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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
ATLANTIC FINANCIAL CORP
(Name of Issuer)
COMMON STOCK, PAR VALUE $5.00
(Title of Class of Securities)
04853R 10 0
(CUSIP Number)
ALFRED B. WHITT
VICE CHAIRMAN/PRESIDENT/CEO
F&M NATIONAL CORPORATION
9 COURT SQUARE
P.O. BOX 2800
WINCHESTER, VA 22604
(540) 665-4282
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 5, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [_].
Note: Schedules files in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 04853R 10 0 SCHEDULE 13D
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1. Names of Reporting Persons I.R.S. Identification Nos. of above persons
(entities only).
F&M National Corporation/54-0857462
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [_]
(b) [_]
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3. SEc Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
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6. Citizenship or Place of Organization
Virginia
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Number Of 7. Sole Voting Power
Shares 829,468*
Beneficially
Owned by -----------------------------------------------------------
Each 8. Shared Voting Power
Reporting none
Person
With -----------------------------------------------------------
9. Sole Dispositive Power
829,468*
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10. Shared Dispositive Power
none
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
829,468*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [_]
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13. Percent Of Class Represented by Amount in Row (11)
19.9%
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14. Type of Reporting Person (See Instructions)
HC
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* Up to 829,468 shares of common stock, par value $5.00 of Atlantic Financial
Corp ("Atlantic Common Stock"), a Virginia corporation ("Atlantic" or the
"Issuer"), covered by this statement are obtainable by F&M National Corporation,
a Virginia corporation ("F&M"), upon exercise of the Option as defined and
described in Item 4 below, if the Option were exercisable on the date hereof.
F&M expressly disclaims beneficial ownership of any such shares. Prior to the
existence of the Option, F&M was not entitled to any rights of a stockholder of
Atlantic with respect to such shares. The Option may be exercised only upon the
happening of certain events described in Item 4 below, none of which has
occurred as of the date hereof, and none of which is in the control of F&M.
Dispositive and voting powers are summarized in Items 4 and 5 below.
ITEM 1. SECURITY AND ISSUER
(a) This Schedule 13D relates to the common stock of Atlantic Financial
Corp, par value $5.00.
(b) The principal executive offices of the Issuer are located at 737 J.
Clyde Morris Boulevard, Newport News, Virginia 23601.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by F&M National Corporation, a Virginia
corporation. F&M is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended. The address of F&M's principal executive office
is located at The Feltner Building, 9 Court Square, First Floor, Winchester,
Virginia 22601.
The name, residence or business address, principal occupation or
employment and principal business address of any corporation or other
organization in which such employment is conducted as to each of the directors
and non-director executive officers of F&M is set forth on Annex A hereto and
incorporated herein by reference. All such individuals are United States
citizens.
During the last five years, F&M has not and, to the best of its knowledge,
none of the persons listed in Annex A hereto has (i) been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(ii) been a party to a civil proceeding before a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
It is presently anticipated that, should any purchase of Atlantic Common
Stock be made by F&M pursuant to the Option Agreement described below in
response to Item 4, or otherwise, the source of any funds used in any such
purchase would be the available cash, cash equivalents, available for sale
securities and bank financing of F&M.
ITEM 4. PURPOSE OF THE TRANSACTION
The following description of the terms of the Agreement and Plan of
Reorganization, dated as of July 5, 2000, by and between Atlantic and F&M (the
"Merger Agreement"), and the Stock Option
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Agreement, dated as of July 5, 2000, between Atlantic and F&M (the "Option
Agreement") and the transactions contemplated by the Merger Agreement and the
Option Agreement, is qualified in its entirety by reference to the Merger
Agreement and the Option Agreement, each of which is incorporated herein by
reference. Copies of the Merger Agreement and the Option Agreement have been
filed as exhibits to this statement. Capitalized terms used and not otherwise
defined herein have the meanings given to them in the Merger Agreement or Option
Agreement, as applicable.
The Merger Agreement
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Pursuant to the Merger Agreement, Atlantic will merge with and into F&M
(the "Merger") with F&M as the surviving corporation. The Merger Agreement
provides that each share of Atlantic Common Stock outstanding immediately prior
to the Effective Date of the Merger (as such terms are defined in the Merger
Agreement) will be converted into the right to receive 0.753 of a share of F&M
common stock, par value $2.00 per share ("F&M Common Stock").
The Merger is subject to the approval of the Board of Governors of the
Federal Reserve Board (the "Federal Reserve Board"), the Virginia State
Corporation Commission, the approval of the stockholders of Atlantic, and the
satisfaction of various other terms and conditions set forth in the Merger
Agreement. It is anticipated that the Merger will be completed in January 2001.
The Option Agreement and the Option
-----------------------------------
As an inducement and a condition to F&M's entering into the Merger
Agreement, Atlantic entered into the Option Agreement pursuant to which Atlantic
granted F&M an option (the "Option") entitling F&M to purchase up to 829,468 (or
such lesser amount as shall constitute 19.9% of the outstanding shares of
Atlantic Common Stock on the date of exercise) fully paid and nonassessable
shares of Atlantic Common Stock at a price of $15.00 per share (the "Option
Price"), subject to adjustment in certain circumstances.
In the event of any change in Atlantic Common Stock by reason of stock
dividends, stock splits, split-ups, recapitalizations, stock combinations,
exchanges of shares, or the like, the type and number of shares or securities
subject to the Option, and the Option Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that F&M shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that F&M would have
received in respect of the Atlantic 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 the Atlantic Common Stock are issued
after the date of the Option Agreement (other than pursuant to an event
described in the preceding sentence), the number of shares of Atlantic Common
Stock subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Atlantic Common Stock previously issued pursuant the
Option Agreement, equals 19.9% of the number of shares of the Atlantic Common
Stock then issued and outstanding, without giving effect to any shares subject
to or issued pursuant to the Option.
Subject to applicable law, regulatory restrictions and other certain
conditions, F&M may exercise the Option, in whole or in part, at any time or
from time to time if a Purchase Event (as defined below) shall have occurred and
be continuing. The Option shall expire and terminate, to the extent not
previously exercised, upon the earlier of: (i) the Effective Date of the Merger;
(ii) upon termination of the Merger Agreement in accordance with the provisions
thereof, other than a termination based upon, following or in connection with
either (A) a material breach by Atlantic of a Specified Covenant (as defined in
the Merger Agreement) or (B) the failure of Atlantic to obtain shareholder
approval of the Merger Agreement by the vote required under applicable law, in
the case that either (A) or (B) follow the
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occurrence of a Purchase Event; or (iii) 12 months after termination of the
Merger Agreement based upon a material breach by Atlantic of a Specified
Covenant or the failure of Atlantic to obtain shareholder approval of the Merger
Agreement by the vote required under applicable law, in either case following
the occurrence of a Purchase Event.
As defined in the Option Agreement, "Purchase Event" means the occurrence
of any of the following events or transactions occurring after July 5, 2000:
1. Atlantic, without having received F&M's prior written consent, shall
have entered into an agreement with any person to (i) acquire, merge or
consolidate, or enter into any similar transaction, with Atlantic, (ii)
purchase, lease or otherwise acquire all or substantially all of the assets of
Atlantic, or (iii) purchase or otherwise acquire directly from Atlantic
securities representing 10% or more of the voting power of Atlantic;
2. any person shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 20% or more of the outstanding shares of
Atlantic Common Stock after the date hereof (the term "beneficial ownership" for
purposes of this Option Agreement having the meaning assigned thereto in Section
13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the
regulations promulgated thereunder); or
3. any person shall have made a bona fide proposal to Atlantic by public
announcement or written communication that is or becomes the subject of public
disclosure to acquire Atlantic by merger, share exchange, consolidation,
purchase of all or substantially all of its assets or any other similar
transaction, and following such bona fide proposal the Board of Directors of
Atlantic shall have recommended that the shareholders of Atlantic approve or
accept such proposal and not the Merger Agreement.
As provided in the Option Agreement, in the event that F&M is entitled to
and wishes to exercise the Option, it must send to Atlantic a written notice
(the date of which is referred to in the Option Agreement as the "Notice Date")
specifying (1) the total number of shares of Atlantic Common Stock which F&M
intends to purchase pursuant to such exercise and (2) a place and date for the
closing that shall not be less than three business days nor more than 60
business days from the Notice Date; provided, however, that if prior
notification to or approval of any federal or state authority is required in
connection with such purchase, F&M will promptly file and expeditiously process
the required notice or application for approval 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
period has expired or been terminated or such approval has been obtained and any
requisite waiting period shall have passed.
Under the Bank Holding Company Act of 1956, F&M may not directly or
indirectly acquire more than 5% of the outstanding shares of any class of voting
securities of Atlantic without application to and prior approval from the
Federal Reserve Board.
The Option may be assigned by F&M in certain circumstances, subject to the
terms and conditions described in the Option Agreement.
In addition, any shares of Atlantic Common Stock purchased upon the
exercise of the Option may be resold by F&M pursuant to registration rights
under the Option Agreement.
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Delisting of Atlantic Common Stock
----------------------------------
If the Merger is completed, F&M will be the sole surviving corporation.
Accordingly, if the Merger is completed, Atlantic Common Stock will no longer be
traded on the Nasdaq SmallCap Market.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER
(a) As a result of the Option Agreement and the receipt of the Option
thereunder, pursuant to Rule 13d-3(d)(i) under the Exchange Act, F&M may be
deemed to own beneficially 829,468 shares of Atlantic Common Stock (or such
lesser amount as shall constitute 19.9% of the outstanding shares of Atlantic
Common Stock on the date of exercise), constituting approximately 19.9% of the
shares of Atlantic Common Stock issued and outstanding as of July 5, 2000. F&M
expressly disclaims any beneficial ownership of the 829,468 shares of Atlantic
Common Stock that are obtainable by F&M upon exercise of the Option because the
Option is exercisable only in the circumstances set forth in the Option
Agreement, which is described in Item 4 hereof, none of which has occurred as of
the date hereof and only then with regulatory approval (if, as a consequence,
F&M would own more than 5% of the outstanding shares of Atlantic Common Stock).
To the best knowledge of F&M, none of F&M's directors and executive
officers beneficially own any shares of Atlantic Common Stock.
As of the date of the Option Agreement, F&M did not own, either directly
or beneficially, any shares of Atlantic Common Stock. There have been no
transactions in shares of the Atlantic Common Stock by F&M, or, to the best
knowledge of F&M, by any of F&M's directors and executive officers, during the
past 60 days.
(b) If F&M were to exercise the Option, it would have sole power to vote
and, subject to the terms of the Option Agreement, sole power to direct the
disposition of, the shares of Atlantic Common Stock covered thereby.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except for the Option Agreement and the Merger Agreement described in Item
4 above, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) between the reporting person and any person or to the best
knowledge of F&M, among any of F&M's executive officers and directors or between
any of F&M's executive officers and directors and any other person, with respect
to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits to this Schedule 13D:
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a. Agreement and Plan of Reorganization, dated as of July 5, 2000, by and
between F&M National Corporation and Atlantic Financial Corp.
b. Stock Option Agreement, dated as of July 5, 2000, by and between F&M
National Corporation and Atlantic Financial Corp.
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: July 14, 2000
F&M NATIONAL CORPORATION
By: /s/ Alfred B. Whitt
---------------------------------
Name: Alfred B. Whitt
Title: President and Chief Executive
Officer
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ANNEX A
Directors and Executive Officers of F&M National Corporation
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Directors of F&M National Corporation
Served as Principal Occupation During
Name Director Since Past Five Years and Business Address
---- -------------- -----------------------------------------
Frank Armstrong, III 1985 Chairman, President and Chief Executive
Officer of National Fruit Product
Company, Inc. (food processor and
distributor), Winchester, Virginia.
P.O. Box 2040
Winchester, VA 22604
William H. Clement 1988 Vice Chairman, Hidden Creek Industries,
Inc. (a private real estate investment
company), Winchester, Virginia; Retired
in 1995 as Chairman of the Board of
Automotive Industries, Inc. and Vice
Chairman of the Board of Automotive
Industries Holding, Inc. (automobile
parts manufacturer), Strasburg, Virginia.
117 Forest Ridge Road
Winchester, VA 22602
Charles E. Curtis 1996 Vice Chairman and Chief Administrative
Officer, F&M National Corporation and
Vice Chairman of F&M Bank-Winchester as
of January 1, 1998. President and Chief
Executive Officer of F&M Bank-Northern
Virginia from August 9, 1996 to December
31, 1997. President and Chief Executive
Officer of Fairfax Bank and Trust Company
from July 22, 1985 to August 8, 1996.
9 Court Square
Winchester, VA 22601
W. M. Feltner 1970 Chairman of the Board, F&M National
Corporation.
9 Court Square
Winchester, VA 22601
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<TABLE>
<CAPTION>
Served as Principal Occupation
Name Director Since During Past Five Years and Business Address
---- -------------- -------------------------------------------
<S> <C> <C>
William R. Harris 1986 Chairman of the Board of Harris Heating &
Plumbing, Inc., Richmond, Virginia;
Chairman of the Board, F&M Bank-Richmond.
1893 Cross Country Road
Mineral, VA
L. David Horner, III 1986 Chairman of the Board of Horner
Properties, Inc. (real estate developer),
Stuart, Florida.
18 Simara Street
Stuart, FL 34996
Jack R. Huyett 1990 Retired President, Chief Administrative
Officer and Vice Chairman of the Board of
F&M National Corporation.
703 S. Samuel Street
Charles Town, WV 25414
J. D. Shockey, Jr. 1970 Chief Executive Officer of The Shockey Companies, Inc.
(general construction contractor),
Winchester, Virginia.
P.O. Box 2530
Winchester, VA 22604
Ronald W. Tydings 1996 Attorney, the law firm of Odin, Feldman & Pittleman,
P.C., Fairfax, Virginia;
Chairman of the Board, F&M
Bank-Northern Virginia.
9302 Lee Highway, Suite 1100
Fairfax, VA 22031
Alfred B. Whitt 1997 President/CEO, Vice Chairman and Chief
Financial Officer of F&M National
Corporation and Chairman
of F&M Bank-Winchester.
Senior Vice President,
Senior Financial Officer and Secretary of
F&M National Corporation from
1991 to 1997.
9 Court Square
Winchester, VA 22601
</TABLE>
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Executive Officers who are not Directors of F&M National Corporation
Name Present Principal Occupation Business Address
---- ---------------------------- ----------------
F. Dixon Whitworth, Jr. Executive Vice President, The Yost Building
F&M National Corporation; 38 Rouss Avenue
President of F&M Trust Company Winchester, VA 22601
Betty H. Carroll Senior Vice President, 115 North Cameron
F&M National Corporation; St. Winchester,
President and Chief Executive VA 22601
Officer of F&M Bank-Winchester
Michael L. Bryan Corporate Secretary and General 9 Court Square
Counsel of Winchester, VA 22601
F&M National Corporation
Barbara H. Ward Treasurer, 9 Court Square
F&M National Corporation; Senior Winchester, VA 22601
Vice President of F&M
Bank-Winchester
