Filed by Bowne Pure Compliance
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the fiscal year ended December 31, 2007
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from April 1, 2007 to December 31, 2007
001-32590
(Commission file number)
COMMUNITY BANKERS ACQUISITION CORP.
(Name of registrant as specified in its charter)
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| Delaware
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20-2652949 |
| (State or other jurisdiction of incorporation of organization)
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(IRS Employer Identification Number) |
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| 9912 Georgetown Pike, Ste. D203, Great Falls, Virginia
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22066 |
| (Address of principal executive offices)
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(Zip Code) |
(703) 759-0751
(Registrant’s
telephone number)
Securities Registered Pursuant to Section 12 (b) of the Act:
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| Units, each consisting of one share of Common
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| Stock and one Warrant
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| Common Stock, $.01 par value |
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| Warrants to Purchase Common Stock |
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American Stock Exchange |
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(Name of each exchange on which registered) |
Securities Registered under Section 12 (g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Exchange Act. Yes o No þ
Indicate by check mark whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large Accelerated filer o Accelerated filer o Non-Accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes þ No o
State the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last sold, as of
September 28, 2007, the last business day of the registrant’s most recently completed second fiscal
quarter. $55,880,000
On March 25, 2008 there were 9,375,000 shares of the issuer’s common stock, par value $.01,
outstanding, which is the only class of common or voting stock of the issuer.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
In October 2007 Community Bankers Acquisition Corp. changed its fiscal year end from March 31
to December 31. In accordance with the rules and regulations of the Securities and Exchange
Commission, the financial statements included elsewhere herein reflect our results of operations
for the nine months ended December 31, 2007 (audited) and 2006 (unaudited). When used in this
report, “fiscal 2007” means the nine months, or transition period, April 1, 2007 to December 31,
2007, our year ended March 31, 2007, means the period April 1, 2006 through March 31, 2007, and
“fiscal 2006” means the year ended March 31, 2006.
Unless otherwise provided in this Annual Report on Form 10-K, references to the “Company,”
“we,” “us” and “our” refer to Community Bankers Acquisition Corp.
ITEM 1. BUSINESS
Forward–Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the
federal securities laws. These statements relate to future events or our future financial
performance and involve known and unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements expressed or implied by the
forward-looking statements to differ materially. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other
comparable terminology. These forward-looking statements include, but are not limited to, the
statements regarding: our ability to complete the proposed mergers with TransCommunity and BOE (as
described below) on a timely basis; failure to obtain regulatory approvals; success in retaining or
recruiting, or changes required in, our officers, key employees or directors following the mergers;
the anticipated benefits of the proposed mergers, including future financial and operating results,
cost savings and enhanced revenues that may be realized, as well as other statements or
expectations regarding the proposed mergers; reduction of our working capital due to costs related
to the proposed mergers; liquidation if no business combination occurs by June 7, 2008; successful
integration of the TransCommunity operations and, potentially the operations of BOE; delisting of
our securities from the American Stock Exchange or our inability to have our securities listed on
the American Stock Exchange following the TransCommunity Merger; financial performance following
the proposed mergers; interest to be earned on the trust account; uses of our working capital;
risks associated with the banking industry in the event one or both of the proposed mergers occur;
and other risks and uncertainties detailed in our filings with the Securities and Exchange
Commission. All forward-looking statements included in this report are based on information
available to us on the date hereof, and we assume no obligation to revise or publicly release the
results of any revision to any such forward-looking statement, except as may otherwise be required
by law.
General
We are a blank check company organized under the laws of the State of Delaware on April 6,
2005. As a “Targeted Acquisition Corporation”SM or “TAC,” SM we were formed
to effect a merger, capital stock exchange, asset acquisition or other similar business combination
with an operating business in the banking industry. Prior to executing the merger agreement with
TransCommunity as described below in “Proposed Business Combination,” our activities were limited
to organizational matters, completing our initial public offering and seeking and evaluating
possible business combination opportunities.
On June 8, 2006, we consummated our initial public offering of 7,500,000 units, which
commenced trading on the American Stock Exchange under the symbol “BTC.U”. Each unit consisted of
one share of common stock and one redeemable common stock purchase warrant. Each warrant entitles
the holder to purchase from us one share of our common stock at an exercise price of $5.00 per
share beginning upon the consummation of a business combination. Our common stock and warrants
started trading separately on the American Stock Exchange as of September 5, 2006, under the
symbols “BTC” and “BTC.WS,” respectively.
1
The initial target business or businesses we acquire must have a collective fair market value
equal to at least 80% of our net assets at the time of the business combination (excluding the
portion of the trust account
attributable to the underwriters’ discount). The fair market value of such business or
businesses will be determined by our board of directors based upon standards generally accepted by
the financial community, such as actual and potential revenues, net income, assets, cash flow and
book value. We are not required to obtain an opinion from an investment banking firm as to the
fair market value if our board of directors independently determines that the target business has
sufficient fair market value, but may do so.
Proposed Business Combination
On September 5, 2007, we entered into an Agreement and Plan of Merger (the “TransCommunity
Merger Agreement”) with TransCommunity Financial Corporation (“TransCommunity”). The TransCommunity
Merger Agreement sets forth the terms and conditions of our proposed acquisition of TransCommunity
through the merger of TransCommunity with and into the Company (the “TransCommunity Merger”).
TransCommunity Bank, N.A., a wholly owned subsidiary of TransCommunity, will become a wholly owned
subsidiary of the surviving company in the TransCommunity Merger.
Under the terms of the TransCommunity Merger Agreement, the Company will issue to the
shareholders of TransCommunity, for each share of TransCommunity’s common stock that they own,
1.4200 shares of our common stock (the “Exchange Ratio”), subject to adjustment. If the daily
average closing price for our common stock for the 20 consecutive days of trading in such stock
ending five days before the closing date is less than $7.42, we will increase the Exchange Ratio to
the quotient obtained by dividing $10.5364 by such daily average closing price.
Consummation of the TransCommunity Merger is subject to a number of customary conditions
including the approval of the TransCommunity Merger by the shareholders of TransCommunity and our
stockholders and the receipt of all required regulatory approvals. In addition, closing of the
transaction is also conditioned on holders of fewer than 20% of the shares of our common stock
voting against the transaction and electing to convert their common stock into cash. The
TransCommunity Merger is expected to be completed in the second quarter of 2008. Pursuant to the
TransCommunity Merger Agreement either party may terminate the Agreement in the event the
TransCommunity Merger is not consummated by May 31, 2008. As a result of the execution of the
TransCommunity Merger Agreement, pursuant to our certificate of incorporation, we have until June
7, 2008 to complete the transaction before we would otherwise be required to liquidate.
Proposed Merger with BOE Financial Services
On December 14, 2007 we announced that we had entered into an Agreement and Plan of Merger
dated as of December 13, 2007, (the “BOE Merger Agreement”) with BOE Financial Services of
Virginia, Inc. (“BOE”). The BOE Merger Agreement sets forth the terms and conditions of the
Company’s acquisition of BOE through the merger of BOE with and into the Company (the “BOE
Merger”). Bank of Essex, a Virginia state bank and a wholly owned subsidiary of BOE (the “Bank”)
will become a wholly owned subsidiary of the surviving corporation in the BOE Merger.
Under the terms of the BOE Merger Agreement, we will issue to the stockholders of BOE, for
each share of BOE’s common stock that they own, 5.7278 shares of our common stock (the “Exchange
Ratio”), subject to adjustment. If the daily average closing price for our common stock for the 20
consecutive days of trading in such stock ending five days before the closing date is less than
$7.42, we will increase the Exchange Ratio to the quotient obtained by dividing $42.50 by such
daily average closing price.
Consummation of the BOE Merger is subject to the consummation of the TransCommunity Merger and
a number of customary conditions including the approval of the BOE Merger by the stockholders of
BOE and by our stockholders and the receipt of all required regulatory approvals. The BOE Merger is
expected to be completed in the second quarter of 2008. Pursuant to the BOE Merger Agreement either
party may terminate the BOE Merger Agreement in the event the BOE Merger Agreement is not
consummated by June 30, 2008.
2
Trust Account
The net proceeds from the sale of our units were approximately $54,950,000. Of this amount,
$54,350,000 of the net proceeds, plus $2,100,000 attributable to the underwriters’ discount that
I-Bankers Securities, Inc., Maxim Group LLC and Legend Merchant Group, Inc., the representatives of
the underwriters in our initial public offering,
agreed to defer until we consummated our initial business combination, was deposited in an
interest-bearing trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer &
Trust Company, as trustee, pursuant to an agreement signed on June 8, 2006. As of December 31,
2007, the amount held in trust was $58,452,512, including $2,100,000 of deferred underwriting
discounts. Except for a portion of the interest earned on the trust account which may be released
to us, these proceeds will not be released until the earlier of the completion of a business
combination or our liquidation. The remaining $600,000 in net proceeds, together with $1,129,000
interest released to us to cover operating expenses, were made available to be used by us to
provide for business, legal and accounting due diligence on prospective business combinations and
continuing general and administrative expenses. Substantially all of the net proceeds not held in
the trust account of our initial public offering are intended to be used to acquire a target
business, including identifying and evaluating prospective acquisition candidates, selecting the
target business, and structuring, negotiating and consummating the business combination. Upon
consummation of our initial business combination, funds held in the trust account after payment of
amounts, if any, to our stockholders requesting and exercising their conversion rights and the
deferred underwriting compensation, will be released to us. We intend to pay any additional
expenses related to the TransCommunity Merger and BOE Merger and hold the remaining funds as
capital at the holding company level pending use for general corporate and strategic purposes. Such
purposes may include increasing the capital of TransCommunity Bank or Bank of Essex, future mergers
and acquisitions, branch construction, asset purchases, payment of dividends, repurchases of shares
of our common stock and general corporate purposes. Until such capital is fully leveraged or
deployed, we may not be able to successfully deploy such capital and our return on equity could be
negatively impacted.
Conversion rights
At the time we seek stockholder approval of the TransCommunity Merger, we will offer each
public stockholder, excluding our initial stockholders who have waived the right to convert any of
their shares, the right to have such stockholder’s shares of common stock converted to cash if the
stockholder both votes against the business combination and exercises his conversion rights and the
business combination is approved and completed. In the event the TransCommunity Merger is not
approved by our stockholders and completed, public stockholders will not be able to convert their
stock. The actual per-share conversion price will be equal to the amount in the trust fund,
including any interest not released to us, net of taxes, as of the record date for determination of
stockholders entitled to vote on the business combination, divided by the 7,500,000 shares of our
common stock sold in our initial public offering. Without taking into account any interest earned
on the trust account subsequent to March 25, 2008, or taxes payable on such interest, the per share
conversion price at March 25, 2008, the record date for our annual meeting, will be approximately
$7.72 or $0.28 lower than the $8.00 per unit price paid in the offering. An eligible stockholder
may request conversion at any time after the mailing to our stockholders of the joint proxy
statement/prospectus relating to the TransCommunity Merger and prior to the vote taken with respect
to the TransCommunity Merger at a meeting held for that purpose, but the request will not be
granted unless the stockholder votes against the TransCommunity Merger, the TransCommunity Merger
is approved and completed and the stockholder timely delivers his stock certificate for
cancellation. If a stockholder votes against the business combination but has not properly
exercised such stockholder’s conversion rights, such stockholder will not have the shares of common
stock held by such stockholder converted into the stockholder’s pro rata distribution of the trust
fund. Any request for conversion, once made, may be withdrawn at any time up to the date of the
meeting held for the approval of the TransCommunity Merger. It is anticipated that the funds to be
distributed to stockholders entitled to convert their shares who elect conversion will be
distributed promptly after completion of our business combination and presentation of their stock
certificates for cancellation. Public stockholders who convert their stock into their share of the
trust fund will continue to own any redeemable warrants they may hold and have the right to sell,
transfer or exercise such redeemable warrants. We will not complete the proposed merger with
TransCommunity if stockholders who own at least a majority of the shares of common stock voted at
the meeting to approve the proposed merger fail to vote in favor of the merger at such meeting or
if stockholders owning 20% or more of the shares sold in our initial public offering both vote
against the TransCommunity Merger and exercise their conversion rights.
3
Opportunity for Stockholder Approval of Business Combination
As we will be issuing shares of our common stock in the TransCommunity Merger totaling more
than 20% of the outstanding shares of our common stock immediately prior to the effective time of
the TransCommunity Merger, as well as in connection with the proposed subsequent BOE Merger,
Delaware law requires that our
stockholders adopt the TransCommunity Merger Agreement for the TransCommunity Merger to be
consummated and adopt the BOE Merger Agreement for the BOE Merger to be consummated. In addition,
our certificate of incorporation requires that we submit the TransCommunity Merger to our
stockholders for approval, even if stockholder approval was not required under Delaware law.
Delaware law requires that the holders of a majority of the outstanding shares of our common stock
entitled to vote at the stockholder meeting adopt the TransCommunity Merger Agreement for the
TransCommunity Merger to be consummated and adopt the BOE Merger Agreement for the BOE Merger to be
consummated.
Further, as required by our certificate of incorporation, we will proceed with the
TransCommunity Merger only:
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if the holders of a majority of the outstanding shares of our common stock issued in our
initial public offering and voted at the stockholder meeting vote in favor of the merger
proposal; and |
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the holders of less than 20% of the outstanding shares of our stock issued in our
initial public offering vote against the business combination and exercise their conversion
rights. |
All of our insiders, including all of our officers, directors and initial stockholders, have
agreed to vote the 1,875,000 shares of our common stock acquired by them before our initial public
offering either for or against the TransCommunity Merger consistent with the majority of the votes
cast by the holders of the shares of common stock issued in the initial public offering. This
voting arrangement shall not apply to shares included in units purchased in our initial public
offering or purchased following our initial public offering in the open market by any of our
officers directors, or initial stockholders. Accordingly, they may vote on the TransCommunity
Merger with respect to shares of common stock acquired in or after the consummation of our initial
public offering any way they choose. Our insiders may vote all of their shares any way they choose
with respect to the BOE Merger.
Liquidation If No Business Combination
If we do not complete the TransCommunity Merger by June 7, 2008, our certificate of
incorporation (1) provides that our corporate powers would automatically thereafter be limited to
acts and activities relating to dissolving and winding up its affairs, including liquidation, and
we would not be able to engage in any other business activities and (2) requires that our board of
directors within 15 days adopt a resolution finding our dissolution advisable and provide notice as
soon as possible thereafter of a special meeting of stockholders to vote on our dissolution.
Pursuant to Delaware law, our dissolution would require the affirmative vote of stockholders owning
a majority of the then outstanding shares of our common stock. We would promptly prepare a proxy
statement and notice of special meeting of stockholders in accordance with the requirements of
Delaware General Corporation Law, or DGCL, and the federal securities laws, which proxy statement
would be required to be submitted to and reviewed by the SEC, and thereafter forward the proxy
statement and notice of meeting to our stockholders no less than 10 nor more than 60 days prior to
our special meeting of stockholders soliciting stockholder votes with respect to our dissolution.
In the event that we do not initially obtain approval for such dissolution by stockholders owning a
majority of the then outstanding shares of our common stock, we would continue to take all
reasonable actions to obtain such approval, which may include adjourning the meeting from time to
time to allow us to obtain the required vote and retaining a proxy solicitation firm to assist us
in obtaining such vote. Our insiders (including all of our directors, officers and initial
stockholders) have agreed to vote all shares of our common stock owned by them that were purchased
prior to or issued in our initial public offering in favor of such dissolution. However, there can
be no assurance that our stockholders would approve a dissolution in a timely manner or ever
approve a dissolution. If we are not able to obtain the approval from a majority of the
stockholders, we would not be able to dissolve and liquidate and we would not be able to distribute
funds from our trust account to public stockholders and these funds would not be available for any
other corporate purpose.
We anticipate that any liquidation would occur pursuant to Section 281(b) of the DGCL and, in
this event, our board of directors would be required under Section 281(b) of the DGCL to adopt,
within a three year period, a plan of distribution pursuant to which we would pay or make
reasonable provision to pay all of our existing claims and obligations, all contingent, conditional
or unmatured contractual claims, claims subject of a pending suit, and claims that are likely to
arise or become known within 10 years after our dissolution. Our plan of distribution will provide
that we will pay or reserve for such claims from our funds not held in trust. Our board of
directors intends to adopt a plan of distribution and to distribute the funds held in trust and any
of our remaining assets to public
stockholders as promptly as practicable following our dissolution. Until adoption of our plan
of distribution and distribution of the funds held in trust, which we anticipate would be
accomplished within six months following board approval of our dissolution, the funds would remain
in trust and held by the trustee in permitted investments.
4
Assuming our dissolution were submitted to and approved by our stockholders in accordance with
Delaware law, the holders of our common stock issued in our initial public offering would, in that
event, be entitled to receive their proportionate share of the trust account (including any
interest not released to us, net of taxes, and the deferred underwriting discount). In addition,
such holders would be entitled to receive a pro rata portion of our remaining assets not held in
trust, less amounts we would pay, or reserve to pay, for all of our liabilities and obligations.
These liabilities and obligations include our corporate expenses arising during our remaining
existence and the costs associated with our dissolution and liquidation. Our corporate expenses
are expected to be primarily associated with preparation for and conduct of our special meeting of
stockholders and our continuing public reporting obligations, including legal services, proxy
soliciting firms, services of our independent public accounting firm and legal fees we may incur in
the event of disputes with any claimants or creditors. Gary A. Simanson, our president and chief
executive officer, and David Zalman, an initial stockholder, would be personally liable for
ensuring that the trust account is not reduced by claims of our vendors and service providers in
the event of our dissolution and liquidation. Messrs. Simanson and Zalman will not be liable for
and will not pay any termination fees that may be payable by the Company to TransCommunity or BOE
under their respective merger agreements. To the extent funds reserved to pay liabilities or
obligations are not subsequently used for such purpose, the funds would be available for
distribution to our public stockholders or for ongoing corporate expenses including costs of our
liquidation during our remaining existence.
Our initial stockholders have waived their rights to participate in any distribution with
respect to shares of common stock owned by them before our initial public offering upon our
liquidation prior to a business combination. In addition, the representatives of the underwriters
in our initial public offering have agreed to forfeit any rights to or claims against the portion
of the trust account attributable to the contingent underwriting discount in the event we do not
timely complete a business combination and dissolve and distribute the funds held in the trust
account upon our liquidation. There will be no distribution from the trust account with respect to
our warrants, which will expire without value in the event of our liquidation.
Under the DGCL, stockholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them in a dissolution. If a corporation,
following its dissolution, complies with the statutory procedures set forth in Section 280 of the
DGCL, intended to ensure that the corporation makes reasonable provision for all claims against it,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and
any liability of the stockholder would be barred after the third anniversary of the dissolution.
The procedures in Section 280 of the DGCL include a 60-day notice period during which any
third-party claims can be brought against the corporation, a 90-day period during which the
corporation may reject any claims brought, and an additional 150-day waiting period before any
liquidating distributions may be made to stockholders. However, it is our intention to seek
approval of our stockholders to make liquidating distributions to our public stockholders as soon
as reasonably practicable following our dissolution in accordance with Section 281(b) of the DGCL.
Therefore, our stockholders could potentially be liable for any claims to the extent of
distributions received by them in a dissolution and any liability of our stockholders may extend
beyond the third anniversary of such dissolution.
In addition, the proceeds deposited in the trust account could become subject to the claims of
our creditors and we could be required to pay creditors prior to making any distributions to the
holders of shares of our common stock that were issued in the initial public offering. We have
prepaid certain of our material legal, printing, accounting, administrative and financial advisory
fees and intend to prepay or to obtain waiver agreements from vendors and service providers we may
engage in the future for any material amounts. Any such waiver agreements will provide that the
applicable vendor or service provider waives any right, title, interest or claim of any kind in or
to any monies held in the trust account for the benefit of us and the holders of shares of our
common stock that were issued in the initial public offering. If any potential vendor or service
provider objects to being prepaid or refuses to enter into a waiver agreement, we will consider
whether there is a suitable alternative provider, the expected aggregate contract amount and our
assessment of the potential risk to the trust account before engaging such person. However,
because we are a blank check company, rather than an operating company, and our operations are
limited to consummation of the TransCommunity and BOE Mergers, the only likely claims to arise
would be from our vendors or
5
service providers (such as accountants, lawyers or investment bankers) or potential
target businesses. In addition, TransCommunity and BOE have each agreed as part of the respective
merger agreements that neither will pursue any claim or enforce any right, title, interest or claim
of any kind in or to any monies held in the trust account. As a result of these efforts coupled
with Messrs. Simanson’s and Zalman’s agreement to be personally liable to ensure that the proceeds
in the trust account are not reduced by the claims of any vendor or service provider, management
believes the claims that could be made against us are significantly limited and the likelihood that
any claim that would result in any liability extending to the trust is remote. However, there can
be no guarantee that persons will not seek recourse against the trust account. Accordingly, we
cannot assure you that the actual per share liquidation price will not be less than $7.72 per share
as of March 25, 2008, due to claims of creditors.
Competition
If we succeed in effecting the TransCommunity Merger and the subsequent BOE Merger, there will
be, in all likelihood, intense competition from competitors in the commercial banking industry and
other financial service businesses. We cannot assure you that, subsequent to our proposed mergers,
if consumamted, we will have the resources or ability to compete effectively.
Employees
Our officers and directors are not obligated to contribute any specific number of hours to our
matters and devote only as much time as they deem necessary to our affairs. Our executive officers
are also involved with business ventures other than us. The amount of time they devote in any time
period has varied based on the availability of suitable target businesses to investigate although
Mr. Simanson devotes the majority of his professional time to our business. We do not currently
have and do not intend to have any full time employees prior to the consummation of the merger with
TransCommunity.
Periodic Reporting and Financial Information
We have registered our units, common stock and warrants under the Securities Exchange Act of
1934, as amended, or the Exchange Act, and have reporting obligations, including the requirement
that we file annual and quarterly reports with the Securities and Exchange Commission (the “SEC”).
The public may read and copy materials we file with the SEC at the SEC’s Public Reference Room at
100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 am to
3:00 pm You may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the
SEC at http://www.sec.gov.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We have received no written comments regarding our periodic or current reports from the staff
of the SEC that were issued 180 days or more preceding the end of our 2007 fiscal year and that
remain unresolved.
ITEM 2. PROPERTIES
We maintain our executive offices at 9912 Georgetown Pike, Suite D203, Great Falls, Virginia
22066. The cost for this space is included in the $7,500 per month fee Community Bankers
Acquisition, LLC charges us for general and administrative services pursuant to a letter agreement
between us and Community Bankers Acquisition, LLC. The $7,500 per month fee will no longer be
payable following consummation of the TransCommunity Merger. We believe, based on rents and fees
for similar services in the Great Falls, Virginia metropolitan area, that the fee charged by
Community Bankers Acquisition, LLC is at least as favorable as we could have obtained from an
unaffiliated person. We consider our current office space adequate for our current activities.
6
ITEM 3. LEGAL PROCEEDINGS
To the knowledge of management there is no litigation pending or contemplated against us or
any of our officers or directors in their capacity as such.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to our stockholders during the quarter ended December 31, 2007.
7
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our units, common stock and warrants trade on the American Stock Exchange under the symbols
“BTC.U.,” “BTC” and, “BTC.WS,” respectively.
The following table sets forth, for the quarters indicated, the quarterly high and low sales
prices of our units, common stock and warrants as reported on the American Stock Exchange since our
units commenced public trading on June 6, 2006 and since such common stock and warrants commenced
public trading on September 5, 2006.
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Common Stock |
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Warrants |
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Units |
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High |
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Low |
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High |
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Low |
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High |
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Low |
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Quarter ended 6/30/2006 |
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N/A |
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$ |
N/A |
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$ |
N/A |
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$ |
N/A |
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$ |
7.90 |
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$ |
7.80 |
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Quarter ended 9/30/2006 |
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$ |
7.20 |
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$ |
7.00 |
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$ |
0.70 |
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$ |
0.51 |
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$ |
7.88 |
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$ |
7.50 |
|
Quarter ended 12/30/2006 |
|
$ |
7.23 |
|
|
$ |
7.00 |
|
|
$ |
0.63 |
|
|
$ |
0.37 |
|
|
$ |
7.80 |
|
|
$ |
7.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended 3/31/2007 |
|
$ |
7.50 |
|
|
$ |
7.10 |
|
|
$ |
0.63 |
|
|
$ |
0.45 |
|
|
$ |
7.85 |
|
|
$ |
7.55 |
|
Quarter ended 6/30/2007 |
|
$ |
7.44 |
|
|
$ |
7.23 |
|
|
$ |
0.81 |
|
|
$ |
0.50 |
|
|
$ |
8.14 |
|
|
$ |
7.69 |
|
Quarter ended 9/30/2007 |
|
$ |
7.46 |
|
|
$ |
7.31 |
|
|
$ |
0.82 |
|
|
$ |
0.45 |
|
|
$ |
8.20 |
|
|
$ |
7.75 |
|
Quarter ended 12/31/2007 |
|
$ |
7.45 |
|
|
$ |
7.36 |
|
|
$ |
0.58 |
|
|
$ |
0.26 |
|
|
$ |
7.90 |
|
|
$ |
7.56 |
|
On March 25, 2008 the closing prices of the common stock, warrants and units were $7.49, $0.08
and $7.45, respectively.
Holders of Record
As of March 25, 2008, there were one holder of record of our units, ten holders of record of
our common stock and two holders of record of our warrants, not including beneficial holders of our
securities held in street name.
Dividends
We have not paid any dividends on our common stock to date and do not intend to pay dividends
prior to the completion of a business combination. The payment of dividends in the future will be
contingent upon our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of a business combination. The payment of any dividends
subsequent to a business combination will be within the discretion of our then board of directors
and subject to restrictions under applicable banking laws and regulations. It is the present
intention of our board of directors to retain all earnings, if any, for use in our business
operations and, accordingly, our board does not anticipate declaring any dividends prior to the
proposed TransCommunity Merger. Upon completion of the TransCommunity and BOE Mergers, we expect
to pay regular dividends to our stockholders. Subject to board and regulatory approvals, we expect
to pay quarterly cash dividends in an amount not less than the quotient obtained by dividing $0.22
by the BOE exchange ratio (5.7278, subject to adjustment), for the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company does not have any securities authorized for issuance under any equity compensation
plans.
Recent Sales of Unregistered Securities
None.
8
Use of Proceeds From Our Initial Public Offering
On June 8, 2006, we consummated the closing of the sale of 7,500,000 units in connection with
our initial public offering. Each unit consists of one share of our common stock and one warrant
entitling the holder to purchase from us one share of our common stock at an exercise price of
$5.00. The units were sold at an offering price of $8.00 per unit, generating total gross proceeds
of $60,000,000 and net proceeds of $54,950,000.
The securities sold in our initial public offering were registered under the Securities Act of
1933, as amended, on a registration statement on Form S-1 (File No. 333-124240). The SEC declared
the registration statement effective on June 5, 2006. I-Bankers Securities, Inc., Maxim Group LLC
and Legend Merchant Group, Inc. acted as the representatives of the underwriters. Of the gross
proceeds from the offering, (i) we deposited $56,450,000 into a trust account at JP Morgan Chase NY
Bank, maintained by Continental Stock Transfer & Trust Company as trustee, which amount included
$2,100,000 of contingent underwriting discount; (ii) the underwriters received $1,800,000 as
underwriting discount and $600,000 as non-accountable expenses; and (iii) we used an estimated
$550,000 for offering expenses. The remaining proceeds of $600,000 together with $1,129,000 of
interest earned on funds held in trust which were released to us have been used for working capital
purposes in connection with acquisition and consummation of a business combination, such as due
diligence, legal, and general and administrative expenses including payment of $180,000 to
Community Bankers Acquisition, LLC, an affiliate of our president and chief executive officer, for
administrative services. The sum of $40,000 in offering expenses was advanced to us by Community
Bankers Acquisition, LLC and was repaid following consummation of the offering. Upon consummation
of the TransCommunity Merger, we will pay the contingent underwriting discount held in the trust
account to the representatives of the underwriters.
In connection with our initial public offering, we sold to I-Bankers Securities, Inc., Maxim
Group LLC and Legend Merchant Group, Inc., or their designees for $100, options to purchase up to a
total of 525,000 units. The units issuable upon exercise of this option are identical to those sold
in our offering except that the warrants included in the units have an exercise price of $7.50.
These options are exercisable at $10.00 per unit commencing on the consummation of a business
combination and expiring on June 4, 2011. The purchase option and the securities issuable upon
exercise of such option were included in our registration statement on Form S-1 described above.
Purchases of Equity Securities by the Issuer
None.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read
in conjunction with our financial statements, the accuracy of which involves risks and
uncertainties. Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons.
General
We were incorporated on April 6, 2005, to serve as a vehicle to effect a merger, capital stock
exchange, asset acquisition or other similar business combination with an operating business in the
banking industry. We consummated our initial public offering on June 8, 2006. We have neither
engaged in any operations nor generated any revenues, other than interest income, nor incurred any
debt or expenses during the period ended December 31, 2007, other than in connection with our
initial public offering, meeting our regulatory reporting requirements including certain legal,
accounting and other expenses related to selection of and consummation of an initial business
combination. Our entire activity since inception has been to prepare for and consummate our
initial public offering and to identify and investigate targets for our initial business
combination as well as a subsequent business combination.
9
We are currently in the process of obtaining regulatory approvals relating to the
TransCommunity Merger and the BOE Merger. We are not presently engaged in, and will not engage in,
any substantive commercial business until we consummate the TransCommunity Merger. We intend to
utilize our capital stock in effecting the TransCommunity Merger as well as the BOE Merger. If we
are unable to consummate the TransCommunity Merger by June 7, 2008, we will be required to dissolve
and liquidate.
On October 29, 2007, our board of directors resolved that our fiscal year that began on April
1, 2007 would end on December 31, 2007, and from and after that date, our fiscal year would be the
period beginning January 1 of each year and ending on December 31. As a result, this Form 10-K is a
transition report, and includes financial information for the nine-month transition period April 1,
2007 through December 31, 2007, which we refer to as “fiscal 2007” or “fiscal year 2007.” All
references to years prior to fiscal 2007, unless otherwise noted, refer to our historical fiscal
year, which ended on March 31. For example, a reference to “fiscal 2006” or “fiscal year 2006”
means the 12-month period ended March 31, 2006.
Results of Operations for the Transition Year April 1, 2007 through December 31, 2007
For the transition period April 1, 2007 through December 31, 2007, operating costs of $263,000
consisted primarily of $54,000 in legal and professional fees, $67,500 for office and
administrative services, $73,000 for amortization of prepaid insurance and $50,500 in travel and
due diligence expenses. Interest income on the trust fund investments, including interest
allocable to shares subject to possible conversion, amounted to $1,944,000. This resulted in net
income for the year ended December 31, 2007 of $1,105,000.
Results of Operations for the Year Ended March 31, 2007
For the year ended March 31, 2007, operating costs of $338,700 consisted primarily of $117,000
in legal and professional fees, $75,000 for office and administrative services, $87,500 for
amortization of prepaid insurance and $7,700 in travel expenses. Interest income on the trust fund
investments, including interest allocable to shares subject to possible conversion, amounted to
$2,268,800. This resulted in net income for the year ended March 31, 2007 of $1,124,100.
Results of Operations for the Period April 6, 2005 (inception) to December 31, 2007
For the period April 6, 2005 (inception) to December 31, 2007, operating costs of $601,800
consisted primarily of $171,000 in legal and professional fees, $142,500 for office and
administrative services, $160,000 for amortization of prepaid insurance and $58,000 in travel and
due diligence expenses. Interest income on the trust fund investments, including interest allocable
to shares subject to possible conversion amounted to $3,611,000. This resulted in net income during
the period of $2,229,000.
Liquidity and Capital Resources
The net proceeds of our initial public offering, after deducting the underwriters’ discount
and offering expenses, was $54,950,000. Of these net proceeds, $54,350,000 has been placed in a
trust account at J.P. Morgan Chase Bank maintained by Continental Stock Transfer & Trust Company,
New York, New York, as trustee, and invested in United States government securities together with
an additional $2,100,000 of deferred underwriting compensation. The funds held in the trust
account, other than the deferred underwriting compensation, may be used as consideration to pay the
sellers of a target business with which we ultimately complete a business combination. Interest
earned on the trust account, net of taxes, will be retained in the trust account for distribution
to public stockholders under certain circumstances except that up to $1,129,000, net of taxes, has
been released to us periodically to fund our working capital requirements. Upon the consummation
of the TransCommunity Merger, we will pay the deferred underwriting compensation to the
underwriters, less $0.28 per share for each share converted in connection with the TransCommunity
Merger, out of the proceeds of our initial public offering held in trust. The remaining funds
currently held in the trust account, less any amounts paid to our stockholders who exercise their
conversion rights, will be released to us. We intend to pay any additional expenses of the
TransCommunity Merger and BOE Merger and hold the remaining funds as capital at the holding company
level pending use for general corporate and strategic purposes. Such purposes may include
increasing the capital of TransCommunity Bank or Bank of Essex, future mergers and acquisitions,
branch construction, asset purchases, payments of dividends,
repurchases of shares of our common stock and general corporate purposes. Until such capital
is fully leveraged or deployed, we may not be able to successfully deploy such capital and our
return on equity could be negatively impacted.
10
As of December 31, 2007, we had cash not held in trust of $162,154, and an aggregate of
$1,600,000 of interest earned on the trust funds was released to us from the trust account for the
payment of taxes and working capital. We have used the funds not held in trust together with
interest released to us from the trust account for identifying, evaluating and selecting
prospective acquisition candidates, performing business due diligence on prospective target
businesses, and legal, accounting and other related expenses attendant to structuring, negotiating
and consummating our two proposed mergers. Our cash requirements are expected to change based on
the timing, nature and outcome of our intended business combination.
We are obligated, until the closing of the TransCommunity Merger, to pay to Community Bankers
Acquisition, LLC, an affiliate of one of our directors and executive officers, a monthly fee of
$7,500 for office space and general and administrative services. An aggregate of $180,000 has been
paid as of December 31, 2007.
We do not believe we will need to raise additional funds in order to meet the expenditures
required for operating our business. However, we may need to raise additional funds through a
private offering or debt or equity securities if it is required to consummate the TransCommunity
and BOE Mergers. We would only consummate such a fundraising simultaneously with the consummation
of a business combination.
If we are unable to obtain the required regulatory approvals and consummate the TransCommunity
Merger by June 7, 2008, we will be forced to liquidate. If we are forced to liquidate, the per
share liquidation amount may be less than the initial per share liquidation value of $7.72 as of
March 25, 2008. Additionally, if third parties make claims against us, the funds held in the trust
account could be subject to those claims, resulting in a further reduction to the per share
liquidation price. Under Delaware law, our stockholders who have received distributions from us may
be held liable for claims by third parties to the extent such claims have not been paid by us.
Furthermore, our warrants will expire worthless if we liquidate before the completion of our
initial business combination.
Off Balance Sheet Arrangements
As of December 31, 2007, we did not have any off balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair
value of a financial instrument. These changes may be the result of various factors, including
interest rates, foreign exchange rates, commodity prices and/or equity prices. Our exposure to
market risk is primarily limited to interest income sensitivity with respect to the funds placed in
the trust account. However, the funds held in our trust account have been invested only in U.S.
“government securities,” defined as any Treasury Bill issued by the United States having a maturity
of one hundred and eighty days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act of 1940, so we are not deemed to be an
investment company under the Investment Company Act. Thus, we are subject to market risk primarily
through the effect of changes in interest rates on government securities. The effect of other
changes, such as foreign exchange rates, commodity prices and/or equity prices, does not pose
significant market risk to us.
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Community Bankers Acquisition Corp.
We have audited the accompanying balance sheets of Community Bankers Acquisition Corp. (a
corporation in the development stage) as of December 31, 2007 and March 31, 2007 and the related
statements of income, stockholders’ equity and cash flows for the nine months ended December 31,
2007, the year ended March 31, 2007 and the period from April 6, 2005 (inception) to December 31,
2007. These financial statements are the responsibility of the Corporation’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
The Corporation is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Corporation’s internal control over financial reporting. Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Community Bankers Acquisition Corp. as of December 31, 2007 and
March 31, 2007 and the results of its operations and its cash flows for the nine months ended
December 31, 2007, the year ended March 31, 2007 and the period from April 6, 2005 (inception) to
December 31, 2007, in conformity with U.S. generally accepted accounting principles.
/s/ Miller Ellin & Company, LLP
New York, NY
March 26, 2008
F-2
COMMUNITY BANKERS ACQUISITION CORP.
(A Corporation in the Development Stage)
BALANCE SHEETS
| |
|
|
|
|
|
|
|
|
| |
|
December 31, 2007 |
|
|
March 31, 2007 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
162,154 |
|
|
$ |
676,183 |
|
Cash and United States Treasury securities held
in trust fund |
|
|
58,452,512 |
|
|
|
58,118,729 |
|
Prepaid expenses |
|
|
178,799 |
|
|
|
17,500 |
|
Deferred acquisition costs |
|
|
647,487 |
|
|
|
— |
|
|
|
|
|
|
|
|
Total current assets |
|
|
59,440,952 |
|
|
|
58,812,412 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
59,440,952 |
|
|
$ |
58,812,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Income taxes payable |
|
$ |
338,690 |
|
|
$ |
806,000 |
|
Deferred payment to underwriter |
|
|
2,100,000 |
|
|
|
2,100,000 |
|
Accounts payable and accrued expenses |
|
|
— |
|
|
|
9,185 |
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
2,438,690 |
|
|
|
2,915,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, subject to conversion, 1,499,999
shares at conversion value |
|
|
11,690,502 |
|
|
|
11,617,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value
Authorized 5,000,000 shares; none
issued |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value |
|
|
|
|
|
|
|
|
Authorized 50,000,000 shares; Issued and
outstanding, 9,375,000 shares in 2007 and
9,375,000 in 2006 (which includes 1,499,999
shares subject to
conversion) |
|
|
93,750 |
|
|
|
93,750 |
|
Additional paid-in capital |
|
|
42,988,876 |
|
|
|
43,061,444 |
|
Earnings accumulated during the development
stage |
|
|
2,229,134 |
|
|
|
1,124,099 |
|
|
|
|
|
|
|
|
Total Stockholders’ Equity |
|
|
45,311,760 |
|
|
|
44,279,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’
Equity |
|
$ |
59,440,952 |
|
|
$ |
58,812,412 |
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-3
COMMUNITY BANKERS ACQUISITION CORP.
(A Corporation in the Development Stage)
STATEMENTS OF INCOME
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Cumulative Period |
|
| |
|
|
|
|
|
|
|
|
|
from |
|
| |
|
|
|
|
|
|
|
April 6, 2005 |
|
| |
|
Nine Months Ended |
|
|
Year Ended |
|
|
(inception) to |
|
| |
|
December 31, 2007 |
|
|
March 31, 2007 |
|
|
December 31, 2007 |
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on cash and short-term investments held in
trust |
|
$ |
1,944,395 |
|
|
$ |
2,268,760 |
|
|
$ |
4,213,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs |
|
|
263,142 |
|
|
|
338,661 |
|
|
|
601,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
|
1,681,253 |
|
|
|
1,930,099 |
|
|
|
3,611,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
576,218 |
|
|
|
806,000 |
|
|
|
1,382,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,105,035 |
|
|
$ |
1,124,099 |
|
|
$ |
2,229,134 |
|
|
|
|
|
|
|
|
|
|
|
| |
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
9,375,000 |
|
|
|
7,997,740 |
|
|
|
6,140,625 |
|
Diluted |
|
|
11,807,432 |
|
|
|
10,256,708 |
|
|
|
8,573,057 |
|
Net income per share-basic
|
|
$ |
0.12 |
|
|
$ |
0.14 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share-diluted
|
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-4
COMMUNITY BANKERS ACQUISITION CORP.
(A Corporation in the Development Stage)
STATEMENTS OF STOCKHOLDERS’ EQUITY
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Additional |
|
|
During the |
|
|
|
|
| |
|
Common Stock |
|
|
Paid-In |
|
|
Development |
|
|
Stockholders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stage |
|
|
Equity |
|
Balance at March 31, 2006 |
|
|
1,875,000 |
|
|
$ |
18,750 |
|
|
$ |
28,125 |
|
|
$ |
— |
|
|
$ |
46,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 7,500,000 units, net of
underwriters’ discount and
offering expenses (includes
1,499,999 shares subject to
possible conversion) |
|
|
7,500,000 |
|
|
|
75,000 |
|
|
|
54,651,153 |
|
|
|
— |
|
|
|
54,726,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds subject to possible
redemption of 1,499,999 shares,
up to 20% of public shares are
subject to redemption |
|
|
— |
|
|
|
— |
|
|
|
(11,617,934 |
) |
|
|
— |
|
|
|
(11,617,934 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of option |
|
|
— |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,124,099 |
|
|
|
1,124,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2007 |
|
|
9,375,000 |
|
|
|
93,750 |
|
|
|
43,061,444 |
|
|
|
1,124,099 |
|
|
|
44,279,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in proceeds subject to
possible conversion |
|
|
— |
|
|
|
— |
|
|
|
(72,568 |
) |
|
|
— |
|
|
|
(72,568 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,105,035 |
|
|
|
1,105,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007 |
|
|
9,375,000 |
|
|
$ |
93,750 |
|
|
$ |
42,988,876 |
|
|
$ |
2,229,134 |
|
|
$ |
45,311,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-5
COMMUNITY BANKERS ACQUISITION CORP.
(A Corporation in the Development Stage)
STATEMENTS OF CASH FLOWS
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Period |
|
| |
|
|
|
|
|
|
|
|
|
from |
|
| |
|
|
|
|
|
|
|
|
|
April 6, 2005 |
|
| |
|
Nine months ended |
|
|
Year Ended |
|
|
(inception) to |
|
| |
|
December 31, 2007 |
|
|
March 31, 2007 |
|
|
December 31, 2007 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,105,035 |
|
|
$ |
1,124,099 |
|
|
$ |
2,229,134 |
|
(Increase) decrease in prepaid expenses |
|
|
(161,299 |
) |
|
|
(17,500 |
) |
|
|
(178,799 |
) |
(Increase) decrease in deferred acquisition costs |
|
|
(647,487 |
) |
|
|
— |
|
|
|
(647,487 |
) |
Increase (decrease) in accounts
payable |
|
|
(9,185 |
) |
|
|
(360,897 |
) |
|
|
|
|
Increase (decrease) in income taxes
payable |
|
|
(467,310 |
) |
|
|
806,000 |
|
|
|
338,690 |
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities |
|
|
(180,246 |
) |
|
|
1,551,702 |
|
|
|
1,741,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in cash and securities held in trust fund |
|
|
(333,783 |
) |
|
|
(58,118,729 |
) |
|
|
(58,452,512 |
) |
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
|
(333,783 |
) |
|
|
(58,118,729 |
) |
|
|
(58,452,512 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
|
— |
|
|
|
— |
|
|
|
46,875 |
|
Gross proceeds from initial public offering |
|
|
— |
|
|
|
60,000,000 |
|
|
|
60,000,000 |
|
Proceeds from note payable to stockholder |
|
|
— |
|
|
|
20,000 |
|
|
|
40,000 |
|
Payment of note payable to stockholder |
|
|
— |
|
|
|
(40,000 |
) |
|
|
(40,000 |
) |
Proceeds from issuance of underwriters purchase option |
|
|
— |
|
|
|
100 |
|
|
|
100 |
|
Payment of public offering costs |
|
|
— |
|
|
|
(2,739,250 |
) |
|
|
(3,173,847 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Financing Activities |
|
|
— |
|
|
|
57,240,850 |
|
|
|
56,873,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (Decrease) IN CASH |
|
|
(514,029 |
) |
|
|
673,823 |
|
|
|
162,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING OF PERIOD |
|
|
676,183 |
|
|
|
2,360 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD |
|
$ |
162,154 |
|
|
$ |
676,183 |
|
|
$ |
162,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING ACTIVITY |
|
|
|
|
|
|
|
|
|
|
|
|
Accrual of deferred payment to underwriter |
|
$ |
— |
|
|
$ |
2,100,000 |
|
|
$ |
2,100,000 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-6
1. ORGANIZATION, BUSINESS OPERATIONS
The Corporation was incorporated in Delaware on April 6, 2005 as a blank check company whose
objective is to merge with or acquire an operating commercial bank or bank holding company. The
Corporation has neither engaged in any operations nor generated revenue to date other than interest
income. The registration statement for the Corporation’s initial public offering (“Offering”) was
declared effective June 5, 2006. The Corporation consummated the Offering on June 8, 2006 and
received net proceeds of $54,950,000 which is discussed in Note 3. The Corporation’s management
has broad discretion with respect to the specific application of the net proceeds of this Offering,
although substantially all of the net proceeds are intended to be generally applied toward
consummating a merger, capital stock exchange, asset acquisition or other similar business
combination with an operating business whose objective is to operate a commercial bank or bank
holding company (“Business Combination”). There is no assurance that the Corporation will be able
to successfully effect a Business Combination. Upon the closing of the Offering, $56,450,000 of
the proceeds, including $2,100,000 attributable to the underwriters’ discount which the
representatives of the underwriters have agreed to defer until the initial Business Combination,
are being held in a trust account (“Trust Account”) and invested in U.S. government securities or
other high-quality, short term interest-bearing investments, until the earlier of (i) the
consummation of the Corporation’s first Business Combination or (ii) distribution of the Trust
Account as described below; provided, however, that up to $1,129,000 of interest income, net of
taxes payable on interest earned on the Trust Account, may be released to the Corporation
periodically to cover its operating expenses. Interest released to the Corporation to cover its
operating expenses and the proceeds of the Offering that were not deposited in the Trust Account
will be used to pay for business, legal and accounting due diligence on prospective mergers or
acquisitions and continuing general and administrative expenses. The Corporation, after signing a
definitive agreement for the Business Combination, will submit such transaction for stockholder
approval. In the event that stockholders owning 20% or more of the outstanding stock excluding,
for this purpose, those persons who were stockholders immediately prior to the Offering, both vote
against the Business Combination and exercise their conversion rights, the Business Combination
will not be consummated. All of the Corporation’s stockholders prior to the Offering, including
all of the officers and directors of the Corporation (“Initial Stockholders”), have agreed to vote
all of their founding shares of common stock either for or against the Business Combination as
determined by the majority of the votes cast by the holders of the common stock who purchase shares
sold in the Offering (“Public Stockholders”) with respect to a Business Combination. After
consummation of the Corporation’s first Business Combination, these voting safeguards no longer
apply.
With respect to the first Business Combination which is approved and consummated, any Public
Stockholder, other than the Corporation’s Initial Stockholders, who vote against the Business
Combination may demand that the Corporation redeem his or her shares. The per share redemption
price will equal the amount in the Trust Fund as of the record date for determination of
stockholders entitled to vote on the Business Combination divided by the number of shares of common
stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public
Stockholders holding up to 20% of the aggregate number of shares owned by all Public Stockholders
may seek redemption of their shares in the event of a Business Combination. Such Public
Stockholders are entitled to receive their per share interest in the Trust Fund computed without
regard to the shares held by Initial Stockholders. In this respect, $11,690,502 has been
classified as common stock subject to possible conversion at December 31, 2007.
The Corporation’s Certificate of Incorporation provides that in the event that the Corporation does
not consummate a Business Combination by the latter of (i) 18 months after the consummation of the
Offering or (ii) 24 months after the consummation of the Offering in the event that either a letter
of intent, an agreement in principle or a definitive agreement to complete the Business Combination
was executed but was not consummated within such 18-month period (such later date being referred to
as the “Termination Date”), the board of directors will adopt a resolution, within 15 days
thereafter, finding the Corporation’s dissolution advisable and provide notice as promptly
thereafter as practicable to stockholders in connection with our dissolution in accordance with
Section 275 of the Delaware General Corporation Law. In the event that the Corporation is so
dissolved, the Corporation shall promptly adopt and implement a plan of distribution which provides
that only holders of shares sold in the Offering shall be entitled to receive liquidating
distributions and the Corporation shall pay no liquidating distributions with respect to any other
shares of capital stock of the Corporation. In the event of liquidation, it is likely that the per
share value of residual assets remaining available for distribution (including Trust Fund assets)
will be less than the initial public
offering price per share in the Offering (assuming no value is attributed to the Redeemable
Warrants contained in the Units sold in the Offering as described in Note 3).
F-7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements include the accounts of the Corporation. As of December 31, 2007, the
Corporation had not engaged in any business operations. All activity through December 31, 2007, is
related to the Corporation’s formation, the Offering and the pursuit of its objective of acquiring
a bank.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingencies at the date of the financial statements
and the reported amounts of expenses during the reporting period. Actual amounts could differ from
those estimates.
Cash Equivalents
The Corporation considers all highly liquid investments with original maturities of three months or
less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Corporation to credit risk consist of cash and
cash equivalents. The Corporation’s policy is to limit the amount of credit exposure to any one
financial institution and place investments with financial institutions or in short-term money
market funds that provide minimal exposure to interest rate and credit risk.
Income Taxes
The Corporation’s policy is to recognize deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between amounts recognized in the Corporation’s
financial statements and its tax returns. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement carrying amounts and the tax
bases of assets and liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. The effect of significant tax positions for which it is more
likely than not that the Corporation will not prevail are recognized liabilities or reductions of
deferred tax assets. Valuation allowances are recognized if it is more likely than not that the
future tax benefits of deferred tax assets will not be realized. Assessments, if any, for tax
related interest are classified as interest expense and tax penalties are classified as general and
administrative expenses.
Earnings per Common Share
Basic earnings per share (“EPS”) is computed by dividing net income applicable to common stock by
the weighted average common shares outstanding during the period. Diluted EPS reflects the
additional dilution for all potentially dilutive securities such as stock warrants.
Recently Issued Accounting Standards
Management does not believe that any recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the accompanying financial statements.
F-8
3. INITIAL PUBLIC OFFERING
On June 8, 2006, the Corporation sold 7,500,000 units (“Units”) in the Offering. Each Unit
consists of one share of the Corporation’s common stock, $0.01 par value, and one Redeemable Common
Stock Purchase Warrant (“Warrant”). Each Warrant will entitle the holder to purchase one share of
common stock from the Corporation at an exercise price of $5.00 commencing on the completion of a
Business Combination and expiring five years from the date of the Offering. The Warrants will be
redeemable by the Corporation at a price of $0.01 per Warrant upon 30 days’ notice after the
Warrants become exercisable, only in the event that the last sale price of the common stock is at
least $11.50 per share for any 20 trading days within a 30 trading day period ending on the third
business day prior to the date on which notice of the redemption is given.
In addition, the Corporation sold an option to purchase an aggregate of up to 525,000 units for
$100, to I-Bankers Securities, Inc., Maxim Group LLC and Legend Merchant Group, Inc. or their
designees, the representatives of the underwriters (the “Underwriters”). The units issuable upon
exercise of this option are identical to those offered in the Initial Public Offering, except that
each of the warrants underlying this option entitles the holder to purchase one share of common
stock at a price of $7.50. This option is exercisable at $10.00 per unit commencing on the later of
the consummation of a Business Combination or one year from the date of the Offering. This option
expires June 4, 2011. In lieu of the payment of the exercise price, this option may be converted
into units on a net-share settlement or cashless exercise basis to the extent that the market value
of the units at the time of conversion exceeds the exercise price of this option. This option may
only be exercised or converted by the option holder and cannot be redeemed by the Corporation for
cash.
The sale of the option to the representatives of the underwriters is accounted for as an equity
transaction in accordance with Emerging Issues Task Force No. 00-19, Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock, and measured at
its fair value. As a result, the Corporation’s cash position and stockholders’ equity increased by
the $100 proceeds from the sale. The Corporation accounted for the fair value of the option as an
expense of the Offering. The Corporation has determined based upon a trinomial model that the
estimated fair value of the option on the date of sale was approximately $2.4145 per unit or an
aggregate of $1,267,613 assuming an expected life of five years, volatility of 32.371% and a
risk-free interest rate of 4.929%. Although an expected life of five years was used, if the
Corporation does not consummate a Business Combination within the prescribed time period and
liquidate, this option would become worthless.
Because the Corporation does not have a trading history, the Corporation estimated the potential
volatility of its common stock price using the average volatility of ten publicly-traded banking
institutions with market capitalizations ranging from $64 million to $288 million with an average
of $149 million. The Corporation believes that the average volatility of these representative
institutions is a reasonable benchmark to use in estimating the expected volatility of its common
stock after consummation of a Business Combination, because these sample institutions are operating
banks or bank holding companies that are similar in size to target business acquisitions. The
volatility calculation of 32.371% was derived using the composite volatility of representative
banks. This calculation used the daily closing prices for the five year period ended April 30,
2006. Using a higher volatility would have the effect of increasing the implied value of this
option.
Pursuant to Rule 2710(g)(1) of the NASD Conduct Rule, the option to purchase 525,000 units is
deemed to be underwriting compensation and therefore upon exercise the underlying shares and
warrants are subject to a 180-day lock-up. Additionally, the option may not be sold, transferred,
assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period)
following the date of the Offering.
Although this option and its underlying securities have been registered by the Corporation, the
Corporation has granted to the holders of this option demand and “piggy back” registration rights
until the later of five years from the date of the Offering or one year after the warrants are
exercised with respect to the securities directly and indirectly issuable upon exercise of this
option. The Corporation will bear all fees and expenses attendant to registering the securities,
other than underwriting commissions which will be paid for by the holders themselves. The exercise
price and number of units issuable upon exercise of this option shall be adjusted in certain
circumstances including in the event of a stock dividend, or the Corporation’s recapitalization,
reorganization, merger or consolidation. However, no adjustments to this option will be made for
issuances of common stock at a price below the exercise price of this option.
F-9
4. NOTE PAYABLE
Community Bankers Acquisition, LLC, an affiliate of the Corporation’s president and one of its
stockholders, entered into a revolving credit agreement with the Corporation in the amount of
$100,000. Advances under the credit facility were $40,000. The loan was non-interest bearing and
was repaid on June 29, 2006.
5. RELATED PARTY TRANSACTIONS
The Corporation presently occupies office space provided by an affiliate of the Corporation’s
president and an Initial Stockholder. Such affiliate has agreed that, until the acquisition of a
target business by the Corporation, it will make such office space, as well as certain office and
secretarial services, available to the Corporation, as may be required by the Corporation from time
to time. The Corporation has agreed to pay such affiliate $7,500 per month for such services
commencing June 5, 2006. Payments made under this agreement totaled $67,320 for the nine months
ended December 31, 2007 and $75,000 for the year ended March 31, 2007.
6. CAPITAL STOCK
Common Stock
The Corporation is authorized to issue 50,000,000 shares of common stock. Stockholders are
entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Stockholders have no conversion, preemptive or other subscription rights and there are no sinking
fund or redemption provisions applicable to the common stock, except that Public Stockholders have
the right to have their shares of common stock converted to cash equal to their pro rata share of
the trust fund if they both elect such conversion within the prescribed time period and they
subsequently vote against a Business Combination that is ultimately approved and completed.
Assuming that such a Business Combination is not timely completed and the Corporation’s dissolution
is approved by the stockholders in accordance with Delaware law, Public Stockholders will be
entitled to receive their proportionate share of the Trust Fund (including any interest not
released to us, net of taxes, and the deferred underwriting discount). In addition, Public
Stockholders will be entitled to receive a pro rata portion of our remaining assets not held in
trust, less amounts we pay, or reserve to pay, for all of our liabilities and obligations.
Pursuant to letter agreements with the Corporation, the Initial Stockholders have waived their
right to receive distributions with respect to their founding shares upon the Corporation’s
liquidation.
Preferred Stock
The Corporation is authorized to issue 5,000,000 shares of preferred stock with such designations,
voting and other rights and preferences as may be determined from time to time by the board of
directors.
The agreement with the underwriters prohibits the Corporation, prior to a Business Combination,
from issuing preferred stock without the consent of the representatives of the underwriters.
7. INCOME TAXES
There is no difference between the effective tax rate reflected by the provision for income taxes
and the amounts calculated using statutory tax rates. The components of the provision for income
tax are as follows:
F-10
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
For the Period |
|
| |
|
For the Nine |
|
|
|
|
|
|
from April 6, |
|
| |
|
Months ended |
|
|
Year ended |
|
|
2005 (inception) |
|
| |
|
December 31, |
|
|
March 31, |
|
|
to December 31, |
|
| |
|
2007 |
|
|
2007 |
|
|
2007 |
|
Federal |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
571,690 |
|
|
$ |
690,000 |
|
|
$ |
1,261,690 |
|
Deferred |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
571,690 |
|
|
|
690,000 |
|
|
|
1,261,690 |
|
|
|
|
|
|
|
|
|
|
|
State |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
4,528 |
|
|
|
116,000 |
|
|
|
120,528 |
|
Deferred |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,528 |
|
|
|
116,000 |
|
|
|
120,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
576,218 |
|
|
$ |
806,000 |
|
|
$ |
1,382,218 |
|
|
|
|
|
|
|
|
|
|
|
There were no deferred tax assets, liabilities or uncertain tax positions at December 31, 2007 and
March 31, 2007.
8. PER SHARE INFORMATION
Basic earnings per common share (“Basic EPS”) is computed by dividing the net income by the
weighted-average number of shares outstanding. Diluted earnings per common share (“Diluted EPS”)
is computed by dividing the net income by the weighted-average number of common shares and dilutive
common share equivalents and warrants then outstanding. The presentation of both Basic EPS and
Diluted EPS on the face of the Corporation’s Statements of Income is required.
The following table sets forth the computation of basic and diluted per share information:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
For the period |
|
| |
|
|
|
|
|
|
|
|
from April 6, |
|
| |
|
Nine months |
|
|
Twelve months |
|
|
2005 |
|
| |
|
ended |
|
|
ended |
|
|
(inception) to |
|
| |
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
| |
|
2007 |
|
|
2007 |
|
|
2007 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,105,034 |
|
|
$ |
1,124,099 |
|
|
$ |
2,229,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
9,375,000 |
|
|
|
7,997,740 |
|
|
|
6,140,625 |
|
Dilutive effect of warrants |
|
|
2,432,432 |
|
|
|
2,278,968 |
|
|
|
2,432,432 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding,
assuming dilution |
|
|
11,807,432 |
|
|
|
10,256,708 |
|
|
|
8,575,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.12 |
|
|
$ |
0.14 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
F-11
10. PROPOSED BUSINESS COMBINATIONS
TransCommunity Merger
On September 5, 2007, the Corporation entered into an Agreement and Plan of Merger (the “TFC Merger
Agreement”) with TransCommunity Financial Corporation (“TFC”). The TFC Merger Agreement sets forth
the terms and conditions of the Corporation’s acquisition of TFC through the merger of TFC with and
into the Corporation (the “TFC Merger”). TransCommunity Bank, N.A., a wholly owned subsidiary of
TFC, will become a wholly owned subsidiary of the surviving company in the TFC Merger.
Under the terms of the TFC Merger Agreement, the Corporation will issue to the shareholders of TFC,
for each share of TFC’s common stock that they own, 1.4200 shares of the Corporation’s common stock
(the “Exchange Ratio”), subject to adjustment as described below. If the daily average closing
price for the Corporation’s common stock for the 20 consecutive full days of trading in such stock
ending five days before the closing date is less than $7.42, the Corporation will increase the
Exchange Ratio to the quotient obtained by dividing $10.5364 by such daily average closing price.
In addition, at the effective time of the TFC Merger, each outstanding option to purchase shares of
TFC’s common stock under any of TFC’s stock plans shall vest pursuant to its terms and shall be
converted into an option to acquire the number of shares of the Corporation’s common stock equal to
the number of shares of common stock underlying the option multiplied by the Exchange Ratio. The
exercise price of each option will be adjusted accordingly.
Consummation of the Merger is subject to a number of customary conditions including the approval of
the Merger by the shareholders of each of TFC and the Corporation and the receipt of all required
regulatory approvals. In addition, closing of the transaction is also conditioned on holders of
fewer than 20% of the shares of the Corporation’s common stock voting against the transaction and
electing to convert their shares of the Corporation’s common stock into cash. Pursuant to the
Merger Agreement either party may terminate the Agreement in the event the Merger is not
consummated by May 31, 2008. As a result of the execution of the Merger Agreement, pursuant to the
Corporation’s certificate of incorporation, it has until June 7, 2008 to complete the transaction
before it would otherwise be required to liquidate.
BOE Merger
On December 14, 2007 the Corporation announced that it had entered into an Agreement and Plan of
Merger dated as of December 13, 2007, ( the “BOE Merger Agreement”) with BOE Financial Services of
Virginia, Inc. (“BOE”). The BOE Merger Agreement sets forth the terms and conditions of the
Corporation’s acquisition of BOE through the merger of BOE with and into the Corporation (the “BOE
Merger”). Bank of Essex, a Virginia state bank and a wholly owned subsidiary of BOE (the “Bank”)
will become a wholly owned subsidiary of the surviving corporation in the BOE Merger.
Under the terms of the BOE Merger Agreement, the Corporation will issue to the stockholders of BOE,
for each share of BOE’s common stock that they own, 5.7278 shares of the Corporation’s common stock
(the “Exchange Ratio”), subject to adjustment. If the daily average closing price for the
Corporation’s common stock for the 20 consecutive full days of trading in such stock ending five
days before the closing date is less than $7.42, we will increase the Exchange Ratio to the
quotient obtained by dividing $42.50 by such daily average closing price.
In addition, at the effective time of the BOE Merger, each outstanding option to purchase shares of
BOE’s common stock under any of BOE’s stock plans shall vest pursuant to its terms and shall be
converted into an option to acquire the number of shares of the Corporation’s common stock equal to
the number of shares of common stock underlying the option multiplied by the Exchange Ratio. The
exercise price of each option will be adjusted accordingly.
Consummation of the BOE Merger is subject to the consummation of the TFC Merger and a number of
customary conditions including the approval of the BOE Merger by the stockholders of BOE and by the
Corporation’s stockholders and the receipt of all required regulatory approvals. The BOE Merger is
expected to be completed in the second quarter of 2008. Pursuant to the BOE Merger Agreement either
party may terminate the BOE Merger Agreement in the event the BOE Merger Agreement is not
consummated by June 30, 2008.
F-12
11. COMMITMENTS
On September 5, 2007, the Corporation entered into an agreement with Keefe, Bruyette & Woods, Inc.
(“KBW”) to provide financial advisory and investment banking services to the Corporation in
connection with the proposed Merger with TransCommunity Financial Corporation discussed in Note 10.
The Corporation paid $125,000 upon execution of the agreement and, in the event that the business
combination with TFC is consummated, it will pay a cash fee to KBW at closing of $375,000.
On December 5, 2007, the Corporation entered into an agreement with KBW to provide financial
advisory and investment banking services to the Corporation in connection with the proposed Merger
with BOE Financial Services of Virginia, Inc., discussed in Note 10. The Corporation paid $125,000
upon execution of the agreement and, in the event that the business combination with BOE is
consummated, it will pay a cash fee to KBW at closing of $375,000.
In addition, the Corporation agreed to pay to I-Bankers Securities, Inc. serving as the
underwriting syndicate’s representative, $2,100,000 attributable to the underwriters’ discount
which the representatives of the underwriters have agreed to defer until the consummation of the
initial Business Combination. Until a Business Combination is completed, these funds are held in
the Trust Account. If the Corporation does not complete a Business Combination, then the 2%
deferred discount will become part of the funds returned to the Corporation’s Public Stockholders
from the trust account upon its liquidation as part of any plan of dissolution and distribution
approved by the Corporation’s stockholders.
12. SUBSEQUENT EVENT
Pursuant to an amendment dated March 20, 2008 to its engagement agreement dated September 5, 2007
with the Corporation, Keefe, Bruyette & Woods, Inc. has agreed to assist the Corporation in
organizing meetings with third parties not currently stockholders in the Corporation to discuss the
TFC Merger. For its assistance in organizing such meetings, the Corporation has agreed to pay
Keefe, Bruyette & Woods a fee of $750,000 contingent upon consummation of the merger. Such fee is
in addition to the other cash fees due to Keefe, Bruyette & Woods, Inc. at the time of and
contingent upon closing of the TFC Merger and the BOE Merger.
F-13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As reported on a Current Report on Form 8-K filed on May 18, 2007, we advised Yount, Hyde &
Barbour, P.C. on May 15, 2007, that the Audit Committee of our board of directors had determined to
engage Miller, Ellin & Company LLP on that date as our independent registered public accounting
firm to audit our financial statements as of and for the fiscal year ended March 31, 2007, and to
serve as our independent registered public accounting firm for the fiscal year ending March 31,
2008. As reported on a Current Report on Form 8-K filed November 2, 2007, on October 29, 2007, our
board of directors acted in accordance with our bylaws to change our fiscal year to end on December
31, commencing with the fiscal year ending December 31, 2007. The reports of Yount, Hyde & Barbour,
P.C. on our consolidated financial statements as of and for the fiscal year ended March 31, 2006,
did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified
as to uncertainty, audit scope or accounting principle. During the period from inception through
the fiscal year ended March 31, 2006, and through May 15, 2007, there were no (1) disagreements
with Yount, Hyde & Barbour, P.C. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to
Yount, Hyde & Barbour’s satisfaction, would have caused Yount, Hyde & Barbour to make reference
thereto in its report on the financial statements for such years, or (2) reportable events
described under Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this annual report, the Company’s management, with the
participation of the Company’s chief executive officer and chief financial officer (“the Certifying
Officer”), conducted evaluations of the Company’s disclosure controls and procedures. As defined
under Sections 13a – 15(e) and 15d –15(e) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures
of an issuer that are designed to ensure that information required to be disclosed by the issuer in
the reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms. Disclosure
controls and procedures include without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying
Officer, to allow timely decisions regarding required disclosures. Based on this evaluation, the
Certifying Officer has concluded that the Company’s disclosure controls and procedures were
effective to ensure that material information is recorded, processed, summarized and reported by
management of the Company on a timely basis in order to comply with the Company’s disclosure
obligations under the Exchange Act and the rules and regulations promulgated thereunder.
Changes in Internal Control over Financial Reporting
Further, there were no changes in the Company’s internal control over financial reporting
during the Company’s last fiscal quarter that materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our chief executive officer (“CEO”) and chief financial officer (“CFO”), is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
13
Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the
Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by
our board of directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
| |
• |
|
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets; |
| |
| |
• |
|
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and |
| |
| |
• |
|
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition or disposition of our assets that could have a material effect
on the financial statements. |
Readers are cautioned that internal control over financial reporting, no matter how well
designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even
effective internal control over financial reporting can only provide reasonable assurance with
respect to the financial statement preparation and presentation.
Our management, under the supervision and with the participation of our CEO and CFO, has
evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report based upon the
framework in Internal Control
_____
Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, our
management has made an assessment that our internal control over financial reporting is effective
as of December 31, 2007.
This annual report does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting. Management’s report was not
subject to attestation by the Company’s registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in this annual report.
ITEM 9B. OTHER INFORMATION
Not applicable.
14
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our current directors and executive officers are as follows:
| |
|
|
|
|
|
|
| Name |
|
Age |
|
|
Position |
|
|
|
|
|
|
|
Eugene S. Putnam, Jr. |
|
|
48 |
|
|
Chairman of the Board of Directors |
|
|
|
|
|
|
|
Gary A. Simanson |
|
|
47 |
|
|
President, Chief Executive and
Financial Officer, Secretary and Director |
|
|
|
|
|
|
|
Keith Walz |
|
|
40 |
|
|
Director |
|
|
|
|
|
|
|
Chris A. Bagley |
|
|
46 |
|
|
Director |
EUGENE S. PUTNAM, JR. has served as Chairman of the Board of the Company since June 2005. Mr.
Putnam has over twenty years of experience in the financial services industry. Mr. Putnam began
his financial services career in Los Angeles in 1986 as an operations and corporate cash manager
with First Interstate Bank of California. In 1988, Mr. Putnam joined Crestar Financial Corporation
($26 billion in assets) in Richmond, Virginia. At Crestar, Mr. Putnam was a Senior Vice President,
serving in various capacities with responsibility for corporate finance, treasury, mergers and
acquisition financing, capital planning, balance sheet management and investor relations. In 1998
SunTrust Banks Inc. ($103 billion in assets) acquired Crestar and Mr. Putnam joined SunTrust in
Atlanta as Senior Vice President and Director of Investor Relations and Corporate Communications.
In 2001 Mr. Putnam was recruited to Houston and joined Sterling Bancshares Inc. ($3.5 billion in
assets) as Executive Vice President and Chief Financial Officer where he served until 2003. From
August 2003 until June 2005 he served as President of Coastal Securities LP, a registered
broker-dealer. From June 2005 until June 2007 he served as Executive Vice President and Chief
Financial Officer of Aegis Mortgage Corporation, formerly one of the largest mortgage production
franchises in the U.S., which filed for bankruptcy protection in August 2007. Since January 2008 he
has served as Interim Chief Financial Officer for Universal Technical Institute, Inc., a
post-secondary education provider, through Resources Global Professionals. Mr. Putnam graduated
from UCLA with a Bachelor of Science degree in economics and earned a MBA with a concentration in
finance from The University of North Carolina at Chapel Hill.
GARY A. SIMANSON has served as our President, Chief Executive and Financial Officer and
Director since our inception in April 2005. Mr. Simanson has been Managing Director of First
Capital Group, L.L.C., an investment banking advisory firm specializing in bank mergers and
acquisitions, from March 1997 to the present. In such capacity, Mr. Simanson has both initiated
and advised on bank merger and acquisition transactions around the country and has spoken
nationally on bank mergers and acquisitions. In addition to serving as managing director of First
Capital Group, Mr. Simanson also served as Senior Vice President concentrating in bank mergers and
acquisitions and capital markets with FTN Financial Capital Markets, a wholly owned investment
banking and financial services subsidiary of First Horizon National Corporation (NYSE: FHS) from
1998 to 1999. From 1992 to 1995, Mr. Simanson was an Associate General Counsel at Union Planters
Corporation, then a NYSE-traded bank holding company (presently part of Regions Financial
Corporation (NYSE: RF)), where his duties included the negotiation and preparation of all bank
merger and acquisition transaction documents, due diligence, regulatory filings, registration
statements and other securities filings and other bank regulatory matters. From 1989 to 1992 he
was a practicing attorney, specializing in the securities, bank regulatory and bank merger and
acquisition areas. Mr. Simanson received a Bachelor of Arts degree majoring in economics from
George Washington University in 1981, writing his thesis on the Monetary Control Act of 1980;
Masters of Business Administration majoring in finance from George Washington University in 1984;
and a Juris Doctor from Vanderbilt University in 1989, writing his thesis on money laundering and
the Bank Secrecy Act. Mr. Simanson is licensed to practice law in the states of New York,
Tennessee and Colorado.
15
KEITH WALZ has been a Director of the Company since April 2005. Mr. Walz is Managing Partner
at Kinsale Capital Partners, a leveraged buy-out private equity investment firm, which he
co-founded in January 2006. From March 1996 to January 2006, Mr. Walz served as President of ABN
AMRO Capital (USA), a small business investment company (SBIC) subsidiary of the ABN AMRO Bank N.V.
(NYSE:ABN) group of companies, an
international banking group with 3,000 banks in 60 countries. During his tenure with the
firm, Mr. Walz also served as a Managing Director in ABN AMRO’s Global Private Equity division, a
private equity firm with over $2 billion in invested capital. As a Senior Partner with the firm,
Mr. Walz participated in the sourcing, evaluation, and monitoring of over 35 investments,
representing $200 million of capital invested. Mr. Walz specializes in Enterprise Software and
Network Infrastructure investments and has served on the Boards of Directors of over a dozen
companies in which ABN AMRO has invested. He has also held operating roles with ABN AMRO portfolio
companies, including Chairman and CEO of Worldweb.net, a provider of content management solutions
for enterprise web sites. Prior to joining ABN AMRO Capital, Mr. Walz was a Vice President from
1991 to 1996 in ABN AMRO’s Investment Banking division, responsible for financial reporting,
analysis, and systems. From 1989 to 1991 he served as a finance associate with Tyson Foods, Inc.,
a processor and distributor of chicken, pork and other food products, where he focused on enhancing
enterprise business processes and systems through the use of client/server computing technologies.
He received a Masters of Business Administration from DePaul University and a Bachelor of Science
degree in finance from the University of Arkansas.
CHRIS A. BAGLEY has been a director of Community Bankers since October 2007. Mr. Bagley has
been chief credit officer with Prosperity Bank since 2001. From 1997 to 2001, Mr. Bagley served as
banking center president at Prosperity Bank. Prosperity Bank is a bank subsidiary of Prosperity
Bancshares, Inc. (Nasdaq: PRSP) a $6 billion in asset bank holding company headquartered in
Houston, Texas, which operates 105 banking centers in Texas under a community banking philosophy.
Mr. Bagley received a Bachelor of Business Administration in finance from Stephen F. Austin State
University and a Masters of Business Administration in finance from the University of Houston.
In addition, Stewart J. Paperin served as a director from April 2005 through March 18, 2008.
Special Advisor
We also may consult, from time to time, with certain individuals who have experience in the
financial and/or banking sectors, who we call our special advisors, each of whom may also be a
stockholder of the Company, who may assist us in our search for, and evaluation of, our target
business and other matters relating to our operations. However, no compensation of any kind,
including finder’s and consulting fees, other than reimbursement for any out-of-pocket expenses
incurred in connection with activities on our behalf, such as identifying potential target
businesses and performing due diligence on suitable business combinations, will be paid to any of
our existing stockholders, including our special advisors, or any of their affiliates, for services
rendered to us prior to or in connection with the consummation of the business combination. Our
special advisor is as follows:
DAVID W. SPAINHOUR has served as a special advisor to the Board of Directors since June 2005.
He is Chairman Emeritus of Pacific Capital Bancorp, (Nasdaq: PCBC) which is the holding company for
Pacific Capital Bank, N.A., a nationally chartered bank. With 48 branches and $7.0 billion in
assets, Pacific Capital Bancorp is the largest independent banking company headquartered on the
Central Coast of California and operates under the local brand names of Santa Barbara Bank & Trust,
First Bank of San Luis Obispo, First National Bank of Central California, South Valley National
Bank, San Benito Bank, and Pacific Capital Bank. Mr. Spainhour joined the bank in 1966 as
Controller, was named Senior Vice President in 1972, elected to the Board of Directors in 1974 and
served as President and CEO from 1989 until being named Chairman of the Board of Santa Barbara Bank
& Trust in 1996. He served as Chairman of the Board of the holding company, Pacific Capital
Bancorp, from April 2000 until his retirement in 2004. Prior to joining Santa Barbara Bank &
Trust, he spent 12 years with the former Security Pacific National Bank in Los Angeles.
Additionally, he serves on a variety of community boards and has received numerous honors and
awards, including most recently the Santa Barbara News-Press Lifetime Achievement Award in 2000. He
attended Glendale College, UCLA, the National School of Bank Investments, and the University of
Southern California’s Managerial Policy Institute. In 1970 he graduated from the Pacific Coast
Banking School, University of Washington, where he was named to the school’s Hall of Fame in 1998
for his personal achievements and contributions to the financial services community.
We may identify, from time to time, additional individuals to serve as special advisors if
those individuals possess a level of experience within the financial or banking sectors that we
believe may be beneficial to us.
16
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons
who own more than ten percent of any publicly traded class of our equity securities, to file
reports of ownership and changes in ownership of equity securities of the Company with the SEC and
the American Stock Exchange. Officers, directors, and greater-than-ten-percent stockholders are
required by the SEC’s regulations to furnish the Company with copies of all Section 16(a) forms
that they file.
Based solely upon a review of Forms 3 and Forms 4 furnished to us during the most recent
fiscal year, and Forms 5 with respect to its most recent fiscal year, we believe that all such
forms required to be filed pursuant to Section 16(a) of the Exchange Act were timely filed, as
necessary, by the officers, directors, and security holders required to file the same during the
fiscal year ended December 31, 2007.
Board of Directors
The board of directors oversees the business affairs of the Company and monitors the
performance of management. Pursuant to our Bylaws, the board of directors has established that the
board of directors shall consist of five members. Our board of directors is divided into three
classes with only one class of directors being elected in each year and each class serving a
three-year term. The term of office of the first class of directors, consisting of Mr. Walz and
Mr. Bagley, will expire at our first annual meeting of stockholders following completion of the
initial public offering. The term of office of the second class of directors, consisting of Mr.
Paperin until his resignation on March 18, 2008, will expire at the second annual meeting following
completion of the initial public offering. The term of office of the third class of directors,
consisting of Mr. Simanson and Mr. Putnam, will expire at the third annual meeting following
completion of the initial public offering.
Our board has established policies regarding meetings and executive sessions. Under the
policy, our board is to meet at least quarterly and the independent directors of our board shall
meet in executive session without management on a regularly scheduled basis, but no less than once
annually. Our board encourages all current board members and all nominees for election to our board
put forth in our proxy statement to attend the annual meeting of shareholders, provided, however,
attendance shall not be required if personal circumstances affecting the board member or director
nominee make his or her attendance impracticable or inappropriate.
Committees of the Board of Directors
Our board of directors has an audit committee, a nominating committee and compensation
committee, each consisting of Eugene S. Putnam, Jr. and Keith Walz. Stewart J. Paperin was also a
member of the audit committee, nominating committee and compensation committee until his
resignation on March 18, 2008. The Board intends to appoint Chris A. Bagley to each of such
committees effective April 1, 2008.
Audit Committee
The directors we appointed to our audit committee are independent as defined by the rules of
the American Stock Exchange and the rules and regulations of the SEC. Each member of our audit
committee is financially literate under the current listing standards of the American Stock
Exchange, one of whom, Keith Walz, qualifies as an “audit committee financial expert,” as such term
is defined by SEC rules.
The audit committee, in accordance with its charter, reviews the professional services and
independence of our independent registered public accounting firm and our accounts, procedures and
internal controls. The audit committee also recommends the firm selected to be our independent
registered public accounting firm, reviews and approves the scope of the annual audit, reviews and
evaluates with the independent public accounting firm our annual audit and annual consolidated
financial statements, reviews with management the status of internal accounting controls, evaluates
problem areas having a potential financial impact on us that may be brought to the committee’s
attention by management, the independent registered public accounting firm or the board of
directors, and evaluates all of our public financial reporting documents. The audit committee also
monitors compliance on a quarterly basis with the terms of our initial public offering. If any
noncompliance is identified, then the audit committee is charged with the responsibility to take
immediately all action necessary to rectify such noncompliance
or otherwise cause compliance with the terms of our initial public offering. The audit
committee held two meetings during fiscal 2007.
17
Nominating Committee
Our board has also established a nominating committee and has adopted a charter for this
committee. The nominating committee is responsible for making recommendations to the board
regarding the membership of our board, including; (i) recommending to the board the slate of
director nominees for election at the annual meeting of shareholders; (ii) considering,
recommending and recruiting candidates to fill any vacancies or new positions on the board,
including candidates that may be recommended by shareholders; (iii) establishing criteria for
selecting new directors; and (iv) reviewing the backgrounds and qualifications of possible
candidates for director positions. The nominating committee held one meeting during fiscal 2007.
The nominating committee will evaluate a candidate proposed by any single shareholder or group
of shareholders that beneficially owned more than 5% of our common stock for at least one year (and
will hold the required number of shares through the meeting of shareholders at which the election
will occur) and that satisfies the notice, information and consent procedures set forth below.
Community Bankers’ bylaws require that all nominations for persons to be elected as a
director, other than those made by the board of directors, be made pursuant to written notice to
Community Bankers’ Secretary. The notice must be received not less than 60 nor more than 90 days
prior to the meeting at which the election will take place (or not later than 10 days after notice
or public disclosure of such meeting date if such disclosure occurs less than 70 days prior to the
date of such meeting). The notice must set forth:
| |
• |
|
as to each person whom the stockholder proposes to nominate for election or
reelection as director: |
| |
• |
|
the name, age, business address and residence address of the person; |
| |
| |
• |
|
the principal occupation or employment of the person; |
| |
| |
• |
|
the class and number of shares of capital stock of the Corporation which
are beneficially owned by the person; and |
| |
| |
• |
|
any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant
to the Rules and Regulations of the SEC under Section 14 of the Exchange
Act; and |
| |
• |
|
as to the stockholder giving the notice: |
| |
• |
|
the name and record address of the stockholder; and |
| |
| |
• |
|
the class and number of shares of capital stock of the Corporation which
are beneficially owned by the stockholder. |
No material changes have been made to the procedures by which stockholders may recommend nominees
to Community Bankers’ board of directors.
Compensation Committee
Our board has also established a compensation committee in order to comply with the American
Stock Exchange corporate governance listing requirements. The compensation committee does not
currently have a charter, as management will receive no compensation until completion of a business
combination. Consequently, the compensation committee held no meetings in fiscal 2007.
18
Code of Conduct and Ethics
The Company has adopted a Code of Conduct and Ethics that applies to all employees as well as
its principal executive, financial and accounting officers.
Communicating with the Board
Our board of directors has established a policy regarding shareholder communications.
Communications from security holders should be in the form of written correspondence, and should be
sent via registered mail or overnight delivery service to the Company’s corporate office, care of
the Corporate Secretary. The correspondence shall include supporting documentation evidencing the
security holder’s security holdings in our company. The board will not respond to or act upon any
security holder correspondence that pertains to the solicitation of services or products (for use
by us or our board) conducted by or obtained from the security holder or any entity with which the
security holder has an affiliation. Security holders should follow the rules adopted under the
Exchange Act and the procedures disclosed within our bylaws and proxy statement to submit
shareholder proposals intended for inclusion in our proxy statement for the next annual meeting of
shareholders and should follow the procedures described within our proxy statement or other
Exchange Act filings to submit board of director nominations. See the procedure for shareholder
nominations set forth above.
Conflicts of Interest
Investors and stockholders should be aware of the following potential conflicts of interest:
| |
• |
|
None of our officers or directors is required to commit their full time to our
affairs and, accordingly, they may have conflicts of interest in allocating management
time among various business activities. The amount of time our officers will commit to
our affairs will vary, depending on which phase we are in of our business plan.
Generally, we expect (i) our chief executive officer to contribute 50% or more of his
time to our affairs and (ii) our independent directors to contribute the customary
amount of time required by an independent director necessary to perform his fiduciary
duties to our company. |
| |
| |
• |
|
In the course of their other business activities, our officers and directors may
become aware of investment and business opportunities which may be appropriate for
presentation to us as well as the other entities with which they are affiliated. They
may have conflicts of interest in determining to which entity a particular business
opportunity should be presented. |
| |
| |
• |
|
Our officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities similar to those
intended to be conducted by us. |
| |
| |
• |
|
Since our directors own shares of our common stock that will be released from escrow
only if a business combination is successfully completed, members of our board may have
a conflict of interest in determining whether a particular target business is
appropriate to effect a business combination. The personal and financial interests of
our directors and officers may influence their motivation in identifying and selecting
a target business, completing a business combination timely and securing the release of
their stock. Additionally, such individuals may purchase our securities in the open
market and would be entitled to vote any shares acquired in the offering or in the open
market as they choose with respect to a proposal to approve a business combination. |
| |
| |
• |
|
Some of our officers and directors may be deemed to have interests in the mergers in
addition to their interests as stockholders generally. These interests include, among
others, proposed employee benefits for those who become our employees, proposed
employment agreements with one of our executive officers, and the continuation of two
of our directors as directors of the surviving entity after the two proposed mergers. |
| |
| |
• |
|
We may have insufficient funds outside of the trust to pay for due diligence, legal,
accounting and other expenses attendant to completing a business combination. In such
event, our existing stockholders may have to incur such expenses in order to proceed
with the proposed business combination. As part of any such combination, such existing
stockholders may negotiate the
repayment of some or all of such expenses, with or without interest or other
compensation, which if not agreed to by the target business’ management, could cause
our management to view such potential business combination unfavorably, thereby
resulting in a conflict of interest. |
19
| |
• |
|
Our officers, directors, and stockholders will receive reimbursement for any out-of
pocket expenses incurred by them in connection with activities on our behalf, such as
identifying potential target businesses and performing due diligence on suitable
business combinations. |
In general, officers and directors of a corporation incorporated under the laws of the State
of Delaware are required to present business opportunities to a corporation if:
| |
• |
|
the corporation could financially undertake the opportunity; |
| |
| |
• |
|
the opportunity is within the corporation’s line of business; and |
| |
| |
• |
|
it would not be fair to the corporation and its stockholders for the opportunity not
to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business affiliations, our officers and directors may
have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our
board evaluates a particular business opportunity with respect to the above-listed criteria. We
cannot assure you that any of the above-mentioned conflicts will be resolved in our favor.
In order to minimize potential conflicts of interest which may arise from multiple corporate
affiliations, each of our officers and directors has agreed, until the earlier of a business
combination, our liquidation or such time as he ceases to be an officer or director, to present to
us for our consideration, prior to presentation to any other entity, any suitable business
opportunity which may reasonably be required to be presented to us.
In connection with the vote required for the TransCommunity Merger, all of our existing
stockholders, including all of our officers and directors, have agreed to vote all of their
respective shares of common stock acquired by them prior to our initial public offering (i) either
for or against the TransCommunity Merger as determined by the majority of the votes cast by the
holders of the shares of our common stock sold in our initial public offering and (ii) in the event
we are unable to timely complete the TransCommunity Merger, in favor of the dissolution and
liquidation of the Company. In addition, they have agreed to waive their respective rights to
exercise their conversion rights with respect to all shares owned by them whether owned on the
effective date of our registration statement or thereafter acquired or to participate in any
liquidation distribution but only with respect to those shares of common stock acquired by them
prior to our initial public offering. Any common stock acquired by existing stockholders in our
initial public offering or in the open market thereafter will have the same voting rights in
connection with the TransCommunity Merger as other stockholders with respect to such shares.
Accordingly, they may vote such shares on the TransCommunity Merger any way they choose.
To further minimize potential conflicts of interest, we have agreed not to consummate a
business combination with an entity that is affiliated with any of our existing stockholders,
officers and directors or management of the representatives of the underwriters unless we obtain an
opinion from an independent investment banking firm that the business combination is fair to our
stockholders from a financial point of view.
ITEM 11. EXECUTIVE COMPENSATION
No executive officer or director has received any cash compensation for services rendered.
Commencing on June 5, 2006, through the acquisition of a target business, we will pay Community
Bankers Acquisition, LLC, an affiliate of Mr. Simanson, our president, a fee of $7,500 per month
for providing us with office space and certain office and secretarial services. Other than this
$7,500 per-month fee, no compensation of any kind, including finder’s and consulting fees, will be
paid to any of our existing stockholders, or any of their respective affiliates, including First
Capital Group, an entity owned by our president, for services rendered to us prior to or with
respect to the business combination. However, our existing stockholders will be reimbursed for any
out-of-pocket expenses incurred in connection with activities on our behalf such as identifying
potential target businesses and performing due diligence on suitable business combinations. Such
individuals may be paid consulting, management or other
fees from target businesses, either prior to or as a result of the business combination, with
such amounts being fully disclosed to stockholders, to the extent then known, in the proxy
materials furnished to the stockholders. There is no limit on the amount of these out-of-pocket
expenses and there will be no review of the reasonableness of the expenses by anyone other than our
board of directors, which includes persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged.
20
Employment Agreements
Currently, we do not have an employment agreement with Gary A. Simanson, our sole executive
officer. We expect to enter into employment agreements with each of Bruce B. Nolte, Patrick J.
Tewell, Richard C. Stonbraker, M. Andrew McLean and Gary A. Simanson prior to the completion of the
TransCommunity Merger. Upon completion of the proposed BOE Merger, we also expect to enter into
employment agreements with George M. Longest, Jr. and Bruce E. Thomas.
Compensation Committee Report
None of our officers or directors received compensation for their service to us during the
fiscal year ended December 31, 2007 nor have there been any grants of stock based awards or stock
options to officers or directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
Beneficial Owners of at Least Five Percent of our Common Stock
The following table shows, as of March 17, 2008, and to the best of our knowledge, all persons
we know to be beneficial owners of five percent or more of the voting securities of the Company.
| |
|
|
|
|
|
|
|
|
| |
|
Common Stock |
|
|
|
|
| Name and Address of Beneficial Owner |
|
Beneficially Owned1 |
|
|
Percent of Class1 |
|
|
|
|
|
|
|
|
|
|
Daniel B. Zwirn
Zwirn Holdings, LLC
DBZ GP, LLC
D.B. Zwirn and Co. L.P.
D.B. Zwirn Spec. Opportunities Fund, Ltd.
D.B. Zwirn Spec. Opportunities Fund, L.P.
745 Fifth Ave, 18th Floor
New York, NY 10151 |
|
|
963,674 |
2 |
|
|
10.28 |
% |
|
|
|
|
|
|
|
|
|
Baupost Group, L.L.C.
SAK Corporation
Seth A. Klarman
10 St. James Avenue, Suite 2000
Boston, MA 02116 |
|
|
927,400 |
3 |
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
HBK Investments LP
HBK Services LLC
HBK Partners II LP
HBK Management LLC
HBK Master Fund LP
300 Crescent Court, Suite 700
Dallas, TX 75201 |
|
|
926,600 |
4 |
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
Gary A. Simanson
Community Bankers Acquisition LLC
9912 Georgetown Pike, Suite D-203
Great Falls, VA 22066 |
|
|
862,500 |
5 |
|
|
9.2 |
% |
21
| |
|
|
|
|
|
|
|
|
| |
|
Common Stock |
|
|
|
|
| Name and Address of Beneficial Owner |
|
Beneficially Owned1 |
|
|
Percent of Class1 |
|
|
|
|
|
|
|
|
|
|
Andrew Weiss, Ph.D
Weiss Capital, LLC
Weiss Asset Management, LLC
29 Commonwealth Ave., 10th Floor
Boston, MA 02116 |
|
|
815,585 |
6 |
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
Polar Securities, Inc.
North Pole Capital Master Fund
372 Bay Street, 21st Floor
Toronto, Ontario M5H 2W9, Canada |
|
|
607,300 |
7 |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
Azimuth Opportunity, LLC
c/o WSmiths Finance
Nemours Chambers
P.O. Box 3170
Road Town, Tortola,
British Virgin Islands |
|
|
539,990 |
8 |
|
|
5.76 |
% |
|
|
|
|
|
|
|
|
|
The
David and Vicki Jo Zalman 2006
Childrens’ Trust
c/o New ICM
220 Sam Biskin
El Campo, TX 77437 |
|
|
475,000 |
9 |
|
|
5.1 |
% |
| |
|
|
| 1 |
|
Unless otherwise noted in these footnotes, the Company believes that all shares
referenced in this table are owned of record by each person named as beneficial owner and that each
person has sole voting and dispositive power with respect to the shares of common stock owned by
each of them. |
| |
| 2 |
|
Based on information derived from a jointly filed Schedule 13G filed on October 18,
2007, by such persons with the SEC. As of the date of the filing, D.B. Zwrin & Co., L.P.; DBZ GP,
LLC; Zwirn Holdings, LLC; and Daniel B. Zwirn may each be deemed the beneficial owner of
(i) 355,282 shares owned by D.B. Zwirn Special Opportunities Fund, L.P. and (ii) 608,392 shares
owned by D.B. Zwirn Special Opportunities Fund, Ltd. (the “Funds”). D.B. Zwirn & Co., L.P. is the
manager of each of the Funds, and consequently has voting control and investment discretion over
the shares held by each of the Funds. Daniel B. Zwirn is the managing member of and thereby
controls Zwirn Holdings, LLC, which in turn is the managing member of and thereby controls DBZ GP,
LLC, which in turn is the general partner of and thereby controls D.B. Zwirn & Co., L.P. In
addition, each of D.B. Zwirn & Co., L.P.; DBZ GP, LLC; Zwirn Holdings, LLC; and Daniel B. Zwirn
disclaims beneficial ownership of the shares held by the Funds. The business address of D.B. Zwirn
Special Opportunities Fund, Ltd is P.O. Box 896 GeorgeTown Harbour Centre, 2nd Floor
Grand Cayman, Cayman Islands, British West Indies. |
| |
| 3 |
|
Based on information derived from a Schedule 13G, dated February 13, 2007, filed by
such entities with the Securities and Exchange Commission, Baupost Group, LLC (“Baupost”) is a
registered investment adviser. SAK Corporation is the manager of Baupost and has sole voting and
dispositive power with respect to the shares set forth above; however, Seth A. Klarman, as the sole
director SAK Corporation and a controlling person of Baupost, may be deemed to have beneficial
ownership under Section 13(d) of the securities beneficially owned by Baupost. |
| |
| 4 |
|
Based on information derived from a Schedule 13G, dated February 4, 2008, filed by
such entities with the SEC. Jamiel A. Akhtar, Richard L. Booth, David C. Haley, Lawrence H.
Lebowitz and William E. Rose are each managing members of HBK Management, LLC and may be deemed to
have control over such entities. |
| |
| 5 |
|
Based on information derived from a Schedule 13G/A, dated January 7, 2008, filed by
such entities with the SEC. As of the date of the filing, Gary A. Simanson beneficially owned
862,500 shares, including 287,500 shares held by Community Bankers Acquisition, LLC, of which
Gary A. Simanson is the sole manager and has sole voting and dispositive power with respect to such
shares. |
22
| |
|
|
| 6 |
|
Based on information derived from a Schedule 13G, dated February 12, 2008, filed by
such entities with the SEC. Andrew M. Weiss, Ph.D., as the managing member of Weiss Asset
Management, LLC and managing member of Weiss Capital, LLC, may be deemed to have control over both
entities. Mr. Weiss disclaims beneficial ownership of the shares reported above, except to the
extent of his pecuniary interest. |
| |
| 7 |
|
Based on information derived from a Schedule 13G, dated February 29, 2008, filed
by such entities with the SEC. Polar Securities, Inc. serves as investment manager to North Pole
Capital Master Fund and a number of discretionary accounts with respect to which it has voting and
discretionary authority over the shares reported here. |
| |
| 8 |
|
Based on information derived from a Schedule 13G, dated September 20, 2007, filed with
the Securities and Exchange Commission. |
| |
| 9 |
|
Daniel Zalman, the trustee of the trust for which David Zalman’s minor children are
beneficiaries, exercises sole dispositive, voting and investment power for such shares based on
information derived from a schedule 13G, filed with the SEC. David Zalman disclaims beneficial
ownership of such shares. David Zalman was an initial stockholder of the Company. |
Security Ownership of Directors and Executive Officers
As of March 25, 2008, we have 9,375,000 shares of common stock outstanding. The following
table sets forth information regarding the beneficial ownership of our common stock as of the date
hereof, by:
| |
• |
|
each of our executive officers and directors; and |
| |
| |
• |
|
all of our executive officers and directors as a group. |
| |
|
|
|
|
|
|
|
|
| |
|
Common Stock |
|
|
|
|
| |
|
Beneficially |
|
|
|
|
| Name and Address of Beneficial Owner1 |
|
Owned |
|
|
Percent of Class |
|
|
|
|
|
|
|
|
|
|
Gary A. Simanson |
|
|
862,500 |
2 |
|
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
Eugene S. Putnam, Jr. |
|
|
75,000 |
3 |
|
|
* |
% |
|
|
|
|
|
|
|
|
|
Keith Walz |
|
|
75,000 |
|
|
|
* |
% |
|
|
|
|
|
|
|
|
|
Chris A. Bagley |
|
|
— |
|
|
|
* |
% |
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group
(4 individuals) |
|
|
1,012,500 |
|
|
|
10.8 |
% |
| |
|
|
| * |
|
Less than 1% |
| |
| 1 |
|
Unless otherwise noted in these footnotes, the Company believes that all shares
referenced in this table are owned of record by each person named as beneficial owner and that each
person has sole voting and dispositive power with respect to the shares of Common Stock owned by
each of them. Except as otherwise indicated, the business address of each of the following is c/o
the Company, 9912 Georgetown Pike, Ste. D203, Great Falls, Virginia 22066. All of our officers
and directors have agreed (i) to vote all of their respective shares of common stock beneficially
owned by them either for or against our initial business combination as determined by the majority
of the votes cast by the holders of the shares of our common stock sold in our initial public
offering and (ii) to vote all shares then beneficially owned by them in the event we are unable to
timely complete a business combination in favor of our dissolution and liquidation. |
| |
| 2 |
|
Includes 575,000 shares held by Mr. Simanson and 287,500 shares held by Community
Bankers Acquisition, LLC, of which Gary A. Simanson is the sole manager and has sole voting and
dispositive power with respect to such shares. Does not include an aggregate of 349,724 warrants
held by Community Bankers Acquisition LLC, which are not exercisable. |
| |
| 3 |
|
The shares are held in the name of The Eugene S. Putnam, Jr. 2004 Irrevocable Trust, of
which Mr. Putnam serves as the Trustee and has sole voting and dispositive power over the shares. |
23
All of the shares of our common stock outstanding as of the date of our initial public
offering including those owned by our officers and directors were placed in escrow with Continental
Stock Transfer & Trust Company, as escrow agent. These shares will be released from escrow on June
2, 2009, but only if the merger with TransCommunity or another business combination is completed on
or before the deadlines contained in our certificate of incorporation.
During the escrow period, the holders of these shares will not be able to sell or transfer
their securities except that Community Bankers Acquisition, LLC may transfer its shares to its
present beneficial owners and other stockholders may make transfers to their spouses and children
or trusts or family partnerships established for their benefit, or to a transferee that does not
affect beneficial ownership, but will retain all other rights as our stockholders, including,
without limitation, the right to vote their shares of common stock and the right to receive cash
dividends, if declared. If dividends are declared and payable in shares of common stock, such
dividends will also be placed in escrow. If we are unable to effect a business combination and
liquidate the company, none of our initial stockholders will receive any portion of the liquidation
proceeds with respect to such common stock owned by them.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company does not have any securities authorized for issuance under any equity compensation
plans.
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The holders of the majority of the 1,875,000 shares held by our initial stockholders,
including our executive officers and directors, will be entitled to make up to two demands that we
register these shares for resale pursuant to an agreement signed concurrently with the consummation
of our initial public offering. The holders of the majority of these shares will be entitled to
elect to exercise these registration rights at any time after the date on which these shares of
common stock are released from escrow. In addition, these stockholders have certain “piggy-back”
registration rights on registration statements filed subsequent to the date on which these shares
of common stock are released from escrow. We will bear the expenses incurred in connection with
the filing of any such registration statements.
Community Bankers Acquisition, LLC, an affiliate of Mr. Simanson, our president and chief
executive officer, has agreed that, commencing June 5, 2006 through the acquisition of a target
business, it will make available to us a small amount of office space and certain office and
secretarial services, as we may require from time to time. We have agreed to pay Community Bankers
Acquisition, LLC $7,500 per month for these services commencing June 5, 2006, and ending upon the
acquisition of a target business. An aggregate of $180,000 has been paid as of December 31, 2007.
We will reimburse our officers, directors and stockholders for any reasonable out-of-pocket
business expenses incurred by them in connection with certain activities on our behalf such as
identifying and investigating possible target businesses, conducting due diligence and other
activities related to consummation of a business combination. There is no limit on the amount of
accountable out-of-pocket expenses reimbursable by us, which will be reviewed only by our board or
a court of competent jurisdiction if such reimbursement is challenged. For fiscal 2007, an
aggregate of $50,500 has been reimbursed to our officers and directors.
In addition, Gary A. Simanson, our president and chief executive officer, and David Zalman, a
stockholder, agreed as part of our initial public offering, pursuant to an agreement with the
representatives of the underwriters in the initial public offering, that they or their affiliates
or designees, would purchase up to 1,000,000 warrants in the aggregate in open market transactions
at market prices not to exceed $0.80 per warrant. Under this agreement, I-Bankers Securities, Inc.,
Maxim Group LLC and Legend Merchant Group, Inc., the representatives of the underwriters, also
agreed to place an irrevocable order for the purchase by them, or their affiliates or designees, of
up to 500,000 warrants in the aggregate under identical terms and conditions as the purchases of
Mr. Simanson and Mr. Zalman. As a result of this agreement, Community Bankers Acquisition, LLC an
affiliate of Mr. Simanson,
acquired an aggregate of 349,724 warrants and the representatives of the underwriters acquired
an aggregate of 300,000 warrants.
24
Pursuant to letter agreements with the Company, the Company’s officers and directors and
initial stockholders waived their rights to receive distributions with respect to shares owned by
them in the event of the Company’s liquidation.
Other than the $7,500 per month administrative fees and reimbursable out-of-pocket expenses
payable to our officers, directors and stockholders, no compensation or fees of any kind, including
finders and consulting fees, will be paid to any of our existing stockholders, officers or
directors who owned our common stock prior to our initial public offering, or to any of their
respective affiliates, including First Capital Group which is affiliated with Mr. Simanson, for
services rendered to us prior to or with respect to the business combination.
All ongoing and future material transactions between us and any of our officers and directors
or their respective affiliates will be on terms believed by us to be no less favorable than are
available from unaffiliated third parties and will require prior approval in each instance by a
majority of the members of our board who do not have an interest in the transaction. In their
consideration of each transaction, these members of the board shall be provided with access, should
they so request and at our expense, to our attorneys or independent legal counsel selected by them.
Moreover, we shall endeavor to obtain and present to the directors considering such transaction
estimates obtained from unaffiliated third parties for similar goods or services to ascertain
whether such transaction is on terms that are no less favorable to us than is otherwise available
from such unaffiliated third parties. If a transaction with an affiliated third party is found to
be on terms less favorable to us than with an unaffiliated third party, we will not engage in such
transaction.
Director Independence
The board of directors has adopted standards concerning director independence, which meet the
independence standards of the American Stock Exchange and, with respect to the audit committee, the
rules of the SEC.
Other than as described above, during the last fiscal year, there were no transactions,
relationships or arrangements not disclosed as related person transactions that were considered by
the board of directors in determining that the applicable independence standards have been met by
each of the directors.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit and Non-Audit Services
The audit committee is directly responsible for the appointment, compensation, and oversight
of the performance of our independent registered public accounting firm. In addition to retaining
Yount, Hyde and Barbour, P.C. to audit our financial statements for the year ended March 31, 2006,
our board of directors retained Yount Hyde and Barbour, P.C. to provide auditing services in
connection with our initial public offering. Effective May 15, 2007, the board of directors
engaged Miller, Ellin & Company LLP to audit the Company’s financial statements for the fiscal year
ended March 31, 2007. The audit committee has reviewed all services provided by Yount Hyde and
Barbour, P.C. and Miller, Ellin & Company LLP, including services provided in connection with the
review of our financial statements during and for the year ended March 31, 2007, and has concluded
that the provision of such services was compatible with maintaining such firms’ respective
independence in the conduct of its auditing functions.
Pre-Approval Policies and Procedures
Our audit committee has adopted policies and procedures for the pre-approval of services
provided by the independent registered public accounting firm. These services may include audit
services, audit-related services, tax services and other services. Such policies and procedures
provide that the audit committee shall pre-approve all auditing and permitted non-audit services
(including the fees and terms thereof).
25
As permitted under the Sarbanes-Oxley Act of 2002, the audit committee may form and delegate
pre-approval authority for audit and permitted non-audit services to a subcommittee consisting of
one or more members of the audit committee. Any service pre-approved by a delegate must be
reported to the audit committee at the next scheduled meeting.
The aggregate fees incurred by us for audit and non audit services for fiscal 2007 and the
years ended March 31, 2007 and 2006 were as follows:
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Year Ended |
|
| Service Category |
|
Fiscal 2007 |
|
|
March 31, 2007 |
|
|
|
|
|
|
|
|
|
|
Audit Fees |
|
$ |
18,280 |
|
|
$ |
— |
|
Audit Related Fees |
|
$ |
6,170 |
|
|
$ |
10,000 |
|
Tax Fees |
|
$ |
3,709 |
|
|
$ |
— |
|
All Other Fees |
|
$ |
5,483 |
|
|
$ |
— |
|
Total |
|
$ |
33,642 |
|
|
$ |
10,000 |
|
In the above table, in accordance with the SEC’s definitions and rules, “audit fees” are fees
for professional services for the audit of a company’s financial statements included in the annual
report on Form 10-K, for the review of a company’s financial statements included in the quarterly
reports on Form 10-Q, and for services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance
and related services that are reasonably related to the performance of the audit or review of a
company’s financial statements; and “tax fees” are fees for tax compliance, tax advice and tax
planning. Included in audit fees are fees that were billed and unbilled for the 2007 audit and
fees associated with our initial public offering.
26
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| (a) |
|
The following documents are filed as part of this Annual Report on Form 10-K: |
| |
| (1) |
|
Consolidated Financial Statements. |
| |
| |
|
Reference is made to the Index to Financial Statements of Community Bankers Acquisition
Corp. under Item 8 of Part II hereof. |
| |
| (2) |
|
Financial Statement Schedules. |
| |
| |
|
All other schedules are omitted because they are not applicable, the amounts are immaterial
or the required information is presented in the financial statements and notes thereto in
Item 8 above. |
| |
| (3) |
|
Exhibits. |
| |
|
|
|
|
| Exhibit No. |
|
Description |
| |
2.1 |
|
|
Agreement and Plan of Merger by and between Community Bankers Acquisition Corp. and
TransCommunity Financial Corporation dated as of September 5, 2007(3) |
| |
2.2 |
|
|
Agreement and Plan of Merger by and between Community Bankers Acquisition Corp. and BOE
Financial Services of Virginia, Inc. dated as of December 13, 2007(4) |
| |
3.1 |
|
|
Amended and Restated Certificate of Incorporation(1) |
| |
3.2 |
|
|
By-laws as amended(5) |
| |
4.1 |
|
|
Specimen Unit Certificate(1) |
| |
4.2 |
|
|
Specimen Common Stock Certificate(1) |
| |
4.3 |
|
|
Specimen Warrant Certificate(1) |
| |
4.4 |
|
|
Form of Unit Purchase Option granted to the representatives(1) |
| |
4.5 |
|
|
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the
Registrant(1) |
| |
4.6 |
|
|
Warrant Clarification Agreement dated as of January 29, 2007 between the Company and
Continental Stock Transfer and Trust Co.(2) |
| |
4.7 |
|
|
Unit Purchase Option Clarification Agreement dated as of January 29, 2007 between the
Company and the holders(2) |
| |
10.1 |
|
|
Form of Letter Agreement among the Registrant, the representatives of the underwriters and
the stockholders, officers and directors of Registrant(1) |
| |
10.2 |
|
|
Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and
the Registrant(6) |
| |
10.3 |
|
|
Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company
and the Initial Stockholders(6) |
| |
10.4 |
|
|
Registration Rights Agreement among the Registrant and the Initial Stockholders(6) |
| |
10.5 |
|
|
Form of Letter Agreement between Community Bankers Acquisition, LLC and Registrant regarding
administrative support(1) |
| |
10.6 |
|
|
Form of Revolving Credit Agreement in the principal amount of $100,000 between the
Registrant and Community Bankers Acquisition, LLC(1) |
| |
10.7 |
|
|
Form of Warrant Purchase Agreement among the representatives, Gary A. Simanson and David
Zalman(1) |
| |
10.8* |
|
|
Letter agreement with Eugene S. Putnam, Jr. (1) |
| |
10.9* |
|
|
Letter agreement with David A. Spainhour(1) |
| |
14 |
|
|
Code of Conduct and Ethics(1) |
| |
31.1 |
|
|
Rule 13a-14(a) or 15d-14(a) Certification |
| |
32.1 |
|
|
Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
27
| |
|
|
| * |
|
Indicates a management contract or compensatory plan required to be filed as an exhibit. |
| |
| (1) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Registration Statement on Form S-1 or amendments thereto (File No. 333-124240). |
| |
| (2) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Current Report on Form 8-K on February 12, 2007 (File No. 001-32590). |
| |
| (3) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Current Report on Form 8-K on September 7, 2007 (File No. 001-32590). |
| |
| (4) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Current Report on Form 8-K on December 14, 2007 (File No. 001-32590). |
| |
| (5) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Current Report on Form 8-K on January 4, 2008 (File No. 001-32590). |
| |
| (6) |
|
Incorporated by reference to exhibits of the same number filed with the Company’s
Quarterly Report on Form 10-Q on November 14, 2007 (File No. 001-32590). |
28
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
|
|
|
|
| Dated: March 31, 2008 |
COMMUNITY BANKERS ACQUISITION CORP.
|
|
| |
By: |
/s/ Gary A. Simanson
|
|
| |
|
Name: |
Gary A. Simanson |
|
| |
|
Title: |
President and Chief Executive Officer |
|
| |
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Gary A. Simanson and Keith Walz, and each of them, his true and lawful
attorneys-in-fact and agents, each with full power of substitution and resubstitution, to sign any
and all amendments (including post-effective amendments) to this Annual Report on Form 10-K and to
file the same, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, or any of them, shall do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant had duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this
Registration Statement has been signed by the following persons in the capacities and on the dates
indicated.
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Eugene S. Putnam, Jr. |
|
Chairman of the Board |
|
March 31, 2008 |
| |
|
|
|
|
Eugene S. Putnam, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Gary A. Simanson |
|
President, Chief Executive
and Financial Officer,
Secretary and Director
(Principal Executive,
Financial and Accounting
Officer) |
|
March 31, 2008 |
| |
|
|
|
Gary A. Simanson
|
|
|
|
|
|
|
|
|
/s/ Keith Walz
|
|
Director |
|
March 31, 2008 |
| |
|
|
|
|
Keith Walz
|
|
|
|
|
|
|
|
|
|
/s/ Chris A. Bagley
|
|
Director |
|
March 31, 2008 |
| |
|
|
|
|
Chris A. Bagley
|
|
|
|
|
29
Index to Exhibits
| |
|
|
|
|
| Exhibit |
|
|
| Number |
|
Description |
| |
31.1 |
|
|
Rule 13a-14(a) or 15d-14(a) Certification |
| |
32.1 |
|
|
Certification pursuant to 18 U.S.C. §1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |