exv10w3



 






Exhibit 10.3




STOCK ESCROW AGREEMENT








     STOCK ESCROW AGREEMENT,
dated as of ___, 2005 (“Agreement”), by and among COMMUNITY
BANKERS ACQUISITION CORP., a Delaware corporation (the “Company”), COMMUNITY BANKERS ACQUISITION,
LLC, GARY A. SIMANSON, DAVID ZALMAN, THE EUGENE S. PUTNAM, JR. 2004
IRREVOCABLE TRUST,  STEWART J. PAPERIN, KEITH WALZ, DAVID W. SPAINHOUR
AND CAROLYN E. SPAINHOUR TRUSTEES OF THE SPAINHOUR FAMILY TRUST U/A DATED
8/22/97 (collectively “Initial
Stockholders”) and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation (the “Escrow
Agent”).











     WHEREAS, the Company has entered into an Underwriting Agreement, dated ___, 2005 (the
“Underwriting Agreement”), with I-Bankers Securities Incorporated (the “Representative”) acting as
representative of the several underwriters (collectively, the “Underwriters”), pursuant to which,
among other matters, the Underwriters will agree to purchase 7,500,000 units (“Units”) of the
Company. Each Unit will consist of one share of the Company’s Common Stock, par value $.01 per
share, and one Warrant to purchase one share of Common Stock, all as more fully described in the
Company’s final Prospectus, dated ___, 2005 (“Prospectus”) comprising part of the Company’s
Registration Statement on Form S-1 (File No. 333-124240) under the Securities Act of 1933, as
amended (“Registration Statement”), declared effective on ___, 2005 (“Effective Date”).







     WHEREAS, the Initial Stockholders have agreed as a condition of the sale of the Units to
deposit their shares of Common Stock of the Company, as set forth opposite their respective names
in Exhibit A attached hereto (collectively “Escrow Shares”), in escrow as hereinafter provided.



     WHEREAS, the Company and the Initial Stockholders desire that the Escrow Agent accept the
Escrow Shares, in escrow, to be held and disbursed as hereinafter provided.



     IT IS AGREED:








     1. Appointment
of Escrow Agent.












The Company and the Initial Stockholders hereby appoint the
Escrow Agent to act in accordance with and subject to the terms of this Agreement and the Escrow
Agent hereby accepts such appointment and agrees to act in accordance with and subject to such
terms.












     2. Deposit
of Escrow Shares. 











On or before the Effective Date, each of the Initial Stockholders
shall deliver to the Escrow Agent certificates representing his respective Escrow Shares, to be
held and disbursed subject to the terms and conditions of this Agreement. Each Initial Stockholder
acknowledges that the certificate representing his Escrow Shares is legended to reflect the deposit
of such Escrow Shares under this Agreement.

 








     3. Disbursement
of the Escrow Shares. 











The Escrow Agent shall hold the Escrow Shares until the
third anniversary of the Effective Date (“Escrow Period”), on which date it shall, upon written
instructions from each Initial Stockholder, disburse each of the Initial Stockholder’s Escrow
Shares to such Initial Stockholder; provided, however, that if the Escrow Agent is
notified by the Company pursuant to Section 6.7 hereof that the Company is being liquidated at any
time during the Escrow Period, then the Escrow Agent shall promptly destroy the certificates
representing the Escrow Shares and; provided further, that if, after the Company consummates a

 




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Business Combination (as such term is defined in the Registration Statement), it (or the surviving
entity) subsequently consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of the stockholders of such entity having the right to exchange their shares
of Common Stock for cash, securities or other property, then the Escrow Agent will, upon receipt of
a certificate, executed by the President of the Company, in form reasonably acceptable to the
Escrow Agent, that such transaction is then being consummated, release the Escrow Shares to the
Initial Stockholders upon consummation of the transaction so that they can similarly participate.
The Escrow Agent shall have no further duties hereunder after the disbursement or destruction of
the Escrow Shares in accordance with this Section 3.




     4. Rights of Initial Stockholders in Escrow Shares.




          4.1 Voting Rights as a Stockholder. Subject to the terms of the Insider Letter
described in Section 4.4 hereof and except as herein provided, the Initial Stockholders shall
retain all of their rights as stockholders of the Company during the Escrow Period, including,
without limitation, the right to vote such shares.









          4.2 Dividends
and Other Distributions in Respect of the Escrow Shares. During the
Escrow Period, all dividends or other distributions payable in stock or other non-cash property shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As
used herein, the term “Escrow Shares” shall be deemed to
include any such dividends or distributions.












          4.3 Restrictions on Transfer. During the Escrow Period, no sale, transfer or other
disposition may be made of any or all of the Escrow Shares except (i) by gift to a member of
Initial Stockholder’s immediate family or to a trust, the beneficiary of which is an Initial
Stockholder or a member of an Initial Stockholder’s immediate family, (ii) by virtue of the laws of
descent and distribution upon death of any Initial Stockholder, (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; provided, 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 Agreement and of the Insider Letter signed by the Initial Stockholder
transferring the Escrow Shares and any transferred Escrow Shares shall
continue to be hold by the Escrow Agent pursuant to this Agreement. During the Escrow Period, the Initial Stockholders shall not pledge
or grant a security interest in the Escrow Shares or grant a security interest in their rights
under this Agreement.








          4.4 Insider Letters. Each of the Initial Stockholders has executed a letter agreement
with the Representative and the Company, dated as indicated on Exhibit A hereto, and which is filed
as an exhibit to the Registration Statement (“Insider Letter”), respecting the rights and
obligations of such Initial Stockholder in certain events, including but not limited to the
liquidation of the Company.




     5. Concerning the Escrow Agent.



          5.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and in the exercise of its own best judgment, and may




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rely conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its due execution and the
validity and effectiveness of its provisions, but also as to the truth and acceptability of any
information therein contained) which is believed by the Escrow Agent to be genuine and to be signed
or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced
by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties
or rights of the Escrow Agent are affected, unless it shall have given its prior written consent
thereto.




          5.2 Indemnification. The Escrow Agent shall be indemnified and held harmless by the
Company from and against any expenses, including counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding involving any claim
which in any way, directly or indirectly, arises out of or relates to this Agreement, the services
of the Escrow Agent hereunder, or the Escrow Shares held by it hereunder, other than expenses or
losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after
the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action,
suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event
of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in
the nature of interpleader in an appropriate court to determine ownership or disposition of the
Escrow Shares or it may deposit the Escrow Shares with the clerk of any appropriate court or it may
retain the Escrow Shares pending receipt of a final, non-appealable order of a court having
jurisdiction over all of the parties hereto directing to whom and under what circumstances the
Escrow Shares are to be disbursed and delivered. The provisions of this Section 5.2 shall survive
in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.




          5.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation from
the Company for all services rendered by it hereunder. The Escrow Agent shall also be entitled to
reimbursement from the Company for all expenses paid or incurred by it in the administration of its
duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and
disbursements and all taxes or other governmental charges.




          5.4 Further Assurances. From time to time on and after the date hereof, the Company
and the Initial Stockholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further acts as the Escrow
Agent shall reasonably request to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is protected in acting
hereunder.




          5.5 Resignation. The Escrow Agent may resign at any time and be discharged from its
duties as escrow agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation shall become effective
at such time that the Escrow Agent shall turn over to a successor escrow agent appointed by the
Company, the Escrow Shares held hereunder. If no new escrow agent is so




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     appointed within the 60 day period following the giving of such notice of resignation, the
Escrow Agent may deposit the Escrow Shares with any court it reasonably deems appropriate.



          5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from
its duties as escrow agent hereunder if so requested in writing at any time by the other parties
hereto, jointly, provided, however, that such resignation shall become effective only upon
acceptance of appointment by a successor escrow agent as provided in Section 5.5.




          5.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent shall
not be relieved from liability hereunder for its own gross negligence or its own willful
misconduct.




     6. Miscellaneous.



          6.1 Governing Law. 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.








          6.2 Third Party Beneficiaries. Each of the Initial Stockholders hereby acknowledges
that the Underwriters are third party beneficiaries of this Agreement and this Agreement may not be
modified or changed without the prior written consent of the Representative.



















          6.3 Headings. The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation thereof.












          6.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the respective parties hereto and their legal representatives, successors and assigns.












          6.5 Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and either be delivered personally or be mailed, certified or
registered mail, or by private national courier service, return receipt requested, postage prepaid,
and shall be deemed given when so delivered personally or, if mailed, two days after the date of
mailing, as follows:








If to the Company, to:



Community Bankers Acquisition Corp.

717 King Street

Alexandria, Virginia 22314

Attn: Gary A. Simanson, President










with a copy
to:

     Dilworth Paxson LLP
     1818 N St. N.W. Ste. 400
      Washington
DC 20036
     Attn: Kathleen L. Cerveny, Esq.






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If to a Stockholder, to his address set forth in Exhibit A.








If to the Escrow Agent, to:







Continental Stock Transfer & Trust Company

17 Battery Place

8th Floor

New York, New York 10004

Attn: Steven Nelson, President





If to the Company, a
Stockholder or the Escrow Agent, with a copy to:

      I-Bankers
Securities Incorporated
      1560
East Southlake Boulevard
      Suite
232
      Southlake, TX
76092
      Attn: Shelley Gluck
Chief Financial Officer


      Greenberg
Traurig, LLP

      600 Three Galleria
Tower
      13155 Noel Road
      Dallas, TX
75240
      Attn: Phillip Kushner, Esq.








The parties may change the persons and addresses to which the notices or other communications are
to be sent by giving written notice to any such change in the manner provided herein for giving
notice.








          6.6 Liquidation of Company. The Company shall give the Escrow Agent written
notification of the liquidation and dissolution of the Company in the event that the Company fails
to consummate a Business Combination within the time period(s) specified in the Prospectus.












          6.7
Entire Agreement; Amendment. 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;
provided, however, that no such change, amendment or modification may be made without the prior
written consent of the Representative. As to any claim, cross-claim or counterclaim in any way
relating to this Agreement, each party waives the right to trial by jury.












          6.8 Assignment. This Agreement may not be assigned by the Escrow Agent without the
prior consent of the Company.








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WITNESS the execution of this Agreement as of the date first above written.




	 	 	 
	

	 	COMMUNITY BANKERS ACQUISITION CORP.
	 
	 	 
	 	 	 
	

	 	Gary A. Simanson, President
	 
	 	 
	

	 	INITIAL STOCKHOLDERS:
	 
	 	 
	 	 	 
	

	 	Gary A. Simanson
	 
	 	 
	 	 	 
	

	 	Community Bankers Acquisition, LLC

	

	 	By: Gary A. Simanson, Manager
	 
	 	 
	 	 	 
	

	 	David Zalman
	



	 
	 	Eugene S. Putnam, Jr.,
Trustee
of the Eugene S. Putnam Jr. 2004 Irrevocable Trust
	



	 	 	 
	

	 	Stewart J. Paperin
	 
	 	 
	 	 	 
	

	 	Keith Walz
	



	 
	 	David
W. Spainhour, Trustee of the Spainhour Family Trust U/A dated 8/22/97
	



	 
	 	 
	



	 
	 	Carolyn
E. Spainhour, Trustee of the Spainhour Family Trust U/A dated 8/22/97
	



	 
	 	 
	

	 	CONTINENTAL STOCK TRANSFER
	

	 	& TRUST COMPANY
	 
	 	 
	 	 	 
	

	 	Steven Nelson
	

	 	President






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EXHIBIT A









	 	 	 	 	 	 	 	 	 
	Name and Address of Initial	 	 	 	 
	Stockholder	 	Number of Shares	 	Stock Certificate Number
	 
	Gary A. Simanson

	 	 	575,000	 	 	 	2	 
	c/o Community Bankers
	 	 	 	 	 	 	 	 
	Acquisition Corp.
	 	 	 	 	 	 	 	 
	717 King Street
	 	 	 	 	 	 	 	 
	Alexandria, Virginia 22314
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	Community Bankers

	 	 	575,000	 	 	 	3	 
	Acquisition, LLC
	 	 	 	 	 	 	 	 
	717 King Street
	 	 	 	 	 	 	 	 
	Alexandria, Virginia 22314
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	Stewart J. Paperin

	 	 	75,000	 	 	 	4	 
	c/o Community Bankers
	 	 	 	 	 	 	 	 
	Acquisition Corp.
	 	 	 	 	 	 	 	 
	717 King Street
	 	 	 	 	 	 	 	 
	Alexandria, Virginia 22314
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	Keith Walz

	 	 	75,000	 	 	 	5	 
	c/o Community Bankers
	 	 	 	 	 	 	 	 
	Acquisition Corp.
	 	 	 	 	 	 	 	 
	717 King Street
	 	 	 	 	 	 	 	 
	Alexandria, Virginia 22314
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	David
W. Spainhour and 
Carolyn E. Spainhour, Trustees of the Spainhour
Family Trust U/A dated August 22, 1997
c/o Community Bankers

Acquisition Corp.
 717 King Street
 Alexandria, VA 22314
	 	 	25,000	 	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	David
Zalman
c/o Community Bankers
Acquisition Corp.
717 King Street
 Alexandria, VA 22314
	 	 	475,000	 	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	The
Eugene S. Putnam, Jr.
2004 Irrevocable

Trust
c/o Community Bankers
Acquisition
Corp. 
717 King Street
 Alexandria, VA 22314
	 	 	75,000	 	 	 	8	 










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