EXHIBIT 1
COMMERCEFIRST BANCORP, INC.
COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AND ADVISORY AGREEMENT
________ __, 2005
XxXxxxxx & Company, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
CommerceFirst Bancorp, Inc., a corporation organized under Maryland law
(the "Company"), proposes to employ you ("you" or the "Underwriter") to advise
the Company in the structure of subscription and public offerings of the
Company's common stock, par value $0.01 per share (the "Common Stock"), and, as
agent of the Company, to assist in the sale on a best efforts basis of (i) up to
700,000 shares of Common Stock in the public offering (the "Public Offering"),
less (ii) any shares of Common Stock that are subscribed for by 5:00 p.m.
Eastern Time, ________ __, 2005 in the Company's rights offering of 175,000
shares of its Common Stock (the "Rights Offering"). The shares of Common Stock
to be issued in the Public Offering are referred to herein as the "Shares."
You have advised the Company (a) that you are authorized to enter into
this Agreement and (b) that you are willing to sell the Shares on a best efforts
basis as agent for the Company.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company
and the Underwriter hereby agree as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of 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 S-2 (File No. 333-________) relating to shares of Common Stock
to be sold in the Rights Offering. Such registration statement in the form in
which it became effective and also in such form as it may be when any
post-effective amendment thereto has or shall become effective, and the
prospectus filed as part of such 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 provisions of 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 information relating to the Underwriter on the front cover of
such prospectus and in the section of such prospectus entitled "Plan of
Distribution" that were made in reliance upon and conformity with information
furnished to the Company by such Underwriter expressly for use therein.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 2
(b) All offers and sales in connection with the Rights
Offering comply with applicable federal and state securities laws and are
conducted in the manner described in "The Rights Offering" section of the
prospectus in the form filed with the Commission as part of the registration
statement relating to the Rights Offering or pursuant to its Rule 424(b), if
any, after such registration statement became effective.
(c) The Company has prepared and filed with the Commission in
accordance with the provisions of the Securities Act, a registration statement
on Form S-2 (File No. 333-________), including a preliminary prospectus,
relating to the Shares to be sold in the Public Offering. Such registration
statement as amended at the time that it becomes effective is referred to
collectively in this Agreement as the "Registration Statement," and the
prospectus in the form filed with the Commission as part of the Registration
Statement or pursuant to its Rule 424(b), if any, after the Registration
Statement becomes effective is referred to collectively as the "Prospectus."
(d) Each preliminary Prospectus that is filed as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto complied, when so filed, in all material respects with the
provisions of the Securities Act; except that this representation and warranty
does not apply to statements in or omissions from information relating to the
Underwriter in the last paragraph on the front cover of the Prospectus and in
the section of the Prospectus entitled "Underwriting" that were made in reliance
upon and conformity with information furnished to the Company by such
Underwriter expressly for use therein.
(e) 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 such
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 provisions of 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
information relating to the Underwriter in the last paragraph on the front cover
of the Prospectus and in the section of the Prospectus entitled "Underwriting"
that were made in reliance upon and conformity with information furnished to the
Company by the Underwriter expressly for use therein.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 3
(f) The Company has the capitalization set forth in the
Prospectus under the caption "Capitalization." All of the outstanding shares of
Common Stock are duly authorized and validly issued, fully paid and
nonassessable and free of preemptive or similar rights (other than the right of
the Company's existing shareholders to purchase shares in the Rights Offering).
The shares of Common Stock to be sold in the Rights Offering and the Shares to
be issued and sold by the Company have been duly authorized, and upon delivery
to the purchasers thereof 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 and
the Prospectus (or any amendment or supplement thereto). None of the Company's
issued and outstanding shares of Common Stock was issued in violation of the
Securities Act.
(g) The Company and its wholly owned subsidiary, CommerceFirst
Bank (the "Bank"), are duly organized and validly existing and in good standing
under Maryland law. There are no other subsidiaries of the Company and there are
no subsidiaries of the Bank. The Company and the Bank are duly qualified to do
business and are in good standing in all jurisdictions that require such
qualification or in which the failure to qualify in such jurisdictions could
have, in the aggregate, any material adverse effect on the business, condition
(financial or otherwise) or properties of the Company or the Bank. The Company
and the Bank hold all material licenses, certificates, permits and other
authorizations from governmental authorities necessary for the conduct of their
businesses as described in the Prospectus 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 the Company and the Bank have the corporate power and
authority to own their properties and conduct their businesses as described in
the Prospectus. The Company is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended. The deposit accounts of the
Bank are insured by the Bank Insurance Fund administered by the Federal Deposit
Insurance Corporation up to the maximum amount provided by law, and no
proceedings for the modification, termination or revocation of any such
insurance are pending or, to the knowledge of the Company, threatened.
(h) All of the outstanding shares of capital stock of the Bank
are owned by the Company, have been duly authorized and are validly issued,
fully paid and nonassessable and are owned by the Company free and clear of any
lien, claim, security interest or other encumbrance.
(i) The Company and the Bank have good and marketable title to
all property described in the Prospectus 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 and the Prospectus (or any amendment
or supplement thereto or in a document filed as an exhibit to the Registration
Statement) 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 the
Company and the Bank taken as a whole, and the property held under lease by the
Company or the Bank 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 the Company and the Bank
taken as a whole; provided that no representation or warranty is made hereby to
the title of the lessor of any such property.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 4
(j) There are no legal or governmental proceedings pending, or
to the knowledge of the Company threatened, required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) that are not described as required, and there is no contract or
document of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed as required.
(k) Neither the Company nor the Bank is in violation of its
articles of incorporation 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 the Company or the Bank is a party
or by which its assets are bound, or in violation of any law, administrative
regulation or ruling or court decree applicable to the Company or the Bank or
any of their properties. Neither the issuance nor the sale of the Shares nor the
execution and delivery of this Agreement nor the performance of the obligations
of the Company 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 other securities laws or
Blue Sky laws or rules of the National Association of Securities Dealers, Inc.
(the "NASD") that may be applicable to the Underwriter) or will conflict with
the articles of incorporation or bylaws of the Company or the Bank, or
constitute a breach or default under any agreement, indenture or other
instrument to which the Company or the Bank is a party or by which either of
them or their property is bound, or any law, administrative regulation or ruling
or court decree applicable to the Company or the Bank or any of their
properties, which conflict, breach or default would have a material adverse
effect on the business, condition (financial or otherwise) or property of the
Company and the Bank taken as a whole.
(l) Except as disclosed in the Registration Statement and the
Prospectus (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), the
Company has 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 the Company and the Bank 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 the Company or the Bank, or any material adverse
change, or any development involving a prospective material adverse change, in
the condition (financial or otherwise), business, net worth or results of
operations of the Company and the Bank taken as a whole.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 5
(m) Xxxxx Xxxxx & Xxxxx, L.L.C., who have certified certain of
the financial statements filed with the Commission as part of the Registration
Statement and the Prospectus, have consented in writing to the inclusion of
their report in the Prospectus and are independent public accountants as
required by the Securities Act.
(n) The Company's financial statements, together with related
schedules and notes, forming part of the Registration Statement and the
Prospectus, present fairly the financial position and the results of operations
of the Company and the Bank at the respective dates or for the respective
periods to which they apply; such 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 and the Prospectus is fairly presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and the Bank. The Company and the Bank have no material contingent
obligations that are not disclosed in the Registration Statement and the
Prospectus, as they may be amended or supplemented.
(o) The Common Stock (including the Shares) is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Shares have been approved for inclusion on the Nasdaq
SmallCap Market under the symbol "CMFB," subject to official notice of issuance
of the Shares being sold by the Company and, upon consummation of the Public
Offering, the Company will be in compliance with the designation and maintenance
criteria applicable to Nasdaq SmallCap Market issuers.
(p) No holders of securities of the Company have rights to the
registration of such securities for sale in the Public Offering.
(q) The Company and the Bank have filed all federal, state and
foreign income tax returns that have been required to be filed and have paid all
taxes indicated by such returns and all assessments received by them or any of
them to the extent that such taxes have become due, and are not being contested
in good faith.
(r) The Company and the Bank hold all material licenses,
certificates and permits from governmental authorities that are necessary to the
conduct of their businesses, and neither the Company nor the Bank has received
any notice of proceedings relating to revocation or modification of any such
license, certificate or permit.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 6
(s) The Company and the Bank are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which it is engaged; all
policies of insurance and fidelity or surety bonds insuring the Company and the
Bank and their businesses, assets, employees, officers and directors are in full
force and effect; the Company and the Bank are in compliance with the terms of
such policies and instruments in all material respects; and there are no claims
by the Company or the Bank under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause; the Company and the Bank have not been refused any insurance
coverage sought or applied for; and the Company and the Bank have no reason to
believe that they will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their businesses at a cost that would
not have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of them taken as a whole, whether or
not arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any amendment or
supplement thereto).
(t) The Company and the Bank maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(u) The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(v) The Company and the Bank own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of their businesses as now conducted or as proposed in the
Registration Statement and the Prospectus to be conducted. Except as set forth
in the Registration Statement and the Prospectus, (i) there are no rights of
third parties to any such Intellectual Property; (ii) there is no material
infringement by third parties of any such Intellectual Property; (iii) there is
no pending or threatened action, suit, proceeding or claim by others challenging
the rights of the Company or the Bank in or to any such Intellectual Property,
and the Company and the Bank are unaware of any facts that would form a
reasonable basis for any such claim; (iv) there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property, and the Company and the Bank are unaware of any
facts that would form a reasonable basis for any such claim; and (v) there is no
pending or threatened action, suit, proceeding or claim by others that the
Company or the Bank infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
and the Bank are unaware of any other fact that would form a reasonable basis
for any such claim.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 7
(w) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is required to be
described in the Prospectus that is not so fully and accurately described.
(x) The Company is not and, after giving effect to the offer
and sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(y) Any statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources to the extent required.
(z) All employee benefit plans established, maintained or
contributed by the Company and the Bank comply in all material respects with
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and no such plan incurred or assumed any "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.
(aa) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
2. Advisory Fee. The Underwriter has advised and agrees to continue to
advise the Company 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 the Company to its
shareholders in the Rights Offering that are not purchased by the Company's
shareholders. For such services, the Company shall pay the Underwriter an
advisory fee equal to one percent (1%) of the aggregate price of the 175,000
shares that the Company sells to its shareholders in the Rights Offering.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 8
3. Sale of the Shares. On the basis of the representations, warranties
and covenants herein contained, and subject to the conditions herein set forth,
the Company agrees to issue and sell up to 700,000 Shares through a combination
of the Rights Offering and the Public Offering. The Company reserves the right
to increase the total number of Shares offered by up to 105,000 Shares. All
Shares to be offered and sold in the Public Offering shall be issued and sold
through the Underwriter, as agent for the Company, to the public and the
Underwriter agrees to use its best efforts to sell the Shares as agent for the
Company, at the price per share set forth on the cover page of the Final
Prospectus for the Public Offering (the "Public Offering Price"). The Company
agrees to pay the Underwriter a commission ("Selling Commission") equal to six
percent (6%) of the Public Offering Price of all Shares sold through the
Underwriter in the Public Offering, including Shares that were offered but not
sold in the Rights Offering (and including Shares sold through selected
dealers). It shall be the Underwriter's responsibility to compensate any
selected dealers out of the commissions that it receives from the Company. The
Underwriter may reject any offer to purchase the Shares made through the
Underwriter or a selected dealer 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 Statement becomes effective, the Underwriter proposes to sell the
Shares to the public as agent for the Company 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 Exchange Act. All
purchasers to whom the Underwriter directly sells Shares shall be instructed to
make their checks for payment of the Shares payable to "CommerceFirst Bancorp,
Inc. Public Offering Escrow Account." In addition, the Underwriter shall comply
with Rule 15c2-4. The Underwriter shall transmit all funds that it receives from
purchasers to SunTrust Bank, the escrow agent (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 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.
5. Payment and Delivery. The Underwriter shall direct the Escrow Agent
to make payment for the Shares sold hereunder by wire transfer. Such payment is
to be made at the offices of CommerceFirst Bancorp, Inc., 0000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. local time, on or about ________ __,
2005, or at such other time, date and place as you and the Company 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 and no
certificates are requested, in which case the procedures applicable thereto
shall be complied with, 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. Any such certificates will be
delivered by the Company to its transfer agent, or the Depository Trust Company,
as applicable, 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.
On the Closing Date, the Company shall direct the Escrow Agent to deliver (i)
payment of 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 9
6. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
(a) The Company 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) below, 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, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(b) The Company 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 conformed copies of the
Registration Statement (without exhibits) as originally filed and of each
amendment thereto as you may reasonably request.
(c) The Company 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 10
(d) Prior to the effective date of the Registration Statement,
the Company 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. The Company consents to the use, in
accordance with the provisions of 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 selected dealers to whom Shares may be sold, prior to the
effective date of the Registration Statement, of each preliminary prospectus so
furnished by the Company.
(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 an Underwriter or a dealer, the Company 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. The Company consents to the use of such
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of 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 selected
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 the Company, 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, the Company 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) The Company will cooperate with you and your counsel in
connection with the registration or qualification of the Shares for offer and
sale by you and by selected 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 the Company be 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 11
(g) The Company will make generally available to its security
holders an earnings statement, which need not be audited, covering a 12-month
period commencing after the effective date of the Registration Statement and
ending no later than 15 months thereafter, as soon as practicable after the end
of such period, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and any applicable regulation.
(h) During the period of five years hereafter, the Company
will furnish to you without charge (i) as soon as available, a copy of each
report of the Company 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 the Company as you may reasonably request.
7. Costs and Expenses.
(a) The Company will pay all costs and expenses incident to
the performance by it of its obligations hereunder, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), each preliminary prospectus, the Prospectus
and all amendments and supplements to any of the foregoing, during the period
specified in Section 6(e) above but not exceeding nine months after the date on
which the Shares are first offered to the public, (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 by counsel to the Underwriter of the
preliminary and supplemental Blue Sky Memoranda (including the reasonable fees
and disbursements of counsel for the Underwriter relating thereto), (iv) the
registration or qualification, if required, of the Shares for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 6(f) above (including the fees and disbursements of counsel for the
Underwriter relating thereto), (v) one-half of the amount of the fees and
expenses of the Underwriter's counsel in connection with due diligence, review
of the Registration Statement and 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 the Company's accountants
and the fees and expenses of counsel for the Company, (vii) during the period
specified in Section 6(e) above but not exceeding nine months after the date on
which the Shares are first offered to the public, delivery to the Underwriter
and selected dealers through whom Shares may be sold (including postage, air
freight and the expenses of counting and packaging) of such copies of the
Registration Statement, the Prospectus, each preliminary prospectus and
amendments or supplements to the Registration Statement and the Prospectus as
may be requested for use by the Underwriter or by selected dealers through whom
Shares may be sold in connection with the offering and sale of the Shares and
during such period of time thereafter as the Prospectus is required, in the
judgment of the Company or in the opinion of counsel for the Underwriter, to be
delivered in connection with the offer and sale of the Shares by you and by
selected dealers, (viii) filing fees with the NASD in connection with the Public
Offering, (ix) filing fees and costs associated with the inclusion of the Shares
for trading on The Nasdaq Stock Market, Inc. ("Nasdaq"), (x) the costs of all
informational and/or investor due diligence meetings and (xi) the performance by
the Company of its other obligations under this Agreement. The Underwriter shall
pay its own costs and expenses except as otherwise provided in this Agreement,
and the Underwriter agrees that the Company's obligation to pay one-half of the
amount of the legal fees and expenses of the Underwriter under this Section 7(a)
shall not exceed $12,500.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 12
(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 below), or if this Agreement shall be
terminated by you because of any failure or refusal on the part of the Company
to comply in any material respect with the terms, or fulfill in any material
respect any of the conditions, of this Agreement, the Company agrees without
further obligation to reimburse you for one-half of the amount of the fees and
expenses of your counsel, as provided in Section 7(a) above, which reimbursement
shall not exceed $12,500.
8. Conditions to the Obligations of the Underwriter. Your obligations
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 effective 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 the Company or the Bank not contemplated by the Prospectus (or any
amendment or supplement thereto) that, 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 the Closing Date, from Xxxxxxx, Xxxxx & Xxxxx, L.L.P., counsel to
the Company, to the effect that:
(i) the Company and the Bank have been duly
organized, are validly existing under the laws of their respective state or
other jurisdiction of incorporation or organization, are in good standing under
applicable law and are duly qualified to do business and are in good standing in
all jurisdictions that 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 the Company or the Bank;
(ii) all of the shares of Common Stock of the Company
outstanding prior to the issuance of the Shares to be issued and sold by the
Company hereunder have been duly authorized and validly issued and are fully
paid and nonassessable;
XxXxxxxx & Company, Inc.
________ __, 2005
Page 13
(iii) all of the outstanding shares of capital stock
of the Bank are owned by the Company, have been duly authorized and validly
issued, and are fully paid and nonassessable and, to the knowledge of such
counsel, are owned by the Company free and clear of any lien, claim, security
interest or other encumbrance, except as otherwise described in the Registration
Statement and the Prospectus (or any amendment or supplement thereto) or such as
are not material;
(iv) the Shares to be issued and sold by the Company
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 the Company's existing shareholders to purchase one
share of Common Stock for each 4.69 shares of Common Stock held of record on
December __, 2004, in the Rights Offering;
(v) Except as described in the Prospectus, there are
no warrants or options to purchase any securities of the Company; to the
knowledge of such counsel, 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 the Company;
(vi) the certificates for the Shares are in proper
legal form;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and (assuming due authorization, execution
and delivery by the Underwriter) is a valid and binding agreement of the Company
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;
(viii) neither the Company nor the Bank, to the
knowledge of such counsel, is in violation of its articles of incorporation or
bylaws, 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 the Company and the
Bank taken as a whole, or in violation of any law, administrative regulation or
ruling or court decree applicable to the Company or the Bank or any of their
respective properties, and the execution, delivery and performance of this
Agreement, compliance by the Company 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 articles of incorporation or bylaws of the Company or the Bank or, to the
knowledge of such counsel, any material agreement, indenture or other instrument
to which the Company or the Bank is a party or by which either of them is 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
the Company or the Bank or any of their respective properties;
XxXxxxxx & Company, Inc.
________ __, 2005
Page 14
(ix) the Registration Statement has been declared
effective by the Commission under the Securities Act and, to the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act and no proceedings for such
purpose have been instituted or are pending or are contemplated or threatened by
the Commission;
(x) except for the order of the Commission making the
Registration Statement effective and any permits and similar authorizations
required under other 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;
(xi) the Company is not and, after giving effect to
the offer and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(xii) the statements in the Prospectus under
"Business--Legal Proceedings", "Description of Our Capital Stock" and
"Supervision and Regulation" 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 with respect to such
documents, legal matters or proceedings;
(xiii) to the knowledge of such counsel, there are no
pending or threatened legal or governmental proceedings to which the Company or
the Bank is a party or of which any property of the Company or the Bank is the
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 or results of operations of the Company and the Bank taken as a whole.
Subject to its customary practices and limitations relating to the
scope of such counsel's participation in the preparation of the Prospectus and
its investigation or verification of information contained therein, Xxxxxxx,
Xxxxx & Xxxxx, L.L.P. also shall state that nothing has come to its attention to
cause it to believe that the Prospectus (except for financial statements,
schedules and other financial data included therein, as to which such counsel
need not express any belief) 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 Prospectus and any
amendment or supplement thereto (except as aforesaid) as of their respective
dates contains any untrue statement of a material fact or omits 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 15
In rendering the opinions required by this Section 8(c), such counsel
with the consent of Underwriter's counsel may rely, as to matters of fact, upon
certificates and representations of officers of the Company and the Bank and on
certificates of public officials.
(d) That you shall have received on the Closing Date the
opinion of Xxxxxxxx Xxxxxx, 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 Xxxxx Xxxxx & Xxxxx, L.L.C.,
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 the Company, 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 the Company nor any
material increase in long-term debt of the Company or the Bank from that set
forth or contemplated in the Registration Statement and the Prospectus (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
and the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and the Prospectus (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 the Company and the Bank, taken as a whole; (iv) neither the
Company nor the Bank shall have any material liability or obligation, direct or
contingent, other than those liabilities or obligations reflected in the
Registration Statement and the Prospectus (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 the Company 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 principal
executive officer and the principal financial officer of the Company, to the
effect set forth in this Section 8(f) and Section 8(g) below.
(g) That the Company 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 16
(h) The Company 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 the Company. The obligations of the
Company 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 the Company 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 be then in effect or proceedings therefor initiated or threatened;
and the Escrow Agent shall have tendered to the Company payment for the Shares.
10. Indemnification and Contribution.
(a) The Company 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 any
preliminary prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, 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 in the last
paragraph on the front cover of the Prospectus and in the section of the
Prospectus entitled "Underwriting" that was made in reliance upon and in
conformity with information furnished to the Company 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).
XxXxxxxx & Company, Inc.
________ __, 2005
Page 17
(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 the Company in accordance with Section 10(a)
above, the Underwriter shall promptly notify the Company in writing, and the
Company 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 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) the Company has agreed in
writing to pay such fees and expenses, (ii) the Company 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 the Company and representations 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 the
Company in writing that it elects to employ separate counsel at the expense of
the Company, the Company 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 the Company 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). The Company shall not be liable for any settlement of any
such action effected without the written consent of the Company, but if settled
with such written consent, or if there be a final judgment for the plaintiff in
any such action, the Company 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 the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company to the same extent as the foregoing indemnity
from the Company 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" that was furnished by or on behalf of the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus, or any amendment or supplement thereto. If any
action or claim shall be brought or asserted against the Company, its directors,
any such officer or any such controlling person based on the Registration
Statement, 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 the
Company by Section 10(b) above (except that if the Company 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 the Company, its directors, any such officer, any such controlling person
shall have the rights and duties given to the Underwriter by Section 10(b)
above.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 18
(d) If the indemnification of the Underwriter or the Company
provided for in this Section 10 is unavailable as a matter of law to the
Underwriter or the Company, 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 the Company, as the case may be, on
the one hand and the Underwriter on the other from the Public Offering or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Underwriter on the other in connection with
the statements or omissions that resulted in such loss, claim, damage, liability
or expense, as well as any other relevant equitable considerations. The relative
benefits received by the Company 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 Public Offering (before deducting expenses) received by the Company,
bear to the total underwriting commissions 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 the Company 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 the Company 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.
The Company 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 that 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 the
Company exceeds the amount of any damages that 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 pursuant to this Section 10 from any person who was not guilty of
such fraudulent misrepresentations.
(e) In any proceeding relating to the Registration Statement,
any preliminary prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 19
(f) The indemnity and contribution agreements contained in
this Section 10 and the respective agreements, representations, warranties and
other statements of the Company 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 the Company or any person controlling the Underwriter, the
Company or its directors, officers (or any person controlling the Company), (ii)
acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A successor of the Underwriter or the Company or
its directors or officers referred to above (or of any person controlling the
Underwriter or the Company) 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 signed by the parties to it.
12. Termination of Agreement. This Agreement shall be subject to
termination in your sole discretion, without liability on your part, by notice
given to the Company, if prior to the Closing Date (i) trading in securities
generally on the New York Stock Exchange or Nasdaq shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking or thrift
activities in Maryland or the United States shall have been declared by either
federal or state authorities or (iii) there shall have occurred any major
outbreak or escalation of hostilities or other international or domestic
calamity or crisis or major 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 reasonable judgment, impracticable or inadvisable to
proceed with the Public Offering. Notice of such cancellation shall be given to
the Company 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 telecopied 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 the Company, to CommerceFirst Bancorp, Inc., 0000 Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx.
14. Successors. This Agreement has been and is made solely for the
benefit of the Underwriter, the Company 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.
XxXxxxxx & Company, Inc.
________ __, 2005
Page 20
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.
[SIGNATURES ON NEXT PAGE]
XxXxxxxx & Company, Inc.
________ __, 2005
Page 21
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 the Company and the
Underwriter in accordance with its terms.
Very truly yours,
COMMERCEFIRST BANCORP, INC.
By:
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Name:
-----------------------------------
Title:
----------------------------------
The foregoing Underwriting and Advisory Agreement is hereby confirmed and
accepted as of the date first above written.
XxXXXXXX & COMPANY, INC.
By:
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Name:
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Title:
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