INTERVEST MORTGAGE CORPORATION
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____________, 2006
Sage, ▇▇▇▇▇ & Co., Inc.
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Dear Sirs:
Intervest Mortgage Corporation, a New York corporation (the "Company"),
hereby confirms its agreement with you (sometimes herein called the
"Underwriter") as follows:
1. Introductory
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The Company proposes to issue and offer, through the Underwriter acting as
agent for the Company: $16,000,000 aggregate principal amount of its Series
__/__/06 Subordinated Debentures in three maturities as follows: $2,000,000
with a maturity date of July 1, 2010, $4,000,000 with a maturity date of July 1,
2012 and $10,000,000 with a maturity date of July 1, 2014. All of the foregoing
debentures are referred to as the "Debentures." If at least $13,000,000 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 ____________ 1, 2006 (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 $13,000,000 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 $13,000,000 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
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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
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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, each with full power and authority to conduct its own business and own
or lease its properties as described in the Prospectus, and each 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 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,
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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
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 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,
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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. Appointment of Underwriter
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(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 $13,000,000 of the Debentures required to be sold
within 90 days after the Effective Date if any Debentures are to be 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 July 1,
2010, five percent (5%) of the purchase price of each Debenture maturing July 1,
2012, and seven percent (7%) of each Debenture maturing July 1, 2014, 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 ( %) of the aggregate gross amount of Debentures
maturing July 1, 2010 and one percent (1%) of the aggregate gross amount of
Debentures maturing July 1, 2012 and July 1, 2014, 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 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 Canandaigua National Bank and Trust
Company (the "Bank") in Canandaigua,
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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 "Canandaigua National Bank & Trust Company, as Escrow Agent for
Intervest Mortgage Corporation". 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 "CNB - Escrow Intervest." After the First Closing Date all
checks for subscriptions of Debentures shall be made payable to "Intervest
Mortgage Corporation", 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 $13,000,000 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.
(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.
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(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.
(g) The Underwriter acknowledges that it has been engaged to act
as a "Qualified Independent Underwriter," as such term is defined in the Conduct
Rules of the National Association of Securities Dealers, Inc. As such, the
Underwriter will participate in the preparation of the Registration Statement
and the Prospectus and shall exercise the usual standards of due diligence in
respect thereto. The yields or interest rates payable in connection with each
maturity of the Debentures shall be established at yields or interest rates no
lower than those recommended to the Company by the Underwriter.
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: (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
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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.
(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
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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) The matters set forth in Paragraphs 2(l) and (m).
(v) To the knowledge of counsel, after due inquiry, 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).
(viii) To the knowledge of counsel, after due inquiry, 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, the Company's independent
accountants 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
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were, an Independent Registered Public Accounting Firm within the meaning of the
Act and the Rules and Regulations and the Public Company Accounting Oversight
Board (the "PCOAB"), 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 audit in accordance
with the standards of PCOAB (United States)), 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, procedures specified by the American Institute of Certified Public
Accountants for a review of interim financial information as described in SAS
No. 100, 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 or prior to the First Closing Date, to the extent
that such data and information may be derived from the audited financial
statements, unaudited financial statements, and 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 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
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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.
(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
10
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: $16,000,000 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 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.
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(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 $13,000,000 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.
(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 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
12
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 MORTGAGE CORPORATION
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, ▇▇▇▇▇ & CO., INC.
By:
--------------------------------
Name:
Title:
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