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EXHIBIT 10.97
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 29, 1998 by and among Mego Mortgage Corporation, a
Delaware corporation (the "Company"), and Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc. ("FBR"), on behalf of the Persons (individually a "Purchaser" and
collectively the "Purchasers") who purchase the Company's common stock, par
value $.01 per share (the "Common Stock") and/or purchase or receive the
Company's Series A Convertible Preferred Stock (the "Series A Preferred Stock")
in any of the transactions comprising the Company's Recapitalization (as
defined below).
WHEREAS, the Company is engaging in a plan of recapitalization (the
"Recapitalization") which includes the following: (i) a private offering (the
"Common Stock Offering") of shares of its Common Stock; (ii) a private offering
(the "Series A Preferred Stock Offering") by the Company of shares of its
Series A Preferred Stock; and (iii) an offer occurring concurrently with the
Common Stock Offering and the Series A Preferred Stock Offering (together, the
"Offerings") and as a condition thereto to exchange shares of Series A
Preferred Stock and/or new 12 1/2% Subordinated Notes Due 2001 (the "New
Notes") of the Company or a combination thereof, subject to certain
limitations, for any and all of the Company's outstanding 12 1/2% Senior
Subordinated Notes Due 2001 of the Company, subject to certain conditions (the
"Exchange Offer");
WHEREAS, the Company has entered into a Placement Agreement dated as
of June 9, 1998 (the "Placement Agreement"), with Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc. ("FBR"), a Virginia corporation, pursuant to which FBR will act as
placement agent in connection with the issue and sale of the Common Stock and
Series A Preferred Stock;
WHEREAS, the Company has entered into various Purchase Agreements
(each a "Purchase Agreement") with certain purchasers of Common Stock and
Series A Preferred Stock in conjunction with the Offerings; and
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WHEREAS, as an incentive to induce investors to participate in the
Recapitalization, the Company has agreed to provide registration rights to
holders of Common Stock acquired in the Offerings and holders of Series A
Preferred Stock issued in the Offerings and the Exchange Offer relating to the
shares of Common Stock underlying the Series A Preferred Stock (such shares of
Common Stock and shares of Common Stock underlying the Series A Preferred Stock
are referred to herein as the "Securities").
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged
by all parties hereto, the parties, intending to be legally obligated, hereby
agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Act": The Securities Act of 1933, as amended.
"Broker-Dealer": Any broker or dealer registered as such under the
Exchange Act.
"Closing Date": The date of this Agreement.
"Commission" or "SEC": The United States Securities and Exchange
Commission.
"DTC": The Depository Trust Company.
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"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Holders": As defined in Section 2(b) hereof.
"Indemnified Holder": As defined in Section 7(a) hereof.
"NASD": National Association of Securities Dealers, Inc.
"Person": An individual, partnership, corporation, trust or
unincorporated organization, or a government or an agency, authority or
political subdivision thereof.
"Prospectus": The prospectus included in a Registration Statement,
as amended or supplemented, including post-effective amendments, therein.
"Registration Default": As defined in Section 4 hereof.
"Resale Filing Deadline": As defined in Section 3 hereof.
"Resale Registration Statement": As defined in Section 3 hereof.
"Securities": As defined in the preamble hereto.
"Transfer Restricted Securities": Each Security, until the earliest
to occur of (a) the date on which such Security has been effectively registered
under the Act and disposed of in accordance with a Resale Registration
Statement or such other applicable registration statement, (b) the date on
which such Security is available for sale without restriction to the public
pursuant to Rule 144 under the
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Act or by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated
in the Resale Registration Statement.
"Underlying Common Stock": The shares of Company Common Stock into
which the Series A Preferred Stock may be converted.
"Underwritten Registration" or "Underwritten Offering": An offering
in which securities of the Company are sold to an underwriter for reoffering to
the public pursuant to an effective registration statement filed with the
Commission.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The Securities are the Transfer
Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities, whether directly in certified form
or through the DTC book-entry system.
SECTION 3. RESALE REGISTRATION STATEMENT
(a) Registration. The Company shall:
(x) cause to be filed one or more registration statements
on Form ▇-▇, ▇-▇, ▇-▇ or S-4, if the use of such form is then
available (each a "Resale Registration Statement") pursuant to Rule
415 under the Act, on or prior to September 16, 1998 (the "Resale
Filing Deadline"),
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which Resale Registration Statements shall provide for resales of
all Transfer Restricted Securities, the Holders of which shall have
provided the information required pursuant to Section 3(b) hereof;
and
(y) use its reasonable best efforts to cause such Resale
Registration Statements to be declared effective by the Commission
on or before the 180th day after the Closing Date.
The Company shall use its reasonable best efforts to keep such Resale
Registration Statement continuously effective, supplemented and amended to the
extent necessary to ensure that it is available for resales of Securities by
the Holders of Transfer Restricted Securities entitled to the benefit of this
Section 3(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, until the earlier of (i) a period of at least two
years following the Closing Date or (ii) the date on which all Transfer
Restricted Securities may be sold without restriction.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Resale
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 business days after receipt of a
request therefor, such information as the Company may reasonably request for
use in connection with any Resale Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to Section 4 hereof
unless and until such Holder shall have used its best efforts to provide all
such reasonably requested information. Each Holder as to which any Resale
Registration Statement is being effected agrees to promptly furnish to the
Company any and all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
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SECTION 4. LIQUIDATED DAMAGES
Subject to the provisions of Section 3(b) hereof, if (i) the
applicable Resale Registration Statements required by this Agreement are not
filed with the Commission on or prior to the date specified for such filing in
this Agreement or (ii) any Resale Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being restored
to effectiveness by amendment or otherwise within thirty (30) business days or
succeeded immediately by an additional Resale Registration Statement that cures
such failure and that is itself immediately declared effective within thirty
(30) business days (each such event referred to in clauses (i) and (ii), a
"Registration Default"), the Company shall pay liquidated damages to each
Holder of Transfer Restricted Securities with respect to the first 90- day
period immediately following the occurrence of such Registration Default, in an
amount equal to $.05 per share per week in the case of holders of Common Stock
and per share of Underlying Common Stock in the case of holders of Series A
Preferred Stock. The amount of the liquidated damages shall increase by an
additional $.05 per week with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.50 per share per week. All accrued liquidated damages shall be
paid to Record Holders by the Company by wire transfer of immediately available
funds or by federal funds check on the 91st day following the occurrence of a
Registration Default. Following the cure of all Registration Defaults relating
to any particular Transfer Restricted Securities, the accrual of liquidated
damages with respect to such Transfer Restricted Securities will cease.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such Security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall
have been satisfied in full.
SECTION 5. REGISTRATION PROCEDURES
(a) Resale Registration Statement. In connection with each Resale
Registration Statement, the Company shall comply with all the provisions of
Section 5(c) below and shall use all reasonable efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended methods thereof. In this regard, the
Company will, by September 16, 1998, prepare and file with the Commission a
Resale Registration Statement relating
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to the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
such intended methods of resale.
(b) General Provisions. In connection with any Resale Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
the Securities by Broker-Dealers), the Company shall:
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3
of this Agreement, and upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B)
not to be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the Company
shall file promptly, and as appropriate, an amendment or supplement
to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use all reasonable efforts to cause such
amendment to be declared effective and such Registration Statement
and the related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may
be necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 hereof or such shorter
period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement cease to be Transfer
Restricted Securities; cause the Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Act in a timely manner, and
reasonably assisting Holders in complying with the provisions of the
Act with respect to the disposition of all Securities covered by
such Registration Statement during the applicable period in
accordance with the intended method of methods of distribution by
the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons in writing, to
confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed,
and, with respect to any Registration Statement or any
post-effective amendment thereto, when
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the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order or
other order or action suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any
state securities or Blue Sky commission of the exemption,
qualification or registration of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, or (D) of the
existence of any fact or the happening or any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement
or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order
or other order or take other action suspending the effectiveness of
the Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending the
exemption, qualification or registration of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company
shall use all reasonable efforts to obtain the withdrawal or lifting
of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of
the underwriter(s), if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Registration Statement),
which documents will be subject to the review of such Holders and
underwriter(s), if any, for a period of at least five business days,
and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated
by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the
underwriter(s), if any, shall reasonably object within five business
days after the receipt thereof. A selling Holder or underwriter, if
any, shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) make available at reasonable times and upon reasonable
notice for inspection by the selling Holders, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant retained by such selling
Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company
and cause the Company's' officers, directors and employees to
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supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vi) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, provided such information is usual and customary in such a
document, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after
the Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(vii) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein
and all exhibits;
(viii) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; and
the Company hereby consent to the use of the Prospectus and any
amendment or supplement thereto (other than in those states or
jurisdictions in which the Company has not complied with or
satisfied the requirements of the relevant "blue sky" securities
laws) by each of the selling Holders and each of the underwriter(s),
if any, in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(ix) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take
all such other actions in connection therewith in order to expedite
or facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this
Agreement, to the extent reasonably and
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customary in this type of offering and as may be reasonably
requested by the Purchaser or by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this
Agreement; and if the registration is an Underwritten Registration,
the Company shall:
(A) furnish to each Purchaser, each selling
Holder and each underwriter, if any, in such substance and
scope as they may request and as are customarily made by
issuers to underwriters in primary underwritten offerings,
upon the date of the effectiveness of the Resale
Registration Statement:
(1) a certificate, dated the date of
effectiveness of the Resale Registration
Statement, as the case may be, signed by (i) the
President or any Vice President and (ii) a
principal financial or accounting officer of the
Company, confirming, as of the date thereof, the
matters set forth in paragraph (c) of Section 5
of the Placement Agreement and such other
matters as such parties may reasonably request;
(2) an opinion, dated the date of
effectiveness of the Resale Registration
Statement, as the case may be, of counsel for
the Company, covering the matters set forth in
paragraph (a) of Section 5 of the Placement
Agreement and such other matter as such parties
may reasonably request, and in any event
including a statement to the effect that such
counsel has participated in conferences with
officers and other representatives of the
Company, representatives of the independent
public accountants for the Company, the
Purchasers' representatives and the Purchaser's
counsel in connection with the preparation of
such Registration Statement and the related
Prospectus and have considered the matters
required to be stated therein and the statements
contained therein, although such counsel has not
independently verified the accuracy,
completeness or fairness of such statements; and
that such counsel advises that, on the basis of
the foregoing, no facts came to such counsel's
attention that caused such counsel to believe
that the applicable Registration Statement, at
the time such Registration Statement or any
post-effective amendment thereto become
effective, contained an untrue statement of a
material fact or omitted to state a material
fact required to be stated therein or necessary
to make the statements therein not misleading,
or that the Prospectus contained in such
Registration Statement as of its date, an untrue
statement of a material fact or omitted to state
a material fact necessary in order to make the
statements therein, in light
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of the circumstances under which they were made,
not misleading. Without limiting the foregoing,
such counsel may state further that such counsel
assumes no responsibility for, and has not
independently verified, the accuracy,
completeness or fairness of the financial
statements, notes and schedules and other
financial data included in any Registration
Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated
as of the date of effectiveness of the Resale
Registration Statement, as the case may be, from
the Company's independent accountants, in the
customary form and covering matters of the type
customarily covered in comfort letters by
underwriters in connection with primary
underwritten offerings, and affirming the
matters set forth in the comfort letters
delivered pursuant to Section 5(b) of the
Placement Agreement, without exception;
(B) set forth in full or incorporate by
reference in the underwriting agreement, if any, the
indemnification provisions and procedures of Section 7
hereof with respect to all parties to be indemnified
pursuant to said Section; and
(C) deliver such other documents and
certificates as may be reasonably requested by such
parties to evidence compliance with clause (A) above and
with any customary conditions contained in the
underwriting agreement or other agreement entered into by
the Company pursuant to this clause (ix), if any.
If at any time the covenants of the Company contemplated
in clause (A)(1) above cease to be true and correct, the Company shall so
advise the Purchasers and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;
(x) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s),
if any, and their respective counsel in connection with the
registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky and securities laws of such
jurisdictions as the selling Holders or underwriter(s) may
reasonably request and do any and all other acts or things necessary
or advisable to
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enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Resale Registration Statement;
provided, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process
in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it
is not now so subject;
(xi) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities
to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if
any, may reasonably request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xii) use its reasonable best efforts to cause the
Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the
proviso contained in paragraph (x) above;
(xiii) if any fact or event contemplated by paragraph
(b)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading;
(xiv) provide a CUSIP number for shares of Common Stock
and Underlying Common Stock that are Transfer Restricted Securities
not later than the effective date of the Registration Statement;
(xv) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in
accordance with the
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rules and regulations of the NASD, and use its reasonable best
efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may be
necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities;
(xvi) otherwise comply with all applicable rules and
regulations of the Commission, and make generally available to its
security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of
any fiscal quarter in which Transfer Restricted Securities are sold
to underwriters in a firm or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with
the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement;
(xvii) cause all shares of Transfer Restricted Securities
covered by the Registration Statement to be listed on each
securities exchange or market, if applicable, on which similar
securities issued by the Company are then listed if requested by the
Holders of a majority in aggregate principal amount of the Notes or
the managing underwriter(s); and
(xviii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Sections 13, 14 and 15 of the Exchange Act for a period of three
years from the Closing Date.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 5(b)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current
immediately prior to the time of receipt of such notice. In the event the
Company shall give any such notice, the time period regarding the effectiveness
of such Registration Statement set forth in Section 3, shall be extended by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 5(c)(iii)(D) hereof to and including the date
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when each selling Holder covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus or shall have
received the Advice.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, as the case may
be, regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses
(including filings made by any Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the NASD)); (ii) all fees and expenses
of compliance with federal securities, foreign securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including the printing of
Prospectuses), messenger and delivery services and telephone incurred by the
Company; (iv) all fees and disbursements of counsel for the Company and,
subject to Section 6(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the shares of
the Common Stock or Underlying Common Stock on a national securities exchange
or automated quotation system pursuant to the requirements hereof; (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance); and (vii) all fees and charges of
the Rating Agencies, if any; provided, that the Company will not bear certain
personal expenses of a Holder who sells Transfer Restricted Securities,
including, underwriting discounts, commissions, and messenger and delivery
services and telephone expenses incurred by such selling Holders.
The Company will, in any event, bear its internal expense
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit, all trustee and Rating Agency fees and charges and the fees and expenses
of any Person, including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Resale Registration Statement),
the Company will reimburse the Purchasers and the Holders of Transfer
Restricted Securities being resold pursuant to registration pursuant to the
Resale Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, such counsel to be chosen by the
Holders of a majority of the Transfer Restricted Securities (excluding, for
this determination, Sovereign Bancorp, Inc., City National Bank
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of West Virginia and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) for whose benefit such Registration
Statement is being prepared.
SECTION 7. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) any Holder (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 Holder or any Controlling Person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation, 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 charges of one counsel to all
Indemnified Holders as a group) directly or indirectly caused by, 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 (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Company by any of
the Holders or counsel or agents of Holders expressly for use therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Holders with respect to which indemnity may be sought
against the Company, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (provided, that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement unless and to the extent
materially and adversely affected). Such Indemnified Holder shall have the
right to employ its own counsel in any such action and the fees and expenses of
such counsel shall be paid, as incurred, by the Company (regardless of whether
it is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder); provided, that if the Indemnified Holder is not
successful and it is determined that such Indemnified Holder is not entitled to
indemnification hereunder, then such Indemnified Holder shall reimburse
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the Company for all monies advanced by the Company to which such Indemnified
Holder was not entitled. The Company shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for such Indemnified Holders, which firm shall be designated by the
Holders of a majority of the shares of Common Stock, Series A Preferred Stock,
or Underlying Common Stock that are subject to, or affected by, such action or
proceeding. The Company shall not be liable for any settlement of any such
action or proceeding effected without the Company's prior written consent,
which consent shall not be withheld unreasonably, and subject to the limitation
contained in the prior paragraph the Company will indemnify and hold harmless
any Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the prior
written consent of the Company. The Company shall not, without the prior
written consent of each Indemnified Holder, settle or compromise or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, and its respective directors, officers and any
person controlling (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) the Company, and the respective officers, directors,
partners, employees, representatives and agents of each such person, to the
same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company or its directors or officers or
any such controlling person in respect of which indemnity may be sought against
a Holder of Transfer Restricted Securities, such Holder shall have the rights
and duties given the Company and the Company or its directors or officers or
such controlling person shall have the rights and duties given to each Holder
by the preceding paragraph. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Restricted Securities
giving rise to such indemnification obligation.
(c) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof
(other than by reason of the exceptions provided therein) in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute
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to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand, and the Holders on the other hand from their purchase of Transfer
Restricted Securities or if such allocation is not permitted by applicable law,
the relative fault of the Company on the one hand and of the Indemnified Holder
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand, and of the Indemnified Holder 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 Company or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 7(a),
any legal or other fees, expenses or charges reasonably incurred by such party
in connection with investigating or defending any action or claim.
The Company and each Holder of Transfer Restricted Securities agree
that it would not be just and equitable if contribution pursuant to this
Section 7(c) were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 7(c) are several in proportion to the respective principal amount of
Securities held by each of the Holders hereunder and are not joint.
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SECTION 8. RULE 144
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144 under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder 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 provided by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Resale
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
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SECTION 11. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including
the liquidated damages contemplated hereby) would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has
not previously entered into any agreement granting any registration rights with
respect to its securities to any Person, except as contemplated by the Offering
Memorandum. The rights granted to the Holders hereunder do not in any way
breach or conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.
(c) Adjustments Affecting the Securities Common Stock. The Company
will not take any action, or permit any change to occur, with respect to the
Securities that would materially and adversely affect the ability of the
Holders to resell such Securities.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company had obtained the
written consent of Holders of a majority of the outstanding Transfer Restricted
Securities. Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose securities are being resold pursuant to the Resale Registration Statement
and that does not affect directly or indirectly the rights of other Holders
whose securities are not reselling pursuant to such Registration Statement may
be given by the Holders of a majority of the outstanding Transfer Restricted
Securities being resold pursuant to such Resale Registration Statement.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class or
certified mail, telex, telecopier, or reliable overnight delivery service:
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(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture; and
(ii) If to the Company:
Mego Mortgage Corporation
Fifth Floor
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if sent via a reliable overnight delivery service.
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(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, by the parties hereto, 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof, in any circumstances,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement together with the Purchase
Agreement, and the Placement Agreement (as defined in the Purchase Agreement)
is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein with respect to the registration rights
granted by the Company with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
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MEGO MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
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