Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the
8th day of June 2006, by and among Community Bankers Acquisition Corp., a
Delaware corporation (the “Company”) and the undersigned parties listed under
Holder on the signature page hereto (each, a “Holder” and, collectively, the
“Holders”).
WHEREAS, the Holders currently hold all of the issued and outstanding securities
of the Company;
WHEREAS, certain of the Holders have agreed to acquire certain warrants to
purchase shares of Common Stock of the Company pursuant to a Warrant Purchase
Agreement with the representatives of the underwriters in connection with the
Company’s contemplated initial public offering;
WHEREAS, the Holders and the Company desire to enter into this Agreement to
provide the Holders with certain rights relating to the registration of shares
of Common Stock held by them;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. The following capitalized terms used herein have the following
meanings:
“Agreement” means this Agreement, as amended, restated, supplemented, or
otherwise modified from time to time.
“Blackout Period” means the period (A) beginning 90 days prior to the date the
Company expects to file a Registration Statement for a public offering (other
than a registration statement relating to any employee benefit plan, or a
registration statement related solely to stock issued upon conversion of debt
securities) and, in the event no such Registration Statement is filed, ending on
the earlier of 90 days thereafter or the date that the Company no longer expects
to file such Registration Statement or, in the event such a Registration
Statement is filed, ending on the last day of the distribution (as contemplated
in Regulation M under the Securities Exchange Act of 1934, as amended) of such
public offering of securities; or (B) beginning on the date following a
determination of the Company’s board of directors made in the good faith
judgment of such board of directors that it would be materially detrimental to
the Company and its stockholders for such Registration Statement to be effected
at such time, ending on the earlier of 90 days thereafter or the date on which
the Company’s board of directors determines that it would no longer be
materially detrimental to the Company and its stockholders for such Registration
Statement to be effected at such time.

 

 

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“Business Combination” means a merger, capital stock exchange, asset acquisition
or other similar business combination with an operating business in the banking
industry as more specifically described in the Company’s registration statement
on Form S-1, as amended, filed with the Commission in connection with the
Company’s Initial Public Offering.
“Commission” means the Securities and Exchange Commission, or any other federal
agency then administering the Securities Act or the Exchange Act.
“Common Stock” means the common stock, par value $0.01 per share, of the
Company.
“Company” is defined in the preamble to this Agreement.
“Demand Registration” is defined in Section 2.1.1.
“Demanding Holder” is defined in Section 2.1.1.
“Effective Date” means the date of effectiveness of the registration statement
filed with the Commission in connection with the Company’s Initial Public
Offering.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.
“Expiration Date” shall mean June 4, 2011.
“Form S-3” is defined in Section 2.3.
“Holder” is defined in the preamble to this Agreement.
“Holder Indemnified Party” is defined in Section 4.1.
“Indemnified Party” is defined in Section 4.3.
“Indemnifying Party” is defined in Section 4.3.
“Initial Public Offering” means the Company’s initial public offering conducted
in June, 2006 pursuant to the Securities Act.
“Maximum Number of Shares” is defined in Section 2.1.4.
“Notices” is defined in Section 6.3.
“Piggy-Back Registration” is defined in Section 2.2.1.
“Register,” “registered” and “registration” mean a registration effected by
preparing and filing a registration statement or similar document in compliance
with the requirements of the Securities Act, and the applicable rules and
regulations promulgated thereunder, and such registration statement becoming
effective.

 

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“Registrable Securities” means all of the shares of Common Stock owned or held
by Holders or Transferees and all of the Warrants acquired by the Holders
pursuant to the Warrant Purchase Agreement together with the shares of Common
Stock issued or issuable upon exercise of such Warrants. Registrable Securities
include any warrants, shares of capital stock or other securities of the Company
issued as a dividend or other distribution with respect to or in exchange for or
in replacement of such shares of Common Stock and/or Warrants. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when: (A) a Registration Statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been sold, transferred, disposed of or exchanged in
accordance with such Registration Statement; (B) such securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under the
Securities Act; or (C) such securities shall have ceased to be outstanding. In
addition, Registrable Securities shall not include any securities held by any
Holder if such securities are then saleable under Rule 144 in the opinion of
counsel to the Company.
“Registration Statement” means a registration statement filed by the Company
with the Commission in compliance with the Securities Act and the rules and
regulations promulgated thereunder for a public offering and sale of Common
Stock (other than a registration statement on Form S-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another entity).
“Release Date” means the date on which shares of Common Stock are disbursed from
escrow pursuant to Section 3 of that certain Stock Escrow Agreement dated as of
June 8, 2006 by and among the parties hereto and Continental Stock Transfer &
Trust Company.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect at the time.
“Transferee” or “Transferees” means the persons, trusts or entities to whom the
Registrable Securities are transferred (i) by gift to a member of Holder’s
immediate family or to a trust, the beneficiary of which is a Holder or a member
of a Holder’s immediate family, (ii) by virtue of the laws of descent and
distribution upon death of any Holder, (iii) pursuant to a qualified domestic
relations order, or (iv) pursuant to a transfer of record ownership whereby
there is no change in beneficial ownership.
“Underwriter” means a securities dealer who purchases any Registrable Securities
as principal in an underwritten offering and not as part of such dealer’s
market-making activities.

 

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“Warrants” means those warrants to purchase shares of Common Stock of the
Company expiring five years from the Effective Date.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
2.1.1 Grant of Demand Right. The Company, upon the receipt of the Initial Demand
Notice (as defined below) of the Holders of at least 51% (collectively, the
“Demanding Holders”) of the Registrable Securities, agrees to register on no
more than two occasions, all or any portion of the Registrable Securities
requested by the Demanding Holders in the Initial Demand Notice. With respect to
such registration request, the Company will use its commercially reasonable
efforts to file a Registration Statement covering the Registrable Securities as
soon as reasonably practicable, but no later than 60 days after the Company
receives notice from the Demanding Holders indicating their desire that the
Company commence the preparation of and effect the filing of a registration
statement with the Commission as to the Registrable Securities (the “Initial
Demand Notice”), and, upon filing, use its commercially reasonable efforts to
have such Registration Statement declared effective as soon as practicable
thereafter; provided, that the Company shall be deemed to have complied with its
obligation hereunder so long as it has made such commercially reasonable
efforts. Notwithstanding the foregoing, if the Company provides the Demanding
Holders notice of a Blackout Period within seven business days after it receives
the Initial Demand Notice, then: (A) the Company’s obligation to take any action
pursuant to this Section 2.1.1, including to file a Registration Statement
covering the Registrable Securities, shall be suspended during the Blackout
Period; (B) the Initial Demand Notice shall thereupon be deemed to have been
received, for purposes of determining the timing of any obligation of the
Company under this Section 2.1.1 to register the Registrable Securities, on the
first business day immediately following the termination of the Blackout Period;
and (C) the Company will use its commercially reasonable efforts to file a
Registration Statement covering the Registrable Securities as soon as reasonably
practicable after the termination of the Blackout Period, but no later than
60 days after the termination of the Blackout Period, and, upon filing, use its
commercially reasonable efforts to have such Registration Statement declared
effective as soon as practicable thereafter. An Initial Demand Notice shall be
effective only if it is received by the Company during the period beginning on
the Release Date and ending on the later of (x) the fifth anniversary of the
Release Date and (y) one year after the date on which the Demanding Holders
exercised Warrants that were included among the Registrable Securities. The
Company shall give written notice of its receipt of any Initial Demand Notice
from any Holder(s) to all other registered Holders of the Registrable Securities
within ten business days from the date of receipt of any such Initial Demand
Notice. Once made, a request for registration pursuant to an Initial Demand
Notice provided in accordance with this Section may not be revoked, except that
such a request for registration pursuant to an Initial Demand Notice may be
revoked (and shall not be deemed to have been made for purposes of determining
the rights of the Holders under this Section), if (A) the Demanding Holders have
received a notice of a Blackout Period from the Company and (B) the Demanding
Holders provide written notice to the Company within 20 days of receipt of any
such notice of a Blackout Period requesting such revocation for the purpose of
preserving the right to request registration pursuant to an Initial Demand
Notice at a time subsequent thereto. For the avoidance of doubt, the Company may
not delay the ability of the Demanding Holders to exercise their registration
rights under this Agreement by way of giving notice of a Blackout Period more
than once during any 12 month period, and any notice of a Blackout Period given
by the Company to the Demanding Holders shall not be made within four months of
any previous Blackout Period notice given by the Company.

 

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2.1.2 Effective Registration. A registration will not count as a Demand
Registration until the Registration Statement filed with the Commission with
respect to such Demand Registration has been declared effective and the Company
has complied with all of its obligations under this Agreement with respect
thereto.
2.1.3 Underwritten Offering. If a majority-in-interest of the Demanding Holders
so elect and such Holders so advise the Company as part of their written demand
for a Demand Registration, the offering of such Registrable Securities pursuant
to such Demand Registration shall be in the form of an underwritten offering. In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting to the extent provided herein. All Demanding Holders shall enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such underwriting by a majority-in-interest of the
Holders initiating the Demand Registration.
2.1.4 Reduction of Offering. If the managing Underwriter or Underwriters for a
Demand Registration that is to be an underwritten offering advises the Company
and the Demanding Holders in writing that the dollar amount or number of shares
of Registrable Securities which the Demanding Holders desire to sell, taken
together with all other shares of Common Stock or other securities which the
Company desires to sell and the shares of Common Stock, if any, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights held by other shareholders of the Company who desire to
sell, exceeds the maximum dollar amount or maximum number of shares that can be
sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method, or the probability of success of such
offering (such maximum dollar amount or maximum number of shares, as applicable,
the “Maximum Number of Shares”), then the Company shall include in such
registration: (A) first, the Registrable Securities as to which Demand
Registration has been requested by the Demanding Holders (pro rata in accordance
with the number of shares of Registrable Securities which such Demanding Holder
has requested be included in such registration, regardless of the number of
shares of Registrable Securities held by each Demanding Holder) that can be sold
without exceeding the Maximum Number of Shares; (B) second, to the extent that
the Maximum Number of Shares has not been reached under the foregoing clause
(A), the shares of Common Stock or other securities that the Company desires to
sell that can be sold without exceeding the Maximum Number of Shares; (C) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (A) and (B), the shares of Common Stock for the account of
other persons that the Company is obligated to register pursuant to written
contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the
Maximum Number of Shares have not been reached under the foregoing clauses (A),
(B), and (C), the shares of Common Stock that other security holders desire to
sell that can be sold without exceeding the Maximum Number of Shares.

 

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2.1.5 Withdrawal. If a majority-in-interest of the Demanding Holders disapprove
of the terms of any underwriting or are not entitled to include all of their
Registrable Securities in any offering, such majority-in-interest of the
Demanding Holders may elect to withdraw from such offering by giving written
notice to the Company and the Underwriter or Underwriters of their request to
withdraw prior to the effectiveness of the Registration Statement filed with the
Commission with respect to such Demand Registration. If the majority-in-interest
of the Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in this Section 2.1.
2.2 Piggy-Back Registration.
2.2.1 Piggy-Back Rights. If at any time on or after the Release Date the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the
Company for its own account or for shareholders of the Company for their account
(or by the Company and by shareholders of the Company including, without
limitation, pursuant to Section 2.1), other than a Registration Statement
(A) filed in connection with any employee stock option or other benefit plan,
(B) for an exchange offer or offering of securities solely to the Company’s
existing shareholders, (C) for an offering of debt that is convertible into
equity securities of the Company or (D) for a dividend reinvestment plan, then
the Company shall (E) give written notice of such proposed filing to the Holders
of Registrable Securities as soon as practicable but in no event less than ten
(10) business days before the anticipated filing date, which notice shall
describe the amount and type of securities to be included in such offering, the
intended method(s) of distribution, and the name of the proposed managing
Underwriter or Underwriters, if any, of the offering, and (F) offer to the
Holders of Registrable Securities in such notice the opportunity to register the
sale of such number of shares of Registrable Securities as such Holders may
request in writing within five (5) business days following receipt of such
notice (a “Piggy-Back Registration”). For purposes of a Piggy-Back Registration
(and not in the case of a Demand Registration), the exclusion from the
definition of Registrable Securities as to Registrable Securities which are then
saleable under Rule 144 contained in the last sentence of the definition of
“Registrable Securities” shall be inapplicable. The Company shall cause such
Registrable Securities to be included in such registration and shall use its
commercially reasonable efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method(s) of distribution thereof. All Holders of
Registrable Securities proposing to distribute their securities through a
Piggy-Back Registration that involves an Underwriter or Underwriters shall enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration.

 

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2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters for a
Piggy-Back Registration that is to be an underwritten offering advises the
Company and the Holders of Registrable Securities in writing that the dollar
amount or number of shares of Common Stock which the Company desires to sell,
taken together with shares of Common Stock, if any, as to which registration has
been demanded pursuant to written contractual arrangements with persons other
than the Holders of Registrable Securities hereunder, the Registrable Securities
as to which registration has been requested under this Section 2.2, and the
shares of Common Stock, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other
shareholders of the Company, exceeds the Maximum Number of Shares, then the
Company shall include in any such registration:
i. If the registration is undertaken for the Company’s account: (A) first, the
shares of Common Stock or other securities that the Company desires to sell that
can be sold without exceeding the Maximum Number of Shares; (B) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the shares of Common Stock, if any, including the
Registrable Securities, as to which registration has been requested pursuant to
written contractual piggy-back registration rights of security holders (pro rata
in accordance with the number of shares of Common Stock which each such person
has actually requested to be included in such registration, regardless of the
number of shares of Common Stock with respect to which such persons have the
right to request such inclusion) that can be sold without exceeding the Maximum
Number of Shares; and
ii. If the registration is a “demand” registration undertaken at the demand of
persons other than the Holders of Registrable Securities pursuant to written
contractual arrangements with such persons, (A) first, the shares of Common
Stock for the account of the demanding persons that can be sold without
exceeding the Maximum Number of Shares; (B) second, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clause (A),
the shares of Common Stock or other securities that the Company desires to sell
that can be sold without exceeding the Maximum Number of Shares; and (C) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (A) and (B), the Registrable Securities as to which
registration has been requested under this Section 2.2 and any Shares as to
which registration has been requested pursuant to written contractual piggy-back
registration rights which other security holders desire to sell that can be sold
without exceeding the Maximum Number of Shares (pro rata in accordance with the
number of shares of Registrable Securities held by each such Holder).
2.2.3 Withdrawal. Any Holder of Registrable Securities may elect to withdraw
such Holder’s request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement. The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the Holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.

 

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2.3 Registrations on Form S-3. The Holders of a majority in interest of
Registrable Securities may at any time and from time to time, request in writing
that the Company register the resale of any or all of such Registrable
Securities on Form S-3 or any similar short-form registration which may be
available at such time (“Form S-3”); provided, however, that the Company shall
not be obligated to effect such request through an underwritten offering. Upon
receipt of such written request, the Company will promptly give written notice
of the proposed registration to all other Holders of Registrable Securities,
and, as soon as practicable thereafter, effect the registration of all or such
portion of such Holder’s or Holders’ Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within fifteen (15) business days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration pursuant to this Section 2.3 if
Form S-3 is not available for such offering. Registrations effected pursuant to
this Section 2.3 shall not be counted as Demand Registrations effected pursuant
to Section 2.1.
3. CERTAIN AGREEMENTS RESPECTING REGISTRATIONS.
3.1 Certain Registration Limitations and Procedures
3.1.1 Limitations. Notwithstanding anything herein to the contrary, the Company
shall not be obligated to effect any registration pursuant to Section 2.1 of
this Agreement if the Holders of the Registrable Securities, together with the
Holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $500,000; provided,
further, that the Company shall not be obligated to file a second Registration
Statement until a Registration Statement that has been filed is counted as a
Demand Registration or is terminated or withdrawn.
3.1.2 Copies. The Company shall, prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto, furnish without charge to
the Holders of Registrable Securities included in such registration, and such
Holders’ legal counsel, copies of such Registration Statement as proposed to be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including each
preliminary prospectus), and such other documents as the Holders of Registrable
Securities included in such registration or legal counsel for any such Holders
may request in order to facilitate the disposition of the Registrable Securities
owned by such Holders.

 

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3.1.3 Amendments and Supplements. Subject to the provisions of Section 3.2
hereof, the Company shall use its commercially reasonable efforts to prepare and
file with the Commission such amendments, including post-effective amendments,
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and in compliance with the provisions of the Securities Act until all
Registrable Securities and other securities covered by such Registration
Statement have been disposed of in accordance with the intended method(s) of
distribution set forth in such Registration Statement (which period shall not
exceed the sum of 180 days plus any period during which any such disposition is
interfered with by any stop order or injunction of the Commission or any
governmental agency or court and any period of suspension pursuant to
Section 3.2) or such securities have been withdrawn from such registration.
3.1.4 Notification. After the filing of a Registration Statement, the Company
shall promptly, and in no event more than two (2) business days after such
filing, notify the Holders of Registrable Securities included in such
Registration Statement of such filing, and shall further notify such Holders
promptly and confirm such advice in writing in all events within two (2)
business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment
to such Registration Statement becomes effective; (iii) the issuance or
threatened issuance by the Commission of any stop order (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered); and (iv) any request by the Commission for any amendment or
supplement to such Registration Statement or any prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly make
available to the Holders of Registrable Securities included in such Registration
Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or prospectus or any amendment or supplement
thereto, including documents incorporated by reference, the Company shall
furnish to the Holders of Registrable Securities included in such Registration
Statement and to the legal counsel for any such Holders, copies of all such
documents proposed to be filed sufficiently in advance of filing to provide such
Holders and legal counsel with a reasonable opportunity to review such documents
and comment thereon, and the Company shall not file any Registration Statement
or prospectus or amendment or supplement thereto, including documents
incorporated by reference, to which such Holders or their legal counsel shall
object.
3.1.5 State Securities Laws Compliance. The Company shall use its commercially
reasonable efforts to (i) register or qualify the Registrable Securities covered
by the Registration Statement under such securities or “blue sky” laws of such
jurisdictions in the United States as the Holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other Governmental Authorities as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the Holders of
Registrable Securities included in such Registration Statement to consummate the
disposition of such Registrable Securities in such jurisdictions; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph 3.1.5 or subject itself to taxation in any such
jurisdiction.

 

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3.1.6 Agreements for Disposition. The Company shall enter into customary
agreements (including, if applicable, an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities. The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters, to the
extent applicable, shall also be made to and for the benefit of the Holders of
Registrable Securities included in such registration statement. No Holder of
Registrable Securities included in such registration statement shall be required
to make any representations or warranties in the underwriting agreement except,
if applicable, with respect to such Holder’s organization, good standing,
authority, title to Registrable Securities, lack of conflict of such sale with
such Holder’s material agreements and organizational documents, and with respect
to written information relating to such Holder that such Holder has furnished in
writing expressly for inclusion in such Registration Statement.
3.1.7 Cooperation. The principal executive officer of the Company, the principal
financial officer of the Company, the principal accounting officer of the
Company and all other officers and members of the management of the Company
shall cooperate fully in any offering of Registrable Securities hereunder, which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential Holders.
3.1.8 Records. The Company shall make available for inspection by the Holders of
Registrable Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any Holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9 Delivery of Opinions and Other Documents. The Company shall furnish to
each of the Holders participating in any of the foregoing offerings, a signed
counterpart, addressed to the participating Holders, of (i) an opinion of
counsel to the Company, dated the effective date of such Registration Statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under any underwriting agreement related thereto),
and (ii) a “cold comfort” letter dated the effective date of such Registration
Statement (and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting agreement) signed by
the independent public accountants who have issued a report on the Company’s
financial statements included in such Registration Statement, in each case
covering substantially the same matters with respect to such Registration
Statement (and the prospectus included therein) and, in the case of such
accountants’ letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer’s counsel
and in accountants’ letters delivered to underwriters in underwritten public
offerings of securities.

 

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3.1.10 Earnings Statement. The Company shall comply with all applicable rules
and regulations of the Commission and the Securities Act, and make available to
its shareholders, as soon as practicable, an earnings statement covering a
period of twelve (12) months, beginning within three (3) months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
3.1.11 Listing. The Company shall use its commercially reasonable efforts to
cause all Registrable Securities included in any registration statement to be
listed on such exchanges or otherwise designated for trading in the same manner
as similar securities issued by the Company are then listed or designated or, if
no such similar securities are then listed or designated, in a manner
satisfactory to the Holders of a majority of the Registrable Securities included
in such registration.
3.2 Obligation to Suspend Distribution. If after a registration statement
relating to the registration of Registrable Securities under Section 2 has been
declared effective (“Effective Registration Statement”), upon the good faith
determination by the Board of Directors of the Company that it is reasonably
necessary to suspend the use of such Effective Registration Statement or sales
of Registrable Securities by Holders under such Effective Registration
Statement, the Company may, upon written notice (the “Suspension Notice”) to the
Holders, direct the Holders to suspend the use of or sales under such Effective
Registration Statement. Upon the occurrence of any such suspension, the Company
shall use its commercially reasonable efforts to take or cause to be taken such
action as is necessary to permit resumed use of such Effective Registration
Statement promptly following the cessation of the Suspension Event giving rise
to such suspension so as to permit the Holders to resume use of and sales under
such Effective Registration Statement as soon as practicable thereafter. Upon
cessation of the Suspension Event giving rise to such suspension, the Company
shall promptly provide the Holders with prompt written notice that the
Suspension Event has ceased (the “End of Suspension Notice”). The Holders shall
not effect any sales of the Registrable Securities pursuant to such Effective
Registration Statement at any time after it has received a Suspension Notice
from the Company and prior to receipt of an End of Suspension Notice. If so
directed by the Company in a Suspension Notice, each Holder will deliver to the
Company (at the expense of the Company) all copies, other than permanent file
copies then in such Holder’s possession, of any prospectuses covering the
Registrable Securities at the time of receipt of such Suspension Notice.

 

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3.3 Registration Expenses. The Company shall bear all costs and expenses
incurred by the Company in connection with any Demand Registration pursuant to
Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any
registration on Form S-3 effected pursuant to Section 2.3, and all expenses
incurred in performing or complying with its other obligations under this
Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or “blue sky” laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company’s internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees); (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities as required by Section 3.1.11;
(vi) National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested
pursuant to Section 3.1.9); and (viii) the fees and expenses of any special
experts retained by the Company in connection with such registration. The
Company shall have no obligation to pay any underwriting discounts or selling
commissions attributable to the Registrable Securities being sold by the Holders
thereof, which underwriting discounts or selling commissions shall be borne by
such Holders. Additionally, in an underwritten offering, all selling
shareholders and the Company shall bear the expenses of the underwriter pro rata
in proportion to the respective amount of shares each is selling in such
offering. The Holders of Registrable Securities shall bear all costs and
expenses incurred by them in connection with any such registration, except to
the extent specifically provided in this Section 3.3.
3.4 Information. The Holders of Registrable Securities shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Registrable Securities under the Securities Act pursuant to
Section 2 and in connection with the Company’s obligation to comply with federal
and applicable state securities laws
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Holder and each other Holder of Registrable Securities, and each
of their respective officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person, if any, who controls a Holder
and each other Holder of Registrable Securities (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, a
“Holder Indemnified Party”), from and against any expenses, losses, judgments,
claims, damages or liabilities, whether joint or several, arising out of or
based upon any untrue statement (or allegedly untrue statement) of a material
fact contained in any Registration Statement under which the sale of such
Registrable Securities was registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arising

 

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out of or based upon any omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation promulgated thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; and the Company shall promptly reimburse the Holder Indemnified
Party for any legal and any other expenses reasonably incurred by such Holder
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon and
in conformity with information furnished to the Company, in writing, by such
selling Holder expressly for use therein. The Company also shall indemnify any
Underwriter of the Registrable Securities, their officers, affiliates,
directors, partners, members and agents and each person who controls such
Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each selling Holder of
Registrable Securities will, in the event that any registration is being
effected under the Securities Act pursuant to this Agreement of any Registrable
Securities held by such selling Holder, indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any), and each other
person, if any, who controls such selling Holder or such underwriter within the
meaning of the Securities Act, against any losses, claims, judgments, damages or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary to
make the statement therein not misleading, if the statement or omission was made
in reliance upon and in conformity with information furnished in writing to the
Company by such selling Holder expressly for use therein, and shall reimburse
the Company, its directors and officers, and each such controlling person for
any legal or other expenses reasonably incurred by any of them in connection
with investigation or defending any such loss, claim, damage, liability or
action. Each selling Holder’s indemnification obligations hereunder shall be
several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling Holder.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person
of any notice of any loss, claim, damage or liability or any action in respect
of which indemnity may be sought pursuant to Section 4.1 or 4.2, such person
(the “Indemnified Party”) shall, if a claim in respect thereof is to be made
against any other person for indemnification hereunder, notify such other person
(the “Indemnifying

 

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Party”) in writing of the loss, claim, judgment, damage, liability or action;
provided, however, that the failure by the Indemnified Party to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which the Indemnifying Party may have to such Indemnified Party hereunder,
except and solely to the extent the Indemnifying Party is actually prejudiced by
such failure. If the Indemnified Party is seeking indemnification with respect
to any claim or action brought against the Indemnified Party, then the
Indemnifying Party shall be entitled to participate in such claim or action,
and, to the extent that it wishes, jointly with all other Indemnifying Parties,
to assume control of the defense thereof with counsel satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of such claim or action,
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no more
than one such separate counsel) to represent the Indemnified Party and its
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, with the fees and expenses of such counsel to be paid by
such Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
4.4 Contribution.
4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and
4.3 is unavailable to any Indemnified Party in respect of any loss, claim,
damage, liability or action referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage, liability or action in such proportion as is appropriate to
reflect the relative fault of the Indemnified Parties and the Indemnifying
Parties in connection with the actions or omissions which resulted in such loss,
claim, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any Indemnifying
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
Indemnified Party or such Indemnifying Party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

 

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4.4.2 The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding Section 4.4.1.
The amount paid or payable by an Indemnified Party as a result of any loss,
claim, damage, liability or action referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Holder of Registrable
Securities shall be required to contribute any amount in excess of the dollar
amount of the net proceeds (after payment of any underwriting fees, discounts,
commissions or taxes) actually received by such Holder from the sale of
Registrable Securities which gave rise to such contribution obligation. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file all reports required to
be filed by it under the Securities Act and the Exchange Act and shall take such
further action as the Holders of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rules may be amended or interpreted from time to time, or any similar Rule
or regulation hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other Registration Rights. The Company represents and warrants that no
person, other than a Holder of the Registrable Securities, persons who acquired
the underwriters’ unit purchase options in the Initial Public Offering (and
their Transferees) has any right to require the Company to register any shares
of the Company’s capital stock for sale or to include shares of the Company’s
capital stock in any registration filed by the Company for the sale of shares of
capital stock for its own account or for the account of any other person.
6.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights,
duties and obligations of the Company hereunder may not be assigned or delegated
by the Company in whole or in part. This Agreement and the rights, duties and
obligations of the Holders of Registrable Securities hereunder may be freely
assigned or delegated by such Holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities by any such
Holder. This Agreement and the provisions hereof shall be binding upon and shall
inure to the benefit of each Holder and Transferee. This Agreement is not
intended to confer any rights or benefits on any persons that are not party
hereto other than as expressly set forth in Section 4 and this Section 6.2.

 

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6.3 Notices. All notices, demands, requests, consents, approvals or other
communications (collectively, “Notices”) required or permitted to be given
hereunder or which are given with respect to this Agreement, other than as
expressly set forth in Section 2.1, shall be in writing and shall be personally
served, delivered by reputable air courier service with charges prepaid, or
transmitted by hand delivery or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile; provided, that if such service or
transmission is not on a business day or is after normal business hours, then
such notice shall be deemed given on the next business day. Notice otherwise
sent as provided herein shall be deemed given on the next business day following
timely delivery of such notice to a reputable air courier service with a
pre-paid order for next-day delivery.
To the Company:
Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
Attn: Gary A. Simanson, President
with a copy to:
Dilworth Paxson LLP
1133 Connecticut Avenue, NW; Suite 620
Washington, DC 20036
Attn: Kathleen L. Cerveny, Esq.;
To a Holder, to:
Gary A. Simanson
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
Community Bankers Acquisition LLC
717 King Street
Alexandria, VA 22314
David Zalman
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
The Eugene S. Putnam, Jr. 2004 Irrevocable Trust
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314

 

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Stewart J. Paperin
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
Keith Walz
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
David W. Spainhour and Carolyn E. Spainhour,
Trustees of the Spainhour Family Trust U/A dated 8/22/97
c/o Community Bankers Acquisition Corp.
717 King Street
Alexandria, VA 22314
with a copy to:
Dilworth Paxson LLP
1133 Connecticut Avenue, NW
Suite 620
Washington, DC 20036
Attn: Kathleen L. Cerveny, Esq.
6.4 Severability. This Agreement shall be deemed severable, and the invalidity
or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision
hereof. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
6.5 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
6.6 Entire Agreement. This Agreement (including all agreements entered into
pursuant hereto and all certificates and instruments delivered pursuant hereto
and thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written.
6.7 Modifications and Amendments. No amendment, modification or termination of
this Agreement shall be binding upon any party unless executed in writing by
such party.

 

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6.8 Titles and Headings. Titles and headings of sections of this Agreement are
for convenience only and shall not affect the construction of any provision of
this Agreement.
6.9 Waivers and Extensions. Any party to this Agreement may waive any right,
breach or default which such party has the right to waive, provided that such
waiver will not be effective against the waiving party unless it is in writing,
is signed by such party, and specifically refers to this Agreement. Waivers may
be made in advance or after the right waived has arisen or the breach or default
waived has occurred. Any waiver may be conditional. No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.10 Remedies Cumulative. In the event that the Company fails to observe or
perform any covenant or agreement to be observed or performed under this
Agreement, the Holder or any other Holder of Registrable Securities may proceed
to protect and enforce its rights by suit in equity or action at law, whether
for specific performance of any term contained in this Agreement or for an
injunction against the breach of any such term or in aid of the exercise of any
power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to
post a bond. None of the rights, powers or remedies conferred under this
Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
6.11 Governing Law. This Agreement shall be governed by, interpreted under, and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed within the State of Delaware, without giving
effect to any choice-of-law provisions thereof that would compel the application
of the substantive laws of any other jurisdiction.
6.12 Waiver of Trial by Jury. Each party hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or other
proceeding (whether based on contract, tort or otherwise) arising out of,
connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Holder in the negotiation, administration,
performance or enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be executed and delivered by their duly authorized representatives as of the
date first written above.

              COMMUNITY BANKERS ACQUISITION CORP.,
a Delaware corporation
 
       
 
  By:   /s/ Gary A. Simanson
 
       
 
      Gary A. Simanson, President
 
            HOLDERS:     /s/ Gary A. Simanson           Gary A. Simanson
 
            Community Bankers Acquisition, LLC
 
       
 
  By:   /s/ Gary A. Simanson
 
       
 
      Gary A. Simanson, Manager
 
            /s/ Daniel Zalman           Daniel Zalman, Trustee of The David and
Vicki Jo Zalman 2006 Childrens’ Trust
 
            /s/ Eugene S. Putnam, Jr.           Eugene S. Putnam, Jr., Trustee
of The Eugene S. Putnam, Jr. 2004 Irrevocable Trust
 
            /s/ Stewart J. Paperin           Stewart J. Paperin
 
            /s/ Keith Walz           Keith Walz
 
            /s/ David W. Spainhour           David W. Spainhour, Trustee of the
Spainhour Family Trust U/A dated August 22, 1997
 
            /s/ Carolyn E. Spainhour           Carolyn E. Spainhour, Trustee of
the Spainhour Family Trust U/A dated August 22, 1997

 

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