INTERVEST CORPORATION OF NEW YORK
ESCROW AGREEMENT
THIS ESCROW AGREEMENT made as of this day of , 2001, by
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and among Intervest Corporation of New York, a New York corporation with its
principal offices at 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
10020-1903 ("Corporation"); Sage, Xxxxx & Co., Inc., a New York corporation with
its principal offices at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000
("Underwriter"); and Manufacturers and Traders Trust Company, a New York banking
organization with an address at M&T Place, 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000 ("Escrow Agent").
R E C I T A L S:
WHEREAS, the Corporation has filed a Form S-11 Registration Statement
under the Securities Act of 1933 with the Securities and Exchange Commission
("Registration Statement") covering a proposed offering of a minimum of
$4,000,000 and maximum of $5,000,000 aggregate principal amount of its Series
/ /01 Subordinated Debentures ("Debentures"); and
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WHEREAS, the Underwriter intends to sell the Debentures as the
Corporation's agent on a best efforts basis; and
WHEREAS, certain officers of the Corporation may also sell Debentures;
and
WHEREAS, under the terms of the offering, subscription funds received
on the sale of Debentures will be deposited in an escrow account until certain
terms and conditions have been met; and
WHEREAS, the Corporation desires that the subscription funds be held in
escrow by the Escrow Agent on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Establishment and Custody of Escrow Fund.
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(a) On or prior to the date of the commencement of the
offering of the Debentures, the parties shall establish an interest-bearing
escrow account with the Escrow Agent. The Corporation will notify the Escrow
Agent in writing of the effective date of the Registration Statement. The escrow
account shall be entitled "Intervest Corporation of New York Escrow Account."
The Corporation shall, prior to the establishment of such account, furnish to
the Escrow Agent a completed IRS Form W-9.
(b) On the next Business Day following receipt by the
Corporation or the Underwriter from an investor desiring to purchase Debentures
("Subscriber(s)") or from any participating selected dealer, of any subscription
documents and payment of the subscription price (in the minimum of $10,000) for
Debentures to be purchased, it will promptly transmit to the Escrow Agent the
following:
(i) Checks, bank drafts or money orders payable
to "M&T Bank, as Escrow Agent for Intervest Corporation of New York" or wire
transfers to the escrow account (such sums as held by Escrow Agent in collected
funds, as increased or decreased by any investments, reinvestments or
distributions made in respect thereof and any interest thereon as held from time
to time by the Escrow Agent pursuant to the terms of this Escrow Agreement,
being hereafter collectively referred to as the "Escrow Fund"). Such funds shall
be delivered to M&T Bank, M&T Place, 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxxxxx, for deposit in accordance with Section 2; and
(ii) With each deposit to the Escrow Fund, a
statement containing the name, address and tax identification number of each
Subscriber.
(c) Checks or other forms of payment not made payable to the
Escrow Agent shall be returned by the Escrow Agent to the purchaser who
submitted the check.
(d) For purposes of this Escrow Agreement, a "Business Day" is
a day upon which the Escrow Agent is open for the conduct of business.
(e) The Escrow Agent will acknowledge receipt of the Escrow
Fund and will hold the Escrow Funds subject to the terms and conditions of this
Escrow Agreement.
(f) The Escrow Agent shall notify the Corporation when the
total amount of subscription funds in the Escrow Fund, less the amount of any
such checks returned for insufficient funds, equals at least $4,000,000 (the
"Minimum Funds"). No investment profits or losses and no interest earned on any
investment of the Escrow Fund shall be considered for purposes of this
calculation.
(g) During the term of this Escrow Agreement, the Corporation
understands that it is not entitled to any funds received into escrow and no
amounts deposited shall become the property of the Corporation or any other
entity, or be subject to the debts of the Corporation or any other entity.
2. Investment of Escrow Fund. Moneys held in the Escrow Fund shall be
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invested and reinvested by the Escrow Agent in its trust money market account.
Moneys held in the Escrow Fund will, in any event, be invested only in
investments permissible under Rule 15c2-4 under the Securities Exchange Act of
1934.
3. Duties of Escrow Agent. Acceptance by the Escrow Agent of its
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duties under this Escrow Agreement is subject to the following terms and
conditions, which all parties to this Escrow Agreement agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Escrow Agent.
(a) The duties and responsibilities of the Escrow Agent shall
be limited to those expressly set forth in this Escrow Agreement and the Escrow
Agent shall not be subject to, nor obligated to recognize, any other agreements
between the Corporation, Underwriter and any Subscriber.
(b) The duties of the Escrow Agent are only such as are herein
specifically provided and such duties are purely ministerial in nature. The
Escrow Agent's primary duty shall be to keep custody of and safeguard the Escrow
Fund during the period of the escrow, to invest monies held in the Escrow Fund
in accordance with Section 2 hereof and to make disbursements from the Escrow
Fund in accordance with Section 4 hereof.
(c) The Escrow Agent shall be under no obligations in respect
of the Escrow Fund other than to faithfully follow the instructions herein
contained or delivered to the Escrow Agent in accordance with this Escrow
Agreement. The Escrow Agent may rely and act upon any written notice,
instruction, direction, request, waiver, consent, receipt or other paper or
document which it in good faith believes to be genuine and what it purports to
be and the Escrow Agent shall be subject to no liability with respect to the
form, execution or validity thereof. If, in the opinion of the Escrow Agent, the
instructions it receives are ambiguous, uncertain or in conflict with any
previous instructions or this Escrow Agreement, then the Escrow Agent is
authorized to hold and preserve intact the Escrow Fund pending the settlement of
any such controversy by final adjudication of a court or courts of proper
jurisdiction.
(d) The Escrow Agent shall not be liable for any error of
judgment or for any act done or step taken or omitted by it, in good faith, or
for any mistake of fact or law, or for anything which it may in good faith do or
refrain from doing in connection herewith, unless caused by its willful
misconduct or gross negligence. The Corporation shall indemnify and hold the
Escrow Agent harmless from and against any and all claims, losses, damages,
liabilities and expenses, including reasonable attorneys' fees, which may be
imposed upon the Escrow Agent or incurred by the Escrow Agent in connection with
its acceptance of the appointment as Escrow Agent hereunder or the performance
of its duties hereunder, unless the Escrow Agent is determined to have committed
an intentional wrongful act or to have been grossly negligent with respect to
its duties under this Escrow Agreement.
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(e) The Escrow Agent shall return to the Corporation any sums
delivered to the Escrow Agent pursuant to this Escrow Agreement for which the
Escrow Agent has not received release instructions pursuant to Section 4 hereof,
and as to which four years have passed since delivery.
(f) The Escrow Agent may consult with, and obtain advice from,
legal counsel (which may not be counsel to the Corporation) in the event of any
dispute or questions as to the construction of any of the provisions hereof or
its duties hereunder, and it shall incur no liability in acting in good faith in
accordance with the written opinion and instructions of such counsel. The fees
for consultation with such counsel shall be paid by the Corporation.
(g) Reference in this Escrow Agreement to the Registration
Statement is for identification purposes only, and its terms and conditions are
not thereby incorporated herein.
4. Distribution and Release of Funds.
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(a) For purposes of this Escrow Agreement, the term
"Termination Date" shall mean the earlier of:
(i) , 2001, or such later date set
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forth in a written notice purportedly executed by the Corporation and delivered
to the Escrow Agent at least five (5) Business Days prior to ,
2001. --------------
(ii) The date, if any, upon which the Escrow
Agent receives a written notice purportedly executed by the Corporation stating
that the offering has been terminated, or such later date set forth in such
notice as the effective date of such termination; or
(iii) Any date specified by the Corporation in
writing, after the date the Escrow Agent has confirmed that it has received in
the Escrow Fund at least the Minimum Funds in good, collected funds.
(b) On the Termination Date, the Escrow Agent shall certify to
the Corporation in writing the total amount of collected funds in the Escrow
Fund.
(c) The Escrow Agent shall return the funds deposited with it
to the Subscribers if, on the Termination Date, the Escrow Fund does not consist
of collected funds totaling at least the Minimum Funds. The Escrow Agent shall
have fully discharged this obligation to return Subscribers' funds if it has
mailed to each Subscriber, at the address furnished to it by the Corporation,
the Underwriter or any selected dealer, by registered or certified mail, return
receipt requested, a bank check made payable to each Subscriber for the amount
originally deposited by that Subscriber, plus the Subscriber's pro rata share of
net interest (defined below) earned without regard to the date the Subscriber's
funds were deposited. For purposes of this Escrow Agreement, "net interest"
shall mean the interest earned on the Escrow Fund, less any fees or expenses of
the Escrow Agent paid from the Escrow Fund pursuant to Section 5.
(d) At such time as (i) the total amount of collected funds in
the Escrow Fund equals at least the Minimum Funds, and (ii) the Escrow Agent has
received, on or before the Termination Date, written instructions executed by
the Underwriter and the Corporation, the Escrow Agent shall distribute the
entire Escrow Fund, less commissions, fees and expense reimbursement due to the
Underwriter and any selected dealers, pursuant to such instructions. The
commissions, fees and expense reimbursement due to the Underwriter and selected
broker-dealers shall be set forth in the written instructions, and the Escrow
Agent shall distribute the commissions, fees and expense reimbursement due to
the Underwriter and selected dealers directly to the Underwriter. Subject to the
foregoing, distributions may be made to third parties at the direction of the
Corporation. Net interest earned on the Escrow Fund shall be paid to the
Corporation.
(e) If the Corporation rejects a subscription for which the
Escrow Agent has already collected funds, the Escrow Agent shall promptly issue
a refund check to the rejected Subscriber. Otherwise, the Escrow Agent shall
promptly remit the rejected Subscriber's check directly to the Subscriber. Any
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check returned unpaid to the Escrow Agent will be returned to the Underwriter or
selected dealer that submitted the check. Any check or other form of payment
received by the Escrow Agent not payable to "M&T Bank, as Escrow Agent for
Intervest Corporation of New York" shall be returned to the Subscriber by the
Escrow Agent.
(f) For purposes hereof, "collected funds" shall mean all
funds received by the Escrow Agent which have cleared normal banking channels
and are in the form of cash. Furthermore, a check which is not (i) a certified
check or (ii) a bank draft or a cashiers check drawn on a bank reasonably
acceptable to the Escrow Agent, shall constitute "collected funds" only if it
has not been returned for insufficient funds within ten (10) Business Days after
its receipt by the Escrow Agent. No investment profits or losses and no interest
earned on any investments of the Escrow Fund shall be considered for purposes of
the above calculation.
(g) It shall be a condition to the return of funds to any
subscriber hereunder that such subscriber shall have delivered to the Escrow
Agent a completed IRS Form W-9. The Corporation shall include in the Prospectus
which is part of the Registration Statement and/or in the subscription forms to
be executed by subscribers, notice of the requirement for delivery of such IRS
Form W-9 as a condition to the return of funds deposited in the Escrow Account.
(h) This Escrow Agreement shall terminate on the final
distribution of the Escrow Fund, at which time the Escrow Agent shall be forever
and irrevocably released and discharged from any and all further responsibility
or liability with respect to the Escrow Fund.
5. Compensation. The Corporation agrees to pay the Escrow Agent
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a fee of $300 as compensation for its services in connection with establishing
the Escrow Fund, payable at the time this Escrow Agreement is executed, whether
or not any Debentures are sold. In addition, the Corporation shall pay an annual
maintenance fee of $100, prorated for the number of months the Escrow Account is
open, payable whether or not any Debentures are sold. The Corporation shall pay,
in addition to the foregoing fees, the following charges:
$700.00 Handling and processing fees.
$ 7.50 Per check disbursed.
$ 10.00 Per prorated net interest computation if
funds are returned to investors.
$ 10.00 Per Form 1099 required to be transmitted by
the Escrow Agent.
$ 25.00 Per check returned for insufficient funds.
Except for the set-up fee due upon execution of this Escrow Agreement, the fees
and charges shall be paid by the Corporation on the date(s) the Escrow Fund is
distributed pursuant to Section 4. The Escrow Agent shall have the right to
cause any fees due hereunder to be paid out of the interest earned on the Escrow
Account.
6. Termination. This Escrow Agreement shall terminate no later
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than the Termination Date, or on such earlier date as the Escrow Agent shall
have paid out a total of at least $4,000,000 in collected funds in accordance
with the provisions of this Escrow Agreement.
7. Resignation and Removal of Escrow Agent. The Escrow Agent may
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at any time resign and be discharged of the duties and obligations created by
this Escrow Agreement by giving at least sixty (60) days' written notice to the
Corporation and the Underwriter; the Escrow Agent may be removed at any time
upon sixty (60) days' notice by an instrument purportedly signed by an
authorized person of the Corporation and the Underwriter. Any successor Escrow
Agent shall be appointed and approved by the Corporation and the Underwriter.
Any such successor Escrow Agent shall deliver to the former Escrow Agent a
written instrument, acknowledged by the Corporation and the Underwriter,
accepting such appointment hereunder and thereupon it shall take delivery of the
Escrow Fund to hold and distribute in accordance with the terms hereof. If no
successor Escrow Agent shall have been appointed within thirty (30) days after
the Corporation and the Underwriter are notified of the Escrow Agent's
resignation, the Escrow Agent shall return the Escrow Fund to the Subscribers in
accordance with the procedure set forth in Section 4(c). Upon the delivery of
the Escrow Fund in accordance with this Section 7, the Escrow Agent shall be
discharged from any further duties hereunder.
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8. Binding Effect. This Escrow Agreement shall be binding upon
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and inure to the benefit of the parties, their successors and assigns.
9. Headings. The headings contained in this Escrow Agreement are
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intended for convenience and shall not in any way determine the rights of the
parties to this Escrow Agreement.
10. Waiver. Waiver of any terms or conditions of this Escrow
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Agreement by any party shall not be construed as (a) a waiver of a subsequent
breach or failure of the same term or condition, or (b) a waiver of any other
term or condition of this Escrow Agreement.
11. Counterparts. This Escrow Agreement may be executed in one or
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more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Escrow Agreement to produce or account for
more than one such counterpart.
12. Modification. This Escrow Agreement constitutes the entire
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agreement between the parties as to the escrow of Subscribers' funds, and shall
not be modified except in writing signed and acknowledged by all the parties.
13. Notices. All notices and communications hereunder shall be in
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writing and shall be deemed to be duly given on the date delivered by the United
States Mail, registered or certified mail, return receipt requested, postage
prepaid to the address of the Corporation and Underwriter as first above
written, and to the Escrow Agent at M&T Bank, M&T Place, 000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxxx, provided, however, that
notices may be given by telex, cable, telecopier, courier service, telephone,
personal delivery or otherwise, effective the date of such communication,
provided that notices given by such means of communications are confirmed by
mail as aforesaid, postmarked within one business day after such other form of
communication.
14. Governing Law. This Escrow Agreement shall be construed and
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enforced in accordance with the laws of the State of New York. The parties
consent to the personal jurisdiction of all courts of the State of New York, and
agree that such jurisdiction shall be exclusive.
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement as of the date and year first above written.
CORPORATION: INTERVEST CORPORATION OF NEW YORK
By:
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Its:
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ESCROW AGENT: MANUFACTURERS AND TRADERS TRUST COMPANY
By:
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Its:
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UNDERWRITER: SAGE, XXXXX & CO., INC.
By:
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Its:
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