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Exhibit 10.67
MEGO MORTGAGE CORPORATION
as the Issuer
and
THE PERSONS WHO FROM TIME TO TIME BECOME
SUBSIDIARY GUARANTORS
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
--------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of October 20, 1997
TO
INDENTURE
Dated as of November 22, 1996
--------------------
12 1/2% Senior Subordinated Notes due 2001
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FIRST SUPPLEMENTAL INDENTURE, dated as of October 20, 1997 (the "First
Supplemental Indenture"), among Mego Mortgage Corporation, a Delaware
corporation (the "Company"), any Person that may from time to time become a
party hereto as a Subsidiary Guarantor by executing and delivering to the
Trustee a Joinder of Subsidiary Guarantor, and American Stock Transfer & Trust
Company, a New York corporation, as trustee (the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee executed and delivered the
Indenture, dated as of November 22, 1996 (the "Original Indenture", and as
amended hereby, the "Indenture"), pursuant to which $40,000,000 aggregate
principal amount of 12 1/2% Senior Subordinated Notes due 2001 (the "Existing
Notes") of the Company were issued;
WHEREAS, Section 9.2 of the Indenture provides that, when authorized by
a resolution of the Board of Directors of the Company, the Company and the
Trustee may enter into a supplemental indenture to add provisions to or change,
eliminate or waive provisions of the Indenture or modify the rights of Holders
under the Indenture with the written consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding;
WHEREAS, the execution and delivery of this First Supplemental
Indenture have been duly authorized and approved by resolution of the Board of
Directors of the Company;
WHEREAS, the Company has solicited the consent of the Holders of the
Existing Notes to certain amendments (the "Amendments") to the Original
Indenture pursuant to that certain Consent Solicitation Statement, dated
September 22, 1997;
WHEREAS, Holders representing at least a majority in aggregate
principal amount of the Existing Notes have consented to the Amendments and
pursuant to Section 1.4 of the Indenture, evidence of such consent has been
proved to the Trustee in a manner which the Trustee has deemed satisfactory; and
WHEREAS, the Company desires and has requested that the Trustee join in
the execution and delivery of this First Supplemental Indenture for the purpose
of amending the Original Indenture.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, it is mutually covenanted and agreed for the equal and
ratable benefit of all Holders of the Notes as follows, effective upon execution
hereof by the Trustee:
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ARTICLE ONE
AMENDMENTS TO INDENTURE
SECTION 1.1 AMENDED RECITALS AND DEFINITIONS.
Paragraph A of the Recitals of the Company hereby is amended to read in
its entirety as follows:
A. The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of a
series of its unsecured 12 1/2% Senior Subordinated Notes due
2001 with an aggregate principal amount of $40,000,000 (herein
called the "EXISTING NOTES") and may, subject to Section 3.12,
in the future authorize the issuance of one or more additional
series of its unsecured 12 1/2% Senior Subordinated Notes due
2001 limited in aggregate principal amount to $110,000,000
(the "FUTURE NOTES" or, together with the Existing Notes, the
"NOTES"), to be issued as in this Indenture provided. All
references to "FUTURE NOTES" include, in the case of Future
Notes issued pursuant to an exemption from the registration
requirements of the Securities Act, any Notes issued in
exchange for such Future Notes pursuant to a registered
exchange offer under the Securities Act (the "EXCHANGE
NOTES").
The word "and" is hereby deleted from the end of paragraph (6) of
Section 1.1 of the Indenture. The following new paragraph (7) is added to
Section 1.1 of the Indenture, and paragraph (7) of the Original Indenture is
hereby renumbered paragraph (8):
(7) references in this Indenture to "interest" on or
with respect to the Notes include, in the case of Future Notes
subject to a Registration Rights Agreement, Added Interest;
and
In addition, each of the following definitions set forth in Section 1.1
of the Indenture hereby is amended to read in each of their entirety as follows:
"CONSOLIDATED ADJUSTED NET INCOME" means, for any
period, (a) Consolidated Net Income MINUS (b) gain on sale of
loans and net unrealized gain on mortgage related securities,
PLUS (c) provision for credit losses, amortization and
depreciation (including amortization of excess servicing
rights or any reclassification thereof), in each case for such
period and for the Company and its Restricted Subsidiaries.
"ISSUE DATE" means the date on which the Existing
Notes were originally issued.
"PERMITTED LIENS" means, with respect to the Company
and any Restricted Subsidiary: (i) pledges or deposits by such
Person under worker's compensation laws, unemployment
insurance laws or similar
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legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or for the
payment of rent, in each case Incurred in the ordinary course
of business; (ii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens, in each case for amounts
not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall
then be proceeding with an appeal or other proceedings for
review; (iii) Liens for property taxes not yet subject to
penalties for nonpayment or which are being contested in good
faith and by appropriate proceedings; (iv) minor survey
exceptions, minor encumbrances, easements or reservations of,
or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the
use of real property, or leases, subleases or other Liens
incidental to the conduct of the business of such Person or to
the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or
materially impair their use in the operation of the business
of such Person; (v) Liens securing Indebtedness of such Person
Incurred to finance the construction, purchase or lease of, or
repairs, improvements or additions to, equipment (including
vehicles) of such Person (but excluding Capital Stock of
another Person); PROVIDED, HOWEVER, that the Lien may not
extend to any other property owned by such Person or any of
its Subsidiaries at the time the Lien is Incurred, and the
Indebtedness secured by the Lien may not be Incurred more than
180 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of
full operation of the property subject to the Lien; (vi) Liens
on Receivables of the Company or a Restricted Subsidiary, as
the case may be, to secure Indebtedness permitted under the
provisions described in clause (b)(1) of Section 10.9; (vii)
Liens on Excess Spread Receivables (or on the Capital Stock of
any Person substantially all the assets of which are Excess
Spread Receivables); PROVIDED, HOWEVER, that no such Liens may
encumber Eligible Excess Spread Receivables of the Company and
its Restricted Subsidiaries (including by way of any such Lien
on Capital Stock of any such Person) in an amount equal to the
sum of (1) the Specified Percentage in effect at the creation
of such Lien (the "DETERMINATION DATE") of the unpaid
principal amount as of the determination date of the Notes and
all other unsecured Indebtedness of the Company and its
Restricted Subsidiaries other than (x) Junior Subordinated
Obligations and (y) liabilities referred to in clause (E) of
the last sentence of the definition of "Unsecured Senior
Indebtedness"
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(collectively, the "SPECIFIED UNSECURED INDEBTEDNESS"; the
amount under this subclause (1) being the "BASE SET ASIDE"),
PLUS (2) 25% of the excess, if any, of (x) the total amount of
Eligible Excess Spread Receivables shown on the balance sheet
of the Company and its Restricted Subsidiaries, determined on
a consolidated basis in accordance with GAAP, as of the
determination date, over (y) the Base Set Aside, PROVIDED that
the sum of the Base Set Aside PLUS the amount in this clause
(2) shall not exceed 200% of Specified Unsecured Indebtedness;
(viii) Liens existing on the Issue Date and listed on Schedule
10.12 to this Indenture; (ix) Liens on property or shares of
Capital Stock of another Person at the time such other Person
becomes a Restricted Subsidiary of such Person; PROVIDED,
HOWEVER, that (A) such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such other
Person becoming a Subsidiary or being designated a Restricted
Subsidiary and (B) such Liens may not extend to any other
property owned by such Person or any of its Restricted
Subsidiaries; (x) Liens on property at the time such Person or
any of its Restricted Subsidiaries acquires the property,
including any acquisition by means of a merger or
consolidation with or into such Person or a Restricted
Subsidiary of such Person; PROVIDED, HOWEVER, that (A) such
Liens are not created, incurred or assumed in connection with,
or in contemplation of, such acquisition and (B) such Liens
may not extend to any other property owned by such Person or
any of its Restricted Subsidiaries; (xi) Liens securing
Indebtedness or other obligations of a Restricted Subsidiary
of such Person owing to such Person or a Wholly Owned
Restricted Subsidiary of such Person; (xii) Liens (other than
on any Excess Spread Receivables) securing Hedging Obligations
of the Company or such Restricted Subsidiary so long as such
Hedging Obligations relate to Indebtedness that is, and is
permitted under this Indenture to be, secured by a Lien on the
same property securing such Hedging Obligations; (xiii) Liens
to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness of the Company or such
Restricted Subsidiary secured by any Lien referred to in the
foregoing clauses (v), (viii) and (ix); PROVIDED, HOWEVER,
that (A) such new Lien shall be limited to all or part of the
same property that secured the original Lien (plus
improvements to or on such property), (B) the Indebtedness
secured by such Lien at such time is not increased to any
amount greater than the sum of (1) the outstanding principal
amount or, if greater, committed amount of the Indebtedness
described in clause (v), (viii) or (ix), as the case may be,
at the time the original Lien became a Permitted Lien and (2)
an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension,
renewal or replacement and (C) the Average Life of such
Indebtedness is not decreased; and (xiv) any Lien in the form
of "over-collateralization" of the senior certificates issued
in, or subordination of or recourse to all or a portion of
Excess Spread Receivables of the Company or any Subsidiary
attributable to, a securitization of Receivables,
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in each case to the extent reflected in the book value of such
Excess Spread Receivables, which Lien is in favor of the
holders of other interests in the trust relating to such
securitization, PROVIDED, HOWEVER, that notwithstanding any of
the foregoing clauses, no Lien on Eligible Excess Spread
Receivables (including by way of any such Lien on Capital
Stock of any such Person), other than a Lien permissible under
the foregoing clauses (vii) and (xiv), shall be a Permitted
Lien. Notwithstanding the foregoing, "Permitted Liens" will
not include any Lien described in clause (v), (ix) or (x)
above to the extent such Lien applies to any Additional Assets
acquired directly or indirectly from Net Available Cash
pursuant to Section 10.13. Without limitation, for purposes of
clause (vii) of this definition, the Incurrence of any
Indebtedness (or an increase in the amount of any
Indebtedness) secured by a Lien on Excess Spread Receivables
shall be considered the incurrence of a new Lien on such
Excess Spread Receivables, irrespective of whether a Lien
securing other Indebtedness (or a lesser amount of
Indebtedness) already exists on such assets at the time of
such Incurrence.
"SPECIAL PURPOSE SUBSIDIARY" means a Restricted
Subsidiary formed in connection with a securitization of
Receivables (i) all the Capital Stock of which (other than
directors' qualifying shares and shares held by other Persons
to the extent such shares are required by applicable law to be
held by a Person other than the Company or a Restricted
Subsidiary) is owned by the Company or one or more Restricted
Subsidiaries, (ii) that has no assets other than Excess Spread
Receivables created in such securitization, (iii) that
conducts no business other than holding such Excess Spread
Receivables, and (iv) that has no Indebtedness (other than (a)
short-term Indebtedness to the Company or any Wholly Owned
Restricted Subsidiary attributable to the purchase by such
Restricted Subsidiary from the Company or such Wholly Owned
Restricted Subsidiary of such Receivables, which Indebtedness
is paid in full upon closing of such securitization, and (b)
Indebtedness permitted to be Incurred pursuant to Section
10.9(a) that is secured by a Permitted Lien on such Excess
Spread Receivables and no other assets of such Restricted
Subsidiary).
SECTION 1.2 ADDED DEFINITIONS. Section 1.1 of the Indenture is hereby
amended by adding the following definitions in their appropriate alphabetical
location:
"ACCREDITED INVESTOR" means an accredited investor as
defined in Rule 501(a)(1), (2), (3), (5), (6) or (7) under the
Securities Act.
"ADDED INTEREST" with respect to Future Notes that
are subject to a Registration Rights Agreement, means any
added interest payable with respect to such Future Notes
pursuant to such Registration Rights Agreement.
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"ADJUSTED CONSOLIDATED LEVERAGE RATIO" as of any date
of determination means the ratio of (i) the aggregate amount
of all Unsecured Senior Indebtedness of the Company and its
Restricted Subsidiaries to (ii) the sum of: (A) Consolidated
Adjusted Net Income accrued during the period (treated as one
accounting period) from September 1, 1997 to the end of the
most recent fiscal quarter prior to such date of determination
for which financial statements are available (or, in case such
Consolidated Adjusted Net Income shall be a deficit, minus
100% of such deficit); and (B) the aggregate Net Cash Proceeds
received by the Company from the issuance or sale after
September 1, 1997 of (1) Capital Stock of the Company (other
than Disqualified Stock) or (2) debt securities of the
Company, but only if, when and to the extent such debt
securities have been converted into any such Capital Stock
(other than, in each case, an issuance or sale to a Subsidiary
of the Company and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their
employees).
"DEFINITIVE NOTE" is defined in Section 4.3(d).
"EXCHANGE NOTES" is defined in the Recitals.
"EXCHANGE OFFER" means an offer to exchange Future
Notes issued without registration under the Securities Act for
Exchange Notes registered under the Securities Act pursuant to
any Registration Rights Agreement applicable to such Future
Notes.
"EXISTING NOTES" is defined in the Recitals.
"FUTURE NOTES" is defined in the Recitals.
"NON-U.S. PERSON" means a Person who is not a "U.S.
person," as defined in Rule 902 of Regulation S.
"PRIVATE PLACEMENT LEGEND" is defined in Section
2.4(b).
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" has the
meaning specified in Rule 144A under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means, with respect
to any Future Notes of any series, any registration rights
agreement that the Company may enter into with respect to and
benefiting such Future Notes.
"REGULATION S DEFINITIVE NOTE" is defined in Section
4.3(d).
"REGULATION S GLOBAL NOTE" is defined in Section
3.1(b).
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"REGULATION S TEMPORARY GLOBAL NOTE" is defined in
Section 3.1(b).
"RESTRICTED GLOBAL NOTE" is defined in Section
3.1(b).
"RESTRICTED PERIOD" is defined in Section 4.3(e).
"RESTRICTED SECURITY" has the meaning assigned to
such term in Rule 144(a)(3) under the Securities Act; PROVIDED
that the Trustee shall be entitled to request and conclusively
rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Security.
"RESTRICTION TERMINATION DATE" means, with respect to
any series of Future Notes that are Restricted Securities when
issued, the date that is two years after the related Series
Issue Date.
"SERIES ISSUE DATE" means, with respect to any series
of Notes, the date on which Notes of such series are initially
issued hereunder, which in the case of the Existing Notes
shall be the Issue Date.
"SHELF REGISTRATION STATEMENT" means any shelf
registration statement that the Company may be required to
file and cause to be declared effective by the SEC pursuant to
any Registration Rights Agreement.
"UNSECURED SENIOR INDEBTEDNESS" means principal of
and premium, if any, on (a) any Indebtedness of the Company or
any Restricted Subsidiary of the type referred to in clause
(i), (iii), (iv) and (vi) of the definition of "Indebtedness"
and (b) all Guarantees by the Company or any Restricted
Subsidiary with respect to Indebtedness referred to in the
foregoing clause (a), unless in the case of clauses (a) and
(b), the instrument under which such Indebtedness is Incurred
expressly provides that it is PARI PASSU with or subordinated
in right of payment to the Notes (in the case of indebtedness
being Incurred by the Company) or the Subsidiary Guarantee of
such Restricted Subsidiary (in the case of Indebtedness being
Incurred by any Restricted Subsidiary), which Indebtedness or
Guarantees referred to in the foregoing clauses (a) and (b),
respectively, are not secured by a Lien on any assets of the
Company or any Restricted Subsidiary; PROVIDED HOWEVER, that
Warehouse Indebtedness Incurred in the ordinary course of
business shall not be deemed to be unsecured, unless
forty-five (45) days after such Warehouse Indebtedness is
Incurred, no Lien on the related Receivables has attached, in
which case such Indebtedness shall be deemed Unsecured Senior
Indebtedness incurred at such time. Notwithstanding the
foregoing, Unsecured Senior Indebtedness shall not include (A)
any liability for federal, state, local, foreign or other
taxes, (B) any Indebtedness of the Company or any
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Restricted Subsidiary to any Affiliates (including obligations
under the Tax Sharing Agreement, as amended from time to
time), (C) any trade accounts payable and expense accruals,
(D) Indebtedness owed for compensation or for services
rendered and (E) any liabilities on account of warrant
obligations under the Payment Agreement dated August 29, 1997
and effective September 2, 1997 between Mego Financial and the
Company, to the extent such liabilities do not constitute
Senior Indebtedness.
SECTION 1.3 AMENDED PROVISIONS.
1.3.1. Section 2.2 of the Indenture is hereby amended to read in its
entirety as follows:
Section 2.2 FORM OF FACE OF NOTE.
MEGO MORTGAGE CORPORATION
12 1/2% Senior Subordinated Notes Due 2001
No................... $..............
Mego Mortgage Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the
"COMPANY", which term includes any Successor Company under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to .........................., or registered
assigns, the principal sum of ....................... Dollars
on December 1, 2001, and to pay interest thereon from [INSERT
SERIES ISSUE DATE OF THE RELEVANT SERIES] or from the most
recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on June 1 and December 1
in each year, commencing [INSERT FIRST INTEREST PAYMENT DATE
AFTER RELEVANT SERIES ISSUE DATE], at the rate of 12 1/2% per
annum, until the principal hereof is paid or made available
for payment, and at the rate of 1% over the rate set forth
above per annum on any overdue principal and (to the extent
that the payment of such interest shall be legally
enforceable) on any overdue installment of interest. The
interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which
shall be the May 15 or November 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders
of Notes not less than 10 days prior to
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such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon
such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
any such interest on this Note will be made at the office or
agency of the Company maintained for that purpose in the City
of New York, Borough of Manhattan, in such coin or currency of
the United States of America as at the time of payment is
legal tender for payment of public and private debts.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof
by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated:
MEGO MORTGAGE CORPORATION
By............................
Attest:
....................................
1.3.2. The first two paragraphs of Section 2.3 of the Indenture are
hereby amended to read in their entirety as follows:
This Note is one of a duly authorized issue of
securities of the Company (herein called the "NOTES"), issued
under an Indenture, dated as of November 22, 1996 (as amended
from time to time, herein called the "INDENTURE"), among the
Company, any Person that may from time to time become a party
thereto as a Subsidiary Guarantor (as defined therein) by
executing and delivering to the Trustee a Joinder of
Subsidiary Guarantor (as defined therein), and American Stock
Transfer & Trust Company, as Trustee (herein called the
"TRUSTEE", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures
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supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the
Holders of the Notes and of the terms upon which the Notes
are, and are to be, authenticated and delivered. This Note is
one of the Notes designated on the face hereof, limited in
aggregate principal amount to $150,000,000.
The Company may redeem, at its option, up to 35% of
the sum of the respective original aggregate principal amounts
of the Notes at any time and from time to time prior to
December 1, 1998, with the Net Cash Proceeds received by the
Company from one or more Public Equity Offerings at a
redemption price of 112 1/2% of the principal amount of the
Notes redeemed, plus accrued and unpaid interest thereon;
PROVIDED, HOWEVER, that at least 65% of the sum of the
respective original aggregate principal amounts of Notes must
remain outstanding after each such redemption; and PROVIDED,
FURTHER, that such redemption must occur within 60 days after
the closing date of any such Public Equity Offering.
Otherwise, the Notes may not be redeemed prior to their Stated
Maturity.
1.3.3. Section 2.4 of the Indenture is hereby amended to read in its
entirety as follows:
Section 2.4 FORM OF LEGENDS FOR CERTAIN NOTES.
(a) Any Global Note authenticated and delivered
hereunder shall bear a legend in substantially the following
form:
"This Note is a Global Note within the meaning of the
Indenture hereinafter referred to and is registered in the
name of a Depositary or a nominee thereof. This Note may not
be transferred to, or registered or exchanged for Notes
registered in the name of, any Person other than the
Depositary or a nominee thereof or a successor of such
Depositary or a nominee of such successor and no such transfer
may be registered, except in the limited circumstances
described in the Indenture. Every Note authenticated and
delivered upon registration of transfer of, or in exchange for
or in lieu of, this Note shall be a Global Note subject to the
foregoing, except in such limited circumstances."
(b) From the related Series Issue Date unless and
until (i) exchanged for an Exchange Note pursuant to the
related Registration Rights Agreement or (ii) sold under an
effective Shelf Registration Statement, Future Notes of any
series that constitute Restricted Securities (including
Restricted Global Notes), Regulation S Global Notes, or
Regulation S Definitive Notes shall contain a legend
substantially to the following effect (the "PRIVATE PLACEMENT
LEGEND") on the face thereof:
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"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE OR UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT IS IN EFFECT WITH RESPECT
TO THIS NOTE. BY ITS ACQUISITION HEREBY (BUT SUBJECT TO
CERTAIN RIGHTS TO REQUIRE REGISTRATION OF THE NOTES), THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3), (5), (6) or (7) UNDER THE
SECURITIES ACT) OR (C) IT IS A "NON-US PERSON" (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT); (2) AGREES THAT IT
WILL NOT PRIOR TO THE LATER TO OCCUR OF (i) TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY OR (ii)
ACQUISITION THEREOF FROM AN AFFILIATE OF THE COMPANY (THE
"RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER
THE NOTE EVIDENCED HEREBY OR ANY INTEREST THEREIN, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN A TRANSACTION NOT REQUIRING REGISTRATION
UNDER THE SECURITIES ACT (A) TO MEGO MORTGAGE CORPORATION OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRUSTEE UNDER THE INDENTURE RELATING TO THIS NOTE (THE
"TRUSTEE") A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTION ON TRANSFER OF THE
NOTES EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM MEGO MORTGAGE CORPORATION OR THE TRUSTEE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S
PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, INCLUDING THE EXEMPTION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), SUBJECT IN
EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF THE PROPERTY OF SUCH HOLDER BE AT ALL TIMES
WITHIN SUCH HOLDER'S CONTROL AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES
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LAWS; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF THE
NOTE EVIDENCED HEREBY PRIOR TO THE RESTRICTION TERMINATION
DATE. IN THE CASE OF CERTAIN TRANSFERS PURSUANT TO CLAUSE
(2)(B) OR (2)(D), THE HOLDER MUST MAKE CERTAIN CERTIFICATIONS
TO THE TRUSTEE TO CONFIRM THAT SUCH TRANSFERS ARE BEING MADE
PURSUANT AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. IN
ADDITION, IN THE CASE OF ANY TRANSFER REFERRED TO IN CLAUSE
(2)(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER FURNISH
TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY OR THE TRUSTEE MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
1.3.4. Section 3.1 of the Indenture is hereby amended to read in its
entirety as follows:
Section 3.1 GLOBAL NOTES; DEPOSITARY.
(a) The Existing Notes initially will be, and the
Future Notes and Exchange Notes initially may be, issued in
the form of one or more Global Notes. Each Global Note will be
deposited on the relevant Series Issue Date (or, in the case
of any Exchange Notes, on the date of consummation of the
relevant Exchange Offer) with The Depository Trust Company or
any other depositary designated for the Notes evidenced
thereby (the "DEPOSITARY"), or the Trustee on its behalf, and
registered in the name of Cede & Co. or any other relevant
Person, as nominee of the Depositary (such nominee being
referred to herein as the "GLOBAL NOTE HOLDER").
(b) Future Notes offered and sold to QIBs in reliance
on Rule 144A shall be issued initially in the form of one or
more Global Notes, and Future Notes offered and sold to
Accredited Investors, if so provided in the offering
memorandum with respect to such offering, shall be issued
initially in the form of one or more Global Notes (each Global
Note referenced in this sentence, a "RESTRICTED GLOBAL NOTE").
If so provided in any such offering memorandum, Future Notes
offered and sold in reliance on Regulation S shall be issued
initially in the form of one or more Global Notes (a
"REGULATION S GLOBAL NOTE"), which, if so specified in the
offering memorandum with respect to such offering, shall be
exchanged at
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the end of the Restricted Period with respect to such
Regulation S Global Note for one or more Regulation S
Definitive Notes as provided in Section 4.3(d) (each
Regulation S Global Note subject to such exchange, a
"REGULATION S TEMPORARY GLOBAL NOTE").
1.3.5. Section 3.2 of the Indenture is hereby amended to read in its
entirety as follows:
Section 3.2 AMOUNT.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is
$150,000,000.00 (One Hundred Fifty Million Dollars and No
Cents), except as for Notes authenticated and delivered
pursuant to Section 3.5, 3.6, 3.7, 4.2, 4.3, 10.13, 10.18 or
13.7.
1.3.6. The third paragraph of Section 3.6 of the Indenture is hereby
amended to read in its entirety as follows:
At the option of the Holder, Notes may be exchanged
for other Notes of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the
Notes to be exchanged at such office or agency. In addition,
in connection with any Exchange Offer, Future Notes shall be
exchanged for Exchange Notes of a like aggregate principal
amount and tenor, upon surrender of the Future Notes to be
exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the
Holder making the exchange is entitled to receive.
1.3.7. Section 4.2 of the Indenture is hereby amended to read in its
entirety as follows:
Section 4.2. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE
(a) Members of, or participants in, the Depositary
("AGENT MEMBERS") shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the
Depositary or under any Global Note, and the Depositary may be
treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of any Global
Note for all purposes whatsoever. Any Holder of any Global
Note shall, by acceptance of such Global Note, agree that the
transfers of Interests in such Global Note may be effected
only through a book-entry system maintained by the Holder of
such Global Note (or its agent), and that ownership of an
Interest in such Global Note shall be required to be reflected
in a book-entry system. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or an agent of
the Company or the Trustee from giving effect to any written
certification, proxy or
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other authorization furnished by the Depositary or impair, as
between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a
Holder of any Note.
(b) The Depositary must, at the time of its
designation and at all times while it serves as Depositary, be
a clearing agency registered under the Exchange Act and any
other applicable statute or regulation.
(c) Notwithstanding any other provision of this
Section, unless and until it is exchanged in whole or in part
for individual Notes represented thereby, a Global Note
representing all or a portion of the Notes may not be
transferred except as a whole by the Depositary to a nominee
of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. Interests of beneficial
owners in the Global Notes (each an "INTEREST") may be
transferred to Agent Members or other beneficial owners or
exchanged for Definitive Notes in accordance with the rules
and procedures of the Depositary, the provisions of this
Indenture and applicable law.
(d) If specified by the Company pursuant to Section
3.4, the Depositary may surrender a Global Note (except
Regulation S Global Notes during the Restricted Period) in
exchange in whole or in part for Definitive Notes of like
tenor and terms on such terms as are acceptable to the
Company, the Trustee and the Depositary. In addition,
Definitive Notes shall be issued to all beneficial owners in
exchange for their Interests in Global Notes if (i) the
Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary
for the Global Notes or is no longer eligible to serve as
Depositary pursuant to the terms of this Indenture and a
successor Depositary is not appointed by the Company within 90
days after delivery of such notice; (ii) the Company, at its
sole discretion, notifies the Trustee in writing that it
elects to cause the issuance of Definitive Notes under this
Indenture; or (iii) there shall have occurred and be
continuing a Default with respect to any Notes represented by
the Global Notes, PROVIDED that clauses (i) and (ii) shall not
apply to Regulation S Global Notes during the Restricted
Period.
(e) In connection with the transfer of any Interest
from one Agent Member to another Agent Member not taking a
Definitive Note, but an Interest, the Depositary shall reflect
on its books and records the date, the name of the transferor
and transferee, and the amount of the Interest transferred.
(f) In connection with the issuance to beneficial
owners of Definitive Notes in exchange for any Global Note
pursuant to paragraph
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(c) or (h) of this Section, such Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the
Company shall execute and the Trustee upon receipt of a
Company Order for the authentication and delivery of
Definitive Notes shall authenticate and deliver, without
service charge:
(i) to the Depositary or to each Person specified by
such Depositary a new Definitive Note or Definitive Notes of
like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal
to and in exchange for such Person's Interest in the Global
Note; and
(ii) to such Depositary a new Global Note of like
tenor and terms and in an authorized denomination equal to the
difference, if any, between the principal amount of the
surrendered Global Note and the aggregate principal amount of
Definitive Notes delivered to Holders thereof.
Except as otherwise provided in this Indenture, any
Note authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, any Global Note shall
also be a Global Note and shall bear the legend specified in
Section 2.4(a) except for any Note authenticated and delivered
in exchange for, or upon registration of transfer of, a Global
Note pursuant to the preceding sentence.
(g) The Holder of any Global Note may grant proxies
and otherwise authorize any person, including Agent Members
and persons that may hold Interests through Agent Members, to
take any action which a Holder is entitled to take under this
Indenture or the Notes.
(h) Upon the exchange of any Global Note in its
entirety for Definitive Notes or another Global Note, such
Global Note shall be canceled by the Trustee.
(i) Notwithstanding anything herein to the contrary,
if at any time the Depositary for the Notes notifies the
Company that it is unwilling or unable to continue as a
Depositary for the Notes or if at any time the Depositary for
the Notes shall no longer be registered or in good standing
under the Exchange Act, or other applicable statute or
regulation, the Company shall appoint a successor Depositary
with respect to the Notes. If a successor Depositary for the
Notes is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such
condition, the Company will execute, and the Trustee, upon
Company Request, will authenticate and deliver Definitive
Notes in an aggregate principal amount equal to the principal
amount of the Global
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Note or Global Notes representing Notes in exchange for such
Global Note or Global Notes.
(j) The Company shall use its best efforts so that
(i) Future Notes of any series that are originally issued in a
public offering under the Securities Act will bear the same
CUSIP number as is then borne by, and will be represented by
the same Global Note as then represents, the Existing Notes,
as soon as practicable after payment of all interest payable
with respect to such Notes on the first Interest Payment Date
following the relevant Series Issue Date, and (ii) Future
Notes of any series that are not originally issued in a public
offering under the Securities Act will bear the same CUSIP
number as is then borne by, and will be represented by the
same Global Note as then represents, the Existing Notes as
soon as practicable after the earliest to occur of (A) the
Restriction Termination Date, (B) consummation of an Exchange
Offer for, or effectiveness of a Shelf Registration Statement
with respect to, all Notes of such series (if no Added
Interest has accrued with respect to such Notes) or (C)
payment of all interest (including Added Interest) payable
with respect to such Notes on the first Interest Payment Date
following consummation of an Exchange Offer for, or
effectiveness of a Shelf Registration Statement with respect
to, all Notes of such series (if any Added Interest has
accrued with respect to such Notes). As and when required by
the foregoing sentence, the Company shall cause all Global
Notes representing such Future Notes and the Existing Notes to
be exchanged for one Global Note representing both such Future
Notes and the Existing Notes. The Company's obligations under
this Section 4.2(j) are subject to (y) the issuance of
Definitive Notes pursuant to this Section 4.2 and (z)
compliance with the Depositary's rules and procedures.
1.3.8. The word "or" is hereby deleted from the end of paragraph (f) of
Section 9.1 of the Indenture. The following new paragraph (g) is added to
Section 9.1 of the Indenture, and paragraph (g) of the Original Indenture is
hereby renumbered paragraph (h):
(g) to modify the provisions relating to Global
Notes, restrictions on transfer and legends set forth herein
with respect to any series of Future Notes not then
outstanding; or
SECTION 1.4 NEW PROVISIONS. The Indenture is hereby amended to add the
following new provisions:
Section 3.12 FUTURE NOTES.
Subject to compliance with Section 10.9(a), the
Company may from time to time issue one or more series of
Future Notes in an aggregate principal amount not to exceed
$110,000,000. All Future Notes (i) shall have terms and
conditions identical to those of the Existing Notes (except
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for provisions relating to restrictions on transfer, global
notes and any Registration Rights Agreement benefiting any
such series), (ii) will have the benefit of the same Indenture
covenants as the Existing Notes, (iii) shall rank in all
respects PARI PASSU with the Existing Notes and any other
series of Future Notes, and (iv) shall be considered part of
the same class and issue of securities as the Existing Notes
and, as such, the Holders of the Existing Notes and the
Holders of any such series of Future Notes shall vote on all
matters subject to vote of the Holders hereunder as one class.
Section 4.3. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-U.S. PERSONS. With respect to
any proposed transfer of any Definitive Note constituting a
Restricted Security or of an Interest in any Restricted Global
Note to any Non-U.S. Person (which Non-U.S. Person would, in
the case of a transfer of any Definitive Note or an Interest
in any Restricted Global Note during the Restricted Period,
take an Interest in a Regulation S Global Note):
(i) in the case of the transfer of
any Definitive Note constituting a Restricted
Security for a Regulation S Definitive Note or a
Regulation S Global Note, the Note Registrar shall,
whether or not such Note bears the Private Placement
Legend, register such transfer and, if applicable,
issue such Definitive Note, if (x) the requested
transfer is after the Restriction Termination Date,
or (y) the proposed transferor has delivered to the
Note Registrar a certificate substantially in the
form of Annex A hereto;
(ii) in the case of the transfer of
an Interest in any Restricted Global Note for an
Interest in a Regulation S Global Note, there shall
be delivered to the Note Registrar (x) the
certificate, if any, required by paragraph (i) above
and (y) instructions in accordance with the
Depositary's and the Note Registrar's procedures; and
(iii) in the case of the transfer of
an Interest in any Restricted Global Note for a
Regulation S Definitive Note, the Note Registrar,
upon receipt of instructions in accordance with the
Depositary's and the Note Registrar's procedures,
shall register such transfer and issue such
Definitive Note, if (x) the requested transfer is
after the Restriction Termination Date, or (y) the
proposed transferor has delivered to the Note
Registrar a certificate substantially in the form of
Annex A hereto.
With respect to all such transfers, (A) the Note
Registrar shall reflect on its books and records the date of
such transfer, (B) in the case of
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any transfer affecting any Global Note, the Company shall
execute, and the Trustee shall authenticate and deliver to the
Depositary, a new Global Note or Global Notes in a principal
amount as appropriate to reflect such transfer, and (C) if the
transfer is of a Definitive Note, the transferred Definitive
Note shall be cancelled and, if the entire amount of such
Definitive Note was not transferred, a new Definitive Note, in
the amount of the untransferred portion of the original
Definitive Note, shall be executed by the Company,
authenticated by the Trustee, and delivered to such
transferor.
(b) TRANSFERS TO QIBS. With respect to any proposed
transfer to a QIB of any Definitive Note constituting a
Restricted Security, any Regulation S Definitive Note or an
Interest in any Regulation S Global Note (excluding transfers
to Non-U.S. Persons) (which QIB would take an Interest in a
Global Note):
(i) in the case of the transfer of
any Definitive Note (including any Regulation S
Definitive Note), the Note Registrar shall register
the transfer only upon receipt of instructions in
accordance with the Depositary's and the Note
Registrar's procedures and if (x) the requested
transfer is after the Restriction Termination Date,
or (y) the transferor has delivered to the Note
Registrar a certificate substantially in the form of
Annex B hereto; and
(ii) in the case of the transfer of
any Interest in any Regulation S Global Note, there
shall be delivered to the Note Registrar (x) the
certificate required by paragraph (i) above and (y)
instructions in accordance with the Depositary's and
the Note Registrar's procedures.
With respect to all such transfers, (A) the Note
Registrar shall reflect on its books and records the date of
such transfer, (B) if the transfer affects a Global Note, the
Company shall execute, and the Trustee shall authenticate and
deliver to the Depositary, a new Global Note or Global Notes
in a principal amount as appropriate to reflect such transfer,
and (C) if the transfer is of a Definitive Note, the
transferred Definitive Note shall be cancelled and, if the
entire amount of such Definitive Note was not transferred, a
new Definitive Note, in the amount of the untransferred
portion of the original Definitive Note, shall be executed by
the Company, authenticated by the Trustee, and delivered to
such transferor.
(c) TRANSFERS TO ACCREDITED INVESTORS. With respect
to any proposed transfer of any Definitive Note constituting a
Restricted Security or any Regulation S Definitive Note or the
proposed transfer of an Interest
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in any Restricted Global Note or any Regulation S Global Note
to any Accredited Investor (other than a QIB):
(i) in the case of the transfer of
any Definitive Note, the Note Registrar shall
register such transfer, whether or not such Note
bears the Private Placement Legend, if (x) the
requested transfer is after the Restriction
Termination Date, or (y) the proposed transferee has
delivered to the Note Registrar a certificate
substantially in the form of Annex C hereto;
(ii) in the case of the transfer of
an Interest in any Restricted Global Note for an
Interest in another Restricted Global Note, there
shall be delivered to the Note Registrar (x) the
certificate, if any, required by paragraph (i) above
and (y) instructions in accordance with the
Depositary's and the Note Registrar's procedures; and
(iii) in the case of the transfer of
an Interest in any Restricted Global Note or any
Regulation S Global Note for a Definitive Note, the
Note Registrar, upon receipt of instructions in
accordance with the Depositary's and the Note
Registrar's procedures, shall register such transfer
and issue such Definitive Note, if (x) the requested
transfer is after the Restriction Termination Date,
or (y) the proposed transferor has delivered to the
Note Registrar a certificate substantially in the
form of Annex C hereto.
With respect to all such transfers, (A) the Note
Registrar shall reflect on its books and records the date of
such transfer, (B) in the case of any transfer affecting a
Global Note, the Company shall execute, and the Trustee shall
authenticate and deliver to the Depositary, a new Global Note
or Global Notes in a principal amount as appropriate to
reflect such transfer, and (C) if the transfer is of a
Definitive Note, the transferred Definitive Note shall be
cancelled and, if the entire amount of such Definitive Note
was not transferred, a new Definitive Note, in the amount of
the untransferred portion of the original Definitive Note,
shall be executed by the Company, authenticated by the
Trustee, and delivered to such transferor.
(d) ISSUANCE OF REGULATION S DEFINITIVE NOTES AFTER
RESTRICTED PERIOD. Interests in a Regulation S Temporary
Global Note will be exchanged for certificated notes
("REGULATION S DEFINITIVE NOTES"; all Notes other than Global
Notes being "DEFINITIVE NOTES") after the Restricted Period
upon receipt by the Trustee and the Company of representations
in form and substance acceptable to it demonstrating that the
Interests in such Regulation S Temporary Global Notes are
owned
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either by Non-U.S. Persons or by QIBs or Accredited Investors
that acquired their Interests in such Notes in a transaction
that did not require registration under the Securities Act.
(e) TRANSFER OF INTERESTS IN ANY REGULATION S GLOBAL
NOTE. Except as otherwise specified in the relevant offering
memorandum, only Non-U.S. Persons may acquire any Interest in
a Regulation S Global Note from the Company, a distributor (as
such term is defined in Regulation S under the Securities Act)
or any of their respective affiliates, during the period from
the relevant Series Issue Date through and including the 40th
day thereafter (such period being the "RESTRICTED PERIOD").
(f) PRIVATE PLACEMENT LEGEND. Upon the registration
of transfer, exchange or replacement of Notes not bearing the
Private Placement Legend, the Note Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the
registration of transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Note Registrar shall
deliver only Notes that bear the Private Placement Legend
(including any Restricted Global Note or any Regulation S
Global Note) unless (i) such transfer takes place after the
Restriction Termination Date or (ii) there is delivered to the
Note Registrar an Opinion of Counsel reasonably satisfactory
to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the
Securities Act.
(g) TRANSFERS PURSUANT TO A SHELF REGISTRATION
STATEMENT. Nothing in subsections (a), (b) and (c) of this
Section 4.3 shall apply to any transfer of Notes pursuant to a
Shelf Registration Statement.
(h) GENERAL. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set
forth in this Indenture and in the Private Placement Legend
and agrees that it will transfer such Note only as provided in
this Indenture. The Company shall cause the Depositary to
follow appropriate procedures so that all transfer of
Interests in any Global Note comply with the restrictions of
this Indenture, including the Private Placement Legend.
(i) The Note Registrar shall retain copies of all
letters, notices and other written communications received
pursuant to Section 4.2 or this Section 4.3 in accordance with
its usual procedures. The Company shall have the right to
inspect and make copies of all such letters, notices or other
written communications at any reasonable time upon the giving
of reasonable written notice to the Note Registrar.
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SECTION 1.5. NEW ANNEXES.
The Indenture is hereby amended to include Annex A, Annex B and Annex C
as attached hereto and hereby incorporated herein.
SECTION 1.6. AMENDED COVENANTS.
The second paragraph of Section 10.1 of the Indenture is hereby amended
to read in its entirety as follows:
All payments of principal, premium, if any, and
interest with respect to the Notes will be made by the Company
in immediately available funds. The Notes shall be included in
the Same-Day Funds Settlement System of The Depository Trust
Company until maturity, PROVIDED that all payments with
respect to Notes the Holders or beneficial owners of which
have given wire transfer instructions to the Company will be
required to be made by wire transfer of immediately available
funds to the accounts specified by such Persons.
Section 10.9 of the Indenture is hereby amended to read in its entirety
as follows:
Section 10.9 Limitations on Indebtedness.
(a) The Company will not Incur, and the Company will
not permit any Restricted Subsidiary to Incur, directly or
indirectly, (i) any Unsecured Senior Indebtedness unless (A)
the Adjusted Consolidated Leverage Ratio, on the date of such
Incurrence and after giving effect thereto, does not exceed
1.0 to 1.0, (B) the Consolidated Leverage Ratio, on the date
of such Incurrence and after giving effect thereto, does not
exceed 2.0 to 1.0, (C) the Stated Maturity of such
Indebtedness is at least 91 days after the Stated Maturity of
the Notes, and (D) the Average Life of such Indebtedness is
longer than the Average Life of the Notes, or (ii) any
Indebtedness (other than Unsecured Senior Indebtedness) or
Disqualified Stock if, on the date of such Incurrence and
after giving effect thereto, the Consolidated Leverage Ratio
exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the
Company and its Restricted Subsidiaries may Incur the
following Indebtedness:
(1) Permitted Warehouse Indebtedness and
Guarantees by the Company of any Permitted Warehouse
Indebtedness of Restricted Subsidiaries, PROVIDED
that to the extent any such Indebtedness ceases to
constitute Permitted Warehouse Indebtedness of the
Company or a Restricted Subsidiary, such event shall
be deemed to constitute the Incurrence of such
Indebtedness (and any such Guarantees, but without
duplication) by the Company or such Subsidiary, as
the case may be;
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(2) the Notes and the Subsidiary Guarantees;
(3) Hedging Obligations directly related to:
(i) Indebtedness permitted to be Incurred by the
Company or the Restricted Subsidiaries pursuant to
this Section; (ii) Receivables held by the Company or
its Restricted Subsidiaries pending sale or that have
been sold pursuant to a Warehouse Facility; or (iii)
Receivables with respect to which the Company or any
Restricted Subsidiary has an outstanding purchase or
offer commitment, financing commitment or security
interest;
(4) Indebtedness outstanding on the Issue
Date (other than Permitted Warehouse Indebtedness and
Guarantees thereof, which shall be permissible under
this paragraph (b) only pursuant to clause (1)
above);
(5) Indebtedness or Disqualified Stock
issued to and held by the Company or a Wholly Owned
Restricted Subsidiary; PROVIDED, HOWEVER, that any
subsequent issuance or transfer of any Capital Stock
that results in any such Wholly Owned Restricted
Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any subsequent transfer of such
Indebtedness or Disqualified Stock (other than to the
Company or a Wholly Owned Restricted Subsidiary) will
be deemed, in each case, to constitute the Incurrence
of such Indebtedness or issuance of such Disqualified
Stock by the issuer thereof;
(6) Indebtedness or Disqualified Stock of a
Restricted Subsidiary Incurred on or prior to the
date on which such Subsidiary was acquired by the
Company, other than Indebtedness or Disqualified
Stock Incurred in connection with, or to provide all
or any portion of the funds or credit support
utilized to consummate, the transaction or series of
related transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the
Company; PROVIDED, HOWEVER, that on the date of such
acquisition and after giving effect thereto, the
Company would have been able to Incur at least $1.00
of Indebtedness pursuant to paragraph (a) above; and
(7) while no Default or Event of Default
exists, Refinancing Indebtedness in respect of
Indebtedness Incurred pursuant to paragraph (a) or
clause (4) or (6) of this paragraph (b).
(c) Notwithstanding the foregoing, (i) the Company
and its Restricted Subsidiaries may not Incur any Indebtedness
(other than the Notes and the Subsidiary Guarantees) if such
Indebtedness is subordinate
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or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness ranks PARI PASSU with or junior or
subordinate to the Notes, (ii) the Company and its Restricted
Subsidiaries shall not Incur any Indebtedness if the proceeds
thereof are used, directly or indirectly, to Refinance any
Junior Subordinated Obligations unless such Indebtedness shall
be subordinated to the Notes or the Subsidiary Guarantees, as
applicable, to at least the same extent as such Junior
Subordinated Obligations, and (iii) no Restricted Subsidiary
that is not a Subsidiary Guarantor shall incur, directly or
indirectly, any Indebtedness, except that any Special Purpose
Subsidiary may incur Indebtedness to the extent permitted by
the definition of "Special Purpose Subsidiary." Unsecured
Indebtedness is not deemed to be subordinate or junior to
secured Indebtedness merely because it is unsecured.
(d) For purposes of determining compliance with the
foregoing: (i) in the event that an item of Indebtedness meets
the criteria of more than one of the types of Indebtedness
described above, the Company, in good faith, will classify
such item of Indebtedness and be required to include the
amount and type of such Indebtedness in one of the above
clauses; and (ii) an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness
described above.
ARTICLE TWO
MISCELLANEOUS
SECTION 2.1. DEFINITIONS. Capitalized terms used herein without
definition shall have the respective meanings specified in the Indenture.
SECTION 2.2. GOVERNING LAW. The laws of the State of New York shall
govern this First Supplemental Indenture without regard to principles of
conflict of laws that would require the application of any other law.
SECTION 2.3. COUNTERPARTS. This First Supplemental Indenture may be
executed in counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 2.4. SURVIVAL. This First Supplemental Indenture and the
Indenture shall henceforth be read together. Except as expressly set forth
herein, the Indenture shall remain unchanged and in full force and effect in
accordance with its terms.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be executed and delivered as of the date first above
written.
MEGO MORTGAGE CORPORATION
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
26
Annex A
Form of Certificate To Be Delivered
in Connection with Transfers to Non-U.S. Persons
PURSUANT TO REGULATION S
-----------------------, ----
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: 12 1/2% Senior Subordinated Notes due 2001 (the
"Notes") of Mego Mortgage Corporation, a Delaware
corporation (the "Company")
Ladies and Gentlemen:
In connection with our proposed transfer of $___________ aggregate
principal amount of the Notes (the "Transfer"), we confirm that (i) we are
familiar with the transfer provisions of the Indenture, dated as of November 22,
1996, as amended, by and among the Company, the Persons who from time to time
become Subsidiary Guarantors and you, as Trustee (the "Indenture"), and (ii)
such Transfer has been effected in compliance with Regulation S under the
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy offer or order was
originated, the transferee was outside the United States or we and any
person acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the Transfer is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes; and
(6) if the Transfer will occur prior to the expiration of the
Restricted Period (as defined in the Indenture), the interest
transferred will be held by a "Non-US Person" (as defined in the
Indenture).
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You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:________________________
Authorized Signature
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Annex B
Form of Certificate To Be Delivered
In Connection With Transfers To Qibs
------------------------------------
-----------------------, ----
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: 12 1/2% Senior Subordinated Notes due 2001 (the
"Notes") of Mego Mortgage Corporation, a Delaware
corporation (the "Company")
Ladies and Gentlemen:
In connection with our proposed transfer of $___________ aggregate
principal amount of the Notes (the "Transfer"), we confirm that (i) we are
familiar with the transfer provisions of the Indenture, dated as of November 22,
1996, as amended, by and among the Company, the Persons who from time to time
become Subsidiary Guarantors and you, as Trustee (the "Indenture"), and (ii)
such Transfer has been effected in compliance with Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the Transfer is being made to a person whom we reasonably
believe is purchasing for its own account or accounts as to which it
exercises sole investment discretion and that such person and each such
account is a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act; and
(2) the Transfer otherwise complies with the requirements of
Rule 144A.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Rule 144A.
Very truly yours,
[Name of Transferor]
By:________________________
Authorized Signature
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Annex C
Form of Certificate To Be Delivered
in Connection with Transfers to Accredited Investors
Mego Mortgage Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
In connection with our proposed purchase of $ ___________ in principal
amount of the 12 1/2% Senior Subordinated Notes due 2001 (the "Notes") of Mego
Mortgage Corporation, a Delaware corporation (the "Company"), we confirm that:
1. we are an "accredited investor" (as defined in Rule 501(a)(1), (2),
(3), (5), (6) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) (an "Accredited Investor");
2. the purchase of the Notes is for our own account or for the account
of one or more other Accredited Investors;
3. we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the Notes;
4. we and any accounts for which we are acting are each able to bear
the economic risk of our or its investment and can afford the complete loss of
such investment; and
5. we are acquiring the Notes for investment purposes and not with a
view to distribution thereof or with any present intention of offering or
selling any of the Notes in violation of the Securities Act.
We understand that the Notes have been issued in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes have not been registered under the Securities
Act and, unless so registered, may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of each account
for which we acquire any Notes, that if in the future we decide to offer,
resell, pledge or otherwise transfer such Notes, prior to the date which is two
years after the later of the date of original issue and the last date on which
the Company or any affiliate of the Company was the owner of such Notes (or any
predecessor thereto) (the "Restriction Termination Date"), such Notes may be
offered, resold, pledged or otherwise transferred only (a) to the Company or a
subsidiary thereof, (b) pursuant to a registration statement that has been
declared effective under the Securities Act, (c) for so long as the Notes are
eligible for resale pursuant to Rule 144A, to a person whom we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the offer, resale, pledge or transfer is being made in reliance on
Rule 144A, (d) pursuant to offers
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and sales that occur outside the United States within the meaning of Regulation
S under the Securities Act, (e) to an Accredited Investor that is purchasing for
his, her or its own account or for the account of an Institutional Accredited
Investor, or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Restriction Termination
Date. If any resale or other transfer of the Notes is proposed to be made
pursuant to clause (e) above prior to the Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company. In the case of certain offers, sales or other
transfers referred to in clause (c) or (d) above, the transferor must make
certain certifications to the Trustee to confirm that such transfers are being
made pursuant an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. We understand that the
registrar and transfer agent for the Notes will not be required to accept for
registration of transfer any Notes acquired by us, except upon presentation of
evidence satisfactory to the Company and the transfer agent that the foregoing
restrictions on transfer have been complied with. We further understand that any
Notes acquired by us will be in the form of definitive physical certificates and
that such certificates will bear a legend reflecting the substance of this
paragraph. Each purchaser acknowledges that the Company and the Trustee reserve
the right prior to any offer, sale or other transfer prior to the Restriction
Termination Date of the Notes pursuant to clause (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
We acknowledge that you, the Company and others will rely upon our
confirmation, acknowledgments and agreements set forth herein and we agree to
notify you promptly if any of our representations or warranties herein ceases to
be accurate and complete.
You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER STATE.
Date:
-----------------------------
(Name of Purchaser)
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Upon transfer, the Notes should be registered in the name of the new
beneficial owner as follows:
Name:
---------------------------------
Address:
------------------------------
------------------------------
Taxpayer ID number:
-------------------
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