1
Exhibit 10.68
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF OCTOBER 20, 1997
BETWEEN
MEGO MORTGAGE CORPORATION
AS ISSUER
AND
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
AS INITIAL PURCHASER
--------------------------------------------------------------------------------
2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is made and
entered into as of October 20, 1997, between MEGO MORTGAGE CORPORATION, a
Delaware corporation (the "Issuer") and FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
(the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
October 14, 1997, between the Issuer and the Initial Purchaser (the "Purchase
Agreement"), which provides for the sale by the Issuer to the Initial Purchaser
of $40,000,000 aggregate principal amount of 12 1/2% Senior Subordinated Notes
due 2001 (the "Additional Notes"). The Issuer's obligations under the Additional
Notes will be guaranteed by the Subsidiary Guarantors as provided in the
Indenture (such guarantees as in effect from time to time, the "Subsidiary
Guarantees"). In order to induce the Initial Purchaser to enter into the
Purchase Agreement, the Issuer has agreed to provide to the Initial Purchaser
and its respective direct and indirect transferees, among other things, the
registration rights for the Additional Notes set forth in this Agreement. The
execution of this Agreement is a condition to the closing of the transactions
contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (and, unless otherwise indicated, capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Purchase
Agreement):
ADDED INTEREST: See Section 4(a) hereof.
ADDITIONAL NOTES: See the introductory paragraph to this Agreement.
APPLICABLE PERIOD: See Section 2(f) hereof.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
CLOSING DATE: The Closing Date as defined in the Purchase Agreement.
DIRECT BROKER-DEALER BUYER: See Section 2(b) hereof.
EFFECTIVENESS TARGET DATE: January 12, 1998.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder, and any succeeding
provisions thereto.
1
3
EXCHANGE NOTES: See Section 2(a) hereof.
EXCHANGE OFFER: See Section 2(a) hereof.
EXCHANGE OFFER COMPLETION DATE: February 11, 1998.
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a) hereof.
FILING DATE: November 28, 1997.
HOLDER: Any holder of Transfer Restricted Securities.
INDEMNIFIED PARTY: See Section 7 hereof.
INDEMNIFYING PARTY: See Section 7 hereof.
INDENTURE: The Indenture, dated as of November 22, 1996, by and among
the Issuer and American Stock Transfer & Trust Company, as Trustee, as amended
pursuant to the First Supplemental Indenture, pursuant to which the Additional
Notes are being issued, as it may be further amended or supplemented from time
to time in accordance with the terms thereof.
INELIGIBLE HOLDER: See Section 2(h) hereof.
INITIAL PURCHASER: See the introductory paragraph to this Agreement.
INSPECTORS: See Section 5(m) hereof.
ISSUER: See the introductory paragraph of this Agreement. (All
references herein to Issuer shall include any Subsidiary Guarantor that may from
time to time exist, and all obligations of Issuer hereunder also shall be joint
and several obligations of any Subsidiary Guarantor.)
ISSUER AFFILIATE: See Section 2(b) hereof.
INITIAL PURCHASER: See the introductory paragraph to this Agreement.
PARTICIPATING BROKER-DEALER: Any broker-dealer (as defined in the
Exchange Act), other than a Direct Broker-Dealer Buyer, that is a Holder or
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Additional
Notes acquired for its own account as a result of market-making activities or
other trading activities that are tendered for exchange in the Exchange Offer
and that thereafter holds Exchange Notes issued in exchange therefor.
PERSON or PERSON: An individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, limited liability company, limited liability partnership, firm or
other legal entity.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information
2
4
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Exchange Notes and/or the Transfer
Restricted Securities (as applicable), covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
PURCHASER INDEMNITEE: See Section 7 hereof.
RECORDS: See Section 5(m) hereof.
REGISTRATION DEFAULT: See Section 4(a) hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuer,
including, but not limited to, the Exchange Offer Registration Statement, the
Shelf Registration Statement or a registration statement of the Issuer that
otherwise covers any of the Transfer Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
RULE 144: Rule 144 promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
RULE 144A: Rule 144A promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
RULE 415: Rule 415 promulgated pursuant to the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder, and any succeeding provisions
thereto.
SHELF EFFECTIVENESS PERIOD: See Section 3(a) hereof.
SHELF NOTICE: See Section 2(g) hereof.
SHELF REGISTRATION STATEMENT: See Section 3(a) hereof.
SUBSIDIARY GUARANTEES: See the introductory paragraph to this
Agreement.
3
5
SUBSIDIARY GUARANTORS: The meaning ascribed thereto in the Indenture.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
TRANSFER RESTRICTED SECURITIES: The Additional Notes upon original
issuance thereof and at all times subsequent thereto, until (i) a Registration
Statement covering such Additional Notes has been declared effective by the SEC
and such Additional Notes have been disposed of in accordance with such
effective Registration Statement, (ii) such Additional Notes are sold in
compliance with Rule 144, (iii) such Additional Notes cease to be outstanding or
(iv) such Additional Notes have been exchanged for Exchange Notes.
TRUSTEE: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Issuer are sold to an underwriter or underwriters for
reoffering to the public.
2. EXCHANGE OFFER
(a) The Issuer agrees to file with the SEC as soon as practicable after
the Closing Date, but in no event later than the Filing Date, an offer to
exchange (the "Exchange Offer"), any and all of the Transfer Restricted
Securities for a like aggregate principal amount of debt securities of the
Issuer as guaranteed by Subsidiary Guarantees in effect from time to time (the
"Exchange Notes"), which Exchange Notes will be (i) substantially identical in
all material respects to the Additional Notes, except that such Exchange Notes
will not contain terms with respect to transfer restrictions, registration
rights or the obligation to pay any Added Interest, (ii) entitled to the
benefits of the Indenture or a trust indenture which is identical to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC or to
effect or maintain the qualification thereof under the TIA), and which, in
either case, has been qualified under the TIA, and (iii) registered pursuant to
an effective Registration Statement in compliance with the Securities Act. The
Exchange Offer will be registered pursuant to the Securities Act on an
appropriate form of Registration Statement (the "Exchange Offer Registration
Statement"), and will comply with all applicable tender offer rules and
regulations promulgated pursuant to the Exchange Act and shall be duly
registered or qualified pursuant to all applicable state securities or Blue Sky
laws. The Exchange Offer shall not be subject to any condition, other than that
the Exchange Offer does not violate any applicable law, policy or interpretation
of the staff of the SEC. No securities shall be included in the Exchange Offer
Registration Statement other than the Exchange Notes. The Issuer agrees to (x)
use its best efforts to cause the Exchange Offer Registration Statement to be
declared effective on or prior to the Effectiveness Target Date and to cause the
Exchange Offer to be consummated on or prior to the Exchange Offer Completion
Date and (y) keep the Exchange Offer open for not less than 30 days (or such
longer period required by applicable law), after the date that the notice of the
Exchange Offer referred to below is mailed to Holders.
4
6
(b) Each Holder who participates in the Exchange Offer will be required
to represent (which representation may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) that (i) any Exchange
Notes received by it will be acquired in the ordinary course of its business,
(ii) at the time of the consummation of the Exchange Offer such Holder is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, the distribution of the
Exchange Notes, and (iii) such Holder is not (1) an "affiliate" of the Issuer or
any Subsidiary Guarantor (an "Issuer Affiliate") or, (2) the Initial Purchaser
or any other broker-dealer that acquired such Transfer Restricted Securities
directly from the Issuer or any Subsidiary Guarantor or any Issuer Affiliate for
resale pursuant to Rule 144A, Regulation S or another available exemption from
the registration requirements of the Securities Act (a "Direct Broker-Dealer
Buyer"). As used herein, "affiliate" shall be as defined in Rule 405 under the
Securities Act. Each Holder hereby acknowledges and agrees that any Issuer
Affiliate, any Direct Broker-Dealer Buyer, and any such Holder intending to use
the Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (i) could not under SEC policy as in effect on
the date of this Agreement participate in the Exchange Offer, and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction and that such a
secondary resale transaction of such Holder's Additional Notes should be covered
by an effective registration statement containing the selling security holder
and other information required by Item 507 and 508, as applicable, of Regulation
S-K under the Securities Act.
(c) Prior to the effectiveness of the Exchange Offer Registration
Statement, the Issuer shall provide a supplemental letter to the SEC (A) stating
that the Issuer is seeking to register the Exchange Offer on the basis of the
position of the SEC enunciated in XXXXXX XXXXXXX AND CO., INC. (available June
5, 1991), EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), and
SHEARMAN & STERLING (available July 2, 1993), and similar no-action letters and
(B) including a representation that none of the Issuer or any Subsidiary
Guarantor has entered into any arrangement or understanding with any person to
distribute the Exchange Notes to be received in the Exchange Offer and that, to
the best of each of the Issuer's and Subsidiary Guarantor's knowledge, each
Holder intending to participate in the Exchange Offer is acquiring the Exchange
Notes in its ordinary course of business and has no arrangement or understanding
with any person to participate in the distribution of the Exchange Notes
received in the Exchange Offer.
(d) The Issuer hereby agrees for a period of at least 180 days after
consummation of the Exchange Offer to make available, upon written request
therefor, a prospectus meeting the requirements of the Securities Act to any
Participating Broker-Dealer for use in connection with resales of Exchange
Notes. Upon consummation of the Exchange Offer in accordance with this
Agreement, the Issuer shall have no further obligation to register Transfer
Restricted Securities pursuant to Section 3 of this Agreement, unless the Issuer
is otherwise obligated to file a Shelf Registration Statement pursuant to clause
3 of subsection (g) of this Section 2.
(e) The Issuer shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made
5
7
by the staff of the SEC with respect to the potential "underwriter" status of
any Participating Broker-Dealer with respect to the Exchange Notes. Such "Plan
of Distribution" section shall also allow the use of the Prospectus by all
persons subject to the prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, and include a statement describing
the means by which Participating Broker-Dealers may resell the Exchange Notes.
(f) The Issuer shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; PROVIDED that such period shall not
exceed 180 days after consummation of the Exchange Offer (or such longer period
if extended pursuant to Section 5(j) hereof) (the "Applicable Period").
In connection with the Exchange Offer, the Issuer shall:
(i) mail as promptly as practicable to each Holder a copy of
the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and
related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered Additional Notes at
any time prior to the close of business, New York time, on the last
Business Day on which the Exchange Offer shall remain open by sending
to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Transfer Restricted Securities
delivered for exchange and a statement that such Holder is withdrawing
his or her election to have such Transfer Restricted Securities
exchanged.
As soon as practicable after the close of the Exchange Offer, the
Issuer shall:
(i) accept for exchange all Additional Notes validly tendered
and not validly withdrawn in accordance with the Exchange Offer;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Additional Notes so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Additional Notes, Exchange Notes equal in principal
amount to the Additional Notes of such Holder so accepted for exchange.
(g) If (1) prior to the consummation of the Exchange Offer, applicable
interpretations of the staff of the SEC do not permit the Issuer to effect the
Exchange Offer, (2) for any other reason the Exchange Offer is not consummated
on or prior to the Exchange Offer Completion
6
8
Date, or (3) any Holder of Transfer Restricted Securities shall notify the
Issuer within 20 Business Days of the consummation of the Exchange Offer (and
confirm such notice in writing within five Business Days thereafter) that such
Holder is a Direct Broker-Dealer Buyer, then the Issuer shall promptly deliver
to the Holders of any Transfer Restricted Securities and the Trustee written
notice thereof (the "Shelf Notice"), and the Issuer shall file a Registration
Statement pursuant to Section 3 hereof. Following the delivery to the Holders of
Transfer Restricted Securities of a Shelf Notice, the Issuer shall not have any
further obligation to conduct the Exchange Offer pursuant to this Section 2(g),
provided, that the Issuer shall have the right, nonetheless, to proceed to
consummate the Exchange Offer notwithstanding its obligation pursuant to this
Section 2(g) (and, upon such consummation, any obligation to file a Shelf
Registration Statement arising from clause (1) or (2) (but not clause (3)) of
this Section 2(g) shall terminate) and PROVIDED that any Shelf Notice delivered
to the Holders of Transfer Restricted Securities pursuant to clause (3) of this
Section 2(g) shall result in the termination of the obligations of the Issuer to
conduct the Exchange Offer only with respect to the Holders described in clause
(3) of this Section 2(g).
3. SHELF REGISTRATION STATEMENT
If the Issuer is required to deliver a Shelf Notice as contemplated by
Section 2(g) hereof, then:
(a) SHELF REGISTRATION STATEMENT. The Issuer shall prepare and file
with the SEC, as promptly as practicable following the Shelf Notice, a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Transfer Restricted Securities, which
registration statement, if the Shelf Notice is given pursuant to Section 2(g)(1)
or (2), may be an amendment to the Exchange Offer Registration Statement (the
"Shelf Registration Statement"). The Shelf Registration Statement shall be on
Form S-1 or another appropriate form permitting registration of the Transfer
Restricted Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, one or more
underwritten offerings). The Issuer shall not permit any securities other than
the Transfer Restricted Securities to be included in the Shelf Registration
Statement. The Issuer shall use its best efforts, as described in Section 5(b)
hereof, to cause the Shelf Registration Statement to be declared effective
pursuant to the Securities Act as promptly as practicable after the filing of
such Shelf Registration Statement, but in no event later than the Effectiveness
Target Date (or in the case of a Shelf Registration Statement filed pursuant to
Section 2(g)(3) hereof, by the later of the Effectiveness Target Date or 60 days
of receipt by the Issuer of the notice contemplated by Section 2(g)(3)), and to
keep the Shelf Registration Statement continuously effective under the
Securities Act until the earlier of (i) the date which is 24 months after its
effective date (or 12 months after such effective date if such Shelf
Registration Statement is filed pursuant to Section 2(g)(3) at the request of
the Initial Purchaser), (ii) the date that all Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold in the manner set
forth and as contemplated in the Shelf Registration Statement, (iii) the date
that there ceases to be securities outstanding that constitute Transfer
Restricted Securities, or (iv) the date on which all Transfer Restricted
Securities covered by the Shelf Registration Statement become tradeable under
Rule 144 without regard to volume limitations (the "Shelf Effectiveness
Period").
7
9
(b) SUPPLEMENTS AND AMENDMENTS. The Issuer shall use its best efforts
to keep the Shelf Registration Statement continuously effective by supplementing
and amending the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities covered by such Registration Statement or
by any underwriter of such Transfer Restricted Securities.
4. ADDED INTEREST
(a) The Issuer and the Initial Purchaser agree that the Holders of
Transfer Restricted Securities will suffer damages if the Issuer fails to
fulfill its obligations pursuant to Section 2 or Section 3 hereof and that it
would not be possible to ascertain the extent of such damages. Accordingly, in
the event of such failure by the Issuer to fulfill such obligations, the Issuer
agrees to pay Added Interest ("Added Interest") to each Holder of Transfer
Restricted Securities under the circumstances and to the extent set forth below:
(i) if the Exchange Offer Registration Statement has not been
filed with the SEC on or prior to the Filing Date; or
(ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness Target
Date; or
(iii) if the Exchange Offer has not been consummated and the
Issuer has not exchanged Exchange Notes for all Additional Notes
validly tendered in accordance with the terms of the Exchange Offer on
or prior to the Exchange Offer Completion Date or a Shelf Registration
Statement has not been declared effective by the SEC prior to the
Exchange Offer Completion Date;
(any of the foregoing, a "Registration Default"), then, the Issuer
shall pay to each Holder of Transfer Restricted Securities, accruing from
November 28, 1997 in the case of clause (i) above, January 12, 1998 in the case
of clause (ii) above or February 11, 1998 in the case of clause (iii) above,
Added Interest in an amount equal to one-half of one percent (0.5%) per annum of
the principal amount of Transfer Restricted Securities held by such Holder;
which rate will be increased by an additional one-half of one percent (0.5%) per
annum for each 90-day period that any such Added Interest continues to accrue;
PROVIDED, HOWEVER, that Added Interest shall not at any time exceed one percent
(1.0%) per annum of the principal amount of Transfer Restricted Securities. Upon
the filing of the Exchange Offer Registration Statement after November 28, 1997,
(y) the effectiveness of the Exchange Offer Registration Statement after January
12, 1998 or (z) the day before the date of the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, after February 11, 1998, the interest rate borne by the Additional Notes
from the date of such filing, effectiveness or the day before the date of such
consummation or effectiveness, as the case may be, will be reduced by the full
amount of the related increase from, but not to less than, the original interest
rate set forth on the cover page of the Offering Memorandum; PROVIDED, HOWEVER,
that (a) if after any such reduction in interest rate,
8
10
a different event specified in clause (i), (ii) or (iii) above occurs, the
interest rate may again be increased and thereafter reduced pursuant to the
foregoing provisions, and (b) such rate will also be reduced to the rate set
forth on the cover page of the Offering Memorandum on the date on which the
Additional Notes become eligible for sale under Rule 144 without limitation as
to volume.
(b) The Issuer shall notify the Trustee within one Business Day after
each and every date on which a Registration Default first occurs. Payment of
Added Interest, if any, will initially be due at the offices of the Paying Agent
(as defined in the Indenture), provided that, at the option of the Issuer, Added
Interest may be paid by check mailed to Holders at their registered addresses,
provided further that (i) all payments with respect to Global Additional Notes
(as defined in the Indenture) are required to be made in same day funds in
accordance with the policies of the Depository (as defined in the Indenture) and
(ii) all payments with respect to Additional Notes, the Holders of which have
given wire transfer instructions to the Issuer, will be required to be made by
wire transfer of immediately available funds to the accounts specified by such
Holders. Added Interest shall be paid on or before the semi-annual interest
payment date provided in the Indenture and on each payment date provided in the
Indenture including, without limitation, whether upon redemption, maturity (by
acceleration or otherwise) or purchase upon a Change of Control. Each obligation
to pay Added Interest shall be deemed to commence accruing on the date of the
applicable Registration Default and to cease accruing when all Registration
Defaults have been cured. In no event shall the Issuer pay Added Interest in
excess of the applicable maximum amount set forth above, regardless of whether
one or multiple Registration Defaults exist.
(c) The parties hereto agree that the Added Interest provided for in
this Section 4 constitutes a reasonable estimate of the damages that will be
suffered by Holders by reason of the failure to file the Exchange Offer
Registration Statement or the Shelf Registration Statement, the failure of the
Exchange Offer Registration Statement or the Shelf Registration Statement to be
declared effective, the failure to consummate the Exchange Offer or the failure
of the Shelf Registration Statement to remain effective, as the case may be, in
accordance with this Agreement. No monetary damages in addition to Added
Interest shall be payable by the Issuer to Holders by reason of the failure of
the actions set forth in this Section 4(c) to occur as set forth herein.
5. REGISTRATION PROCEDURES
In connection with the registration of any Exchange Notes or Transfer
Restricted Securities pursuant to Sections 2 or 3 hereof, the Issuer shall
effect such registration to permit the exchange of such Exchange Notes for
Additional Notes or the sale of such Transfer Restricted Securities (as
applicable), in accordance with the intended method or methods of exchange or
disposition thereof, and pursuant thereto the Issuer shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Section 2 or Section 3 hereof, and use
its best efforts to cause such Registration Statement to become effective and
remain effective as provided herein; PROVIDED that, if (1) such
9
11
filing is pursuant to Section 3 hereof, or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Issuer shall furnish to and afford the Holders of the
Transfer Restricted Securities and each such Participating Broker-Dealer, as the
case may be, covered by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto), proposed to be filed (at least 5
Business Days prior to such filing, or such later date as is reasonable under
the circumstances). The Issuer shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders, pursuant to this Agreement, must be afforded an opportunity to review
prior to the filing of such document, if the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities covered by such
Registration Statement, or such Participating Broker-Dealer, as the case may be,
their counsel, or the managing underwriters, if any, shall reasonably object on
a timely basis (except that documents filed as exhibits that are incorporated by
reference or deemed to be incorporated by reference shall not be subject to such
objections);
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Shelf Effectiveness Period or the
Applicable Period, as the case may be, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force), under the Securities Act; and comply
with the provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder with respect to the disposition of
all securities covered by such Registration Statement, as so amended, or in such
Prospectus, as so supplemented, and with respect to the subsequent resale of any
Exchange Notes being sold by a Participating Broker-Dealer covered by any such
Prospectus; the Issuer shall be deemed not to have used its best efforts to keep
a Registration Statement effective during the Applicable Period or the Shelf
Effectiveness Period or otherwise when required to use its best efforts under
Sections 2, 3 and 5 hereof if the Issuer voluntarily takes any action that would
result in selling Holders of the Transfer Restricted Securities covered thereby
or Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Transfer Restricted Securities or such Exchange Notes during that
period, unless (i) such action is required by applicable law, or (ii) such
action is taken by it in good faith and for valid business reasons (not
including avoidance of its obligations hereunder), including the acquisition or
divestiture of assets or the preservation of the confidentiality of information
the disclosure of which may have a material adverse effect on the assets,
business, financial condition or prospects of the Issuer and any other direct or
indirect subsidiary of the Issuer, taken as a whole;
(c) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2
10
12
hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
notify the selling Holders of Transfer Restricted Securities, or each known
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly and confirm such notice in writing, (i) when a
Prospectus, any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
Prospectus is required by the Securities Act to be delivered in connection with
sales of the Transfer Restricted Securities the representations and warranties
of the Issuer contained in any agreement (including any underwriting agreement)
contemplated by Section 5(l) hereof cease to be true and correct in any material
respect, (iv) of the receipt by the Issuer or the Subsidiary Guarantors of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Transfer Restricted
Securities or the Exchange Notes to be sold by any Participating Broker-Dealer
for offer or sale in any jurisdiction, or the initiation of any proceeding for
such purpose, (v) of the happening of any event or any information becoming
known that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the reasonable determination of the Issuer
that a post-effective amendment to a Registration Statement would be
appropriate;
(d) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, use its best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification), of any of the Transfer
Restricted Securities or the Exchange Notes (as applicable), to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, to use its best efforts to obtain the withdrawal of any such
order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3
hereof and if requested by the managing underwriters, if any, or the Holders of
a majority in aggregate principal
11
13
amount of the Transfer Restricted Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information relating to underwriters, if any, any
Holder of Transfer Restricted Securities or the plan of distribution of the
Transfer Restricted Securities as the managing underwriter, if any, or such
Holders may reasonably request to be included therein, (ii) make all required
filings of such prospectus supplement or such post-effective amendment as soon
as practicable after the Issuer has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment pursuant
to clause (i), and (iii) supplement or make amendments to such Registration
Statement with such information as is required in connection with any request
made pursuant to clause (i);
(f) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, furnish to each selling Holder of Transfer
Restricted Securities and to each such Participating Broker-Dealer who so
requests and to counsel and each managing underwriter, if any, without charge,
one conformed copy of the Registration Statement or Registration Statements and
each post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits;
(g) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, deliver to each selling Holder of Transfer
Restricted Securities, or each such Participating Broker-Dealer, as the case may
be, its counsel, and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of preliminary Prospectus),
and each amendment or supplement thereto and any documents incorporated by
reference therein, as such Persons may reasonably request; and, subject to the
last paragraph of this Section 5 hereof, the Issuer hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders of Transfer Restricted Securities or each such Participating
Broker-Dealer, as the case may be, and their underwriters or agents, if any, and
dealers, if any, in connection with the offering and sale of the Transfer
Restricted Securities covered by or the sale by Participating Broker-Dealers of
the Exchange Notes pursuant to such Prospectus and any amendment or supplement
thereto;
(h) prior to any public offering of Transfer Restricted Securities or
any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, to use its reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Transfer Restricted
Securities or each such Participating Broker-Dealer, as the case may be, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification), of such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as any selling Holder,
Participating
12
14
Broker-Dealer or the managing underwriters reasonably request in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Transfer Restricted Securities covered by
the applicable Registration Statement; PROVIDED that the Issuer shall not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) subject it to taxation in any such jurisdiction where it is not so subject;
(i) if a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Transfer Restricted Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to be sold,
which certificates shall not bear any restrictive legends with respect to
transfer and shall be in a form eligible for deposit with The Depository Trust
Company, ("DTC"), and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the managing underwriters, if any,
or Holders may reasonably request at least two Business Days prior to any sale
of the Transfer Restricted Securities, for delivery in connection with the
closing of such sale of Transfer Restricted Securities pursuant to such Shelf
Registration Statement;
(j) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the expense
of the Issuer, a post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Transfer Restricted
Securities being sold thereunder or to the purchasers of the Exchange Notes to
whom such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that:
(A) the Issuer may delay such preparation and filing of such supplement
or post-effective amendment pursuant to this Section 5(j) if (i) such
action is required by applicable law, or (ii) such action is taken by
it in good faith and for valid business reasons (not including
avoidance of its obligations hereunder), including the acquisition or
divestiture of assets or the preservation of the confidentiality of
information the disclosure of which may have a material adverse effect
on the assets, business, financial condition or prospects of the Issuer
and any other direct or indirect subsidiaries of the Issuer, taken as a
whole (in any such case, an "Amendment Delay");
13
15
(B) the Issuer may effect, in the aggregate, no more than one Amendment
Delay during the Applicable Period and such Amendment Delay shall be
for no longer than 45 Business Days;
(C) the Issuer may effect, in the aggregate, no more than two Amendment
Delays during the Shelf Effectiveness Period, provided that no more
than one Amendment Delay shall be effected during any twelve-month
period, and each such Amendment Delay shall be for no longer than 45
Business Days; and
(D) to the extent that the Issuer effects one or more Amendment Delays,
the duration of the Shelf Effectiveness Period (if such duration is
determined pursuant to clause (i) of the definition thereof) or the
maximum duration of the Applicable Period, as the case may be, shall be
extended for the aggregate amount of time that any such Amendment
Delays were in effect;
(k) prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, (i) provide the Trustee with
certificates for the Transfer Restricted Securities in a form eligible for
deposit with DTC and (ii) use its best efforts to provide a CUSIP number for the
Transfer Restricted Securities;
(1) in connection with an underwritten offering of Transfer Restricted
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings and take all
such other actions as are reasonably requested by the managing underwriters in
order to expedite or facilitate the registration or the disposition of such
Transfer Restricted Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the business
of the Issuer, the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, as
are customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to the
Issuer and updates thereof in form and substance reasonably satisfactory to the
managing underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters; (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the Independent certified public
accountants of the Issuer (and, if necessary, any other independent certified
public accountants with respect to any business for which financial statements
and financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as are reasonably requested by underwriters as permitted by STATEMENT ON
AUDITING STANDARDS NO. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
outstanding Transfer Restricted Securities covered by such Registration
Statement and the managing underwriters or agents), with respect to all parties
to be indemnified pursuant to said Section.
14
16
The above shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder;
(m) if (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, make available for inspection by any selling
Holder of such Transfer Restricted Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter participating
in any such disposition of Transfer Restricted Securities, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Issuer (collectively, the "Records"), solely as
shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Issuer and any of its respective subsidiaries to supply all information in
each case reasonably requested by any such Inspector in connection with such
Registration Statement, subject to such reasonable confidentiality requirements
as the Issuer or any of its respective subsidiaries may impose with respect
thereto;
(n) provide an indenture trustee for the Transfer Restricted Securities
or the Exchange Notes, as the case may be, and cause the Indenture to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Transfer Restricted
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the Holders of the Transfer Restricted Securities, to effect
such changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its best
efforts to cause such trustee to execute, all customary documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner;
(o) comply with all applicable rules and regulations of the SEC and, as
soon as reasonably practicable, make generally available to the holders of
Exchange Notes and the Holders, if any, consolidated earning statements of the
Issuer that satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(p) if an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Securities by Holders to the Issuer (or to such other Person
as directed by the Issuer), in exchange for the Exchange Notes, the Issuer shall
xxxx, or cause to be marked, on such Transfer Restricted Securities that such
Transfer Restricted Securities are being canceled in exchange for the Exchange
Notes; in no event shall such Transfer Restricted Securities be marked as paid
or otherwise satisfied;
(q) reasonably cooperate with each seller of Transfer Restricted
Securities covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such
15
17
Transfer Restricted Securities and their respective counsel in connection with
any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD");
(r) use its best efforts to take all other steps necessary to effect
the registration of the Transfer Restricted Securities or the Exchange Notes
covered by a Registration Statement contemplated hereby; and
(s) use its best efforts to cause the Transfer Restricted Securities or
the Exchange Notes, as applicable, covered by an effective registration
statement required by Section 2 or Section 3 hereof to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Transfer Restricted Securities relating to such
registration statement or the managing underwriters in connection therewith, if
any.
The Issuer may require each seller of Transfer Restricted Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuer such information regarding such seller or Participating
Broker-Dealer and the distribution of such Transfer Restricted Securities or
Exchange Notes to be sold by such Participating Broker-Dealer, as the case may
be, as required to be included in a Registration Statement prepared in
accordance with the Securities Act or as the Issuer may, from time to time,
reasonably request. The Issuer may exclude from such registration the Transfer
Restricted Securities or Exchange Notes of any seller or Participating
Broker-Dealer, as the case may be, who fails to furnish such information within
a reasonable time after receiving such request.
Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Notes to be sold by such Participating Broker-Dealer, as the case may
be, that, upon receipt of' any notice from the Issuer of the happening of any
event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi)
hereof, such Holder or such Participating Broker-Dealer shall forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus or such Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, until such Holder's or such
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing by the Issuer that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuer shall be borne by the Issuer, whether or not
the Exchange Offer or a Shelf Registration Statement is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (a) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (b) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Transfer Restricted Securities or Exchange
Notes (x) where the Holders of Transfer Restricted Securities
16
18
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Transfer Restricted Securities or Exchange Notes to
be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities or Exchange Notes in a form
eligible for deposit with DTC and of printing Prospectuses if the printing of
Prospectuses is requested by the managing underwriters, if any, or, in respect
of Transfer Restricted Securities or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuer, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(l)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Issuer desires
such insurance, (viii) fees and expenses of all other Persons retained by the
Issuer, except as otherwise agreed with respect to Friedman, Billings, Xxxxxx &
Co., Inc., (ix) internal expenses of the Issuer (including, without limitation,
all salaries and expenses of officers and employees of the Issuer performing
legal or accounting duties), (x) the expense of any annual audit and (xi) the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange. Nothing contained in this Section 6
shall create an obligation on the part of the Issuer to pay or reimburse any
Holder for any underwriting commission or discount, brokers' fees or accountable
or non-accountable expense reimbursement attributable to any such Holder's
Transfer Restricted Securities included in an underwritten offering pursuant to
a Registration Statement filed in accordance with the terms of this Agreement,
or to guarantee such Holder any profit or proceeds from the sale of such
Additional Notes.
(b) In connection with any Shelf Registration Statement hereunder, the
Issuer shall reimburse the Holders of the Transfer Restricted Securities being
registered in such registration for the reasonable fees and disbursements of not
more than one counsel (in addition to appropriate local counsel), chosen by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities to be included in such Registration Statement.
7. INDEMNIFICATION
The Issuer agrees to indemnify and hold harmless (i) the Initial
Purchaser or each Holder of Transfer Restricted Securities, each initial Holder
of Exchange Notes and each Participating Broker-Dealer, (ii) each person, if
any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act), any such Person (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person"),
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any of such Person or any controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "Purchaser Indemnitee"), to the fullest extent lawful, from and against
any and all losses, claims, damages, judgments, actions, out-of-pocket expenses,
and other liabilities (the "Liabilities"), including without limitation and as
incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or
17
19
proceeding by any governmental agency or body, commenced or threatened,
including the reasonable fees and expenses of counsel to any Purchaser
Indemnitee, joint or several, directly or indirectly related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Issuer shall have furnished to
such Purchaser Indemnitee any amendments or supplements thereto), or any
preliminary prospectus, or any omission or alleged omission to state therein a
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, except insofar as such Liabilities arise out of or are based upon
(i) any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to any
Purchaser Indemnitee furnished to the Issuer or any underwriter in writing by
such Purchaser Indemnitee expressly for use therein, or (h) any untrue statement
contained in or omission from a preliminary prospectus if a copy of the
Prospectus (as then amended or supplemented, if the Issuer shall have furnished
to or on behalf of the Holder participating in the distribution relating to the
relevant Registration Statement any amendments or supplements thereto) was not
sent or given by or on behalf of such Holder to the person asserting any such
Liabilities who purchased Additional Notes, if such Prospectus (or Prospectus as
amended or supplemented) is required by law to be sent or given at or prior to
the written confirmation of the sale of such Additional Notes to such person and
the untrue statement contained in or omission from such preliminary prospectus
was corrected in the Prospectus (or the Prospectus as amended or supplemented).
The Issuer shall notify the Holders promptly of the institution, threat or
assertion of any claim, proceeding (including any governmental investigation),
or litigation of which it shall have become aware in connection with the matters
addressed by this Agreement which involves the Issuer or a Purchaser Indemnitee.
In connection with any Registration Statement in which a Holder of
Transfer Restricted Securities or a Participating Broker-Dealer is
participating, such Holder of Transfer Restricted Securities or Participating
Broker-Dealer agrees, severally and not jointly, to indemnify and hold harmless
the Issuer, each person who controls the Issuer within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act and the respective
partners, directors, officers, members, representatives, employees and agents of
such person or controlling person to the same extent as the foregoing indemnity
from the Issuer to each Purchaser Indemnitee, but only with reference to
information relating to such Purchaser Indemnitee furnished to the Issuer in
writing by such Purchaser Indemnitee expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
Prospectus. The liability of any Purchaser Indemnitee pursuant to this paragraph
shall in no event exceed the net proceeds received by such Purchaser Indemnitee
from sales of Transfer Restricted Securities giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Party"), shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Party"), in writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 7,
18
20
except to the extent the Indemnifying Party is materially prejudiced by the
failure to give notice), and the Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to such
proceeding. Notwithstanding the foregoing, in any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense
and employ counsel reasonably satisfactory to the Indemnified Party or (iii) the
named parties to any such action (including any impleaded parties), include both
such Indemnified Party and the Indemnifying Party, or any affiliate of the
Indemnifying Party, and such Indemnified Party shall have been reasonably
advised by counsel that, either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party or such affiliate of the Indemnifying Party or (y) a conflict
may exist between such Indemnified Party and the Indemnifying Party or such
affiliate of the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel), for
all such indemnified parties, which firm shall be designated in writing by those
indemnified parties who sold a majority in outstanding aggregate principal
amount of Transfer Restricted Securities sold by all such indemnified parties
and any such separate firm for the Issuer, the directors, the officers and such
control persons of the Issuer as shall be designated in writing by the Issuer.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Party agrees to indemnify any Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is for any reason held to be unavailable to an Indemnified
Party in respect of any Liabilities referred to therein (other than by reason of
the exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted
19
21
in such Liabilities, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Indemnifying Party(ies) and the Indemnified Party, as well
as any other relevant equitable considerations. The relative fault of the Issuer
on the one hand and any Purchaser Indemnitees on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuer or by such Purchaser
Indemnitees and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA allocation
(even if such indemnified parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of any Liabilities referred
to in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 7, in
no event shall a Purchaser Indemnitee be required to contribute any amount in
excess of the amount by which proceeds received by such Purchaser Indemnitee
from sales of Transfer Restricted Securities or Exchange Notes exceeds the
amount of any damages that such Purchaser Indemnitee has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. For purposes of this Section 7, each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) the Initial Purchaser, a Holder of Transfer Restricted Securities,
an initial Holder of Exchange Notes or a Participating Broker-Dealer shall have
the same rights to contribution as such Initial Purchaser, such Holder of
Transfer Restricted Securities, such initial Holder of Exchange Notes or such
Participating Broker-Dealer, as the case may be, and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) the Issuer, and each officer, director, partner, employee,
representative, agent or manager of the Issuer shall have the same rights to
contribution as the Issuer. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise, except to
the extent that any party is materially prejudiced by the failure to give
notice. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act), shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the indemnifying parties may
otherwise have to the indemnified parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 7 are several in
proportion to the respective principal amount of Additional Notes sold by each
of the Purchaser Indemnitees hereunder and not joint.
20
22
8. RULES 144 AND 144A
The Issuer covenants that it will file the reports, if any, required to
be filed by it pursuant to the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Issuer is not required to file such reports, it will, upon the request
of any Holder of Transfer Restricted Securities, make available information with
respect to it required by Rule 144 and Rule 144A under the Securities Act in
order to permit sales pursuant to Rule 144 and Rule 144A. The Issuer further
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 and Rule 144A or (b) any similar rule or
regulation hereafter adopted by the SEC. The obligations of the Issuer to
furnish information under this Section 8 shall expire upon either the
consummation of the Exchange Offer or the full and complete performance of the
Issuer's registration obligations under this Agreement.
9. UNDERWRITTEN REGISTRATIONS
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering and shall be reasonably acceptable to the Issuer.
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder, unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice), by the managing underwriters in an
underwritten offering or by a placement agent in a private offering of the
Issuer's debt securities, not to effect any private sale or distribution
(including a sale pursuant to Rule 144(k) or Rule 144A under the Securities Act,
but excluding non-public sales to any of its affiliates, officers, directors,
employees and controlling persons) of any of the Additional Notes except
pursuant to an Exchange Offer, other than in compliance with applicable
securities laws and in no event during the period beginning 10 days prior to,
and ending 90 days after, the closing date of the underwritten offering.
The foregoing provisions shall not apply to any Holder of Transfer
Restricted Securities if such Holder is prevented by applicable statute or
regulation from entering into any such agreement.
21
23
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Issuer of any of its
obligations under this Agreement, each Holder of Transfer Restricted Securities
and each Participating Broker-Dealer holding Exchange Notes, in addition to
being entitled to exercise all rights provided herein, in the Indenture or, in
the case of the Initial Purchaser, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Subject to Section 4, the Issuer agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agree that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to or departures from the provisions hereof may not be
given, unless the Issuer has obtained the written consent of holders of at least
a majority of the then outstanding aggregate principal amount of Transfer
Restricted Securities and Exchange Notes held by Participating Broker-Dealers
taken as one class. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and Participating Broker-Dealers holding
Exchange Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders and Participating Broker-Dealers holding
Exchange Notes may be given by holders of at least a majority in aggregate
principal amount of the Transfer Restricted Securities and Exchange Notes held
by Participating Broker-Dealers being sold by such Holders and Participating
Broker-Dealers pursuant to such Registration Statement; PROVIDED that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(c) NOTICES. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee), provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or by telegram :
(i) if to a Holder of Transfer Restricted Securities, at the
most current address given by the Trustee to the Issuer; and
(ii) if to the Issuer at the offices of the Company at 0000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention:
Executive Vice President; (facsimile: 800-694-6346).
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
22
24
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation and without the need for an express assignment or
assumption, subsequent Holders of Transfer Restricted Securities. The Issuer
agrees that the Holders of Transfer Restricted Securities and Participating
Broker-Dealers holding Exchange Notes shall be third party beneficiaries to the
agreements made hereunder by the Initial Purchaser and the Issuer, and each
Holder and Participating Broker-Dealer shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder; provided, however, that such Holder
or Participating Broker-Dealer fulfills all of its obligations hereunder.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties hereto that they would have
23
25
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(i) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(j) TRANSFER RESTRICTED SECURITIES HELD BY THE ISSUER OR ITS
AFFILIATES. Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Issuer or its affiliates (as such term is
defined in Rule 405 under the Securities Act), shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) SURVIVAL. This Agreement is intended to survive the consummation of
the transactions contemplated by the Purchase Agreement. The indemnification and
contribution obligations under Section 7 of this Agreement shall survive the
termination of the Issuer's obligations under Sections 2 and 3 of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ISSUER
------
MEGO MORTGAGE CORPORATION
By:
---------------------------------
Name:
Title:
INITIAL PURCHASER
-----------------
FRIEDMAN, BILLINGS, XXXXXX & CO.,
INC.
By:
---------------------------------
Name:
Title:
24
