Exhibit 1
[FORM OF UNDERWRITING AGREEMENT]
____________ Shares
CARDINAL FINANCIAL CORPORATION
Common Stock
___________________________
Underwriting Agreement
___________________________
XXXXX & XXXXXXXXXXXX, INC.
As Representative of the Several
Underwriters Named in Schedule I hereto
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000 ____________, 1998
Dear Sirs:
Cardinal Financial Corporation, a Virginia corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to Xxxxx & Xxxxxxxxxxxx, Inc. (the "Representative") and the several other
underwriters named in Schedule I hereto (collectively, with the Representative,
the "Underwriters") an aggregate of ________ shares (the "Firm Securities") of
Common Stock, $1.00 par value per share, of the Company (the "Common Stock")
and, at the election of the Underwriters, up to ________ additional shares (the
"Optional Securities") of Common Stock. The Firm Securities and the Optional
Securities that the Underwriters elect to purchase pursuant to Section 2 hereof
are collectively called the "Securities."
1. Representations and Warranties.
The Company represents and warrants to, and agrees with the several
Underwriters that:
(a) In connection with the transactions contemplated by this
Underwriting Agreement (the "Agreement"), a registration statement on Form SB-2
(File No. ___________) and as a part thereof a preliminary prospectus, in
respect of the Securities has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act") and has
been filed with the Securities and Exchange Commission (the "Commission") in the
form heretofore delivered to you; such registration statement, as amended, has
been declared effective by the Commission; no other document with respect to
such registration statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been instituted or threatened
by the Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) under the Act
being hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) of this
Agreement and deemed by virtue of Rule 430A under the Act to be a part of the
registration statement at the time it was declared effective, each as amended at
the time such part became effective, being herein called collectively the
"Registration Statement" and the final prospectus, in the form first filed
pursuant to Rule 424(b), being hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
amendments or supplements thereto will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable filing
date as to the Prospectus and any amendment or supplement thereto contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
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conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use therein;
(d) Neither the Company nor its wholly-owned subsidiary bank,
Cardinal Bank, N.A., a national banking association (the "Bank"), has sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or expressly contemplated in the Prospectus;
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise set forth or
expressly contemplated therein, (i) there has not been any change in the capital
stock or long term debt of the Company or the Bank, respectively, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and the
Bank taken as a whole and (ii) there have been no transactions entered into by
the Company or the Bank, other than transactions entered into in the ordinary
course of business, that are material with respect to the Company and the Bank
taken as a whole;
(f) The Company and the Bank have good and marketable title to all
real property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company and the Bank; and any real property and
buildings held under lease by the Company and the Bank are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and the Bank;
(g) The Company and the Bank have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, with power and authority (corporate
and other) to own or lease their respective properties and conduct their
respective businesses as described in the Prospectus; and each has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify would not result in a
material adverse effect on the Company and the Bank taken as a whole; and each
of the Company and the Bank holds all material licenses, certificates,
authorizations and permits from governmental authorities necessary for the
conduct of its business as described in the Prospectus;
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(h) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
conform to the description of the capital stock of the Company contained in the
Prospectus; there are no preemptive or other rights to subscribe for or to
purchase any securities of the Company under the Articles of Incorporation of
the Company or under Virginia law; except as described in the Prospectus, there
are no warrants, options or other rights to purchase any securities of the
Company which have been granted by the Company; and neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any securities of the Company;
(i) All outstanding shares of capital stock of the Bank are owned by
the Company free and clear of any perfected security interest and any other
security interests, claims, liens or encumbrances; and, other than the Bank, the
Company does not own or control, directly or indirectly, any corporation,
association or other entity;
(j) The Securities have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly issued
and fully paid and nonassessable and will conform to the description of the
Securities contained in the Prospectus;
(k) The issuance and sale of the Securities being issued at each
Delivery Date (as hereinafter defined) by the Company and the performance of
this Agreement and the consummation by the Company of the other transactions
herein contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Bank pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company
or the Bank is a party or by which the Company or the Bank is bound or to which
any of the property or assets of the Company or the Bank is subject, nor will
such action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company or the Articles of Association or Bylaws
of the Bank or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or the Bank or
any of their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the issuance and sale of the Securities or the
consummation by the Company of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under the Act, under state securities or Blue
Sky laws, and under the rules of the
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National Association of Securities Dealers, Inc. (the "NASD") in connection with
the purchase and distribution of the Securities by the Underwriters;
(l) There are no legal or governmental proceedings pending to which
the Company or the Bank is a party or of which any of their respective property
or assets is subject, which, if determined adversely to the Company or the Bank,
would individually or in the aggregate, have a material adverse effect on the
financial position, stockholders' equity or results of operations of the Company
and the Bank taken as a whole and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
by others;
(m) KPMG Peat Marwick LLP, which has certified certain financial
statements of the Company and the Bank, are independent public accountants
within the meaning of the Act and the rules and regulations of the Commission
thereunder;
(n) All employee benefit plans established, maintained or
contributed to by the Company or the Bank comply in all material respects with
all applicable requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and no such plan has incurred or assumed an
"accumulated funding deficiency" within the meaning of Section 302 of ERISA or
has incurred or assumed any material liability to the Pension Benefit Guaranty
Corporation;
(o) The consolidated financial statements of the Company, together
with related notes, as set forth in the Registration Statement present fairly
the consolidated financial position and the results of operations of the Company
at the indicated dates and for the indicated periods, all in accordance with
generally accepted accounting principles, consistently applied throughout the
periods presented except as noted in such financial statements and the notes
thereon, and all adjustments necessary for a fair presentation of results for
such periods have been made; and the selected financial information included in
the Prospectus presents fairly the information shown therein and has been
compiled on a basis consistent with the financial statements presented therein;
(p) The Company and the Bank have filed all federal, state, local
and foreign income and franchise tax returns that have been required to filed
(or have received extensions with respect thereto) other than those filings
being contested in good faith, and have paid, or made adequate reserves for, all
taxes indicated by said returns and all assessments received by them to the
extent that such taxes have become due and are not being contested in good
faith;
(q) No relationship, direct or indirect, exists between or among the
Company and the Bank, on the one hand, and the directors, officers,
shareholders,
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customers or suppliers of the Company or the Bank, on the other hand, that is
required by the Act or by the rules and regulations thereunder to be described
in the Registration Statement and the Prospectus which is not so described;
(r) The Company and the Bank have not taken and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities;
(s) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company in
accordance with its terms; and
(t) The Securities have been approved for trading, subject to notice
of issuance, on the SmallCap Market of the Nasdaq System.
2. Purchase and Sale of the Securities.
Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
share of $_____ , the number of Firm Securities (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Firm Securities to be sold by the Company by a fraction, the numerator of which
is the aggregate number of Firm Securities to be purchased by such Underwriter
as set forth opposite the name of such Underwriter in Schedule I hereto, and the
denominator of which is the aggregate number of Firm Securities to be purchased
by all the Underwriters from the Company hereunder and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to sell to the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the same purchase price set forth in clause (a) of
this Section 2, that portion of the number of Optional Securities as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Securities by a fraction, the numerator of which is the maximum number of
Optional Securities which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto, and the denominator
of which is the maximum number of Optional Securities which all of the
Underwriters are entitled to purchase hereunder .
The Company grants the Underwriters the right to purchase at their
election up to _______________ Optional Securities, at the purchase price per
share set forth in the preceding paragraph, for the sole purpose of covering
overallotments in the sale of the
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Firm Securities. Any such election to purchase the Optional Securities may be
exercised no more than once by written notice from you to the Company, given
within a period of 30 days after the date of this Agreement, setting forth the
aggregate amount of the Optional Securities to be purchased and the date on
which such Optional Securities are to be delivered, as determined by you but in
no event earlier than the First Delivery Date (as defined in Section 4 hereof)
or, unless you otherwise agree in writing, earlier than two or later than seven
business days after the date of such notice.
3. Offering by the Underwriters.
Upon authorization by you of the release of the Firm Securities, the
Underwriters propose to offer the Firm Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. Delivery and Payment.
Certificates in definitive form for the Securities to be purchased by
each Underwriter hereunder, and in such denominations and registered in such
names as you may request upon at least two business days' prior notice to the
Company, shall be delivered by or on behalf of the Company to you for the
account of each Underwriter, against payment of the purchase price therefor by
certified or official bank check in next day funds (unless the Company desires
settlement in same day funds, in which case the Company shall pay the
Underwriters for any costs associated with settlement in same day funds), all at
the offices of Xxxxx & Xxxxxxxxxxxx, Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx. The time and date of such delivery and payment shall be, with respect
to the Firm Securities, 10:00 a.m., Richmond, Virginia time, on
__________________, 1998, or at such other time and date as you and the Company
may agree upon writing and, with respect to the Optional Securities, 10:00 a.m.,
Richmond, Virginia time, on the date specified by you in the written notice of
the Underwriters' election to purchase such Optional Securities, or at such
other time and date as you and the Company may agree upon in writing. Such time
and date for delivery of the Firm Securities is herein called the "First
Delivery Date," such time and date for delivery of the Optional Securities, if
not the First Delivery Date, is herein called the "Second Delivery Date," and
each such time and date for delivery is herein called a "Delivery Date." Such
certificates will be made available to the Underwriters for checking and
packaging at least twenty-four hours prior to each Delivery Date at the offices
of Xxxxx & Xxxxxxxxxxxx, Inc. in Richmond, Virginia or such other location
designated by the Underwriters to the Company.
5. Agreements of the Company.
The Company agrees with the Underwriters:
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(a) To prepare the Prospectus in a form reasonably approved by you
and to file such Prospectus pursuant to Rule 424(b) under the Act within the
time period prescribed or, if applicable, such earlier time as may be required
by Rule 430A under the Act; to make no amendment or supplement to the
Registration Statement or Prospectus which shall be reasonably disapproved by
you promptly after reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Securities; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you have requested and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Registration
Statement and the Prospectus in such quantities as you may from time to time
reasonably request during such period following the date hereof as a prospectus
is required to be delivered in connection with offers or sales of Securities,
and, if the delivery of a prospectus is required and if at such time any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply with
the Act, to notify you and upon your request prepare and furnish without charge
to each
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Underwriter and to any dealer in securities as many copies as you may from time
to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(d) As soon as practicable, but not later than the Availability Date
(as defined below), to make generally available to its security holders and
deliver to you an earnings statement covering a period of at least 12 months
beginning after the effective date of the Registration Statement which will
satisfy the provisions of Section 11(a) of the Act (for the purpose of this
subsection 5(d) only, "Availability Date" means the 45th day after the end of
the fourth fiscal quarter following the fiscal quarter that includes the
effective date of the Registration Statement, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year, "Availability Date"
means the 90th day after the end of such fourth fiscal quarter);
(e) To furnish to the holders of the Securities as soon as
practicable after the end of the each fiscal year an annual report (including a
balance sheet and statements of operations, changes in stockholders' equity and
cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its consolidated
subsidiaries for such quarter in reasonable detail;
(f) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed or the NASD;
and (ii) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably request;
(g) For a period of 120 days from the effective date of the
Registration Statement, not to offer, sell, contract to sell or otherwise
dispose of any securities of the Company which are substantially similar to the
Securities (other than the Securities or pursuant to (i) employee stock option
or stockholder dividend reinvestment plans, (ii) merger and acquisition
transactions, or (iii) currently outstanding warrants) without your prior
written consent;
(h) To apply the net proceeds from the sale of the Securities for
the purposes set forth in the Prospectus;
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(i) To notify the Representative of the the filing of a registration
statement wit the Commission pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, to furnish the Representative with a copy of such
registration statement, and promptly inform the Representative of its
effectiveness; and
(j) To use its best efforts to cause the Common Stock to be approved
for quotation on the Nasdaq SmallCap Market (the "Nasdaq System").
6. Payment of Expenses.
The Company agrees with the several Underwriters that the Company will
pay or cause to be paid the following, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated: (i) the
fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
reproducing this Agreement, the Blue Sky Survey and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriter in connection with such qualification and in connection with the
Blue Sky Survey; (iv) the filing fees incident to securing any required review
by the NASD of the terms of the sale of the Securities; (v) the cost of
preparing stock certificates; (vi) the costs or expenses of any transfer agent
or registrar; (vii) all fees relating to the quotation of the Securities on the
Nasdaq System; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that except as provided
in this Section, Section 8 and Section 10 hereof, the Underwriters will pay all
of their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. Conditions to Obligations of the Underwriters.
The obligations of each Underwriter hereunder, as to the Securities to
be delivered at each Delivery Date, shall be subject, in its discretion, to the
condition that all representations and warranties and other statements of the
Company are, at and as of the date hereof and each Delivery Date, true and
correct and the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
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(a) The Registration Statement is effective; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and within the
time period required by Rule 424(b); no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or, to the knowledge of the Company,
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) On each Delivery Date, XxXxxxx Xxxx, A Professional Corporation,
counsel for the Underwriters, shall have furnished to you such opinion or
opinions, dated such dates, with respect to the incorporation of the Company,
the validity of the Securities being issued on such Delivery Date, the
Registration Statement, the Prospectus, and other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) On each Delivery Date, Williams, Mullen, Christian & Xxxxxxx,
counsel for the Company, shall have furnished to you their written opinion,
dated such dates, in form and substance satisfactory to you, to the effect that:
(i) The Company and the Bank have been duly incorporated and
are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, with corporate power
and authority to own or lease their respective properties and conduct
their respective businesses as described in the Prospectus; and the
Company and the Bank are duly qualified to do business and are in good
standing in each jurisdiction in which it owns or leases properties or
conducts business so as to require such qualification;
(ii) The Company has an authorized capitalization as set forth
under the caption "Description of Capital Stock" in the Prospectus, and
all of the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and nonassessable and
conform to the description contained in the Prospectus; there are no
preemptive or similar rights to subscribe for or to purchase any
securities of the Company under the Articles of Incorporation of the
Company or under Virginia law; except as described in the Prospectus,
there are no warrants or options to purchase any securities of the
Company which have been granted by the Company; to the best of such
counsel's knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Securities as contemplated by this
Agreement gives
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rise to any rights for or relating to the registration of any
securities of the Company; and the form of the certificates evidencing
the Securities complies with all formal requirements of Virginia law;
(iii) The Registration Statement has been declared effective
under the Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened under the Act;
(iv) The Securities have been duly authorized and, when issued
and delivered against payment therefor as provided herein, will be
validly issued and fully paid and nonassessable and conform to the
description of the Securities contained in the Prospectus, as amended
or supplemented;
(v) All outstanding shares of capital stock of the Bank are
owned by the Company free and clear of any perfected security
interests, claims, liens or encumbrances;
(vi) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending to which the Company or the
Bank is a party or of which any property or assets of the Company or
the Bank is subject which, if determined adversely to the Company or
Bank, would individually or in the aggregate, have a material adverse
effect on the financial position, stockholders' equity or results of
operations of the Company and the Bank taken as a whole; and, to the
best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
(viii) The issue and sale of the Securities and the performance
of this Agreement by the Company and the consummation of the other
transactions contemplated by this Agreement will not result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
Bank pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which the Company or Bank is a party or by which the Company or Bank is
bound or to which any of the property or assets of the Company or Bank
is subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation or Bylaws of the Company or
the Articles of Association or Bylaws of the Bank or of any statute or
any order, rule or
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regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or Bank or any of their
respective properties;
(ix) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Securities by the Company or
the consummation by the Company of the other transactions contemplated
by this Agreement, except such as have been obtained under the Act,
such as may be required under state securities or Blue Sky laws, and
under the rules of the NASD in connection with the purchase and
distribution of the Securities by the Underwriters; and
(x) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules and other financial and statistical information included
therein and information furnished for use therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; nothing has come to their attention which leads them to
believe that, as of the effective date of the Registration Statement
and as of each Delivery Date, either the Registration Statement or the
Prospectus or, as of its date, any further amendment or supplement
thereto made by the Company prior to the Delivery Date (in each case,
other than the financial statements and the related schedules and other
financial and statistical information included therein, as to which
such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. With
respect to such statement, such counsel may state that their belief is
based upon the procedures set forth therein, but is without independent
check or verification.
In rendering such opinion, such counsel may rely as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the Company and
the Bank and public officials.
(d) At 10:00 a.m., Richmond, Virginia time, on the date of this
Agreement and also at each Delivery Date, KPMG Peat Marwick LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex I hereto;
-13-
(e) (i) Neither the Company nor the Bank shall have sustained since
the date of the latest audited financial statements included in the Prospectus,
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or expressly contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or the
Bank or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, stockholders'
equity or results of operation of the Company or the Bank taken as a whole
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities being issued at such
Delivery Date on the terms and in the manner contemplated by the Prospectus; and
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the Nasdaq System; (ii) a general
moratorium on commercial banking activities in New York or Virginia declared by
federal, New York State or Virginia authorities; (iii) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if any such event specified in
this clause (iii) would have such a materially adverse effect, in your judgment,
as to make it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus; or (iv) such a material adverse change in general economic,
political, financial or international conditions affecting financial markets in
the United States having a material adverse impact on trading prices of
securities in general, as, in your judgment, makes it impracticable or
inadvisable to proceed with the offering or delivery of the Securities on the
terms and in the manner contemplated in the Prospectus.
(g) The Company shall have furnished or caused to be furnished to
you copies of agreements between the Company and each of the executive officers
and directors of the Company specified by you, in form and content satisfactory
to you, pursuant to which such persons agree not to offer, sell, or contract to
sell, or otherwise dispose of, any shares of Common Stock beneficially owned by
them or any securities convertible into, or exchangeable for, Common Stock on or
before the 120th day after the date of this Agreement without your prior written
consent;
(h) The Company shall have furnished or caused to be furnished to
you on the date of this Agreement and on the Delivery Date certificates of
officers of the Company satisfactory to you as to the accuracy of the
representations and warranties of
-14-
the Company herein at and as of the date hereof and the Delivery Date, as to the
performance by the Company of all of its obligations hereunder to be performed
at or prior to the Delivery Date, as to the matters set forth in subsections (a)
and (e) of this Section and as to such other matters as you may reasonably
request; and
(i) The Common Stock shall have been approved for trading on the
Nasdaq System.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any breach of any representation, warranty, agreement
or covenant of the Company herein contained or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending, or appearing as a third party
witness in connection with, any such action or claims as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims damages or liabilities, joint or several, to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, Registration Statement or
-15-
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through you expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating, preparing to defend or defending, or appearing as a third party
witness in connection with, any such action or claim as such expenses are
incurred. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that for purposes
of this Section 8 the statement set forth in ______________ on the cover page of
the Prospectus, the statement on page __ of the Prospectus concerning
stabilization and over-allotment by the Underwriter, and under the heading
"Underwriting" in the Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Preliminary Prospectus or the Prospectus, and
you confirm, as the Representative, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection, unless and to the
extent that such indemnifying party did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have been advised by counsel
that representation of such indemnified party and the indemnifying party would
present such counsel with a conflict of interest under applicable standards of
professional conduct due to actual or potential differing interests between
them, the indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties. It
is understood that the indemnifying party shall, in connection with any such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm or
attorneys together with appropriate local counsel at any time for all
indemnified parties not having actual or potential differing interests with any
indemnified party. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and
-16-
approval by the indemnified party of such counsel, the indemnifying party will
not be liable for any settlement entered into without its consent and will not
be liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii). Notwithstanding the immediately preceding
sentence and the third preceding sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
and footnote ___ thereto on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact
-17-
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) the provisions of the Agreement Among
Underwriters shall govern contribution among the Underwriters, (ii) no
Underwriter (except as provided in the Agreement Among Underwriters) shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. Notwithstanding the
provisions of this subsection (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations under this subsection (d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director, employee and
agent of the Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. Substitution of Underwriters.
(a) If any of the Underwriters fail (other than for a reason
sufficient to justify the termination of this Agreement) to purchase on the
Delivery Date the Securities agreed to be purchased on such Delivery Date by
such Underwriter, the remaining Underwriters may find one or more substitute
underwriters to purchase such
-18-
Securities or make such other arrangements as the remaining Underwriters deem
advisable or the remaining Underwriters may agree to purchase such Securities
upon the terms set forth in this Agreement. If no such arrangements have been
made within 36 hours after such Delivery Date, the Company will be entitled to
an additional period of 24 hours within which to find one or more substitute
underwriters reasonably satisfactory to the remaining Underwriters to purchase
such Securities on the terms set forth in this Agreement.
(b) In any such case, the remaining Underwriters or the Company will
have the right to postpone the Delivery Date for not more than five business
days in order that necessary changes and arrangements (including any necessary
amendments or supplements to the Registration Statement or Prospectus) may be
effected by the remaining Underwriters and the Company. If neither the
nondefaulting Underwriters nor the Company makes arrangements pursuant to this
Section 9 within the period stated for the purchase of the Securities that the
defaulting Underwriters agreed to purchase, this Agreement will terminate
without liability on the part of the nondefaulting Underwriters to the Company
and without liability on the part of the Company, except in both cases, as
provided in Sections 5, 8 and 11. This Section 9 will not affect the liability
of the defaulting Underwriters to the Company or the nondefaulting Underwriters
arising out of such default. A substitute underwriter will become an Underwriter
for all purposes of this Agreement.
10. Representations and Warranties to Survive.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation (or any statement as to the results
thereof) made by or on behalf of the Underwriters or any controlling person of
any Underwriter, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Securities.
11. Termination and Payment of Expenses.
(a) This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Company prior to the delivery of any payment
for the Securities, if prior to such time there shall have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York
-19-
Stock Exchange or the Nasdaq System; (ii) a general moratorium on commercial
banking activities in New York or District of Columbia declared by federal, Xxx
Xxxx Xxxxx xx Xxxxxxxx xx Xxxxxxxx authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if any such event specified in this
clause (iii) would have such a materially adverse effect, in your judgment, as
to make it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus; or (iv) such a material adverse change in general economic,
political, financial or international conditions affecting financial markets in
the United States having a material adverse impact on trading prices of
securities in general, as, in your judgment, makes it impracticable or
inadvisable to proceed with the offering or delivery of the Securities on the
terms and in the manner contemplated in the Prospectus.
(b) If this Agreement shall be terminated pursuant to Section 10
hereof, the Company shall not then be under any liability to any Underwriter
except as provided in Section 6 and Section 8 hereof; but if for any other
reason the sale of the Securities provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to this Section 11
or because of any refusal, inability or failure on the part of the Company to
perform any agreements herein or comply with the provisions hereof other than by
reason of a default by any of the Underwriters, the Company will be responsible
for and will reimburse the Underwriters upon demand for all out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred by
the Underwriters in connection with the proposed purchase, sale and delivery of
the Securities. Nothing in this Section 10 shall be deemed to relieve the
Underwriter of its liability, if any, to the Company for damages occasioned by
its default hereunder.
12. Notices.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you. All statements, requests, notices and agreements hereunder shall
be in writing or by telegram if promptly confirmed in writing, and if to the
Underwriters shall be sufficient in all respects if delivered or sent by mail,
telex or facsimile transmission to Xxxxx & Xxxxxxxxxxxx, Inc., 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Finance Department; and
if to the Company shall be sufficient in all respects if delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Prospectus, Attention: __________________. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof provided, however,
that any notice to any Underwriter pursuant to Section 12 hereof
-20-
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter, which will be supplied to the Company by you upon request.
13. Successors.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters and the Company and, to the extent provided in Sections 8
and 11 hereof, the officers and directors of the Company, the officers and
directors, employees and agents of any Underwriter and each person who controls
the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time of the Essence.
Time shall be of the essence in this Agreement.
15. Business Day.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
16. Applicable Law.
This Agreement shall be construed in accordance with the laws of the
State of New York.
17. Captions.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
18. Counterparts.
This Agreement may be executed by any one or more of the parties in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
-21-
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
among each of the Underwriters and the Company. It is understood that your
acceptance of this Agreement on behalf of each of the Underwriters is pursuant
to the authority set forth in a form of Agreement Among Underwriters, the form
of which will be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
CARDINAL FINANCIAL CORPORATION
By: _____________________________________
X. Xxxxxxx Xxxx, Jr.
President and Chief Executive Officer
Accepted as of the date hereof
at Richmond, Virginia:
XXXXX & XXXXXXXXXXXX, INC.
As Representative of the Underwriters
By: ___________________________________
Name: _________________________________
Title: ________________________________
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SCHEDULE I
Underwriters
Optional Securities
to be Purchased if
Firm Securities Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ---------
Xxxxx & Xxxxxxxxxxxx, Inc.
Interstate/Xxxxxxx Lane Corporation
Xxxxxx, Xxxxx Xxxxx Incorporated
TOTAL
-23-
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, KPMG Peat
Marwick LLP shall furnish letters to the Representative to the effect that:
1. They are independent public accountants with respect to the
Company and its subsidiary within the meaning of the Act and the applicable
published rules and regulations thereunder;
2. In their opinion, the consolidated audited financial statements
audited by them and included in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Securities Exchange Act of 1934, as amended, as
applicable, and the related published rules and regulations thereunder;
3. On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards, consisting
of a reading of the latest unaudited financial statements made available by the
Company, inspection of the minute books of the Company and the Bank since the
date of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company and the Bank responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in such letter, nothing came to their attention that caused them to believe
that:
(A) the unaudited consolidated financial statements included
in the Registration Statement or the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and published rules and regulations thereunder
or are not presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the Registration
Statement or Prospectus;
(B) (i) as of a specified date not more than five calendar
days prior to the date of delivery of such letter, there have been any
changes in the capital stock, short-term debt or long-term debt of the
Company, or any decreases in consolidated total assets or stockholders'
equity as compared with amounts shown on the most recent consolidated
balance sheet included in the Registration Statement or Prospectus, and
(ii) for the period from the date of the most recent consolidated
financial statements included in the Registration Statement or
Prospectus to such specified date there were any decreases in
consolidated net interest income or the total or per share amounts of
net income as compared with the corresponding period in the preceding
year, except in each case for
-24-
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
4. In addition to the audit referenced in their report included in
the Registration Statement and the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information which are derived from the
general accounting records of the Company and the Bank, which appear in any
Preliminary Prospectus, the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representative, and
have compared certain of such amounts, percentages and financial information
with the accounting records of the Company and have found them to be in
agreement.
-25-
