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EXHIBIT 10.96
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 29, 1998
BETWEEN
MEGO MORTGAGE CORPORATION
AS ISSUER
AND
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
AS PLACEMENT AGENT
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is made and
entered into as of June 29, 1998, between MEGO MORTGAGE CORPORATION, a Delaware
corporation (the "Issuer") and FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC. (the
"Placement Agent").
This Agreement is being made in conjunction with an exchange offer
by the Issuer (the "Issuer Exchange Offer") pursuant to which the Issuer is
offering to exchange shares of its Series A convertible preferred stock, par
value $.01 per share and its 12 1/2% Subordinated Notes Due 2001, or a
combination thereof for all of the Issuer's $80.0 aggregate principal amount of
12 1/2% Senior Subordinated Notes Due 2001 ("New Notes"). This Agreement
provides certain registration rights to persons who receive 12 1/2%
Subordinated Notes Due 2001 in the Issuer Exchange Offer. The Issuer Exchange
Offer is part of a broad plan to recapitalize the Issuer as more fully
described in Issuer's offering memorandum dated June 9, 1998. The parties hereby
agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings (and, unless otherwise indicated, capitalized terms used
herein without definition shall have the respective meanings ascribed to them
in the Purchase Agreement):
Added Interest: See Section 4(a) hereof.
Applicable Period: See Section 2 hereof.
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
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Closing Date: The Closing Date as defined in the Offering
Memorandum.
Direct Broker-Dealer Buyer: See Section 2(b) hereof.
Effectiveness Target Date: March 15, 1999.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder, and any succeeding
provisions thereto.
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Offer Completion Date: April 14, 1999.
Exchange Offer Registration Statement: See Section 2(a) hereof.
Filing Date: December 15, 1998.
Holder: Any holder of Transfer Restricted Securities.
Indemnified Party: See Section 7 hereof.
Indemnifying Party: See Section 7 hereof.
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Indenture: The Indenture, dated as of June __, 1998, by and among
the Issuer and American Stock Transfer & Trust Company, as Trustee, as it may
be further amended or supplemented from time to time in accordance with the
terms thereof.
Inspectors: See Section 5(m) hereof.
Issuer: See the introductory paragraph to this Agreement.
Issuer Affiliate: See Section 2(b) hereof.
Issuer Exchange Offer: See the second paragraph to this Agreement.
New Notes: See the second paragraph to this Agreement.
Offering Memorandum: The Issuer's Offering Memorandum dated June 9,
1998.
Participating Broker-Dealer: Any broker-dealer (as defined in the
Exchange Act), other than a Direct Broker-Dealer Buyer, that is a Holder or
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of New Notes
acquired for its own account as a result of market-making activities or other
trading activities that are tendered for exchange in the Exchange Offer and
that thereafter holds Exchange Notes issued in exchange therefor.
Placement Agent: See the introductory paragraph to this Agreement.
Person or person: An individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, limited liability company, limited liability partnership, firm or
other legal entity.
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Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Exchange Notes and/or the Transfer Restricted Securities (as
applicable), covered by such Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchaser Indemnitee: See Section 7 hereof.
Records: See Section 5(m) hereof.
Registration Default: See Section 4(a) hereof.
Registration Statement: Any registration statement of the Issuer,
including, but not limited to, the Exchange Offer Registration Statement, the
Shelf Registration Statement or a registration statement of the Issuer that
otherwise covers any of the Transfer Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A promulgated pursuant to the Securities Act, as
currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
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Rule 415: Rule 415 promulgated pursuant to the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder, and any succeeding
provisions thereto.
Shelf Effectiveness Period: See Section 3(a) hereof.
Shelf Notice: See Section 2(g) hereof.
Shelf Registration Statement: See Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Transfer Restricted Securities: The New Notes upon original issuance
thereof and at all times subsequent thereto, until (i) a Registration Statement
covering such New Notes has been declared effective by the SEC and such New
Notes have been disposed of in accordance with such effective Registration
Statement, (ii) such New Notes are sold in compliance with Rule 144, (iii) such
New Notes cease to be outstanding or (iv) such New Notes have been exchanged
for Exchange Notes.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes.
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Underwritten registration or underwritten offering: A registration
in which securities of the Issuer are sold to an underwriter or underwriters
for reoffering to the public.
2. Exchange Offer
(a) The Issuer agrees to file with the SEC as soon as practicable
after the Closing Date, but in no event later than the Filing Date, an offer to
exchange (the "Exchange Offer") any and all of the Transfer Restricted
Securities for a like aggregate principal amount of debt securities of the
Issuer (the "Exchange Notes"), which Exchange Notes will be (i) substantially
identical in all material respects to the New Notes, except that such Exchange
Notes will not contain terms with respect to transfer restrictions,
registration rights or the obligation to pay any Added Interest, (ii) entitled
to the benefits of the Indenture or a trust indenture which is identical to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC or to
effect or maintain the qualification thereof under the TIA), and which, in
either case, has been qualified under the TIA, and (iii) registered pursuant to
an effective Registration Statement in compliance with the Securities Act. The
Exchange Offer will be registered pursuant to the Securities Act on an
appropriate form of Registration Statement (the "Exchange Offer Registration
Statement"), and will comply with all applicable tender offer rules and
regulations promulgated pursuant to the Exchange Act and shall be duly
registered or qualified pursuant to all applicable state securities or Blue Sky
laws. The Exchange Offer shall not be subject to any condition, other than that
the Exchange Offer does not violate any applicable law, policy or
interpretation of the staff of the SEC. No securities shall be included in the
Exchange Offer Registration Statement other than the Exchange Notes. The Issuer
agrees to (x) use its best efforts to cause the Exchange Offer Registration
Statement to be declared effective on or prior to the Effectiveness Target Date
and to cause the Exchange Offer to be consummated on or prior to the Exchange
Offer Completion Date and (y) keep the Exchange Offer open for not less than 30
days (or such longer period required by applicable law), after the date that
the notice of the Exchange Offer referred to below is mailed to Holders.
(b) Each Holder who participates in the Exchange Offer will be
required to represent (which representation may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) that (i)
any Exchange Notes received by it will be acquired in the ordinary course of
its business, (ii) at the time of the consummation of the Exchange Offer such
Holder is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, the
distribution of the Exchange Notes, and (iii) such Holder is not (1) an
"affiliate" of the Issuer (an "Issuer Affiliate") or, (2) the Placement Agent
or any other broker-dealer that acquired such Transfer Restricted Securities
directly from the Issuer or any Issuer Affiliate for resale pursuant to Rule
144A, Regulation S or another available exemption from the
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registration requirements of the Securities Act (a "Direct Broker-Dealer
Buyer"). As used herein, "affiliate" shall be as defined in Rule 405 under the
Securities Act. Each Holder hereby acknowledges and agrees that any Issuer
Affiliate, any Direct Broker-Dealer Buyer, and any such Holder intending to use
the Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (i) could not under SEC policy as in effect on
the date of this Agreement participate in the Exchange Offer, and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction and that such
a secondary resale transaction of such Holder's New Notes should be covered by
an effective registration statement containing the selling security holder and
other information required by Item 507 and 508, as applicable, of Regulation
S-K under the Securities Act.
(c) Prior to the effectiveness of the Exchange Offer Registration
Statement, the Issuer shall provide a supplemental letter to the SEC (A)
stating that the Issuer is seeking to register the Exchange Offer on the basis
of the position of the SEC enunciated in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Co., Inc.
(available June 5, 1991), Exxon Capital Holdings Corporation (available May 13,
1988), and Shearman & Sterling (available July 2, 1993), and similar no-action
letters and (B) including a representation that the Issuer has not entered into
any arrangement or understanding with any person to distribute the Exchange
Notes to be received in the Exchange Offer and that, to the best of the
Issuer's knowledge, each Holder intending to participate in the Exchange Offer
is acquiring the Exchange Notes in its ordinary course of business and has no
arrangement or understanding with any person to participate in the distribution
of the Exchange Notes received in the Exchange Offer.
(d) The Issuer hereby agrees for a period of at least 180 days after
consummation of the Exchange Offer to make available, upon written request
therefor, a prospectus meeting the requirements of the Securities Act to any
Participating Broker-Dealer for use in connection with resales of Exchange
Notes. Upon consummation of the Exchange Offer in accordance with this
Agreement, the Issuer shall have no further obligation to register Transfer
Restricted Securities pursuant to Section 3 of this Agreement, unless the
Issuer is otherwise obligated to file a Shelf Registration Statement pursuant
to clause 3 of subsection (g) of this Section 2.
(e) The Issuer shall include within the Prospectus contained in the
Exchange Offer Registration Statement a Section entitled "Plan of
Distribution," reasonably acceptable to the Placement Agent, which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
Participating Broker-Dealer with respect to the Exchange Notes. Such "Plan of
Distribution" Section shall also allow the use of the Prospectus by all persons
subject to the prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, and include a statement describing
the means by which Participating Broker-Dealers may resell the Exchange Notes.
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(f) The Issuer shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Notes; provided that such period
shall not exceed 180 days after consummation of the Exchange Offer (or such
longer period if extended pursuant to Section 5(j) hereof) (the "Applicable
Period").
In connection with the Exchange Offer, the Issuer shall:
(i) mail as promptly as practicable to each Holder a copy
of the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and
related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered New Notes at any
time prior to the close of business, New York time, on the last
Business Day on which the Exchange Offer shall remain open by
sending to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice,
a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Transfer Restricted
Securities delivered for exchange and a statement that such Holder
is withdrawing his or her election to have such Transfer Restricted
Securities exchanged.
As soon as practicable after the close of the Exchange Offer, the
Issuer shall:
(i) accept for exchange all New Notes validly tendered and
not validly withdrawn in accordance with the Exchange Offer;
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(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all New Notes so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of New Notes, Exchange Notes equal in
principal amount to the New Notes of such Holder so accepted for
exchange.
(g) If (1) prior to the consummation of the Exchange Offer,
applicable interpretations of the staff of the SEC do not permit the Issuer to
effect the Exchange Offer, (2) for any other reason the Exchange Offer is not
consummated on or prior to the Exchange Offer Completion Date, or (3) any
Holder of Transfer Restricted Securities shall notify the Issuer within 20
Business Days of the consummation of the Exchange Offer (and confirm such
notice in writing within five Business Days thereafter) that such Holder is a
Direct Broker-Dealer Buyer, then the Issuer shall promptly deliver to the
Holders of any Transfer Restricted Securities and the Trustee written notice
thereof (the "Shelf Notice"), and the Issuer shall file a Registration
Statement pursuant to Section 3 hereof following the delivery to the Holders of
Transfer Restricted Securities of a Shelf Notice, the Issuer shall not have any
further obligation to conduct the Exchange Offer pursuant to this Section 2(g),
provided, that the Issuer shall have the right, nonetheless, to proceed to
consummate the Exchange Offer notwithstanding its obligation pursuant to this
Section 2(g) (and, upon such consummation, any obligation to file a Shelf
Registration Statement arising from clause (1) or (2) (but not clause (3)) of
this Section 2(g) shall terminate) and provided that any Shelf Notice delivered
to the Holders of Transfer Restricted Securities pursuant to clause (3) of this
Section 2(g) shall result in the termination of the obligations of the Issuer
to conduct the Exchange Offer only with respect to the Holders described in
clause (3) of this Section 2(g).
3. Shelf Registration Statement
If the Issuer is required to deliver a Shelf Notice as contemplated
by Section 2(g) hereof, then:
(a) Shelf Registration Statement. The Issuer shall prepare and file
with the SEC, as promptly as practicable following the Shelf Notice, a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities, which
registration statement, if the Shelf Notice is given pursuant to Section
2(g)(1) or (2), may be
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an amendment to the Exchange Offer Registration Statement (the "Shelf
Registration Statement"). The Shelf Registration Statement shall be on Form S-1
or another appropriate form permitting registration of the Transfer Restricted
Securities for resale by the Holders in the manner or manners reasonably
designated by them (including, without limitation, one or more underwritten
offerings). The Issuer shall not permit any securities other than the Transfer
Restricted Securities to be included in the Shelf Registration Statement. The
Issuer shall use its best efforts, as described in Section 5(b) hereof, to
cause the Shelf Registration Statement to be declared effective pursuant to the
Securities Act as promptly as practicable after the filing of such Shelf
Registration Statement, but in no event later than the Effectiveness Target
Date (or in the case of a Shelf Registration Statement filed pursuant to
Section 2(g)(3) hereof, by the later of the Effectiveness Target Date or 60
days of receipt by the Issuer of the notice contemplated by Section 2(g)(3)),
and to keep the Shelf Registration Statement continuously effective under the
Securities Act until the earlier of (i) the date which is 24 months after its
effective date (or 12 months after such effective date if such Shelf
Registration Statement is filed pursuant to Section 2(g)(3) at the request of
the Placement Agent), (ii) the date that all Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold in the manner set
forth and as contemplated in the Shelf Registration Statement, (iii) the date
that there ceases to be securities outstanding that constitute Transfer
Restricted Securities, or (iv) the date on which all Transfer Restricted
Securities covered by the Shelf Registration Statement become tradeable under
Rule 144 without regard to volume limitations (the "Shelf Effectiveness
Period").
(b) Supplements and Amendments. Subject to Section 3(a) above, the
Issuer shall use its best efforts to keep the Shelf Registration Statement
continuously effective by supplementing and amending the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used for such Shelf Registration Statement, if required
by the Securities Act, or if reasonably requested by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities covered by
such Registration Statement or by any underwriter of such Transfer Restricted
Securities.
4. Added Interest
(a) The Issuer and the Placement Agent agree that the Holders of
Transfer Restricted Securities will suffer damages if the Issuer fails to
fulfill its obligations pursuant to Section 2 or Section 3 hereof and that it
would not be possible to ascertain the extent of such damages. Accordingly, in
the event of such failure by the Issuer to fulfill such obligations, the Issuer
agrees to pay liquidated damages ("Added Interest") to each Holder of Transfer
Restricted Securities under the circumstances and to the extent set forth
below:
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(i) if the Exchange Offer Registration Statement has not
been filed with the SEC on or prior to the Filing Date; or
(ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness
Target Date; or
(iii) if the Exchange Offer has not been consummated and
the Issuer has not exchanged Exchange Notes for all New Notes
validly tendered in accordance with the terms of the Exchange Offer
on or prior to the Exchange Offer Completion Date or a Shelf
Registration Statement has not been declared effective by the SEC
prior to the Exchange Offer Completion Date;
(any of the foregoing, a "Registration Default"), then, the Issuer shall pay to
each Holder of Transfer Restricted Securities, accruing from December 15, 1998
in the case of clause (i) above, March 15, 1999 in the case of clause (ii)
above or April 14, 1999 in the case of clause (iii) above, Added Interest in an
amount equal to one-half of one percent (0.5%) per annum of the principal
amount of Transfer Restricted Securities held by such Holder; which rate will
be increased by an additional one-half of one percent (0.5%) per annum for each
90-day period that any such Added Interest continues to accrue; provided,
however that Added Interest shall not at any time exceed one percent (1.0%) per
annum of the principal amount of Transfer Restricted Securities. Upon the
filing of the Exchange Offer Registration Statement after December 15, 1998,
(y) the effectiveness of the Exchange Offer Registration Statement after March
15, 1999 or (z) the day before the date of the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, after April 14, 1999, the interest rate borne by the New Notes from the
date of such filing, effectiveness or the day before the date of such
consummation or effectiveness, as the case may be, will be reduced by the full
amount of the related increase from, but not to less than, the original
interest rate set forth on the cover page of the Offering Memorandum; provided,
however, that (a) if after any such reduction in interest rate, a different
event specified in clause (i), (ii) or (iii) above occurs, the interest rate
may again be increased and thereafter reduced pursuant to the foregoing
provisions, and (b) such rate will also be reduced to the rate set forth on the
cover page of the Offering Memorandum on the date on which the New Notes become
eligible for sale under Rule 144 without limitation as to volume.
(b) The Issuer shall notify the Trustee within one Business Day
after each and every date on which a Registration Default first occurs. Payment
of Added Interest, if any, will initially be due at the offices of the Paying
Agent (as defined in the Indenture), provided that, at the option of the
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Issuer, Added Interest may be paid by check mailed to Holders at their
registered addresses, provided further that (i) all payments with respect to
Global New Notes (as defined in the Indenture) are required to be made in same
day funds in accordance with the policies of the Depository (as defined in the
Indenture) and (ii) all payments with respect to New Notes, the Holders of
which have given wire transfer instructions to the Issuer, will be required to
be made by wire transfer of immediately available funds to the accounts
specified by such Holders. Added Interest shall be paid on or before the
semi-annual interest payment date provided in the Indenture and on each payment
date provided in the Indenture including, without limitation, whether upon
redemption, maturity (by acceleration or otherwise) or purchase upon a Change
of Control. Each obligation to pay Added Interest shall be deemed to commence
accruing on the date of the applicable Registration Default and to cease
accruing when all Registration Defaults have been cured. In no event shall the
Issuer pay Added Interest in excess of the applicable maximum amount set forth
above, regardless of whether one or multiple Registration Defaults exist.
(c) The parties hereto agree that the Added Interest provided for in
this Section 4 constitutes a reasonable estimate of the damages that will be
suffered by Holders by reason of the failure to file the Exchange Offer
Registration Statement or the Shelf Registration Statement, the failure of the
Exchange Offer Registration Statement or the Shelf Registration Statement to be
declared effective, the failure to consummate the Exchange Offer or the failure
of the Shelf Registration Statement to remain effective, as the case may be, in
accordance with this Agreement. No monetary damages in addition to Added
Interest shall be payable by the Issuer to Holders by reason of the failure of
the actions set forth in this Section 4(c) to occur as set forth herein.
5. Registration Procedures
In connection with the registration of any Exchange Notes or
Transfer Restricted Securities pursuant to Sections 2 or 3 hereof, the Issuer
shall effect such registration to permit the exchange of such Exchange Notes
for New Notes or the sale of such Transfer Restricted Securities (as
applicable), in accordance with the intended method or methods of exchange or
disposition thereof, and pursuant thereto the Issuer shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Section 2 or Section 3 hereof, and use
its best efforts to cause such Registration Statement to become effective and
remain effective as provided herein; provided that, if (1) such filing is
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the
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Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuer shall furnish
to and afford the Holders of the Transfer Restricted Securities and each such
Participating Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto),
proposed to be filed (at least 5 Business Days prior to such filing, or such
later date as is reasonable under the circumstances). The Issuer shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders, pursuant to this Agreement, must be
afforded an opportunity to review prior to the filing of such document, if the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities covered by such Registration Statement, or such Participating
Broker-Dealer, as the case may be, their counsel, or the managing underwriters,
if any, shall reasonably object on a timely basis (except that documents filed
as exhibits that are incorporated by reference or deemed to be incorporated by
reference shall not be subject to such objections);
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Shelf Effectiveness Period or the
Applicable Period, as the case may be, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force), under the Securities Act; and comply
with the provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder with respect to the disposition
of all securities covered by such Registration Statement, as so amended, or in
such Prospectus, as so supplemented, and with respect to the subsequent resale
of any Exchange Notes being sold by a Participating Broker-Dealer covered by
any such Prospectus; the Issuer shall be deemed not to have used its best
efforts to keep a Registration Statement effective during the Applicable Period
or the Shelf Effectiveness Period or otherwise when required to use its best
efforts under Sections 2, 3 and 5 hereof if the Issuer voluntarily takes any
action that would result in selling Holders of the Transfer Restricted
Securities covered thereby or Participating Broker-Dealers seeking to sell
Exchange Notes not being able to sell such Transfer Restricted Securities or
such Exchange Notes during that period, unless (i) such action is required by
applicable law, or (ii) such action is taken by the Issuer in good faith and
for valid business reasons (not including avoidance of its obligations
hereunder), including the acquisition or divestiture of assets or the
preservation of the confidentiality of information the disclosure of which may
have a material adverse effect on the assets, business, financial condition or
prospects of the Issuer and any other direct or indirect subsidiary of the
Issuer, taken as a whole;
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(c) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, notify the selling Holders
of Transfer Restricted Securities, or each known Participating Broker-Dealer,
as the case may be, their counsel and the managing underwriters, if any,
promptly and confirm such notice in writing, (i) when a Prospectus, any
prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that
any Holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated
by reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
Prospectus is required by the Securities Act to be delivered in connection with
sales of the Transfer Restricted Securities the representations and warranties
of the Issuer contained in any agreement (including any underwriting agreement)
contemplated by Section 5(l) hereof cease to be true and correct in any
material respect, (iv) of the receipt by the Issuer of any notification with
respect to the suspension of the qualification or exemption from qualification
of a Registration Statement or any of the Transfer Restricted Securities or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale
in any jurisdiction, or the initiation of any proceeding for such purpose, (v)
of the happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and (vi) of the reasonable determination of the
Issuer that a post-effective amendment to a Registration Statement would be
appropriate;
(d) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, use its best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from qualification),
of any of the Transfer Restricted Securities or the Exchange Notes (as
applicable), to be sold by any
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Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, to use its best efforts to obtain the withdrawal of any such
order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3
hereof and if requested by the managing underwriters, if any, or the Holders of
a majority in aggregate principal amount of the Transfer Restricted Securities
being sold in connection with an underwritten offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information relating to underwriters, if any, any Holder of Transfer Restricted
Securities or the plan of distribution of the Transfer Restricted Securities as
the managing underwriter, if any, or such Holders may reasonably request to be
included therein, (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Issuer has
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment pursuant to clause (i), and (iii)
supplement or make amendments to such Registration Statement with such
information as is required in connection with any request made pursuant to
clause (i);
(f) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, furnish to each selling
Holder of Transfer Restricted Securities and to each such Participating
Broker-Dealer who so requests and to counsel and each managing underwriter, if
any, without charge, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all
exhibits.
(g) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, deliver to each selling
Holder of Transfer Restricted Securities, or each such Participating
Broker-Dealer, as the case may be, its counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of preliminary Prospectus), and each amendment or supplement thereto
and any documents incorporated by reference therein, as such Persons may
reasonably request; and, subject to the last paragraph of this Section 5
hereof, the Issuer hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities or each such Participating Broker-Dealer, as the case may
be, and their underwriters or agents, if any, and dealers, if any, in
connection with the offering and sale of the Transfer Restricted
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Securities covered by or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to such Prospectus and any amendment or supplement
thereto;
(h) prior to any public offering of Transfer Restricted Securities
or any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, to use its reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Transfer Restricted
Securities or each such Participating Broker-Dealer, as the case may be, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification), of such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as any selling Holder,
Participating Broker-Dealer or the managing underwriters reasonably request in
writing; keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange Notes
held by Participating Broker-Dealers or the Transfer Restricted Securities
covered by the applicable Registration Statement; provided that the Issuer
shall not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) subject it to taxation in any such jurisdiction
where it is not so subject;
(i) if a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Transfer Restricted Securities
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to be
sold, which certificates shall not bear any restrictive legends with respect to
transfer and shall be in a form eligible for deposit with The Depository Trust
Company, ("DTC"), and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the managing underwriters, if
any, or Holders may reasonably request at least two Business Days prior to any
sale of the Transfer Restricted Securities, for delivery in connection with the
closing of such sale of Transfer Restricted Securities pursuant to such Shelf
Registration Statement;
(j) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon the occurrence of any
event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly as
practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at
the expense of the Issuer, a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated
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or deemed to be incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Transfer
Restricted Securities being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that:
(A) the Issuer may delay such preparation and filing of
such supplement or post-effective amendment pursuant to this Section
5(j) if (i) such action is required by applicable law, or (ii) such
action is taken by it in good faith and for valid business reasons
(not including avoidance of its obligations hereunder), including
the acquisition or divestiture of assets or the preservation of the
confidentiality of information the disclosure of which may have a
material adverse effect on the assets, business, financial condition
or prospects of the Issuer and any other direct or indirect
subsidiaries of the Issuer, taken as a whole (in any such case, an
"Amendment Delay");
(B) the Issuer may effect, in the aggregate, no more than
one Amendment Delay during the Applicable Period and such Amendment
Delay shall be for no longer than 45 Business Days;
(C) the Issuer may effect, in the aggregate, no more than
two Amendment Delays during the Shelf Effectiveness Period, provided
that no more than one Amendment Delay shall be effected during any
twelve-month period, and each such Amendment Delay shall be for no
longer than 45 Business Days; and
(D) to the extent that the Issuer effects one or more
Amendment Delays, the duration of the Shelf Effectiveness Period (if
such duration is determined pursuant to clause (i) of the definition
thereof or the maximum duration of the Applicable Period, as the
case may be, shall be extended for the aggregate amount of time that
any such Amendment Delays were in effect;
(k) prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, (i) provide the Trustee with
certificates for the Transfer Restricted Securities
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in a form eligible for deposit with DTC and (ii) use its best efforts to
provide a CUSIP number for the Transfer Restricted Securities;
(l) in connection with an underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings and take all
such other actions as are reasonably requested by the managing underwriters in
order to expedite or facilitate the registration or the disposition of such
Transfer Restricted Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the
business of the Issuer, the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Issuer and updates thereof in form and substance reasonably
satisfactory to the managing underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form
and substance reasonably satisfactory to the managing underwriters from the
Independent certified public accountants of the Issuer (and, if necessary, any
other independent certified public accountants with respect to any business for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as are reasonably requested by underwriters as
permitted by Statement on Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in Section 7
hereof (or such other provisions and procedures acceptable to Holders of a
majority in aggregate principal amount of outstanding Transfer Restricted
Securities covered by such Registration Statement and the managing underwriters
or agents), with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(m) if (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Transfer Restricted Securities being
sold, or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Transfer Restricted
Securities, if any, and any attorney, accountant or other agent retained by any
such selling Holder or each such Participating Broker-Dealer, as the case may
be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and
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other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records"), solely as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Issuer and any of its
respective subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration Statement,
subject to such reasonable confidentiality requirements as the Issuer or any of
its respective subsidiaries may impose with respect thereto;
(n) provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Notes, as the case may be, and cause the Indenture
to be qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Transfer Restricted
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the Holders of the Transfer Restricted Securities, to effect
such changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its
best efforts to cause such trustee to execute, all customary documents as may
be required to effect such changes, and all other forms and documents required
to be filed with the SEC to enable such indenture to be so qualified in a
timely manner;
(o) comply with all applicable rules and regulations of the SEC and,
as soon as reasonably practicable, make generally available to the holders of
Exchange Notes and the Holders, if any, consolidated earning statements of the
Issuer that satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(p) if an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Securities by Holders to the Issuer (or to such other
Person as directed by the Issuer), in exchange for the Exchange Notes, the
Issuer shall ▇▇▇▇, or cause to be marked, on such Transfer Restricted
Securities that such Transfer Restricted Securities are being canceled in
exchange for the Exchange Notes; in no event shall such Transfer Restricted
Securities be marked as paid or otherwise satisfied;
(q) reasonably cooperate with each seller of Transfer Restricted
Securities covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD");
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(r) use its best efforts to take all other steps necessary to effect
the registration of the Transfer Restricted Securities or the Exchange Notes
covered by a Registration Statement contemplated hereby; and
(s) use its best efforts to cause the Transfer Restricted Securities
or the Exchange Notes, as applicable, covered by an effective registration
statement required by Section 2 or Section 3 hereof to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Transfer Restricted Securities relating to such
registration statement or the managing underwriters in connection therewith, if
any.
The Issuer may require each seller of Transfer Restricted Securities
or Participating Broker-Dealer as to which any registration is being effected
to furnish to the Issuer such information regarding such seller or
Participating Broker-Dealer and the distribution of such Transfer Restricted
Securities or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, as required to be included in a Registration Statement
prepared in accordance with the Securities Act or as the Issuer may, from time
to time, reasonably request. The Issuer may exclude from such registration the
Transfer Restricted Securities or Exchange Notes of any seller or Participating
Broker-Dealer, as the case may be, who fails to furnish such information within
a reasonable time after receiving such request.
Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Notes to be sold by such Participating Broker-Dealer, as the case may
be, that, upon receipt of any notice from the Issuer of the happening of any
event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi)
hereof, such Holder or such Participating Broker-Dealer shall forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus or such Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, until such Holder's or such
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing by the Issuer that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto.
6. Registration Expenses
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(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer shall be borne by the Issuer,
whether or not the Exchange Offer or a Shelf Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (a) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (b) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Transfer Restricted Securities
or Exchange Notes (x) where the Holders of Transfer Restricted Securities are
located, in the case of the Exchange Notes, or (y) as provided in Section 5(h)
hereof, in the case of Transfer Restricted Securities or Exchange Notes to be
sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities or Exchange Notes in a form
eligible for deposit with DTC and of printing Prospectuses if the printing of
Prospectuses is requested by the managing underwriters, if any, or, in respect
of Transfer Restricted Securities or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuer and, subject to Section 6(b) below,
Holders of Transfer Restricted Securities, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(l)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (vi)
rating agency fees, (vii) Securities Act liability insurance, if the Issuer
desires such insurance, (viii) fees and expenses of all other Persons retained
by the Issuer, except as otherwise agreed with respect to Friedman, Billings,
▇▇▇▇▇▇ & Co., Inc., (ix) internal expenses of the Issuer (including, without
limitation, all salaries and expenses of officers and employees of the Issuer
performing legal or accounting duties), (x) the expense of any annual audit and
(xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange. Nothing contained in
this Section 6 shall create an obligation on the part of the Issuer to pay or
reimburse any Holder for any underwriting commission or discount, brokers' fees
or accountable or non-accountable expense reimbursement attributable to any
such Holder's Transfer Restricted Securities included in an underwritten
offering pursuant to a Registration Statement filed in accordance with the
terms of this Agreement, or to guarantee such Holder any profit or proceeds
from the sale of such New Notes.
(b) In connection with any Registration Statement hereunder, the
Issuer shall reimburse the Holders of the Transfer Restricted Securities being
registered in such registration for the reasonable fees and disbursements of
not more than one counsel (in addition to appropriate local counsel), chosen by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities to be included in such Registration Statement.
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7. Indemnification
The Issuer agrees to indemnify and hold harmless (i) the Placement
Agent and each Holder of Transfer Restricted Securities, each initial Holder of
Exchange Notes and each Participating Broker-Dealer, (ii) each person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act), any such Person (any of the persons referred to in
this clause (ii) being hereinafter referred to as a "controlling person"), and
(iii) the respective officers, directors, partners, employees, representatives
and agents of any of such Person or any controlling person (any person referred
to in clause (i), (ii) or (iii) may hereinafter be referred to as an "Purchaser
Indemnitee"), to the fullest extent lawful, from and against any and all
losses, claims, damages, judgments, actions, out-of-pocket expenses, and other
liabilities (the "Liabilities"), including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Purchaser Indemnitee, joint or several,
directly or indirectly related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (as amended or
supplemented if the Issuer shall have furnished to such Purchaser Indemnitee
any amendments or supplements thereto), or any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such Liabilities arise out of or are based upon (x) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Purchaser Indemnitee furnished to
the Issuer or any underwriter in writing by such Purchaser Indemnitee expressly
for use therein, or (y) any untrue statement contained in or omission from a
preliminary prospectus if a copy of the Prospectus (as then amended or
supplemented, if the Issuer shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to the person asserting any such Liabilities who
purchased New Notes, if such Prospectus (or Prospectus as amended or
supplemented) is required by law to be sent or given at or prior to the written
confirmation of the sale of such New Notes to such person and the untrue
statement contained in or omission from such preliminary prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented). The
Issuer shall notify the Holders promptly of the institution, threat or
assertion of any claim, proceeding (including any governmental investigation),
or litigation of which it shall have become aware in connection with the
matters addressed by this Agreement which involves the Issuer or a Purchaser
Indemnitee.
In connection with any Registration Statement in which a Holder of
Transfer Restricted Securities or a Participating Broker-Dealer is
participating, such Holder of Transfer Restricted
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Securities or Participating Broker-Dealer agrees, severally and not jointly, to
indemnify and hold harmless the Issuer, each person who controls the Issuer
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act and the respective partners, directors, officers, members,
representatives, employees and agents of such person or controlling person to
the same extent as the foregoing indemnity from the Issuer to each Purchaser
Indemnitee, but only with reference to information relating to such Purchaser
Indemnitee furnished to the Issuer in writing by such Purchaser Indemnitee
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary Prospectus. The liability of any
Purchaser Indemnitee pursuant to this paragraph shall in no event exceed the
net proceeds received by such Purchaser Indemnitee from sales of Transfer
Restricted Securities giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of
the two preceding paragraphs, such person (the "Indemnified Party"), shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Party"), in writing of the commencement thereof (but the failure
to so notify an Indemnifying Party shall not relieve it from any liability
which it may have under this Section 7, except to the extent the Indemnifying
Party is materially prejudiced by the failure to give notice), and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnifying Party may reasonably designate in such
proceeding and shall pay the reasonable fees and expenses actually incurred by
such counsel related to such proceeding. Notwithstanding the foregoing, in any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party, unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Party failed within a reasonable time after notice of commencement
of the action to assume the defense and employ counsel reasonably satisfactory
to the Indemnified Party or (iii) the named parties to any such action
(including any impleaded parties), include both such Indemnified Party and the
Indemnifying Party, or any affiliate of the Indemnifying Party, and such
Indemnified Party shall have been reasonably advised by counsel that, either
(x) there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party or such
affiliate of the Indemnifying Party or (y) a conflict may exist between such
Indemnified Party and the Indemnifying Party or such affiliate of the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of such Indemnified Party,
it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel), for all such
indemnified parties, which firm shall be designated in writing by those
indemnified parties who sold a majority in outstanding aggregate principal
amount of Transfer Restricted Securities sold by all such indemnified parties
and any such separate firm for the Issuer, the
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directors, the officers and such control persons of the Issuer as shall be
designated in writing by the Issuer. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent,
which consent shall not be unreasonably withheld, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason held to be unavailable to an
Indemnified Party in respect of any Liabilities referred to therein (other than
by reason of the exceptions provided therein) or is insufficient to hold
harmless a party indemnified thereunder, then each Indemnifying Party under
such paragraphs, in lieu of indemnifying such Indemnified Party thereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Liabilities (i) in such proportion as is appropriate to reflect
the relative benefits of the Indemnified Party on the one hand and the
Indemnifying Party(ies) on the other in connection with the statements or
omissions that resulted in such Liabilities, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Indemnifying Party(ies) and the
Indemnified Party, as well as any other relevant equitable considerations. The
relative fault of the Issuer on the one hand and any Purchaser Indemnitees on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Issuer or by such Purchaser Indemnitees and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of any
Liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any reasonable legal or
other expenses actually incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall a Purchaser Indemnitee be
required to contribute any amount in excess of the amount by which proceeds
received by such Purchaser Indemnitee from sales of Transfer
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Restricted Securities or Exchange Notes exceeds the amount of any damages that
such Purchaser Indemnitee has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. For
purposes of this Section 7, each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) the
Placement Agent, a Holder of Transfer Restricted Securities, an initial Holder
of Exchange Notes or a Participating Broker-Dealer shall have the same rights
to contribution as such Placement Agent, such Holder of Transfer Restricted
Securities, such initial Holder of Exchange Notes or such Participating
Broker-Dealer, as the case may be, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) the Issuer, and each officer, director, partner, employee, representative,
agent or manager of the Issuer shall have the same rights to contribution as
the Issuer. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 7 or otherwise, except to the extent that any party is
materially prejudiced by the failure to give notice. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the indemnifying parties may
otherwise have to the indemnified parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 7 are several
in proportion to the respective principal amount of New Notes sold by each of
the Purchaser Indemnitees hereunder and not joint.
8. Rules 144 and 144A
The Issuer covenants that, for so long as any Transfer Restricted
Securities remain outstanding, it will file the reports, if any, required to be
filed by it pursuant to the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Issuer is not required to file such reports, it will, upon the request
of any Holder of Transfer Restricted Securities, make available information
with respect to it required by Rule 144 and Rule 144A under the Securities Act
in order to permit sales pursuant to Rule 144 and Rule 144A. The Issuer further
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities
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Act within the limitation of the exemptions provided by (a) Rule 144 and Rule
144A or (b) any similar rule or regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering and shall be reasonably acceptable to the Issuer.
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder, unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuer of any of its
obligations under this Agreement, each Holder of Transfer Restricted Securities
and each Participating Broker-Dealer holding Exchange Notes, in addition to
being entitled to exercise all rights provided herein, in the Indenture or, in
the case of the Placement Agent, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Subject to Section 4, the Issuer agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agree that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of consents
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to or departures from the provisions hereof may not be given, unless the Issuer
has obtained the written consent of holders of at least a majority of the then
outstanding aggregate principal amount of Transfer Restricted Securities and
Exchange Notes held by Participating Broker-Dealers taken as one class.
Notwithstanding the foregoing, a waiver or consent to or departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and Participating Broker-Dealers holding Exchange Notes whose
securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect, impair, limit or compromise the rights of
other Holders and Participating Broker-Dealers holding Exchange Notes may be
given by holders of at least a majority in aggregate principal amount of the
Transfer Restricted Securities and Exchange Notes held by Participating
Broker-Dealers being sold by such Holders and Participating Broker-Dealers
pursuant to such Registration Statement; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee),
provided for or permitted hereunder shall be made in writing by delivered by
facsimile (with receipt confirmed), overnight courier or registered or
certified mail, return receipt requested, or by telegram:
(i) if to a Holder of Transfer Restricted Securities, at
the most current address given by the Trustee to the Issuer; and
(ii) if to the Issuer at the offices of the Company at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Executive Vice President; (facsimile:
800-694-6346).
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties
hereto, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders of Transfer Restricted Securities.
The Issuer agrees that the Holders of Transfer Restricted Securities and
Participating
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Broker-Dealers holding Exchange Notes shall be third party beneficiaries to the
agreements made hereunder by the Placement Agent and the Issuer, and each
Holder and Participating Broker-Dealer shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder; provided, however, that such Holder
or Participating Broker-Dealer fulfills all of its obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result
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as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties hereto that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(j) Transfer Restricted Securities Held by the Issuer or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Issuer or its affiliates (as such term is
defined in Rule 405 under the Securities Act), shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Survival. This Agreement is intended to survive the consummation
of the transactions contemplated by the Issuer Exchange Offer. The
indemnification and contribution obligations under Section 7 of this Agreement
shall survive the termination of the Issuer's obligations under Sections 2 and
3 of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ISSUER
MEGO MORTGAGE CORPORATION
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By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
PLACEMENT AGENT
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ &
CO., INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
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