INTERVEST CORPORATION OF NEW YORK
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-1903
, 2001
----------
Sage, Xxxxx & Co., Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Sirs:
Intervest Corporation of New York, a New York corporation (the
"Company"), hereby confirms its agreement with you (sometimes herein called the
"Underwriter") as follows:
1. Introductory
------------
The Company proposes to issue and offer, through the Underwriter
acting as agent for the Company: $5,000,000 aggregate principal amount of its
Series / /01 Subordinated Debentures in three maturities as follows:
-- --
$1,000,000 with a maturity date of October 1, 2004, $2,000,000 with a maturity
date of October 1, 2006 and $2,000,000 with a maturity date of October 1, 2008.
All of the foregoing debentures are referred to as the "Debentures." If at least
$4,000,000 of Debentures, without regard to maturity, are not sold within 90
days after the date the Registration Statement (as defined below) is declared
effective by the Securities and Exchange Commission, all subscription documents
and funds (together with any net interest thereon) will be returned to
subscribers and the offering will terminate. The Debentures will be issued
pursuant to the provisions of an Indenture, dated as of , 2001 (the
------
"Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee"). The Debentures will be sold in denominations of $10,000 with a
minimum purchase of $10,000, and are more fully described in the Prospectus
referred to below. The Company hereby appoints the Underwriter as its exclusive
agent to sell the Debentures, subject to the terms and provisions of this
Agreement, on a "best efforts" basis with at least $4,000,000 of the Debentures,
without regard to maturity, required to be sold within 90 days after the date
the Registration Statement (as defined below) is declared effective by the
Securities and Exchange Commission (the "Termination Date"). If at least
$4,000,000 of the Debentures, without regard to maturity, are sold prior to the
Termination Date, any remaining Debentures may continue to be sold until 120
days after the minimum amount has been sold.
2. Representations and Warranties of the Company
---------------------------------------------
The Company hereby represents and warrants to, and agrees with, the
Underwriter as follows:
(a) A registration statement on Form S-11 (File No. 333-
) (the "Registration Statement") with respect to the Debentures,
--------
including the related Prospectus (the "Prospectus"), and any amendments thereto,
copies of which have heretofore been delivered by the Company to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act") and the published rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act, and has been filed with the Commission under the
Act. The Company may file on or prior to the Effective Date (as defined in
Section 3(a)) additional amendments to said Registration Statement, including
the final Prospectus.
(b) The Registration Statement and the Prospectus (other
than the financial statements and other financial data and schedules which are
or should be contained therein) conform as to form in all material respects to
the requirements of the Act and the Rules and Regulations and do not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and no event has
occurred which should have been set forth in the Registration Statement or the
Prospectus which has not been so set forth therein; provided, however, the
Company makes no representation or warranty as to statements or omissions made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriter expressly for use in the Registration
Statement, the Prospectus, or any amendment or supplement thereto.
(c) Neither the Commission nor the "blue sky" or state
securities authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing or
suspending the use of the Prospectus, the Registration Statement or any
amendment or supplement thereto, refusing to permit the effectiveness of the
Registration Statement or suspending the registration of the Debentures, nor
have any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
(d) The Company and each of the subsidiaries of the
Company described in the Prospectus (the "Subsidiaries"), are corporations duly
organized, validly existing and in good standing under the laws of the State of
New York, with full power and authority to conduct its own business and own or
lease its properties as described in the Prospectus, and is duly qualified and
in good standing as a foreign corporation in each jurisdiction where the conduct
of its business or its ownership or leasing of property requires it to be
qualified, except where the failure so to qualify would not have a material
adverse effect on the Company or the Subsidiaries.
(e) The authorized capital stock of the Company consists
of 200 shares of common stock, no par value (the "Common Stock") and 100 shares
of Class B Stock, no par value (the "Class B Stock"). There are 100 shares of
Common stock and no shares of Class B Stock outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable. All of the issued and
outstanding shares of Common Stock are owned by Intervest Bancshares
Corporation, a Delaware corporation. The Company owns all of the outstanding
shares of the Subsidiaries, free and clear of any liens or encumbrances and all
such shares are duly authorized, validly issued, fully paid and nonassessable.
(f) The financial statements of the Company together with
related schedules and notes as set forth in the Registration Statement and the
Prospectus fairly present the financial condition of the Company and the results
of its operations and the changes in its financial position as of the dates and
for the periods therein specified and such financial statements have been
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved.
(g) Except as reflected in or contemplated by the
Registration Statement or the Prospectus, since the date as of which information
is given in the Registration Statement or the Prospectus, there has not been any
material adverse change in the condition, financial or otherwise, of the Company
or the Subsidiaries. Since the date as of which information is given in the
Registration Statement or the Prospectus, neither the Company nor the
Subsidiaries have entered into any transaction, other than transactions in the
ordinary course of business.
(h) There are no actions, suits or proceedings pending,
or to the knowledge of the Company threatened, against or with respect to the
Company or its business or assets, or the Subsidiaries, or their business or
assets, at law or in equity, or before or by any federal or state commission,
regulatory body or administrative agency or other governmental body, domestic or
foreign, in which an adverse decision might have a material adverse effect on
2
the business or assets of the Company or the business or assets of the
Subsidiaries.
(i) The Company and the Subsidiaries have good title to
all properties and assets which the Prospectus indicates are owned by them, free
and clear of all liens, security interests, pledges, charges, encumbrances and
mortgages (except as may be described in the Prospectus or such as in the
aggregate will not have a material adverse effect upon the business or assets of
the Company or the Subsidiaries).
(j) The Company and the Subsidiaries are not in default
in any material respect under, and no event has occurred which, with the passage
of time or the giving of notice, or both, would constitute a material default
under, any contract, agreement, instrument, lease or license to which the
Company or the Subsidiaries is a party or by which any of them are bound, except
as may be properly described in the Prospectus or such as in the aggregate will
not have a material adverse effect on the business or assets of the Company or
on the business or assets of the Subsidiaries. The Company and the Subsidiaries
are not in violation of their certificates of incorporation or bylaws.
(k) The Company has all requisite power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and
the Indenture, and to issue, sell and deliver the Debentures in accordance with
and upon the terms and conditions set forth in this Agreement and the Indenture.
All necessary corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance by the Company of this
Agreement and the Indenture, and the issuance, sale and delivery of the
Debentures. This Agreement has been duly authorized, executed and delivered by
the Company, is the legal, valid and binding obligation of the Company, and is
enforceable as to the Company in accordance with its terms, except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws, court decisions or public policy. The Indenture has been duly
authorized by the Company and, when the Indenture has been executed and
delivered, will constitute the legal, valid and binding obligation of the
Company, and will be enforceable as to the Company in accordance with its terms.
The Debentures have been duly authorized by the Company and, when the Debentures
have been executed and authenticated in the manner set forth in the Indenture
and issued, sold and delivered against payment therefor in accordance with this
Agreement, will constitute the legal, valid and binding obligations of the
Company, will be enforceable as to the Company in accordance with their terms
and the terms of the Indenture and the holders of the Debentures will be
entitled to the benefits provided by the Indenture. The Debentures and the
Indenture conform to the description thereof in the section entitled
"DESCRIPTION OF DEBENTURES" in the Prospectus. The enforceability of this
Agreement, the Indenture, and the Debentures is subject in each case to (i)
applicable bankruptcy, moratorium, insolvency, reorganization and similar laws
relating to or affecting creditors' rights generally and (ii) general principles
of equity (regardless of whether such principles are considered in a proceeding
in equity or at law).
(l) No consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal is
required for the execution, delivery or performance by the Company of this
Agreement or the Indenture, or the execution, authentication, issuance, sale or
delivery of the Debentures (except (i) registration under the Act and (ii)
registration or qualification under "blue sky" or state securities laws).
(m) No consent of any party to any contract, agreement,
instrument, lease or license to which the Company or its Subsidiaries is a
party, or to which any of the Company's or its Subsidiaries' properties or
assets are subject, is required for the execution, delivery or performance of
this Agreement, the Indenture, or the execution, authentication, issuance, sale
and delivery of the Debentures; and the execution, delivery and performance of
3
this Agreement and the Indenture, and the execution, authentication, issuance,
sale and delivery of the Debentures, will not violate, result in a material
breach of, conflict with or (with or without the giving of notice or the
passage of time or both) result in a default under any such contract, agreement,
instrument, lease or license, or violate the certificate of incorporation or
bylaws of the Company or the Subsidiaries, or violate or conflict with any law,
rule, regulation, order, judgment or decree binding on the Company or its
Subsidiaries or to which any of the Company's or the Subsidiaries' properties or
assets are subject or result in the creation or imposition of any lien, charge
or encumbrance upon any assets of the Company or its Subsidiaries pursuant to
the terms of any contract, agreement, instrument, lease or license to which the
Company or its Subsidiaries is a party or to which any of their properties or
assets are subject.
(n) The Company knows of no outstanding claims for
services in the nature of a finder's fee or origination fee with respect to the
sale of the Debentures hereunder resulting from its acts for which the
Underwriter may be responsible.
(o) The Company and the Subsidiaries have filed all
federal and state tax returns which were required to be filed by them and have
paid all taxes shown on such returns and all assessments received by them, to
the extent such taxes or returns have become due (after giving effect to
applicable grace periods or extensions, if any).
3. Employment of Underwriter
-------------------------
(a) Subject to the terms and conditions herein set forth,
the effective date of this Agreement commences on the effective date under the
Act of the Registration Statement (the "Effective Date"), and the Company hereby
appoints the Underwriter as its exclusive agent as of the Effective Date, for
the purpose of offering the Debentures as provided in this Agreement on a "best
efforts" basis with at least $4,000,000 of the Debentures required to be sold
within 90 days after the Effective Date if any Debentures are sold. The
Underwriter agrees to use its best efforts to sell the Debentures as agent for
the Company. It is understood and agreed that there is no firm commitment on the
part of the Underwriter to purchase any of the Debentures.
(b) The Underwriter will offer the Debentures hereunder
at a price of $10,000 per Debenture. The Underwriter will be entitled to a
commission of three percent (3%) of the purchase price of each Debenture
maturing October 1, 2004, five percent (5%) of the purchase price of each
Debenture maturing October 1, 2006, and seven percent (7%) of each Debenture
maturing October 1, 2008, in each case sold in the offering by the Underwriter
or any of its selected dealers. In addition, the Company will pay the
Underwriter a fee in an amount equal to one-half of one percent (1/2%) of the
aggregate gross amount of Debentures maturing October 1, 2004 and one percent
(1%) of the aggregate gross amount of Debentures maturing October 1, 2006 and
October 1, 2008, in each case sold in the offering, such fee to be paid upon
completion of the offering. The Underwriter shall have the right to associate
with other dealers selected by the Underwriter who are members of the National
Association of Securities Dealers, Inc., pursuant to a written Selected Dealer
Agreement, and to offer a part of the Debentures to such selected dealers for
sale by them at the offering price. In no event shall sales be made to accounts
over which the Underwriter or any dealer may exercise discretionary authority
without the written approval of the customer and the Underwriter prior to the
execution of any order, and the Selected Dealer Agreement will include
provisions so as to assure compliance with this restriction. The Selected Dealer
Agreement will provide that if a Debenture is sold through any such selected
dealer, the Underwriter will allow to such selected dealer the entire commission
paid by the Company for such Debenture. If a Debenture is sold directly by the
Underwriter, the Underwriter will retain the entire commission paid by the
Company for such Debenture. The Underwriter shall take such steps as it deems
appropriate to assure that purchasers of Debentures meet the suitability
standards set forth in the Prospectus or otherwise imposed by the Company and
4
will maintain for a period of at least four (4) years a record of the
information obtained to indicate that such standards have been met.
(c) The obligation of the Underwriter to offer the
Debentures is subject to receipt by the Underwriter of a copy of written advice
from the Commission that the Registration Statement is effective. It is also
subject to the Debentures being qualified for offering under applicable state
securities laws.
(d) (i) A special interest-bearing account (the
"Escrow Account"') will be opened and maintained at M&T Bank (the "Bank") in
Rochester, New York, for the purpose of holding subscription funds in escrow
until the First Closing Date (as hereinafter defined). The title of the Escrow
Account will be "Intervest Corporation of New York Escrow Account". All
subscription funds shall be in the form of wire transfers of immediately
available funds, or checks, and all checks should be made payable to "M&T Bank,
as Escrow Agent for Intervest Corporation of New York." After the First Closing
Date all checks for subscriptions of Debentures shall be made payable to
"Intervest Corporation of New York", the Company. The Company, the Underwriter
and the Bank will, prior to the beginning of the offering of the Debentures,
enter into an escrow agreement with respect to the Escrow Account in form
satisfactory to the parties. The parties hereto agree to faithfully perform
their obligations under such escrow agreement. Except to the extent that
interest earned on the funds in the Escrow Account may be applied to pay escrow
expenses in the event the offering is terminated prior to the First Closing
Date, all costs, expenses, and charges incurred in connection with the Escrow
Account shall be paid by the Company.
(ii) Until the First Closing Date all funds
received from subscribers by any selected dealer shall be promptly transmitted
to the Bank (for deposit in the Escrow Account), but in any event such funds
shall be so transmitted by noon of the next business day following the day such
funds are received from the subscriber by the selected dealer. The Underwriter
shall promptly transmit to the Bank all funds received by it from subscribers
for deposit in the Escrow Account in accordance with Rule 15c2-4 under the
Securities Exchange Act of 1934, as amended, but in any event such funds shall
be so transmitted for deposit by noon of the next business day following the day
such funds are received. After the First Closing Date all funds received from
subscribers by any selected dealer shall be promptly transmitted to the
Underwriter for distribution to the Company, but in any event such funds shall
be transmitted by noon of the next business day following the day such funds are
received by the selected dealer.
(iii) The first closing of the offering will take
place at the offices of counsel to the Company on a date (the "First Closing
Date") which is within ten business days after the date on which acceptable
subscriptions have been received in cleared, collected funds for at least
$4,000,000 of Debentures.
(iv) On the First Closing Date the Underwriter
will cause the Bank to distribute the funds on deposit in the Escrow Account to
the Company, selected dealers and the Underwriter, as their interests may
appear. The Underwriter will be entitled to cause the Bank to distribute to the
Underwriter from the Escrow Account an amount sufficient to pay all of the
commissions on the Debentures sold to which the Underwriter and selected dealers
are entitled under the provisions of Section 3(b) hereof. Debentures may
continue to be offered and sold for up to 120 days after the First Closing Date.
After the First Closing Date, the Underwriter will distribute the checks for
subscriptions of Debentures directly to the Company within one business day of
receipt by the Underwriter. The Company shall, not less frequently than twice in
each calendar month, remit to the Underwriter commissions on the Debentures sold
to which the Underwriter and selected dealers are entitled under the provisions
of Section 3(b) hereof.
5
(v) In the event the offering pursuant to the
Prospectus is terminated prior to the First Closing Date for any reason
whatsoever, the Underwriter shall promptly cause the Bank to refund to the
subscribers of the Debentures all funds which have been received from them by
the Underwriter. Interest earned on funds in the Escrow Account shall be applied
to pay escrow expenses, with the balance of interest, if any, to be paid to
subscribers in proportion to the amount of funds paid by each subscriber on
subscription and without regard to the date when such subscription funds were
paid by the subscriber.
(e) In the event the offering is terminated prior to the
First Closing Date, this Agreement shall terminate, and upon the payments and
refunds to subscribers being made as provided in Section 3(d)(v), neither party
hereto shall have any further liability to the other hereunder.
(f) The Company shall pay all costs and expenses incident
to the performance of the obligations of the Company hereunder, including the
fees and expenses of the Company's counsel and accountants, registration fees,
the costs and expenses incident to the preparation, printing and shipping of the
Registration Statement, each preliminary prospectus, if any, the final
Prospectus and all amendments and supplements thereto and this Agreement and
related documents, filing fees required to be paid to the National Association
of Securities Dealers, Inc., the costs incurred in connection with the
qualification of the Debentures under applicable state securities laws and the
fee of Underwriter's legal counsel. The Underwriter shall pay all other costs
incurred or to be incurred by it, or by its personnel, in connection with the
offering of the Debentures.
4. Covenants of the Company
------------------------
(a) The Company will furnish to the Underwriter, without
charge, as soon as the Registration Statement or any amendment thereto becomes
effective or a supplement is filed, two signed copies of the Registration
Statement and each amendment thereto, including all financial statements and
exhibits, and two copies of any supplement thereto. The Company will also
furnish to the Underwriter such number of conformed copies of the Registration
Statement and of each amendment thereto, including all financial statements but
excluding exhibits, and of each supplement thereto, and of the Indenture as the
Underwriter may reasonably request.
(b) The Company will furnish to the Underwriter as soon
as possible after the Effective Date and thereafter during the period required
by law for the Prospectus to be delivered in connection with sales of the
Debentures, as many copies of the Prospectus (and of any amended or supplemented
Prospectus) as the Underwriter may reasonably request. If during such period any
event occurs as a result of which the Registration Statement or the Prospectus,
as then amended or supplemented, would include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances in which they were made, not misleading,
or it shall be necessary to amend or supplement the Registration Statement or
the Prospectus to comply with the Act or the Rules and Regulations, the Company
will forthwith notify the Underwriter thereof and prepare and furnish to the
Underwriter and dealers selected by the Underwriter, in such quantity as the
Underwriter and such dealers may reasonably request, an amendment or supplement
which will correct such statement or omission or cause the Registration
Statement and the Prospectus to comply with the Act and the Rules and
Regulations. The Company will not at any time prior to the expiration of such
period, whether before or after the Effective Date, file any amendment to the
Registration Statement of which the Underwriter will not have been advised and
furnished with a copy, or which is not in compliance with the Act and the Rules
and Regulations.
(c) The Company will use its best efforts to cause the
Registration Statement to become effective and will promptly advise the
Underwriter and will confirm such advice in writing, of the following:
6
(i) when the Registration Statement or any post-effective amendment thereto
shall have become effective, and when any amendment of or supplement to the
Prospectus is filed with the Commission; (ii) when the Commission shall make a
request or suggestion for any amendment to the Registration Statement or the
Prospectus or for additional information and the nature and substance thereof;
and (iii) the issuance by the Commission of a stop order suspending the
effectiveness of the Registration Statement or the suspension of the
qualification of the Debentures for sale in any jurisdiction, or of the
initiation of any proceeding for that purpose.
(d) The Company will take all action necessary to permit
the offering of the Debentures as contemplated hereby under the "blue sky" or
securities laws of the states in which it determines that Debentures shall be
sold; provided, however, that the Company shall not be required to qualify as a
foreign corporation or to file a consent to service of process in any state in
any action other than one arising out of the offering or sale of the Debentures.
The Company shall furnish the Underwriter with written notice as to the states
in which the Debentures are to be offered, together with such reasonable
documentation as may be requested by the Underwriter to establish that the
Debentures have been duly registered for offer and sale in those states or are
exempt from the registration requirements of such states, including, among other
things, "blue sky" memoranda or surveys prepared by the Company's counsel with
respect to those states in which the Company has determined that the Debentures
are to be offered. Notwithstanding the foregoing, nothing in this agreement
shall be construed as obligating the Underwriter or any selected dealers engaged
in the offering of the Debentures to offer Debentures in any states in which the
Underwriter or selected dealer, as the case may be, is not registered as a
broker-dealer.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act and the Rules and Regulations) to its
security holders, within 120 days of the first day of the fiscal year of the
Company, an earnings statement of the Company (which will be in reasonable
detail and will comply with the requirements of Section 11 (a) of the Act, but
need not be audited) covering the prior fiscal year of the Company, commencing
with the fiscal year of the Company during which this Agreement is executed.
(f) For a period of five years after the termination of
the Offering, the Company will furnish the Underwriter without charge, within 90
days after the end of each fiscal year, a copy of its financial statements
certified by independent certified public accountants.
(g) The Company will apply the net proceeds received by
it from the offering in the manner set forth under "Use of Proceeds" in the
Prospectus.
(h) The Company will furnish to the Underwriter as early
as practicable prior to the First Closing Date, but no less than two full
business days prior thereto, a copy of the latest available unaudited interim
financial statements of the Company which have been read by the Company's
independent certified public accountants, as stated in their letters to be
furnished pursuant to Section 5(f).
(i) The Company will comply with all registration,
filing, and reporting requirements of the Securities Exchange Act of 1934, which
may from time to time be applicable to the Company, and, for a period of three
years after the termination of the Offering, the Company will furnish the
Underwriter, without charge, with copies of all filings made with the Commission
pursuant to the Securities Exchange Act of 1934.
(j) The Company will comply with all provisions of all
undertakings contained in the Registration Statement.
7
(k) Offers and sales of Debentures by the Company shall
only be made by persons who meet the safe harbor provisions of Rule 3a4-1 under
the Securities Exchange Act of 1934.
5. Conditions of Underwriter's Obligations
---------------------------------------
The obligations of the Underwriter as provided herein shall be subject
to the continuing accuracy of the representations and warranties of the Company
herein contained as of the date hereof and through and including the date of
termination of the offering, to the performance by the Company of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Registration Statement shall have become effective
at the time of any sale of Debentures hereunder, no Stop Order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission or be pending.
(b) The Company shall not have sustained after the date
hereof any material loss or interference with its business from any calamity,
whether or not covered by insurance, which in your reasonable judgment makes it
impracticable or inadvisable to sell the Debentures as contemplated hereby.
(c) All corporate proceedings and related matters in
connection with the organization of the Company and the registration,
authorization, issuance, sale and delivery of the Debentures, and in connection
with this Agreement, shall be reasonably satisfactory to you and you shall have
been furnished with such papers and information as you may reasonably have
requested in this connection.
(d) Between the date hereof and the First Closing Date,
there shall have been no litigation instituted or threatened against the Company
and there shall have been no proceeding instituted or threatened against the
Company before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially adversely affect the
business, operations or financial condition or income of the Company.
(e) At the time of the execution of this Agreement, and
at the First Closing Date, counsel for the Company shall provide to the
Underwriter its written opinion, in form and substance satisfactory to counsel
for the Underwriter, with respect to the following matters:
(i) The matters set forth in Paragraph 2(d).
(ii) The matters set forth in Paragraph 2(e).
(iii) The matters set forth in Paragraph 2(k).
(iv) To the best of counsel's knowledge, the
matters set forth in Paragraphs 2(l) and (m).
(v) To the best of counsel's knowledge, the
matters set forth in paragraph 2(h).
(vi) That the Registration Statement has become
effective and to the best of counsel's knowledge, the matters set forth in
Paragraph 2(c).
(vii) The matters set forth in paragraph 2(b).
8
(viii) To the best of counsel's knowledge, there
are no contracts, agreements, or other understandings required to be described
in the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not so described or filed.
(f) At the First Closing Date, Xxxxxxx X. Xxxxxx &
Company shall have furnished a letter addressed to you and dated as of the date
it is required to be delivered in form and substance reasonably satisfactory to
you, to the effect that: (i) with respect to the Company they are, and during
the period covered by their reports included in the Registration Statement and
the Prospectus they were, independent public accountants within the meaning of
the Act and the Rules and Regulations, and the response to Item 509 of
Regulation S-K as reflected by the Registration Statement is correct insofar as
it relates to them; (ii) in their opinion, the financial statements of the
Company examined by them at all dates and for all periods referred to in their
opinion and included in the Registration Statement and Prospectus, comply in all
material respects with the applicable accounting requirements of the Act and
Rules and Regulations; (iii) on the basis of certain indicated procedures (but
not an examination in accordance with generally accepted accounting principles),
including, but not limited to, a reading of the latest available interim
unaudited financial statements of the Company, whether or not appearing in the
Prospectus, inquiries of the officers of the Company or other persons
responsible for its financial and accounting matters and a reading of the minute
book of the Company, nothing has come to their attention which would cause them
to believe that (A) there has been any change in the capital stock or other
securities of the Company or any payment or declaration of any dividend or other
distribution in respect thereof or exchange therefor from that shown on its
audited balance sheets or a change in the debt of the Company from that shown or
contemplated under "Capitalization" in the Registration Statement other than as
set forth in or contemplated by the Registration Statement, (B) there has been
any material adverse change in the financial condition of the Company except as
set forth in or contemplated by the Registration Statement, or (C) the unaudited
financial statements and schedules of the Company included in the Registration
Statement and Prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and Rules and Regulations, or are
not fairly presented in conformity with generally accepted accounting principles
applied on a consistent basis; and (iv) they have compared specific numerical
data and financial information pertaining to the Company set forth in the
Registration Statement and Prospectus, which have been specified by the
Underwriter prior to the date of this Agreement, to the extent that such data
and information may be derived from the general accounting records of the
Company, and found them to be in agreement.
(g) The Company shall have furnished or caused to be
furnished to you a certificate by the President of the Company, dated as of the
First Closing Date and at the termination of the offering, to the effect that
(i) the representations and warranties of the Company herein are true and
correct as of each such date, and the Company has complied with all the
agreements and has satisfied all the conditions on its part to be performed or
satisfied at or prior to each such date; (ii) the Registration Statement has
become effective and no order suspending the effectiveness of the Registration
Statement has been issued and to the best knowledge of the signer, no proceeding
for that purpose has been initiated or threatened by the Commission; and (iii)
except as set forth in the Registration Statement and Prospectus, since the
respective dates as of which and the periods for which information is given in
the Registration Statement and Prospectus and prior to the date of such
certificate (A) there has not been any substantial adverse change, financial or
otherwise, in the affairs or condition of the Company or the Subsidiaries and
(B) neither the Company nor the Subsidiaries have incurred any liabilities,
direct or contingent, or entered into any transactions, otherwise than in the
ordinary course of business.
6. Indemnification
---------------
(a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless you and each person, if any, who
controls you within the meaning of Section 15 of the Act, against any and all
9
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expense and counsel fees reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever), and any and all amounts paid in settlement
of any claim or litigation, arising out of, based upon or in connection with (i)
any untrue or alleged untrue statement of a material fact contained in (A) any
preliminary prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented) or (B) any application or other document
(in this Section 6(a) called "application") executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Debentures under the
"blue sky" or securities laws thereof; (ii) the omission or alleged omission
from any preliminary prospectus, the Registration Statement, the Prospectus (as
from time to time amended and supplemented) or any application of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
you by or on behalf of you expressly for use in any preliminary prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereof or
in any application, as the case may be; or (iii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. This indemnity shall not apply to amounts paid in settlement of
any such litigation if such settlement is effected without the consent of the
Company.
If any action is brought against you or any of your officers,
directors, partners, employees, agents or counsel, or any controlling persons of
you (an "indemnified party") in respect of which indemnity may be sought against
the Company pursuant to the foregoing paragraph, such indemnified party or
parties shall promptly notify the Company in writing of the institution of such
action (but the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 6(a)) and the Company
shall promptly assume the defense of such action, including the employment of
counsel (reasonably satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel reasonably satisfactory to such indemnified party
or parties to have charge of the defense of such action, in either of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent. The Company agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Debentures, any preliminary prospectus, the Registration Statement,
the Prospectus, any amendment or supplement thereto or any application. With
respect to any untrue statement or alleged untrue statement made in, or omission
or alleged omission from, any preliminary prospectus or the Prospectus, the
indemnity agreement contained in this Section 6(a) with respect to such
preliminary prospectus or Prospectus, to the extent it is based on the claim of
a person who purchased Debentures directly from you, shall not inure to your
benefit (or, to the benefit of any of your officers, directors, partners,
employees, agents or counsel, or any person controlling you), if the Prospectus
(or the Prospectus as amended or supplemented if the Company shall have filed
with the Commission any amendment or supplement thereto) which shall have been
furnished to you prior to the time you sent written confirmation of such sale to
such person does not contain such statement, alleged statement, omission or
alleged omission and a copy of the Prospectus (or the Prospectus as amended or
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto) shall not have been sent or given to such person and such
person shall not otherwise have received a copy thereof at or prior to the time
of the written confirmation of such sale to such person.
10
(b) You agree to indemnify and hold harmless the Company
and each of the officers and directors of the Company and each other person, if
any, who controls the Company within the meaning of Section 15 of the Act
against any and all such losses, liabilities, claims, damages and expenses as
are indemnified by the Company under Section 6(a) above, provided, however, that
such indemnification by you hereunder shall only be with respect to statements
or omissions, if any, made in any preliminary prospectus, the Registration
Statement, the Prospectus, any amendment or supplement thereof or any
application, in reliance upon, and in conformity with, written information
furnished by or on behalf of you expressly for use in any preliminary
prospectus, the Registration Statement, the Prospectus, any amendment or
supplement thereof or in any of said applications. In case any action shall be
brought against the Company or any other person so indemnified based on any
preliminary prospectus, the Registration Statement, the Prospectus, any
amendment or supplement thereof or any such application and in respect of which
indemnity may be sought against you, you shall have the rights and duties given
to the Company, and the Company and each other person so indemnified shall have
the rights and duties given to you by the provisions of Section 6(a) above.
7. Underwriter's Representations and Warranties
--------------------------------------------
(a) The Underwriter represents and warrants to and agrees
with the Company that: (i) the Underwriter is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(ii) it is duly authorized to execute this Agreement and to perform its duties
hereunder, and the execution and delivery by it of this Agreement and the
consummation of the transactions herein contemplated will not result in any
violation of, be in conflict with or constitute a default under, any agreement
or instrument to which the Underwriter is a party or by which it is bound, or
any judgment, decree, order, or, to its knowledge, any statute, rule or
regulation applicable to it; (iii) the Underwriter is registered as a
broker/dealer with the Commission and is registered as a broker/dealer in all
states in which it conducts business and is a member in good standing of the
National Association of Securities Dealers, Inc.; and (iv) there is not now
pending or threatened against the Underwriter any action or proceeding of which
it has been advised, in any court of competent jurisdiction or before the
Commission or any state securities commission concerning its activities as a
broker/dealer, which would materially impair the Underwriter's ability to act as
such pursuant to this Agreement.
(b) The Underwriter will deliver a certificate dated as
of the First Closing Date and at the termination of the offering, and signed by
the president of the Underwriter stating that the representations of the
Underwriter set forth herein are true and correct in all material respects as of
each such date.
(c) The Underwriter covenants that promptly after the
First Closing Date, and until such time as the earlier of: $5,000,000 in
Debentures are sold, or the offering is terminated pursuant to Section 8 hereof,
it will supply the Company with such information as the Company may reasonably
request to be supplied to the securities commissions of such states in which the
Debentures have been qualified for sale.
8. Effectiveness and Termination
-----------------------------
(a) This Agreement shall become effective at 9:00 A.M. on
the first full business day after the Effective Date unless prior to such time
you shall have received notice from the Company that it elects that this
Agreement shall not become effective.
(b) This Agreement may be terminated by you by written
notice to the Company in the event that the Company shall have failed or been
unable to comply with any of the terms, conditions or provisions of this
Agreement on the part of the Company to be performed, complied with or fulfilled
11
within the respective times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by you in
writing.
(c) This Agreement may be terminated by you by written
notice to the Company if you believe in your reasonable judgment that a material
adverse change has occurred in the management of the Company, that a material
adverse change has occurred in the financial condition or obligations of the
Company, or if the Company shall have sustained a loss by strike, fire, flood,
accident or other calamity of such a character as, in your reasonable judgment,
may interfere materially with the conduct of the Company's business and
operations regardless of whether or not such loss shall have been insured.
(d) This Agreement may be terminated by you by written
notice to the Company at any time if, in your reasonable judgment, the payment
for and delivery of the Debentures is rendered impracticable or inadvisable
because (i) additional material governmental restrictions not in force and
effect on the date hereof shall have been imposed upon the registration and/or
sale of securities generally, or (ii) there shall be a material outbreak of
hostilities or a material escalation of existing hostilities between the United
States and any foreign power or a formal declaration of war by the United States
shall have occurred, or (iii) substantial and material changes in the condition
of the market (either generally or with reference to the sale of the Debentures
to be offered hereby) beyond normal fluctuations are such that it would be
undesirable, impracticable or inadvisable in your reasonable judgment to proceed
with this Agreement or with the offering of the Debentures.
(e) This Agreement may be terminated by either party by
written notice to the other at any time before it becomes effective as
hereinabove provided.
(f) In the event, at any time prior to the First Closing
Date, any action or proceeding shall be instituted or threatened against you in
any court of competent jurisdiction, before the Commission or any state
securities commission or in any court pursuant to any federal, state, local or
municipal statute, concerning your activities as a broker or dealer that would
materially impair your ability to act as Underwriter pursuant to this Agreement,
or a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of your assets is filed or if you make a
assignment for the benefit of creditors, the Company shall have the right on
three days' written notice to you to terminate this Agreement without any
liability to you of any kind.
(g) This Agreement shall terminate if at least $4,000,000
of the Debentures, without regard to maturity, are not sold within 90 days after
the date the Registration Statement is declared effective by the Commission.
(h) Any termination of this Agreement pursuant to this
Section 8 shall be without liability (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party hereto,
except that the Company shall nevertheless be obligated to pay to the
Underwriter its accountable out-of-pocket expenses pursuant to Paragraph 3(f),
unless the Agreement is terminated pursuant to Section 8(f), and further
provided that Paragraph 9(b) shall survive the termination of this Agreement.
9. Miscellaneous
-------------
(a) Whenever notice is required by the provisions of this
Agreement to be given to the parties hereto, such notice shall be in writing and
shall be sent by certified or registered mail, return receipt requested, postage
prepaid, and shall be deemed delivered two days after mailing, and shall be
addressed to the party to whom such notice is directed at the address set forth
above or at such other address as a party has designated by like notice.
12
(b) The respective indemnities, agreements, representations,
warranties and other statements of you and the Company hereunder, as set forth
in this Agreement or made pursuant to this Agreement, shall remain in full force
and effect, regardless of any investigation made by or on behalf of you, the
Company, or any officers, directors or controlling person of you or the Company,
and shall survive delivery of and payment for the Debentures.
(c) This Agreement shall be binding upon and inure solely
to the benefit of you and the Company and, to the extent provided in Section 6
hereof, the officers and directors of the Company and any person who controls
you, the Company and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Debentures shall be construed a successor or assign by
reason merely of such purchase.
(d) This Agreement shall be construed and governed by the
laws of the State of New York. This Agreement cannot be changed or terminated
orally.
(e) This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
Please confirm that the foregoing sets forth the Agreement between you
and the Company by signing and returning to us the enclosed copy of this letter.
Very truly yours,
INTERVEST CORPORATION OF NEW YORK
By:
----------------------------------
Name:
Title:
WE HEREBY CONFIRM AS OF THE DATE
HEREOF THAT THE ABOVE LETTER SETS
FORTH THE AGREEMENT BETWEEN THE
COMPANY AND UNDERSIGNED.
SAGE, XXXXX & CO., INC.
By:
------------------------------
Name:
Title:
13
