Exhibit 1.1
CARDINAL FINANCIAL CORPORATION
Common Stock
($1.00 par value)
UNDERWRITING AGREEMENT
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May , 2002
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XxXxxxxx & Company, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, V A 23510
Gentlemen:
Cardinal Financial Corporation, a bank holding company organized under
Virginia law ("Cardinal"), proposes to employ you (the "Underwriter") to advise
Cardinal in the structure of rights and public offerings of Cardinal's Common
Stock, par value $1.00 (the "Common Stock"), and, as agent of Cardinal, to
assist in the sale on a best efforts basis of (i) 5,000,000 shares of Cardinal's
Common Stock (the "Shares") in the public offering (the "Public Offering"), less
(ii) any Shares that are subscribed for by May , 2002 in Cardinal's rights
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offering of up to 2,500,000 Shares of its Common Stock (the "Rights Offering"
and, together with the Public Offering, the "Offerings").
You have advised Cardinal (a) that you are authorized to enter into this
agreement (this "Agreement") and (b ) that you are willing to sell the Shares
offered in the Public Offering on a best efforts basis as agent for Cardinal.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, Cardinal and
the Underwriter hereby agree as follows :
1. Representations and Warranties of Cardinal. Cardinal represents and
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warrants as follows:
(a) Cardinal has prepared and filed with Securities and Exchange
Commission (the "Commission"), in accordance with the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement on Form SB-2
(File No. 333-82946), including the preliminary prospectuses relating to the
Rights Offering and the Public Offering (collectively, the "Preliminary
Prospectus"). Such registration statement, as amended at the time it becomes
effective (including the Prospectus, as defined herein, filed as a part
thereof), is referred to in this Agreement as the "Registration Statement," and
the final prospectuses relating to the Rights Offering and the Public Offering
in the forms filed with the Commission as part of the Registration Statement or
pursuant to its Rule
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424(b), if any, after the Registration Statement becomes effective are referred
to collectively as the "Prospectus."
(b) Each Preliminary Prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment or supplement thereto
when so filed complied in all material respects with the Securities Act, except
that this representation and warranty does not apply to statements in or
omissions from any such Preliminary Prospectus (or any amendment or supplement
thereto) made in reliance upon and conformity with information relating to the
Underwriter furnished to Cardinal in writing by such Underwriter expressly for
use therein.
(c) The Registration Statement, in the form in which it becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the Prospectus filed as part of the
Registration Statement and in the form first filed with the Commission under its
Rule 424(b), if any, and when any supplement thereto is filed with the
Commission, will comply in all material respects with the Securities Act and
will not contain at any such times 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, except that this representation and
warranty does not apply to statements in or omissions from the Registration
Statement or the Prospectus (or any amendment or supplement thereto) made in
reliance upon information relating to the Underwriter furnished to Cardinal in
writing by the Underwriter expressly for use therein.
(d) Cardinal has the capitalization set forth in the Prospectus under
the caption "Capitalization"; all of the outstanding shares of Common Stock of
Cardinal are duly authorized and validly issued, fully paid and non-assessable
and free of preemptive or similar rights; the Shares to be issued and sold by
Cardinal have been duly authorized, and upon delivery to the subscribers
therefor (the "Subscribers") against payment therefor in accordance with the
terms hereof, will have been validly issued and fully paid and will be
nonassessable and free of preemptive or similar rights; and the Common Stock
conforms in all material respects to the description thereof in the Registration
Statement (or any amendment or supplement thereto).
(e) Cardinal is duly organized and validly existing as a Virginia
corporation and is in good standing under the laws of the Commonwealth of
Virginia. Cardinal's wholly-owned subsidiaries, Cardinal Bank, N.A. and Cardinal
Wealth Services, Inc. (the "Subsidiaries"), are duly organized and validly
existing and in good standing under the laws governing their organization.
Cardinal and the Subsidiaries are duly qualified to do business and are in good
standing in all jurisdictions which require such qualification or in which the
failure to qualify in such jurisdictions could, in the aggregate, have any
material adverse effect on the business, condition or properties of Cardinal or
the Subsidiaries. Cardinal and the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities necessary for the conduct
of their businesses as described in the Registration Statement and own, or
possess adequate rights to use, all material rights necessary for the conduct of
their business and have not received any notice of conflict with the asserted
rights of others in respect thereof; and Cardinal and the Subsidiaries have the
corporate power and authority to own their properties and conduct their
businesses as described in the Registration Statement.
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(f) All of the outstanding shares of capital stock of the Subsidiaries
are owned by Cardinal, have been duly authorized and are validly issued, fully
paid and non-assessable and are owned by Cardinal free and clear of any lien,
claim, security interest or other encumbrance. The Subsidiaries are Cardinal's
only Subsidiaries.
(g) Cardinal and the Subsidiaries have good and marketable title to
all property described in the Registration Statement as being owned by them,
free and clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement (or any amendment or
supplement thereto) or such as are not material and do not interfere in any
material respect with the use of the property or the conduct of the business of
Cardinal and the Subsidiaries taken as a whole, and the property held under
lease by Cardinal and the Subsidiaries is held by them under valid and
enforceable leases with only such exceptions as in the aggregate are not
material and do not interfere in any material respect with the conduct of the
business of Cardinal and the Subsidiaries taken as a whole, provided that no
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representation or warranty is made hereby to the title of the lessor of any such
property.
(h) There are no legal or governmental proceedings pending, or to the
knowledge of Cardinal threatened, required to be described in the Registration
Statement (or any amendment or supplement thereto) which are not described as
required, and there is no contract or document of a character required to be
described in the Registration Statement which is not described as required.
(i) Neither Cardinal nor the Subsidiaries are in violation of their
charter or bylaws, or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any agreement, indenture, lease or
other instrument to which they are a party or by which their assets are bound.
Neither the issuance nor the sale of the Shares nor the execution and delivery
of this Agreement nor the performance of the obligations of Cardinal set forth
herein nor the consummation of the transactions herein contemplated requires any
consent, approval, authorization or other order of any court, regulatory, body,
administrative agency or other governmental body (except such as may be required
under the Securities Act or state securities or Blue Sky laws) or will conflict
with or constitute a breach of, or default under, the charter or bylaws of
Cardinal or the Subsidiaries, or constitute a breach or default under any
agreement, indenture or other instrument to which Cardinal or the Subsidiaries
are a party or by which they or any of their property is bound, or any law,
administrative regulation or ruling or court decree applicable to Cardinal or
the Subsidiaries or any of their properties.
(j) Except as disclosed in the Registration Statement (or any
amendment or supplement thereto), subsequent to the respective dates as of which
such information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), Cardinal and the Subsidiaries have not
incurred any liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material to
Cardinal or the Subsidiaries taken as a whole, and there has not been any
material change in the capital stock, or material increase in the short-term
debt or long-term debt, of Cardinal or the Subsidiaries, or any material adverse
change, or any development involving a prospective material adverse change, in
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the condition (financial or otherwise), business, net worth or results of
operations of Cardinal and the Subsidiaries taken as a whole.
(k) KPMG LLP, who have certified certain of the financial statements
filed with the Commission as part of the Registration Statement, have consented
in writing to the inclusion of their report in the Registration Statement and
are independent public accountants as required by the Securities Act.
(l) Cardinal's financial statements, together with related schedules
and notes, forming part of the Registration Statement, present fairly the
financial position and the results of operations of Cardinal and the
Subsidiaries at the respective dates or for the respective periods to which they
apply; said statements and related notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the financial and statistical
information and data set forth in the Registration Statement is fairly presented
and prepared on a basis consistent with such financial statements and the books
and records of Cardinal and the Subsidiaries; provided, however, that any
interim unaudited financial statements of Cardinal included in the Registration
Statement are subject to normal year-end adjustments, which will not be material
in the aggregate, and lack footnotes and other presentation items. Cardinal and
the Subsidiaries have no material contingent obligations which are not disclosed
in the Registration Statement, as it may be amended or supplemented.
(m) Except as contemplated by the Rights Offering, no holders of
securities of Cardinal have rights to sell shares in the Offerings contemplated
hereby.
(n) Cardinal and the Subsidiaries have filed all federal, state and
foreign income tax returns which have been required to be filed and have paid
all taxes indicated by said returns and all assessments received by them or any
of them, to the extent such taxes have become due and are not being contested in
good faith.
(o) Cardinal and the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities which are necessary to
the conduct of their businesses, and neither Cardinal nor the Subsidiaries have
infringed any patents, patent rights, trade names, trademarks or copyrights in
any manner material to the business of Cardinal and the Subsidiaries taken as a
whole.
(p) This Agreement has been duly authorized, executed and delivered by
Cardinal and is a valid and binding agreement of Cardinal enforceable in
accordance with its terms.
(q) All employee benefit plans established, maintained or contributed
by Cardinal comply in all material respects with requirements of the Employee
Retirement Income Security Act of 1974 ("ERlSA") and no such plan incurred or
assumed any "accumulated funding deficiency" within the meaning of ss. 302 of
ERISA or has incurred or assumed any material liability to the Pension Benefit
Guaranty Corporation.
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2. Advisory Fee. The Underwriter has advised and agrees to continue to
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advise Cardinal on the structure, format and manner of consummation of the
Rights Offering. The Underwriter has further agreed to use its best efforts in
the Public Offering to sell any Shares offered by Cardinal to its shareholders
in the Rights Offering that are not purchased by Cardinal's shareholders. For
such assistance, Cardinal shall pay you an advisory fee equal to one percent
(1%) of the gross proceeds of the Rights Offering.
3. Sale of the Shares. On the basis of the representations, warranties and
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covenants herein contained, and subject to the conditions herein set forth,
Cardinal agrees to issue and sell 5,000,000 of the Shares through a combination
of the Rights Offering and the Public Offering. Cardinal reserves the right to
increase the total number of Shares offered in the Public Offering by up to
750,000 Shares. All Shares to be offered and sold in the Public Offering shall
be issued and sold through the Underwriter, as agent for Cardinal, to the
public, and the Underwriter agrees to use its best efforts to sell the Shares as
agent for Cardinal, at the price per share set forth on the cover page of the
Prospectus for the Public Offering (the "Public Offering Price"). No person
shall be permitted to purchase more than five percent (5%) of the Shares without
the prior written consent of Cardinal. Cardinal agrees to pay the Underwriter a
commission equal to 4.0% of the Public Offering Price of the Shares sold through
the Underwriter (including Shares sold through selected dealers and Shares that
were offered but not sold in the Rights Offering). It shall be the Underwriter's
responsibility to compensate any selected dealers out of the commissions it
receives from Cardinal. The Underwriter may reject any offer to purchase the
Shares made through the Underwriter in whole or in part, and any such rejection
shall not be deemed a breach of the Underwriter's agreement contained herein.
4. Sales by the Underwriter. It is understood that after the Registration
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Statement becomes effective, you propose to sell the Shares to be sold in the
Public Offering to the public as agent for Cardinal upon the terms and
conditions set forth in the Prospectus. The escrow procedures established by the
Underwriter shall comply with Commission Rule 15c2-4 promulgated under the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). All subscribers to whom
the Underwriter directly sells Shares shall be instructed to make their check
for payment of the Shares payable to " ." In addition, the
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Underwriter shall comply with Rule 15c2-4. The Underwriter shall transmit all
funds it receives from subscribers to , the escrow agent
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(the "Escrow Agent"), by noon of the next business day following receipt
thereof. Only broker/dealers who are either (i) members in good standing of the
National Association of Securities Dealers, Inc. (the "NASD") that are
registered with the NASD and maintain net capital pursuant to Rule 15c3-1
promulgated under the Exchange Act of not less than $25,000 or (ii) dealers with
their principal places of business located outside the United States, its
territories and its possessions and not registered as brokers or dealers under
the Exchange Act, who have agreed not to make any sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein, shall be designated selected dealers by the
Underwriter. The Underwriter shall require all selected dealers to comply with
Rule 15c2-4.
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5. Payment and Delivery. The Underwriter shall direct the Escrow Agent to
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make payment for the Shares sold hereunder by wire transfer or certified or bank
cashier's checks drawn to the order of Cardinal in next day funds. Such payment
is to be made at the offices of Cardinal, 00000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000, at 12:00 noon, on or about May , 2002, or at such other
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time, date and place as you and Cardinal shall agree upon, such time and date
being herein referred to as the "Closing Date." Unless the transaction is closed
book-entry through The Depository Trust Company, the certificates for the Shares
will be delivered in such denominations and in such registrations as the
Underwriter requests in writing not later than the third (3rd) full business day
prior to the Closing Date, and will be made available for inspection by the
Underwriter at least twenty-four (24) hours prior to the Closing Date. Such
certificates will be delivered by Cardinal to the Escrow Agent by 12:00 p.m. on
the day prior to the Closing Date, along with addressed labels to be used to
mail the certificates to the purchasers thereof. Cardinal shall, upon tender of
payment for the Shares, direct the Escrow Agent to deliver (i) payment of the
advisory fee and the portion of the selling commission due to the Underwriter,
by wire transfer or certified or bank cashier's check drawn to the order of the
Underwriter in next day funds, to the Underwriter on the Closing Date and (ii)
payment of the portion of the selling commission due to each selected dealer by
wire transfer or certified or bank cashier's check drawn to the order of such
selected dealer in next day funds, to each selected dealer on the Closing Date.
6. Covenants of Cardinal. Cardinal covenants and agrees with the
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Underwriter as follows:
(a) Cardinal will endeavor to cause the Registration Statement to
become effective and will advise you promptly and, if requested by you, will
confirm such advice in writing (i) when the Registration Statement has become
effective and when any amendment thereto thereafter becomes effective, (ii) of
any request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or contemplation of any
proceeding for such purposes and (iv) within the period of time referred to in
Section 6(e), of the happening of any event that makes any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any addition to or
change in the Registration Statement or the Prospectus (as then amended or
supplemented) to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or of the necessity to
amend or supplement the Prospectus (as then amended or supplemented) to comply
with the Securities Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration Statement,
Cardinal will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(b) Cardinal will furnish you, without charge, three signed copies of
the Registration Statement as originally filed with the Commission and of each
amendment to it, including financial statements and all exhibits thereto, and
will also furnish to you such number of
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conformed copies of the Registration Statement (without exhibits) as originally
filed and of each amendment thereto as you may reasonably request.
(c) Cardinal will not file any amendment to the Registration Statement
or make any amendment or supplement to the Prospectus of which you shall not
have been advised previously or to which you shall reasonably object in writing
promptly after being so advised.
(d) Prior to the effective date of the Registration Statement,
Cardinal has delivered or will deliver to you, without charge, in such
quantities as you have requested or may hereafter reasonably request, copies of
each form of Preliminary Prospectus. Cardinal consents to the use, in accordance
with the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by dealers
to whom Shares may be sold, prior to the effective date of the Registration
Statement, of each Preliminary Prospectus so furnished by Cardinal.
(e) On the effective date of the Registration Statement and thereafter
from time to time, for such period as in the opinion of counsel for the
Underwriter a prospectus is required by law to be delivered in connection with
sales by the Underwriter or a dealer, Cardinal will deliver to you and each
dealer through whom Shares may be sold without charge (except as provided below)
as many copies of the Prospectus (and of any amendment or supplement thereto) as
they may reasonably request. Cardinal consents to the use of such Prospectus
(and of any amendment or supplement thereto) in accordance with the Securities
Act and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the Underwriter and by dealers through whom Shares may be
sold, both in connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law to be delivered
in connection therewith. If during such period of time any event shall occur
that, in the judgment of Cardinal or in the opinion of counsel for the
Underwriter, requires that a material fact be stated in the Prospectus (as then
amended or supplemented) in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with the Securities
Act or any other law, Cardinal at its own expense (except as provided below)
will forthwith prepare and file with the Commission an appropriate amendment or
supplement thereto, and will furnish to the Underwriter and each dealer through
whom Shares may be sold without charge (except as provided below) a reasonable
number of copies thereof.
(f) If required, Cardinal will cooperate with you in connection with
the registration or qualification of the Shares for offer and sale by you and by
dealers through whom Shares may be sold under the securities or Blue Sky laws of
such jurisdictions as you may reasonably designate and will file such consents
to service of process or other documents as may be necessary in order to effect
such registration or qualification, provided that in no event shall Cardinal be
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obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to the service of process
in suits, other than those arising out of the offer and sale of the Shares, in
any jurisdiction where it is not now so subject.
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(g) Cardinal will make generally available to its security holders an
earnings statement covering a twelve-month period commencing after the date of
the Prospectus and ending no later than 15 months thereafter, as soon as
practicable after the end of such period, which earnings statement shall satisfy
Section 11(a) of the Securities Act and any applicable Commission regulations.
(h) During the period of five years hereafter, Cardinal will furnish
to you (i) as soon as available, a copy of each report of Cardinal mailed to
shareholders or filed with the Commission and (ii) from time to time such other
proper information concerning the business and financial condition of Cardinal
as you may reasonably request.
7. Costs and Expenses.
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(a) Cardinal will pay all costs and expenses incident to the
performance by it of its obligations hereunder, including (i) the preparation
and printing of the Registration Statement (including financial statements and
exhibits) and each Preliminary Prospectus, the Prospectus and all amendments and
supplements to any of the foregoing, during the period specified in Section 6(e)
but not exceeding nine months after the date on which the Shares are first
offered in the Rights Offering; (ii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp tax in
connection with the original issuance of the Shares; (iii) the preparation and
delivery of the preliminary and supplemental Blue Sky Memoranda (including the
reasonable fees and disbursements of counsel relating thereto); (iv) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 6(f)
(including the reasonable fees and disbursements of counsel relating thereto);
(v) the fees and expenses of counsel in connection with due diligence, review of
the Prospectus, NASD filings and preparation of this Agreement, the Selected
Dealer Agreement, the Escrow Agreement and matters related thereto; (vi) the
fees and expenses of Cardinal's accountants and the fees and expenses of counsel
for Cardinal; (vii) during the period specified in Section 6(e), but not
exceeding nine months after the date on which the Shares are first offered in
the Rights Offering, delivery to the Underwriter and dealers through whom Shares
may be sold (including postage, air freight and the expenses of counting and
packaging) of such copies of the Preliminary Prospectus and the Prospectus and
any amendments or supplements thereto as may be requested for use by the
Underwriter or by dealers through whom Shares may be sold in connection with the
Public Offering and sale of the Shares; (viii) filing fees with the NASD in
connection with the Offerings; (ix) the costs of all informational and/or
investor due diligence meetings; and (x) the performance by Cardinal of its
other obligations under this Agreement. The Underwriter shall pay its own costs
and expenses except as otherwise provided in this Agreement and agrees that
Squire, Xxxxxxx & Xxxxxxx L.L.P. will serve as counsel for Cardinal and as
special counsel for the Underwriter.
(b) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than by notice given by you terminating this Agreement
pursuant to Section 12 hereof or the non-fulfillment of the conditions to
Cardinal's obligation to perform set forth in Section 9), or if this Agreement
shall be terminated by you because of any failure or refusal on the part of
Cardinal to comply in any material respect with the terms, or fulfill in any
material respect
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any of the conditions, of this Agreement, Cardinal agrees without further
obligation to reimburse you for all out-of-pocket expenses (including fees and
expenses of your counsel) reasonably and actually incurred in connection
herewith.
8. Conditions of the Underwriter's Obligations. The obligations of you
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hereunder are subject to the following conditions:
(a) That the Registration Statement shall have become effective not
later than 5:00 p.m., on the date hereof, or at such later date and time as
shall be consented to by you.
(b) That subsequent to the date of the Registration Statement, there
shall not have occurred any change, or any development involving a prospective
change in or affecting particularly the condition (financial or otherwise),
business, properties, net worth or results of operations of Cardinal or the
Subsidiaries not contemplated by the Prospectus (or any supplement thereto)
which, in your opinion, would materially adversely affect the market for the
Shares.
(c) That you shall have received on the Closing Date an opinion dated
as of the Closing Date, from Squire, Xxxxxxx & Xxxxxxx L.L.P., as counsel to
Cardinal, to the effect that:
(i) Cardinal and the Subsidiaries have been duly organized and
incorporated, are validly existing and are duly qualified to do business and are
in good standing in all jurisdictions which require such qualification or in
which the failure to qualify in such jurisdictions could, in the aggregate, be
reasonably expected to have any material adverse effect on the business,
condition or properties of Cardinal or the Subsidiaries.
(ii) The Subsidiaries are Cardinal's only Subsidiaries, and all
the outstanding shares of capital stock of the Subsidiaries are owned by
Cardinal, have been duly authorized and validly issued, and are nonassessable
and, to the knowledge of such counsel, are fully paid and owned by Cardinal free
and clear of any lien, claim, security interest or other encumbrance, except as
otherwise described in the Prospectus (or any amendment or supplement thereto)
or such as are not material;
(iii) The Shares to be issued and sold by Cardinal hereunder have
been duly authorized and, when issued and delivered in accordance with the terms
of this Agreement, will have been validly issued and will be fully paid and
nonassessable, and the issuance of such Shares is not subject to any preemptive
rights or, to the knowledge of such counsel, similar rights other than the right
of Cardinal's existing shareholders to purchase Shares in the Rights Offering;
(iv) Cardinal has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization", and all of the issued shares
of capital stock of Cardinal have been duly and validly authorized and issued,
are nonassessable and conform to the description of the capital stock contained
in the Prospectus; except as described in the Prospectus, there are no warrants
or options to purchase any securities of Cardinal; to the best of such counsel's
knowledge, the offering or sale of the Shares as contemplated by this Agreement
does not give rise to any rights for the offering or sale of other shares of
capital stock of Cardinal;
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(v) The certificates for the Shares are in proper legal form;
(vi) This Agreement has been duly authorized, executed and
delivered by Cardinal and (assuming due authorization, execution and delivery by
the Underwriter) is a valid and binding agreement of Cardinal enforceable in
accordance with its terms, except in all cases as rights of indemnity or
contribution hereunder may be limited under applicable law and except as the
enforceability hereof may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or general equitable principles;
(vii) Except for the order of the Commission making the
Registration Statement effective and any permits and similar authorizations
required under state securities or Blue Sky laws, no consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the consummation of the sale
of the Shares to the purchasers through the Underwriter as contemplated by this
Agreement;
(viii) To the knowledge of such counsel, neither Cardinal nor its
Subsidiaries are in violation of their charter or bylaws, or are in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any agreement, indenture or other instrument known to such
counsel that is material to the conduct of the business of Cardinal and the
Subsidiaries taken as a whole, and the execution, delivery and performance of
this Agreement, compliance by Cardinal with all provisions hereof and the
consummation of the transactions contemplated hereby will not conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or bylaws of Cardinal or the Subsidiaries or, to the knowledge of
such counsel, any material agreement, indenture or other instrument to which
Cardinal or the Subsidiaries is a party or by which they are bound, or (assuming
compliance with the Securities Act and other securities or Blue Sky laws)
violate any law, administrative regulation or ruling (except as the
indemnification or contribution provisions in this Agreement may be limited by
applicable law) or, to the knowledge of such counsel, court decree applicable to
Cardinal or the Subsidiaries or any of their respective properties;
(ix) To the knowledge of such counsel, there are no material
legal or governmental proceedings or contracts or other documents which are
required to be described in the Prospectus which are not so described;
(x) The statements in the Prospectus under the captions
"Government Supervision and Regulation" and "Description of Capital Stock",
insofar as such statements constitute a summary of the documents, legal matters
or proceedings referred to therein, fairly and accurately present in all
material respects the information called for by Commission Regulations with
respect to such documents, legal matters or proceedings; and
(xi) The Registration Statement and the Prospectus (and any
amendment or supplement thereto) comply as to form in all material respects with
the requirements of Form SB- 2 under the Securities Act.
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Subject to its customary practices and limitations relating to the scope of
such counsel's participation in the preparation of the Registration Statement
and its investigation or verification of information contained therein, Squire,
Xxxxxxx & Xxxxxxx L.L.P. also shall state that nothing has come to its attention
to cause it to believe that the Registration Statement (except for financial
statements, schedules and other financial data included therein, as to which
such counsel need not express any belief), at the time it became effective or as
of the date of their opinion, contained any untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Registration
Statement and any amendment or supplement thereto (except as aforesaid) as of
their respective dates contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
In rendering the opinions required by this Section 8(c), such counsel may
rely, as to matters of fact, upon certificates and representations of officers
of Cardinal and the Subsidiaries (including the representations set forth in
this Agreement) and on certificates of public officials.
(d) That you shall have received on the Closing Date the opinion of
Squire, Xxxxxxx & Xxxxxxx L.L.P., as special counsel to you, dated the Closing
Date, covering such matters as you may have reasonably requested.
(e) That you shall have received letters addressed to you and dated
the date hereof and the Closing Date from KPMG LLP, independent public
accountants, substantially in the form heretofore approved by you.
(f) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of Cardinal, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any material change in the capital stock of Cardinal nor any
material increase in long-term debt of Cardinal or any of the Subsidiaries from
that set forth or contemplated in the Registration Statement (or any amendment
or supplement thereto); (iii) there shall not have been, since the respective
dates as of which information is given in the Registration Statement (or any
amendment or supplement thereto), except as otherwise be stated in the
Registration Statement (or any amendment or supplement thereto), any material
adverse change in the condition (financial or otherwise), business, properties,
net worth or results of operations of Cardinal and the Subsidiaries, taken as a
whole; (iv) neither Cardinal nor the Subsidiaries shall have any material
liability or obligation, direct or contingent, other than those liabilities or
obligations reflected in the Registration Statement (or any amendment or
supplement thereto) or incurred or arising in the ordinary course of business;
and (v) all of the representations and warranties of Cardinal contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and the Closing Date as if made on and as of such date, and you
shall have received a certificate, dated the Closing Date and signed by the
President and the Chief Financial Officer of Cardinal, to the effect set forth
in this Section 8(f) and Section 8(g) hereof.
XxXxxxxx & Company, Inc.
May , 2002
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(g) That Cardinal shall not have failed at or prior to the Closing
Date to have performed or complied in any material respect with any of the
agreements herein contained and required to be performed or complied with by it
at or prior to the Closing Date.
(h) That Cardinal shall have furnished you such further certificates
and documents confirming the representations and warranties contained herein and
related matters as you may reasonably have requested.
9. Conditions to the Obligations of Cardinal. The obligations of Cardinal
-----------------------------------------
to sell and deliver the portion of the Shares required to be delivered as and
when specified in this Agreement are subject to the conditions that at or before
5:00 p.m., on the date of this Agreement, or such later time and date to which
Cardinal and the Underwriter may from time to time consent, the Registration
Statement shall have become effective; at the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened; and the
Escrow Agent shall have tendered to Cardinal payment for the Shares.
10. Indemnification and Contribution.
--------------------------------
(a) Cardinal agrees to indemnify and hold harmless the Underwriter and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages, liabilities or expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or in any amendment or supplement thereto if used within the period
set forth in Section 6(e), or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement based upon
information relating to the Underwriter furnished in writing to Cardinal by or
on behalf of the Underwriter expressly for use in connection therewith; provided
that the indemnification contained in this paragraph with respect to any
Preliminary Prospectus shall not inure to the benefit of the Underwriter (or any
person controlling the Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by the Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person with or prior to the written confirmation of the sale involved (or
any supplement to the Prospectus at the time of such confirmation was not so
delivered or sent) and the statement or omission giving rise to such loss,
claim, damage, liability or expense was contained in the Preliminary Prospectus
and corrected in the Prospectus (or any supplement thereto at the time such
confirmation was delivered or sent).
(b) If any action or claim shall be brought against the Underwriter or
any person controlling the Underwriter, in respect of which indemnity may be
sought against Cardinal in accordance with Section 10(a), the Underwriter shall
promptly notify Cardinal in writing and Cardinal shall assume the defense
thereof, including the employment of counsel and payment of all reasonable fees
and expenses. The Underwriter or any such person controlling the Underwriter
XxXxxxxx & Company, Inc.
May , 2002
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shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the reasonable fees and expenses of such
counsel shall be at the expense of the Underwriter or such controlling person
unless (i) Cardinal has agreed in writing to pay such fees and expenses, (ii)
Cardinal has failed to assume the defense and employ counsel, or (iii) the named
parties to any such action (including any impleaded party) include both the
Underwriter or controlling person and Cardinal and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them (in which case, if such Underwriter or
controlling person notifies Cardinal in writing that it elects to employ
separate counsel at the expense of Cardinal, Cardinal shall not have the right
to assume the defense of such action on behalf of the Underwriter or such
controlling person, it being understood, however, that Cardinal shall not, in
connection with any such action or separate but substantially related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the Underwriter and controlling
persons, which firm shall be designated in writing by you). Cardinal shall not
be liable for any settlement of any such action effected without the written
consent of Cardinal, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, Cardinal agrees to
indemnify and hold harmless the Underwriter and any such controlling person from
and against any loss, liability, damage or expense by reason of such settlement
or judgment.
(c) The Underwriter agrees to indemnify and hold harmless Cardinal,
its directors and officers and any person controlling Cardinal to the same
extent as the foregoing indemnity from Cardinal to the Underwriter, but only
with respect to information [in the last paragraph on the front cover of the
Prospectus] and in the section of the Prospectus entitled "Underwriting," which
were furnished by or on behalf of the Underwriter expressly for use in the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto. If any action or claim shall be brought or asserted against Cardinal,
its directors, any such officer or any such controlling person based on the
Prospectus or any Preliminary Prospectus, or any amendment or supplement thereto
and in respect of which indemnity may be sought against the Underwriter, the
Underwriter shall have the rights and duties given to Cardinal by Section 10(b)
(except that if Cardinal shall have assumed the defense thereof, the Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of the Underwriter), and Cardinal, its directors, any
such officer, any such controlling person shall have the rights and duties given
to the Underwriter by Section 10(b).
(d) If the indemnification of the Underwriter or Cardinal provided for
in this Section 10 is unavailable as a matter of law to the Underwriter or
Cardinal, as the case may be, in respect of any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or expense (i) in such proportion as is appropriate to reflect
the relative benefits received by Cardinal, as the case may be, on the one hand,
and the Underwriter, on the other, from the Offerings or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion
XxXxxxxx & Company, Inc.
May , 2002
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as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of Cardinal, on the one hand, and
of the Underwriter, on the other, in connection with the statements or omissions
which resulted in such loss, claims, damage, liability or expense, as well as
any other relevant equitable considerations. The relative benefits received by
Cardinal, on the one hand, and the Underwriter, on the other, shall be deemed to
be in the same proportion as the total net proceeds from the Offerings (before
deducting expenses) received by Cardinal bear to the total underwriting
commissions (and advisory fee) received by the Underwriter as set forth in the
table on the cover page of the Prospectus (as amended or supplemented and in the
section entitled "Underwriting" in the Prospectus as amended or supplemented).
The relative fault of Cardinal, on the one hand, and of the Underwriter, on the
other, 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 related to information supplied by Cardinal,
on the one hand, or by the Underwriter, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
Cardinal and the Underwriter agree that it would not be just and equitable
if contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses actually and reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(d), the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares sold by it as agent for
Cardinal exceeds the amount of any damages which the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentations.
(e) In any proceeding relating to the Registration Statement, the
Preliminary Prospectus or the Prospectus or any supplement or amendment thereto,
each party against whom indemnity or contribution may be sought under this
Section 10 hereby consents to the jurisdiction of any court having jurisdiction
over any other contributing party, agrees that process issuing from such court
may be served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party .
(f) The indemnity and contribution agreements contained in this
Section 10 and the respective agreements, representations, warranties and other
statements of Cardinal or its officers and the Underwriter set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of the Underwriter or
Cardinal or any person controlling the Underwriter, Cardinal or its directors,
officers (or any person controlling Cardinal), (ii) acceptance of any Shares and
payment therefor
XxXxxxxx & Company, Inc.
May , 2002
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hereunder and (iii) any termination of this Agreement. A successor of the
Underwriter or Cardinal or its directors or officers referred to above (or of
any person controlling the Underwriter or Cardinal) shall be entitled to the
benefits of the indemnity contribution and reimbursement agreements contained in
this Section 10.
11. Effective Date of Agreement. This Agreement shall become effective when
---------------------------
notification of the effectiveness of the Registration Statement has been
released by the Commission. Until such time as this Agreement shall have become
effective, it may be terminated by Cardinal by notifying you, or by you by
notifying Cardinal; provided, however, that the provisions of this Section 11
-------- -------
and of Sections 7 and 10 hereof shall at all times be effective.
12. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your sole discretion, without liability on your part, by notice
given to Cardinal, if prior to the Closing Date, (a) trading in securities
generally on the New York Stock Exchange shall have been suspended or materially
limited, (b) a general moratorium on commercial banking or thrift activities in
Virginia or the United States shall have been declared by either federal or
state authorities or (c) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to proceed with the Offerings. Notice of such
cancellation shall be given to Cardinal by telegraph or telephone but shall be
subsequently confirmed by letter.
13. Notices. All communications hereunder shall be in writing and, except
-------
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriter, to XxXxxxxx & Company, Inc., 000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X.
XxXxxxxx, Xx.; if to Cardinal, to Cardinal Financial Corporation, 00000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxx,
Chief Executive Officer.
14. Successors. This Agreement has been and is made solely for the benefit
----------
of the Underwriter, Cardinal and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. The term "successor" shall not include any purchaser of
the Shares merely because of such purchase.
15. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the Commonwealth of Virginia without reference to
the conflict of laws principles thereof.
XxXxxxxx & Company, Inc.
May , 2002
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If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between Cardinal and the
Underwriter in accordance with its terms.
Very truly yours,
CARDINAL FINANCIAL CORPORATION
By:
--------------------------------------
President and Chief Executive Officer
The foregoing Underwriting
Agreement is hereby confirmed and
accepted as of the date first above
written.
XxXXXXXX & COMPANY, INC.
By:
------------------------
President
