1
EXHIBIT 1.1
2,000,000 Shares
MEGO MORTGAGE CORPORATION
Common Stock
UNDERWRITING AGREEMENT
, 1996
-----------
Xxxxxxxxxxx & Co., Inc.
Friedman, Billings, Xxxxxx & Co., Inc.
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Mego Mortgage Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to you and the other underwriters named
on Schedule I to this Agreement (the "Underwriters"), for whom you are acting
as Representatives, an aggregate of 2,000,000 shares (the "Firm Shares") of the
Company's common stock, $0.01 par value (the "Common Stock"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 300,000 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the
"Shares."
1. Sale and Purchase of the Shares. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the
Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase from the Company the respective number of Firm
Shares (subject to such adjustment as you may determine to avoid
fractional shares) which bears the same proportion to the number of
Firm Shares
2
to be sold by the Company as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I to this Agreement
bears to the total number of Firm Shares to be sold by the Company, in
each case at a purchase price of $___ per share (the "Initial Price").
(b) The Company grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of the
Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted
by the Representatives to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter
is purchasing of the Firm Shares. Such option may be exercised only
to cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on
or before 12:00 noon, New York City time, on the business day before
the Firm Shares Closing Date (as defined below), and only once
thereafter within 30 days after the date of this Agreement, in each
case upon written or telegraphic notice, or oral or telephonic notice
confirmed by written or telegraphic notice, by the Representatives to
the Company no later than 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date or at least two
business days before the Option Shares Closing Date (as defined
below), as the case may be, setting forth the number of Option Shares
to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the
Firm Shares to the Representatives for the respective accounts of the
Underwriters, and payment of the purchase price by certified or official bank
check or checks payable in same day funds to the Company, shall take place at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third (fourth, if pricing
occurs after 4:30 p.m. New York City time) business day following the date of
this Agreement, or at such time on such other date, not later than ten business
days after the date of this Agreement, as shall be agreed upon by the Company
and the Representatives (such time and date of delivery and payment are called
the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by certified or official bank check or checks payable in same day funds
to the Company shall take place at the offices of Xxxxxxxxxxx & Co., Inc.
specified above at the time and on the date (which may be the same date as, but
in no event shall be earlier than, the Firm Shares Closing Date) specified in
the notice referred to in Section 1(b) (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall request
at least two full business days before the Firm Shares Closing Date or, in the
case of Option Shares, on the day of notice of
2
3
exercise of the option as described in Section l(b) and shall be made available
to the Representatives for checking and packaging, at such place as is
designated by the Representatives, on the full business day before the Firm
Shares Closing Date (or the Option Shares Closing Date in the case of the
Option Shares).
3. Registration Statement and Prospectus; Public
Offering. The Company has prepared in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(No. 333-12443), including a preliminary prospectus relating to the Shares, and
has filed with the Commission the registration statement and such amendments
thereof as may have been required to the date of this Agreement. Copies of
such registration statement (including all amendments thereof) and of the
related preliminary prospectus have heretofore been delivered by the Company to
you. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
registration statement. The Registration Statement as amended at the time and
on the date it becomes effective (the "Effective Date"), including all exhibits
and information, if any, deemed to be part of the Registration Statement
pursuant to Rule 424(b) and Rule 430A of the Rules, is called the "Registration
Statement." The term "Prospectus" means the prospectus in the form first used
to confirm sales of the Shares (whether such prospectus was included in the
Registration Statement at the time of effectiveness or was subsequently filed
with the Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to make
a public offering of the Shares, as set forth in and pursuant to the
Prospectus, as soon after the Effective Date and the date of this Agreement as
the Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The
Company hereby represents and warrants to, and agrees with, each Underwriter as
follows:
(a) On the Effective Date the Registration Statement
complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the Prospectus
is filed with the Commission and on each Closing Date, the
Registration Statement and the Prospectus (and any amendment thereof
or supplement thereto) will comply, in all material respects, with the
applicable provisions of the Securities Act and the Rules and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder; the
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein
3
4
not misleading; and on the other dates referred to above neither
the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part
of the registration statement or any amendment thereto or pursuant to
Rule 424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and the
Rules and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or
warranty as to information furnished in writing by the Representatives
on behalf of the several Underwriters specifically for inclusion in
the Registration Statement, any preliminary prospectus or the
Prospectus, which includes only the last paragraph on the cover page,
the paragraph with respect to stabilization on the inside front cover
page of the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus.
(b) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed with
the Commission as exhibits to the Registration Statement.
(c) The financial statements of the Company (including
all notes and schedules thereto) included in the Registration
Statement and Prospectus present fairly the financial position, the
results of operations and cash flows and the shareholders' equity and
the other information purported to be shown therein of the Company at
the respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made.
(d) Deloitte & Touche LLP, whose reports are filed with
the Commission as a part of the Registration Statement, are and,
during the periods covered by their reports, were independent public
accountants as required by the Securities Act and the Rules.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or
the nature of its business makes such qualification necessary except
for such jurisdictions where the failure to so qualify would not have
a material adverse effect on the assets or properties, business,
results of operations or financial condition of the
4
5
Company and in each jurisdiction in which it originates or purchases
loans. Except as disclosed in the Registration Statement and the
Prospectus, the Company does not own, lease or license any material
asset or property or conduct any business outside the United States of
America. The Company has all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity, to own, lease and
license its assets and properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus except for such authorizations, approvals, consents,
orders, licenses, certificates and permits the failure to so obtain
would not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company; no such authorization,
approval, consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; and the Company has all
such corporate power and authority, and such authorizations,
approvals, consents, orders, licenses, certificates and permits to
enter into, deliver and perform this Agreement and to issue and sell
the Shares (except as may be required under the Securities Act and
state and foreign Blue Sky laws).
(f) The Company owns or possesses adequate and
enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its
business as described in the Registration Statement and the
Prospectus. The Company has not received any notice of, nor to its
best knowledge is aware of, any infringement of or conflict with
asserted rights of others with respect to any Intangibles which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect upon the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company.
(g) The Company has good title to each of the items of
personal property which are reflected in the financial statements
referred to in Section 4(c) or are referred to in the Registration
Statement and the Prospectus as being owned by it and valid and
enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration Statement
and the Prospectus as being leased by it, in each case free and clear
of all liens, encumbrances, claims, security interests and defects,
other than those described in the Registration Statement and the
Prospectus and those which do not and will not have a material adverse
effect upon the assets or properties, business, results of operations
or financial condition of the Company.
(h) Except as disclosed in the Registration Statement and
the Prospectus with respect to the Commission's investigation of Mego
Financial Corp. (the Company's parent), there is no litigation or
governmental or other proceeding or investigation before any court or
before or by any public body or board pending or, to the best
knowledge
5
6
of the Company, threatened (and the Company does not know of any basis
therefor) against, or involving the assets, properties or business of,
the Company which would materially adversely affect the value or the
operation of any such assets or properties or the business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as described therein, (1) there has not been any material
adverse change in the assets or properties, business, results of
operations, prospects or condition (financial or otherwise), of the
Company, whether or not arising from transactions in the ordinary
course of business; (2) the Company has not sustained any material
loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
order or decree; and (3) and since the date of the latest balance
sheet included in the Registration Statement and the Prospectus,
except as reflected therein, the Company has not (a) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations
incurred in the ordinary course of business, (b) entered into any
transaction not in the ordinary course of business or (c) declared or
paid any dividend or made any distribution on any shares of its stock
or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(j) There is no document or contract of a character
required to be described in the Registration Statement or Prospectus
or to be filed as an exhibit to the Registration Statement which is
not described or filed as required. Each agreement listed in the
Exhibits to the Registration Statement is in full force and effect and
is valid and enforceable by and against the Company in accordance with
its terms, assuming the due authorization, execution and delivery
thereof by each of the other parties thereto. Except as disclosed in
the Registration Statement and the Prospectus with respect to the
possible termination of servicing rights, neither the Company,
nor to the best knowledge of the Company, any other party is in
default in the observance or performance of any term or obligation to
be performed by it under any such agreement, and no event has occurred
which with notice or lapse of time or both would constitute such a
default, in any such case which default or event would have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the
Company of any other agreement or instrument to which the Company is a
party or by which it or its properties or business may be bound or
affected which default or event would have a material adverse effect
on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
6
7
(k) The Company is not in violation of any term or
provision of its charter or bylaws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material adverse
effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(l) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets of
the Company pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party
or by which it or any of its respective properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or violate any
provision of the charter or bylaws of the Company, except for such
consents or waivers which have already been obtained and are in full
force and effect.
(m) The Company has an authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the
Prospectus. All of the outstanding shares of Common Stock have been
duly and validly issued and are fully paid and nonassessable and were
not issued in violation of any preemptive or other similar right. The
Company has no subsidiaries. The Shares, when issued and sold
pursuant to this Agreement, will be duly and validly issued, fully
paid and nonassessable and none of them will be issued in violation of
any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform
in all material respects to all statements in relation thereto
contained in the Registration Statement and the Prospectus.
(n) No holder of any security of the Company has the
right to have any security owned by such holder included in the
Registration Statement or to demand registration of any security owned
by such holder during the period ending 180 days after the date of
this Agreement. The sole shareholder of the Company has delivered to
the Representatives its enforceable written agreement that it will
not, for a period of 180 days after the date of this Agreement, offer
for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or
any securities
7
8
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by it, without the prior written consent of the
Representatives.
(o) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company enforceable against the Company
in accordance with its terms, except (A) as the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to the extent
that rights to indemnity or contribution under this Agreement may be
limited by Federal and state securities laws or the public policy
underlying such laws.
(p) The Company is not involved in any labor dispute nor,
to the knowledge of the Company, is any such dispute threatened, which
dispute would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(q) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and
the Prospectus.
(r) The Company has not taken, nor will it take, directly
or indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale
or resale of any of the Shares.
(s) The Company or its parent, Mego Financial Corp., has
filed all Federal, state, local and foreign tax returns which are
required to be filed by the Company through the date hereof, or has
received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same
are material and have become due.
(t) The Shares have been duly authorized for quotation on
The Nasdaq National Market System.
(u) The Company has prepared and filed with the
Commission a registration statement on Form S-1 (No. 333-13421)
including a prospectus (including any amendments or supplements
thereto, the "Note Registration Statement") registering up to $40.0
million of the Company's __% Senior Subordinated Notes due 2001 (the
"Notes") in connection with the proposed public offering of the Notes.
8
9
(v) The Company is not, and will not become upon the
issuance and sale of the Shares as herein contemplated and the
application of net proceeds therefrom as described in the Prospectus
under the caption "Use of Proceeds," an "investment company" or an
entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be
in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered
pursuant to Section 5(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date and the Company
shall have performed all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed
or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives and dated
such Closing Date, of the chief executive or chief operating officer
and the chief financial officer or chief accounting officer of the
Company to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus and this
Agreement and that the representations and warranties of the Company
in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date and the Company
has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by it at or prior to such Closing Date.
(e) The Representatives shall have received on the
Effective Date, at the time this Agreement is executed and on each
Closing Date a signed letter from Deloitte & Touche LLP addressed to
the Representatives and dated, respectively, the Effective Date, the
date of this Agreement and each such Closing Date, in form and
substance reasonably satisfactory to the Representatives, confirming
that they are
9
10
independent accountants within the meaning of the Securities Act and
the Rules, that the response to Item 10 of the Registration Statement
is correct insofar as it relates to them and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in the
Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and
the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Financial Data" and "Selected
Financial Data," carrying out certain procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Summary Financial
Data," and "Selected Financial Data" included in the
Registration Statement and the Prospectus do not
agree with the corresponding amounts in the audited
and unaudited financial statements from which such
amounts were derived; or
(B) with respect to the Company, there
were, at a specified date not more than three
business days prior to the date of the letter, any
changes in the capital stock or long- term
indebtedness of the Company or any decreases in net
income, total assets, working capital, total revenues
or stockholders' equity of the Company, as compared
with the amounts shown on the Company's audited
balance sheet for the fiscal year ended August 31,
1996 included in the Registration Statement; and
(iii) they have performed certain other procedures
as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company)
set forth in the Registration Statement and the Prospectus and
reasonably specified by the Representatives agrees with the
accounting records of the Company.
10
11
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the
date of the letter.
(f) The Representatives shall have received on each
Closing Date from Greenberg, Traurig, Hoffman, Lipoff, Xxxxx &
Quentel, P.A., counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Delaware. The Company is duly qualified
and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets
or properties (owned, leased or licensed) or the nature of its
business makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company.
(ii) The Company has all requisite corporate power
and authority to own, lease and license its assets and
properties and conduct its business as now being conducted and
as described in the Registration Statement and the Prospectus;
and the Company has all requisite corporate power and
authority and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits to enter
into, deliver and perform this Agreement and to issue and sell
the Shares other than those required under the Securities Act
and state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital
stock as set forth in the Registration Statement and the
Prospectus; the certificates evidencing the Shares are in due
and proper legal form and have been duly authorized for
issuance by the Company; all of the outstanding shares of
Common Stock of the Company have been duly and validly
authorized and, to the best of such counsel's knowledge, have
been duly and validly issued and are fully paid and
nonassessable and none of them was issued in violation of any
preemptive or other similar right. To the best of such
counsel's knowledge, the Company has no subsidiaries. The
Shares when issued and sold pursuant to this Agreement will
be duly and validly issued, outstanding, fully paid and
nonassessable and will not have been issued in violation of
any preemptive or other similar right. To the best of such
counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of stock
of the Company or any security convertible into, exercisable
for, or exchangeable for stock of the Company. The Common
Stock and the Shares conform in all material respects to the
11
12
descriptions thereof contained in the Registration Statement
and the Prospectus.
(iv) The agreement of the Company's sole stockholder
stating that for a period of 180 days from the date of this
Agreement it will not, without the prior written consent of
the Representatives, sell, grant any option for the sale of,
or otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any securities convertible into, exercisable
for, or exchangeable for any shares of Common Stock) owned by
it has been duly and validly delivered by it and constitutes
the legal, valid and binding obligation of it enforceable
against it in accordance with its terms, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(v) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms except (A) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles and (B)
to the extent that rights to indemnity or contribution under
this Agreement may be limited by Federal or state securities
laws or the public policy underlying such laws.
(vi) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse
of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any
properties or assets of the Company pursuant to the terms of
any indenture, mortgage, deed of trust, note or other
agreement or instrument of which such counsel is aware and to
which the Company is a party or by which it or any of its
properties or businesses is bound, except for such consents
and waivers which have already been obtained, or any
franchise, license,
12
13
permit, judgment, decree, order, statute, rule or regulation
of which such counsel is aware or violate any provision of the
charter or bylaws of the Company.
(vii) To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus with respect to the possible termination of
servicing rights, no default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a
default, in the due performance and observance of any term,
covenant or condition by the Company of any indenture,
mortgage, deed of trust, note or any other agreement or
instrument to which the Company is a party or by which it or
any of its assets or properties or businesses may be bound or
affected, where the consequences of such default would have a
material and adverse effect on the assets,
properties,business, results of operations, prospects or
condition (financial or otherwise) of the Company.
(viii) To the best of such counsel's knowledge, the
Company is not in violation of any term or provision of its
charter or bylaws or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the
consequences of such violation would have a material and
adverse effect on the assets or properties, businesses,
results of operations, prospects or condition (financial or
otherwise) of the Company.
(ix) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby, except
such as have been obtained under the Securities Act and such
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by
the several Underwriters.
(x) To the best of such counsel's knowledge, except
as disclosed in the Registration Statement and the Prospectus
with respect to the Commission's investigation of Mego
Financial Corp., there is no litigation or governmental or
other proceeding or investigation, before any court or before
or by any public body or board pending or threatened against,
or involving the assets, properties or businesses of, the
Company which would have a material adverse effect upon the
assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(xi) The statements in the Prospectus under the
captions "Description of Capital Stock," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources,"
"Business-Government Regulation," "Shares Eligible for Future
Sale," "Management-Employment Agreement," "Management-Company
Stock Option Plan," and "Certain Transactions," insofar as
such statements constitute
13
14
a summary of documents referred to therein or matters of law,
are fair summaries in all material respects and accurately
present the information called for with respect to such
documents and matters. To the best of such counsel's
knowledge, all contracts and other documents required to be
filed as exhibits to, or described in, the Registration
Statement have been so filed with the Commission or are
fairly described in the Registration Statement, as the
case may be.
(xii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
schedules and other financial and statistical data included
therein, as to which such counsel expresses no opinion) comply
as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xiii) The Registration Statement has become
effective under the Securities Act, and, to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are threatened, pending or contemplated.
(xiv) The Shares to be sold under this Agreement to
the Underwriters are duly authorized for quotation on The
Nasdaq National Market.
(xv) The Company is not, and will not become upon
and as a result of the sale of the Shares and the application
of the net proceeds therefrom as described in the Prospectus
under the caption "Use of Proceeds," an "investment company,"
as such term is defined in the 1940 Act.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel
satisfactory to the Representatives as to matters which are governed
by laws other than the laws of the States of Florida or New York, the
General Corporation Law of the State of Delaware and the Federal laws
of the United States; provided that such counsel shall state that in
their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions
shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the Representatives and
representatives of the independent certified public accountants of the
Company, at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
14
15
(except as specified in the foregoing opinion), on the basis of the
foregoing, no facts have come to the attention of such counsel which
lead such counsel to believe that the Registration Statement at the
time it became effective (except with respect to the financial
statements and notes and schedules thereto and other financial data,
as to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements and
notes schedules thereto and other financial data, as to which such
counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(g) All proceedings taken in connection with the sale of
the Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives
and their counsel and the Underwriters shall have received on each
Closing Date from Xxxxxx, Xxxx & Xxxxxxxx LLP a favorable opinion,
addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the Prospectus,
and such other related matters, as the Representatives may reasonably
request, and the Company shall have furnished to Xxxxxx, Xxxx &
Xxxxxxxx LLP such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives, and
dated such Closing Date, of an executive officer of the Company to the
effect that as of such Closing Date, neither the Company nor any of
its affiliates does business with the government of Cuba or with any
person or affiliate located in Cuba.
(i) The Note Registration Statement registering the Notes
shall have become effective under the Securities Act, and no stop
order suspending the effectiveness of the Note Registration Statement
has been issued and no proceedings for that purpose shall have been
instituted or be threatened, pending or contemplated, and the offering
of the Notes, in an aggregate amount not to exceed $40.0 million,
shall have been consummated as contemplated in the Note Registration
Statement on the Firm Closing Date.
6. Covenants of the Company.
(a) The Company covenants and agrees with each
Underwriter as follows:
(i) The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the
15
16
second business day following the execution and delivery of
this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Securities Act, and
shall promptly advise the Representatives (A) when any
amendment to the Registration Statement shall have become
effective, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or
for any additional information, (C) of the prevention or
suspension of the use of any preliminary prospectus or the
Prospectus or of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding
for that purpose and (D) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus unless
the Company has furnished the Representatives a copy for its
review prior to filing and shall not file any such proposed
amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to
prevent the issuance of any such stop order and, if issued, to
obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (i) of
this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iii) The Company shall make generally available to
its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days
if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy
the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(iv) The Company shall furnish to the
Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement (including
all exhibits thereto and amendments thereof) and to each
16
17
other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so
long as delivery of a prospectus by an Underwriter or dealer
may be required by the Securities Act or the Rules, as many
copies of any preliminary prospectus and the Prospectus and
any amendments thereof and supplements thereto as the
Representatives may reasonably request.
(v) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for
the distribution of the Shares; provided, however, that the
Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business
in any jurisdiction.
(vi) For a period of five years after the date of
this Agreement, the Company shall supply to the
Representatives, and to each other Underwriter who may so
request in writing, copies of such financial statements and
other periodic and special reports as the Company may from
time to time distribute generally to the holders of any class
of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to
file with the Commission (including the Report on Form SR
required by Rule 463 of the Rules).
(vii) Without the prior written consent of the
Representatives, for a period of 180 days after the date of
this Agreement, the Company shall not issue, sell or register
with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into or exercisable or exchangeable for
equity securities of the Company), except for the issuance of
the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock
option plan. In the event that during this period, (A) any
shares are issued pursuant to the Company's existing stock
option plan or (B) any registration is effected on Form S-8 or
on any successor form, the Company shall obtain the written
agreement of such grantee or purchaser or holder of such
registered securities that, for a period of 180 days after the
date of this Agreement, such person will not, without the
prior written consent of the Representatives, offer for sale,
sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common
Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by such
person.
17
18
(viii) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by The Nasdaq National Market System
(including any required registration under the Exchange Act).
(b) The Company agrees to pay, or reimburse if paid by
the Representatives, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the public offering of the Shares and the
performance of the obligations of the Company under this Agreement
including those relating to: (i) the preparation, printing, filing
and distribution of the Registration Statement including all exhibits
thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and
the printing, filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Shares to the
Underwriters; (iii) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the
various jurisdictions referred to in Section 6(a)(v), including the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs
of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus
and all amendments or supplements to the Prospectus, and of the
several documents required by this Section to be so furnished, as may
be reasonably requested for use in connection with the offering and
sale of the Shares by the Underwriters or by dealers to whom Shares
may be sold; (v) the filing fees of the National Association of
Securities Dealers, Inc. in connection with its review of the terms of
the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies
of all reports and information required by Section 6(a)(vi); (vii)
inclusion of the Shares for quotation on The Nasdaq National Market;
and (viii) all transfer taxes, if any, with respect to the sale and
delivery of the Shares by the Company to the Underwriters. Subject to
the provisions of Section 9, the Underwriters agree to pay, whether or
not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Underwriters under this
Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in
18
19
settlement of, any action, suit or proceeding or any claim asserted),
to which they, or any of them, may become subject under the Securities
Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus
or any amendment thereof or supplement thereto, or arise out of or are
based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such
indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any
person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
on behalf of any Underwriter specifically for use therein, which
includes only the statements contained in the last paragraph of the
cover page, in the paragraph relating to stabilization on the inside
front cover page of the Prospectus and the statements contained under
the caption "Underwriting" in the Prospectus. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration
Statement, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission with
respect to such Underwriter which was made in any preliminary
prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use
therein, which includes only the statements contained in the last
paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus and the
statements contained under the caption "Underwriting" in the
Prospectus; provided, however, that the obligation of any Underwriter
to indemnify the Company (including any controlling person, director
or officer thereof) shall be limited to the net proceeds received by
the Company from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party
in respect of which a claim is to be made against an
19
20
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 6(a) or 6(b) shall be available to any party
who shall fail to give notice as provided in this Section 6(c) if the
party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure
to give such notice but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from
any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in,
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement
of any action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 7(a) is due in accordance with its terms but for any reason is
held to be unavailable from the Company, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who may
also be liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect
the relative
20
21
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters) be
liable or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder, and (ii) the
Company shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that 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. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. 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 under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise
than under this Section. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its written
consent. The Underwriter's obligations to contribute pursuant to this Section
8 are several in proportion to their respective underwriting commitments and
not joint.
21
22
9. Termination. This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the Representatives
by notifying the Company at any time:
(a) in the absolute discretion of the Representatives at
or before any Closing Date: (i) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the future
materially disrupt, the securities markets; (ii) if there has occurred
any new outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the judgment of the
Representatives, inadvisable to proceed with the offering; (iii) if
there shall be such a material adverse change in general financial,
political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to
make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares has
been suspended by the Commission or trading generally on the New York
Stock Exchange, Inc. or on the American Stock Exchange, Inc. has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or
any other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled when
and as required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter,
and no Underwriter shall be under any liability to the Company, except that (y)
if this Agreement is terminated by the Representatives or the Underwriters
because of any failure, refusal or inability on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,
the Company will reimburse the Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel) incurred by
them in connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no Underwriter
who shall have failed or refused to purchase the Shares agreed to be purchased
by it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company or to the other Underwriters for damages
occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more
substitute underwriters to purchase such Shares or make such other
22
23
arrangements as the Representatives may deem advisable or one or more of the
remaining Underwriters may agree to purchase such Shares in such proportions as
may be approved by the Representatives, in each case upon the terms set forth
in this Agreement. If no such arrangements have been made by the close of
business on the business day following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10% of
the Shares that all the Underwriters are obligated to purchase on such
Closing Date, then each of the nondefaulting Underwriters shall be
obligated to purchase such Shares on the terms herein set forth in
proportion to their respective obligations hereunder; provided, that
in no event shall the maximum number of Shares that any Underwriter
has agreed to purchase pursuant to Section 1 be increased pursuant to
this Section 10 by more than one-ninth of such number of Shares
without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of the
Shares that all the Underwriters are obligated to purchase on such
Closing Date, then the Company shall be entitled to an additional
business day within which it may, but is not obligated to, find one or
more substitute underwriters reasonably satisfactory to the
Representatives to purchase such Shares upon the terms set forth in
this Agreement.
In any such case, either the Representatives or the Company
shall have the right to postpone the applicable Closing Date for a period of
not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives
and the Company. If the number of Shares to be purchased on such Closing Date
by such defaulting Underwriter or Underwriters shall exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing Date, and
none of the nondefaulting Underwriters or the Company shall make arrangements
pursuant to this Section within the period stated for the purchase of the
Shares that the defaulting Underwriters agreed to purchase, this Agreement
shall terminate with respect to the Shares to be purchased on such Closing Date
without liability on the part of any nondefaulting Underwriter to the Company
and without liability on the part of the Company, except in both cases as
provided in Sections 6(b), 7, 8 and 9. The provisions of this Section shall
not in any way affect the liability of any defaulting Underwriter to the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes
of this Agreement.
11. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Sections 7 and 8
hereof, and shall
23
24
survive delivery of and payment for the Shares. The provisions of Sections
6(b), 7, 8 and 9 shall survive the termination or cancellation of this
Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representatives, c/o Oppenheimer & Co., Inc.,
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
Xxxx X. Xxxxxxxx and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
24
25
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. Please confirm that the
foregoing correctly sets forth the agreement among us.
Very truly yours,
MEGO MORTGAGE CORPORATION
By:
--------------------------
Title:
Confirmed:
XXXXXXXXXXX & CO., INC.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
Acting severally on behalf of themselves
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By: XXXXXXXXXXX & CO., INC.
By:
------------------------------
Title:
25
26
SCHEDULE I
NUMBER OF
FIRM SHARES
NAME TO BE PURCHASED
----------------------------------------------------------- ----------------
Xxxxxxxxxxx & Co., Inc. . . . . . . . . . . . . . . . . . .
Friedman, Billings, Xxxxxx & Co., Inc. . . . . . . . . . .
-------------
Total . . . . . . . . . . . . . . . . . . . . . . 2,000,000
=============
26
