to $4.00 divided by the average closing price of Summit's common stock as
reported on the NASDAQ Capital Market for the twenty (20) trading days before
the closing of the merger. In no event will each share of GAFC common stock be
exchanged for more than 0.328625 of a share of Summit common stock. If, at
closing, GAFC's shareholders' equity, adjusted to exclude accumulated other
comprehensive income or loss and the effect of removing the benefit of net
operating loss carryforwards from the net deferred tax assets, is less than
$4,213,617 (which equals GAFC's shareholders' equity at March 31, 2008), then
the aggregate value of the merger consideration will be reduced one dollar for
each dollar that GAFC's adjusted shareholders' equity is less than $4,213,617.
For purposes of determining GAFC's adjusted shareholders' equity at closing,
GAFC's shareholders' equity at closing shall be increased by the actual monthly
operating losses, up to $250,000 per month, incurred by GAFC after March 31,
2008 and before September 1, 2008, the fees accrued or paid to GAFC's financial
advisor, and the fees accrued or paid to GAFC's legal counsel up to $150,000.
The preceding example is subject to numerous assumptions and
uncertainties, including, without limitation, the level of GAFC's future
shareholders' equity. There can be no guarantee that a GAFC shareholder will
receive such value in the merger.
Under the terms of the merger agreement, Summit has agreed to assume
all of GAFC's obligations under its outstanding convertible trust preferred
securities.
In addition to the receipt of GAFC shareholder and customary regulatory
approvals, and other customary closing conditions, the completion of the merger
is conditioned on GAB having core deposits (generally all deposits except
municipal, wholesale and brokered deposits) of at least $144.0 million as of
closing . At May 31, 2008, GAB's core deposits were approximately $180.8
million. Summit and GAFC have each completed their due diligence.
The completion of the merger is also conditioned on (a) GAFC and GAB
having the following minimum regulatory capital ratios: Tier 1 (core) capital
equal to 4.0%, Tier 1 risk-based capital equal to 4.0% and total risk-based
capital equal to 8.0%, (b) GAB's maximum ratio of the sum of non-performing
loans, other real estate owned and net loans charged off after March 31, 2008,
to total consolidated assets shall not exceed 2.78%, and (c) GAFC's allowance
for loan losses shall be adequate in accordance with generally accepted
accounting principles and applicable regulatory guidance, as determined by
Summit with the concurrence of GAFC's independent auditors.
The merger is expected to be completed in the fourth calendar quarter
of 2008, subject to regulatory and shareholder approvals. Following the merger,
Summit intends to merge GAB with and into Summit Community Bank, with Summit
Community Bank as the surviving institution.
GAFC's press release dated June 10, 2008, filed pursuant to SEC Rule
14a-12, is incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits:
2.1 Agreement and Plan of Reorganization dated June 9, 2008
99.1 Press Release dated June 10, 2008
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.
GREATER ATLANTIC FINANCIAL CORP.
Date: June 12, 2008 By: /s/ Carroll E. Amos
-------------------------------------
Carroll E. Amos
President and Chief Executive Officer
Date: June 12, 2008 By: /s/ David E. Ritter
-------------------------------------
David E. Ritter
Senior Vice President and
Chief Financial Officer