exv10w7



 






Exhibit 10.7




____________, 2005




I-Bankers Securities, Inc.

Legend Merchant Group, Inc.

Newbridge Securities Corp.

c/o I-Bankers Securities, Inc.

1560 East Southlake Boulevard, Suite 232

Southlake, TX 76092




     Re:           Community Bankers Acquisition Corp.




 

Gentlemen:




     This letter will confirm the agreement of Gary A. Simanson and David Zalman, on the one hand
(the “Stockholders”), and I-Bankers Securities, Inc. (“I-Bankers”), Newbridge Securities Corp. and
Legend Merchant Group, Inc., (collectively, the “Representatives”), on the other hand, with respect
to the purchase of certain warrants to purchase common stock (“Warrants”) of Community Bankers
Acquisition Corp. (the “Company”) included in the units (comprised of one share of common stock and
one warrant to purchase common stock) being sold in the Company’s initial public offering (“IPO”)
upon the terms and conditions set forth herein. The shares of Common Stock and Warrants will not
be separately tradable until 90 days after the effective date of the Company’s IPO, unless
I-Bankers, on behalf of the Representatives, informs the Company of their decision to allow earlier
separate trading.



     1.      Each of the Stockholders, the Representatives and their respective designees will enter
into an agreement or plan (a “10b5-1 Plan”) in accordance with the terms of this agreement and with
the guidelines specified in Rule 10b5-1 (“Rule 10b5-1”) promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), with a broker-dealer registered under Section 15 of
the Exchange Act who shall be mutually acceptable to the Stockholders and the Representatives and
which shall agree to effect all such purchases pursuant to the 10b5-1 Plans on a commission-free
basis.



     2.      The 10b5-1 Plans entered into pursuant hereto shall, among other things:



     (a) provide for the purchase pursuant to the 10b5-1 Plans of up to a maximum of 1,000,000
Warrants (the “Stockholders’ Maximum Warrant Purchase”) in the aggregate by the Stockholders and
their designees;



     (b) provide for the purchase pursuant to the 10b5-1 Plans of up to a maximum of 500,000
Warrants (the “Representatives’ Maximum Warrant Purchase”) in the aggregate by the Representatives
and their designees;



 









 





     (c) provide that all purchases of Warrants pursuant to the 10b5-1 Plans shall be made only in
the public market, at market prices not to exceed $1.20 per Warrant, and shall occur only during
the 20-trading day period (the “Trading Window”) commencing on the later of (i) the date separate
trading of the Warrants has commenced or (ii) 60 calendar days after the end of the IPO “restricted
period” as defined in Regulation M (“Regulation M”) promulgated under the Exchange Act;



     (d) provide instructions to the Broker to make, keep, and produce promptly upon request a
daily time-sequenced schedule of all Warrant purchases made pursuant to the 10b5-1 Plans;



     (e) provide irrevocable instructions to the Broker to fill the order of each party to each
such 10b5-1 Plan in such amounts and at such times as the Broker may determine, in its sole
discretion, during the Trading Window; provided, however, that the Broker shall sequence the
fulfillment of such orders such that the initial 50,000 Warrants shall be purchased for the account
of the Stockholders and their designees, the next 50,000 Warrants shall be purchased for the
account of the Representatives and their designees and thereafter, alternating the fulfillment of
the Stockholders’ and Representatives’ respective orders in 50,000 Warrant increments during the
Trading Window until the Representatives’ Maximum Warrant Purchase is fulfilled, and, thereafter,
all additional purchases shall be for the account of the Stockholders and their designees until the
Stockholders’ Maximum Warrant Purchase is fulfilled;



     (f) contain a representation and warranty by each party that such party is not aware of any
material nonpublic information concerning the Company or any securities of the Company and is
entering into the Rule 10b5-1 Plan in good faith and not as part of a plan or scheme to evade the
prohibitions of Rule 10b-5 promulgated under the Exchange Act; and



     (g) provide that each party, while the Rule 10b5-1 Plan is in effect, shall comply with the
prohibition set forth in Rule 10b5-1(c)(1)(i)(C) against entering into or altering a corresponding
or hedging transaction or position with respect to the Company’s securities and that such party
shall not, directly or indirectly, communicate any material nonpublic information relating to the
Company or the Company’s securities to any officer, director or employee of the Representatives or
the Broker.



     3.      None of the Stockholders, the Representatives or their respective designees have, and shall
not attempt to exercise, any influence over how, when or whether to effect purchases of Warrants by
the Broker or any person.



     4.      Each of the parties hereto agrees that the Warrants acquired pursuant to this agreement and
the Rule 10b5-1 Plans shall not be sold or transferred until the earlier of the consummation by the
Company of a merger, capital stock exchange, asset acquisition or other similar business
combination; provided, however, nothing contained herein shall preclude a sale or transfer (i) by
gift to the immediate family of a member of any Stockholder or to a trust, the beneficiary of which
is any Stockholder or a person in the immediate family of such Stockholder, (ii) by virtue of the
laws of descent and distribution upon death of any Stockholder, (iii) pursuant to a qualified
domestic relations order, or (iv) pursuant to a transfer of record ownership whereby there is no
change in



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beneficial ownership; provided further, however, that such permissive transfers may be
implemented only upon the respective transferee’s written agreement to be bound by the terms and
conditions of this paragraph. Each party hereto acknowledges that the certificates for such
Warrants shall contain a legend indicating such restriction on transferability. It is further
understood and acknowledged by each party hereto that all Warrants purchased pursuant to this
Agreement and the Rule 10b5-1 Plans shall be non-callable by the Company for so long as such
Warrants are held by the purchaser thereof or its permitted transferee.




     5.      Each of the parties hereto hereby covenants and agrees that such party and its respective
designees shall comply with, and shall take all actions reasonably necessary to cause compliance by
the Broker with, the following conditions:




(i)      The Company and I-Bankers shall provide to the Division of Market Regulation of
the Securities and Exchange Commission (the “Division”) promptly upon request, a daily
time-sequenced schedule of all Warrant purchases made pursuant to the 10b5-1 Plans, on a
transaction-by-transaction basis, including: (i) size, broker, time of execution, price of
purchase; and (ii) the exchange, quotation system, or other facility through which the
Warrant purchase occurred;




(ii)      Upon the request of the Division, the Company and I-Bankers shall transmit the
information as specified in paragraph 5(i) to the Division at its headquarters in
Washington, D.C. within 30 days of its request; and




(iii)      Representatives of the Company, the Stockholders, the Representatives and the
respective designees of the Stockholders and the Representatives shall be made available
(in person at the offices of the Division in Washington, D.C. or by telephone) to respond
to inquiries by the Division regarding their purchase(s).



     6.      This agreement shall for all purposes be deemed to be made under and shall be construed in
accordance with the laws of the State of Delaware. This agreement contains the entire agreement
and understanding of the parties hereto with respect to the subject matter hereof. This agreement
or any provision hereof may only be changed, amended or modified by a writing signed by each of the
parties hereto and shall be binding upon each of the parties hereto and their respective heirs,
successors and assigns.



	 	 	 	 	 
	 	Very truly yours,

 	 
	 	
 	 
	 	Gary A. Simanson 	 
	 	 	  	 	 
	 
	 	 	 
	 	
 	 
	 	David Zalman	 
	 	  	 	 



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AGREED:





I-Bankers Securities, Inc.



 

By: _______________________________________

          Shelly Gluck, Chief Financial Officer






Legend Merchant Group, Inc.



By: _______________________________________

          John Shaw, President






Newbridge Securities Corp.



By: _______________________________________

          James Hosch, Investment Banking





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