Item 1.01
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Entry into a Material Definitive Agreement
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On
May 19, 2016, Cordia Bancorp Inc., a Virginia corporation (the “Company”), and its wholly owned subsidiary, Bank of
Virginia (the “Bank”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
First-Citizens
Bank & Trust Company (“First-Citizens”) and its wholly owned subsidiary, FC Merger Subsidiary I, Inc. (“Merger
Sub”), pursuant to which (i) Merger Sub will merge with and into the Company with the Company as the surviving entity and
(ii) First-Citizens will acquire the Company and the Bank.
Following the
merger of Merger Sub with and into the Company, the Company and the Bank are expected to be combined into First-Citizens.
Under the terms of
the Merger Agreement, First-Citizens will acquire all of the Company’s outstanding common stock at a price of $5.15 per share
in cash, resulting in a valuation of the acquisition of approximately $37.1 million. Each outstanding option to acquire shares
of Company common stock will be canceled in exchange for a cash payment equal to the difference, if any, between $5.15 and the
exercise price of the option. If the exercise price of an option exceeds $5.15, then such option will be cancelled without any
payment. In addition, unvested restricted stock will vest in full upon the merger.
The Merger Agreement
contains customary representations and warranties from the Company, the Bank and First-Citizens, and each party has agreed to customary
covenants, including, among others, covenants relating to (i) the conduct of the Company’s and the Bank’s businesses
during the interim period between the execution of the Merger Agreement and the closing of the merger, (ii) the Company’s
obligations to facilitate its stockholders’ consideration of, and voting upon, the Merger Agreement and the merger, (iii)
the recommendation by the Board of Directors of the Company in favor of approval of the Merger Agreement and the merger by its
stockholders, and (iv) the Company’s non-solicitation obligations relating to alternative business combination transactions.
Consummation of the
merger is expected to occur no later than the fourth quarter of 2016 and is subject to certain conditions, including, among others,
approval of the merger by the Company’s stockholders, the receipt of all required regulatory approvals and expiration of
applicable waiting periods, accuracy of specified representations and warranties of each party, the performance in all material
respects by each party of its obligations under the Merger Agreement, and the absence of any injunctions or other legal restraints.
The Merger Agreement
contains termination rights which may be exercised by the Company or First-Citizens in specific circumstances, such as the following:
the parties are unable to complete the merger by December 31, 2016; the representations of the other party are false or misleading
in any material respect (or, with respect to Cordia, certain representations are false and misleading in any respect); or the Company’s
stockholders fail to approve the merger. In addition, the Company may terminate the Merger Agreement to enter into an alternative
business combination transaction pursuant to a “superior proposal,” as defined in the Merger Agreement. If the Merger
Agreement is terminated under certain circumstances, (i) the Company will be required to pay First-Citizens a termination fee of
$1.0 million and (ii) the Company and First-Citizens will be required to reimburse the other party for its expenses incurred in
connection with the merger, up to an aggregate of $250,000.
In connection with
the execution of the Merger Agreement, all of the directors of the Company have entered into support agreements with First-Citizens
pursuant to which such individuals, in their capacities as stockholders, have agreed, among other things, to vote their respective
Company common shares in favor of the approval of the Merger Agreement and the transactions contemplated thereby. A form of support
agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
The foregoing summary
of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of such
document, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The representations, warranties and
covenants of each party set forth in the Merger Agreement have been made only for purposes of, and were and are solely for the
benefit of the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the Merger 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, the representations
and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should
not rely on them as statements of fact. In addition, such representations and warranties (i) will not survive the consummation
of the Merger, and (ii) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger
Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date
of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.
Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of
the Merger Agreement, and not to provide investors with any other factual information regarding the Company or First-Citizens,
their respective affiliates or their respective businesses. The Merger Agreement should not be read alone, but should instead be
read in conjunction with the other information regarding the Company, First-Citizens, their respective affiliates or their respective
businesses, the Merger Agreement and the merger that will be contained in, or incorporated by reference into, the proxy statement
of the Company to be filed in connection with the transactions contemplated by the Merger Agreement, as well as in the Forms 10-K,
Forms 10-Q and other documents that each of the Company and First Citizens Bancshares, Inc., the parent holding company of First-Citizens,
file with or furnish to the Securities and Exchange Commission (“SEC”).