INTERVEST MORTGAGE CORPORATION
One Rockefeller Plaza
Suite 400
New York, New York 10020-2002
____________, 2006
Sage, Rutty
& Co., Inc.
1621 Jefferson
Road
Rochester, New
York 14623
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
------------
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
--------------------------------------------------
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
1
<PAGE>
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,
2
<PAGE>
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,
3
<PAGE>
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
----------------------------
(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,
4
<PAGE>
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
