UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. )1
MEGO MORTGAGE CORPORATION
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
585165 10 3
(CUSIP Number)
Hubert M. Stiles, Jr., President,
T. Rowe Price Recovery Fund II Associates, L.L.C.
100 East Pratt Street, Baltimore, Maryland 21202
(410) 345-6703
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 29, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filled a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(e) 13d-(f) or 13d-1(g), check the following box.
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
1 The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to the liabilities of that section of the act but
shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. ROWE PRICE RECOVERY FUND II, L.P.
52-1995189
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) x
3 SEC USE ONLY
____________________________________________
4 SOURCE OF FUND*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OF PLACE OF ORGANIZATION
DELAWARE
Number of
Shares 7 SOLE VOTING POWER -0-
Beneficially
Owned
By Each 8 SHARED VOTING POWER<PAGE>
**6,666,667 (1)
<PAGE>
Reporting
Person 9 SOLE DISPOSITIVE POWER -0-
With: 10 SHARED DISPOSITIVE POWER **6,666,667 (1)<PAGE>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,666,667
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.8%
14 TYPE OF REPORTING PERSON*
PN
(1) Representing 6,666,667 common shares owned. Voting and
dispositive power is exercised through its sole general partner,
T. Rowe Price Recovery Fund II Associates, L.L.C.
**See Item 5 for additional information
<PAGE>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO,. OF ABOVE PERSON
T. ROWE PRICE RECOVERY FUND II ASSOCIATES, L.L.C.
52-1599407
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) x
3 SEC USE ONLY
_____________________________
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Number
of
Shares 7 SOLE VOTING POWER<PAGE>
-0-
Beneficially
Owned By
Each 8 SHARED VOTING POWER **6,666,667 (1)
Reporting Person 9 SOLE DISPOSITIVE POWER -0-
With: 10 SHARED DISPOSITIVE POWER **6,666,667 (1)<PAGE>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,666,667
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.8%
14 TYPE OF REPORTING PERSON*
OO (Limited Liability Company)
(1) Representing 6,666,667 common shares owned. Voting and
dispositive power is exercised solely in its capacity as sole
general partner of T. Rowe Price Recovery Fund II, L.P.
**See Item 5 for additional information
<PAGE>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO,. OF ABOVE PERSON
T. ROWE PRICE ASSOCIATES, INC.
52-0556948
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) x
3 SEC USE ONLY
_______________________________
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Number of
Shares 7 SOLE VOTING POWER -0-
Beneficially
Owned
By Each 8 SHARED VOTING POWER **6,666,667 (1)
Reporting
Person 9 SOLE DISPOSITIVE POWER -0-
With: 10 SHARED DISPOSITIVE POWER **6,666,667 (1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,666,667
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.8%
14 TYPE OF REPORTING PERSON*
IA
(1) Representing 6,666,667 common shares owned. Voting and
dispositive power is exercised solely in its capacity as managing
member of T. Rowe Price Recovery Fund II Associates, L.L.C.
**See Item 5 for additional information
<PAGE>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO,. OF ABOVE PERSON
HUBERT M. STILES, JR.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) x
3 SEC USE ONLY
____________________________
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S. Citizen
Number
of
Shares 7 SOLE VOTING POWER -0-
Beneficially
Owned By
Each 8 SHARED VOTING POWER **6,666,667 (1)
Reporting
Person 9 SOLE DISPOSITIVE POWER -0-
With: 10 SHARED DISPOSITIVE POWER **6,666,667 (1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,666,667
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.8%%
14 TYPE OF REPORTING PERSON*
IN
(1) Representing 6,666,667 common shares which may be deemed to
be beneficially owned by Mr. Stiles as a result of his position
as Director of T. Rowe Price Recovery Fund II Associates, L.L.C.,
the sole General Partner of T. Rowe Price Recovery Fund II, L.P.
Mr. Stiles disclaims beneficial ownership of such shares.
**See Item 5 for additional information
<PAGE>
Item 1. Security and Issuer.
This statement relates to the shares of common stock, $.01
par value per share (the "Common Stock") of Mego Mortgage
Corporation (the "Issuer") having its principal executive office
at 1000 Parkwood Circle, 5th Floor, Atlanta, Georgia 30339.
The Common Stock beneficially owned by the reporting persons
(the "Recovery II Shares") are those acquired by T. Rowe Price
Recovery Fund II, L.P. ("Recovery II") pursuant to a Common Stock
Purchase Agreement dated as of June 24, 1998 among the Issuer and
Recovery II (the "Purchase Agreement," attached hereto as Exhibit
7.2).
Item 2. Identity and Background.
(a) This statement is being filed by (i) Recovery II, a
Delaware limited partnership, (ii) T. Rowe Price Recovery Fund II
Associates, L.L.C., a Maryland limited liability company and the
sole general partner of Recovery II (the "General Partner"),
(iii) T. Rowe Price Associates, Inc., a Maryland corporation and
the sole manager of the General Partner (the "Manager") and
(iv) Hubert M. Stiles, Jr., the Vice President of the Manager
with principal responsibility over investment in the Issuer by
Recovery II. Recovery II, the General Partner, the Manager and
Hubert M. Stiles, Jr. are collectively referred to herein as the
"Reporting Persons."
(b) The address of the principal business and the
principal office of Recovery II, the General Partner and the
Manager and the business address of Hubert M. Stiles, Jr. is: 100
East Pratt Street, Baltimore, Maryland 21202.
(c) The principal business of Recovery II is to engage in
venture capital investments in securities of distressed
companies. The principal business of the General Partner is to
act as the sole general partner of Recovery II. The principal
business of the Manager is to act as manager of certain venture
capital funds affiliated with T. Rowe Price Associates, Inc., a
Maryland corporation. The principal occupations of Hubert M.
Stiles, Jr. are the Director of the General Partner and the Vice
President of the Manager.
(d) During the five years prior to the date hereof, none
of the reporting persons have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors
or civil infractions).
(e) During the five years prior to the date hereof, none of
the reporting persons have been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction
ending in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Recovery II is a limited partnership organized under
the laws of Delaware. The General Partner is a limited
liability company organized under the laws of Maryland. The
Manager is a corporation organized under the laws of Maryland.
Hubert M. Stiles, Jr. is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration:
On June 29, 1998 Recovery II acquired 6,666,667 shares of
the Common Stock of the Issuer for the total purchase price of
$10,000,000.00. The working capital of Recovery II was the
source of funds for this purchase.
Item 4. Purpose of Transaction:
Recovery II acquired the Issuer's securities for investment
purposes. Depending on market conditions, their continuing
evaluation of the business and prospects of the Issuer and other
factors, Recovery II may dispose of or acquire additional
securities of the Issuer. Except as otherwise described herein
or as expressly stated below, none of the Reporting Persons has
any present plans which relate to or would result in:
(a) The acquisition by any person of additional securities
of the Issuer, or the disposition of securities of the
Issuer;
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
the Issuer or of any of its subsidiaries;
(d) Any change in the present board of directors or
management of the Issuer, including any plans or
proposals to change the number or term of directors or
to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming
eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of
1934; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in the Securities of the Issuer:
(a) Recovery II is the record owner of 6,666,667 shares of
the Common Stock of the Issuer (the "Recovery II Shares").
As the sole manager of the General Partner, the Manager may
be deemed to own beneficially the Recovery II Shares. As the
individual President of the General Partner, Hubert M. Stiles,
Jr. may be deemed to own beneficially the Recovery II Shares.
The General Partner, the Manager and Hubert M. Stiles, Jr. each
disclaim beneficial ownership of the Recovery II Shares.
Each of the Reporting Persons may be deemed to own
beneficially 21.8% of the Common Stock, which percentage is
calculated based upon 30,566,667 shares of the Common Stock
disclosed by the Issuer as outstanding pursuant to the
recapitalization of the Issuer, to which Recovery II's purchase
of the Issuer's Common Stock under the Purchase Agreement is a
component thereof.
(b) Number of shares of Common Stock as to which each such
person has
(i) Sole power to vote or direct the vote:
0 shares for each Reporting Person;
(ii) Shared power to vote or direct the vote:
6,666,667 shares for each Reporting Person;
(iii) Sole power to dispose or to direct the
disposition:
0 shares for each Reporting Person;
(iv) Shared power to dispose or to direct the
disposition:
6,666,667 shares for each Reporting Person.
(c) Except as set forth above, none of the Reporting
Persons has effected any transaction in the Shares during the
last 60 days.
(d) No other person is known to have the right to receive
or the power to direct the receipt of dividends from, or any
proceeds from the sale of, the Common Stock beneficially owned by
any of the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer:
Pursuant to the terms of a certain Common Stock Purchase
Agreement dated June 24, 1998 (the "Purchase Agreement," attached
hereto as Exhibit 7.2) by and between the Issuer and Recovery II,
Recovery II purchased 6,666,667 shares of the Common Stock.
Pursuant to the terms of the Registration Rights Agreement
dated as of June 29, 1998 by and between the Issuer and Friedman,
Billings, Ramsey & Co. on behalf of Recovery II (and certain
other purchasers of the Issuer's capital stock) the "Registration
Rights Agreement", attached hereto and filed as Exhibit 7.3, the
Issuer has agreed to grant certain registration rights to the
Recovery II (and certain other purchasers of the Issuer's capital
stock).
Item 7. Material to be Filed as Exhibits:
Exhibit 7.1 - Agreement regarding filing of joint Schedule
13D.
Exhibit 7.2 - Common Stock Purchase Agreement dated June 24,
1998 by and between the Issuer and Recovery II.
Exhibit 7.3 - Execution Copy of the Registration Rights
Agreement dated June 29, 1998 by and between the
Issuer and Friedman, Billings, Ramsey & Co. on behalf
of Recovery II (and certain other purchasers of the
Issuer's capital stock).
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certify that the information set
forth in this statement is true, complete and correct.
Date: July 9, 1998
T. ROWE PRICE RECOVERY FUND II, L.P.
By: T. Rowe Price Recovery Fund II
Associates, L.L.C., Its General Partner
By: T. Rowe Price Associates, Inc.,
Its Managing Member
By:/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Vice President
T. ROWE PRICE RECOVERY FUND II ASSOCIATES, L.L.C.
By: T. Rowe Price Associates, Inc.,
Its Managing Member
By:/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Vice President
T. ROWE PRICE ASSOCIATES, INC.
By:/s/ Lucy B. Robins
Lucy B. Robins
Vice President
/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr., individually
EXHIBIT 7.1
AGREEMENT
This Agreement, dated as of July 9, 1998, is by and among
T. Rowe Price, Recovery Fund II, L.P., a Delaware limited
partnership, T. Rowe Price Recovery Fund II Associates, L.L.C., a
Maryland limited liability company, T. Rowe Price Associates,
Inc., a Maryland corporation and Hubert M. Stiles, Jr., an
individual.
Pursuant to Rule 13d-1(k)(1) promulgated under the
Securities Exchange Act of 1934, as amended, the parties hereby
agree to file a single statement on Schedule 13D on behalf of
each of the parties, and hereby further agree to file this
Agreement as an exhibit to such statement, as required by such
rule.
Executed and delivered as of the date first above written.
T. ROWE PRICE RECOVERY FUND II, L.P.
By: T. Rowe Price Recovery Fund II
Associates, L.L.C., Its General Partner
By: T. Rowe Price Associates, Inc.,
Its Managing Member
By:/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Vice President
T. ROWE PRICE RECOVERY FUND II ASSOCIATES, L.L.C.
By: T. Rowe Price Associates, Inc.,
Its Managing Member
By:/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Vice President
T. ROWE PRICE ASSOCIATES, INC.
By:/s/ Lucy B. Robins
Lucy B. Robins
Vice President
/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr., individually
MEGO MORTGAGE CORPORATION
AND
T. ROWE PRICE RECOVERY FUND II, L.P.
COMMON STOCK
PURCHASE AGREEMENT
Dated as of
June 24, 1998
<PAGE>
Table of Contents
Page
Section 1 Definitions 2
Section 2 Agreement to Sell and Purchase the Securities 2
Section 3 Issuance of the Certificates Representing the
Securities 2
Section 4. . . . .Representations, Warranties and Covenants of the Company 3
4.1.Organization and Qualification 3
4.2 Authorized Capital Stock 4
4.3.Due Execution, Delivery and Performance 4
4.4.Offering Memorandum and Additional Information 5
4.5 Legal Proceedings 5
4.6.No Material Adverse Change 6
4.7.Law and Regulation 6
4.8.Accounting Matters 7
4.9.Compliance with Securities Laws 8
4.10.Intangibles 8
4.11.Title 9
4.12.Contracts 9
4.13.No Violation 9
4.14.Transactions with Affiliates 9
4.15.No Manipulation 10
4.16.Taxes 10
4.17.Investment Company Act of 1940 10
4.18.Use of Proceeds 10
4.19.Certificates 10
4.21.Other Transactions 10
4.22.Best Efforts 10
4.23.Due Diligence 11
Section 5. Representations, Warranties and Covenants of Purchaser 11
5.1.Compliance with United States Securities Laws 11
5.2.Status of Purchaser 11
5.3 Restrictions on Re-Sale 12
5.4.Due Execution, Delivery and Performance of the
Purchase Agreement and Other Obligations 12
5.5.Representations, Warranties and Covenants at
Closing 13
Section 6. Survival of Representations, Warranties, Covenants and Agreements
13
Section 7. . . . . . . . . . . . . . . . . . . Conditions to Closing 13
7.1.Exchange Offer 13
7.2.Additional Equity 14
7.3.Waiver of Change of Control Payments 14
7.4.Registration Rights Agreement 14
7.5.Opinion of Greenberg Traurig 14
7.6.Comfort Letter 19
7.7.Offering Memorandum 19
7.8.Other Transactions 19
7.9.No Material Adverse Effect 20
7.10.Certificates 20
7.11.Consents 20
Section 8. . . . . . . . . . . . . . . . . . . . Conditions to Closing 20
Section 9. . . . . . . . . . . . . . . .Compliance with the Securities Act 20
9.1. Information Available 20
9.2. Legend Requirement 21
Section 10.. . . . . . . . . . . . . . . . . . . . . . . .Broker's Fee 21
Section 11.. . . . . . . . . . . . . . . . . . . . . . . . . . Notices 22
Section 12.. . . . . . . . . . . . . . . . . . . . . . . . .Amendments 22
Section 13.. . . . . . . . . . . . . . . . . . . . . . . . . .Headings 23
Section 14.. . . . . . . . . . . . . . . . . . . . . . . . Enforcement 23
Section 15.. . . . . . . . . . . . . . . . . . . . . . . Governing Law 23
Section 16.. . . . . . . . . . . . . . . . . . . . . . . .Severability 23
Section 17.. . . . . . . . . . . . . . . . . . . . . . . .Counterparts 23
Section 18.. . . . . . . . . . . . . . . . . . . . . . . . .Assignment 23
<PAGE>
MEGO MORTGAGE CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
This Common Stock Purchase Agreement is made as of
June 24, 1998, by and between T. Rowe Price Recovery Fund II,
L.P. (the "Purchaser"), and Mego Mortgage Corporation (the
"Company"), a Delaware corporation, with its principal offices at
1000 Parkwood Circle, 5th Floor, Atlanta, Georgia.
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, par value $.01 per share (the
"Common Stock"); (ii) a private offering (the "Series A Preferred
Stock Offering") by the Company of shares of its Series A
Convertible Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock"); and (iii) an exchange offer to occur
concurrent 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 12.5% Subordinated Notes Due 2001 ("New Notes") of the
Company or a combination thereof, subject to certain limitations,
for any and all of the outstanding 12.5% Senior Subordinated
Notes Due 2001 of the Company, subject to certain conditions (the
"Exchange Offer");
WHEREAS, the Company will enter into a Placement
Agreement (the "Placement Agreement"), with Friedman, Billings,
Ramsey & Company, Incorporated ("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 (together with the New Notes, the "Securities")
to be issued in the Offerings, and;
WHEREAS, the completion of the Offerings (the
"Closing") is scheduled to take place on June 26, 1998, or such
other date (the "Closing Date") as is agreed upon by the Company
and FBR;
WHEREAS, the Company wishes to offer and sell to
Purchaser, and Purchaser wishes to buy from the Company, on the
terms and conditions set forth herein, up to 6,666,667 shares of
Common Stock for a purchase price of $1.50 per share, or
$10,000,000 in aggregate;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained in this Purchase Agreement, the
parties agree as follows:
Section 1. Definitions. Capitalized terms not
otherwise defined herein shall have the meanings assigned to them
in the Company's Offering Memorandum, dated June 9, 1998 (the
"Offering Memorandum").
Section 2. Agreement to Sell and Purchase the
Securities. Subject to the terms and conditions of this Purchase
Agreement, that certain registration rights agreement (the
"Registration Rights Agreement") to be entered into by and
between the Company and Purchaser, as described in the Offering
Memorandum, and the Placement Agreement, the Company agrees to
sell and Purchaser agrees to buy 6,666,667 shares (the "Shares")
of Common Stock for a purchase price of $1.50 per share, or
$10,000,000 in the aggregate (the "Purchase Price"). Purchaser
shall pay the Purchase Price on the Closing Date in New York
Clearing House Funds, to the account of the Company.
The Company represents to Purchaser that, prior to the
Closing, the Company will be executing substantially identical
purchase agreements with respect to shares of Common Stock and
Series A Preferred Stock (except for the name and address of the
Purchaser and the number of shares of Series A Preferred Stock or
Common Stock, as the case may be, purchased) with certain other
investors (the "Other Purchasers") for an aggregate purchase
price of at least $30,000,000. Purchaser and Other Purchasers
are hereinafter sometimes referred to as the "Purchasers," and
this Purchase Agreement and such other Purchase Agreements are
hereinafter sometimes referred to as the "Purchase Agreements."
Section 3. Issuance of the Certificates
Representing the Securities. At the Closing, the Company will
cause to be delivered to the Purchaser, one certificate for the
Shares being purchased registered in the name of Purchaser as set
forth on the signature page hereof (or in such other name as may
be designated by Purchaser to the Company in writing upon payment
of the applicable purchase price therefor).
Section 4. Representations, Warranties and
Covenants of the Company. The Company hereby represents and
warrants to, and covenants with, Purchaser as follows:
4.1. Organization and Qualification. The Company
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company
has all requisite power and authority, and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or
regulatory bodies or any other person or entity, to own, lease
and license its assets and properties and conduct its business as
now being conducted and as described in the Offering Memorandum,
except for such authorizations, approvals, consents, orders,
licenses, certificates and permits the failure to so obtain would
not have a material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect"); no such
authorization, approval, consent, order, license, certificate or
permit contains a materially burdensome restriction other than as
disclosed in the Offering Memorandum; and the Company has all
such corporate power and authority, and has or will have as of
the Closing such authorizations, approvals, consents, orders,
licenses, certificates and permits as shall be necessary to enter
into, deliver and perform this Agreement, the Purchase Agreements
and the Other Transaction Documents (as defined in Section 4.3,
below) and to issue and sell the Securities (except as may be
required under state securities laws). The Company is duly
qualified to do business and is in good standing in every
jurisdiction where such qualification is required by controlling
law and where the failure to so qualify is reasonably likely to
have a Material Adverse Effect. The Company has no subsidiaries
that would be deemed to be "significant subsidiaries" for
purposes of Rule 1-02 of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
substituting in the tests set forth in such rule the figure "5%"
in each case for "10%."
4.2. Authorized Capital Stock. The authorized,
issued and outstanding capital stock of the Company is as set
forth in the Offering Memorandum. All issued and outstanding
shares of Company capital stock have been duly and validly
authorized and issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities
laws, and have not been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right of
first refusal or other similar right. All of the outstanding
shares of capital stock of the Company's subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable and are owned, directly or indirectly, by the
Company, free and clear of any lien, pledge, charge, security
interest or other encumbrance. The Shares have been duly
authorized and, when issued and sold pursuant to this Purchase
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Offering Memorandum, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of capital
stock of the Company or any subsidiary or any security
convertible into, or exercisable or exchangeable for, such
capital stock. The Shares conform in all material respects to
all statements in relation thereto contained in the Offering
Memorandum.
4.3. Due Execution, Delivery and Performance. The
execution, delivery and performance of each of this Agreement and
the Placement Agreement, the Registration Rights Agreement, the
Purchase Agreements entered into with the Other Purchasers
(collectively, the "Other Transaction Documents") by the Company
(a) have been (or prior to Closing will be) duly authorized by
all requisite corporate action of the Company and (b) will not
violate (i) the Certificate of Incorporation or Bylaws of the
Company, or (ii) any provision of any indenture, mortgage,
agreement, contract, or other instrument to which the Company or
any of its subsidiaries is bound or be in conflict with, or
result in a breach of or constitute (upon notice or lapse of time
or both) a default under any such indenture, mortgage, agreement,
contract, or other instrument or result in the creation or
imposition of any lien, security interest, mortgage, pledge,
charge or other encumbrance of any nature whatsoever upon any of
the properties or assets of the Company or any of its
subsidiaries, except for any such violations, conflicts, breaches
or defaults which have been waived in writing as of the Closing
or would not have a Material Adverse Effect. Upon execution and
delivery, this Agreement and the Other Transaction Documents will
constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except
insofar as the enforcement thereof may be limited by bankruptcy
law or other laws relating to or affecting the enforcement of
creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and except as rights to indemnity
or contribution may be limited under applicable law.
4.4. Offering Memorandum and Additional
Information. The Company has furnished, and Purchasers
acknowledge receipt of the Offering Memorandum dated June 9,
1998.
The Offering Memorandum when combined with the
documents incorporated by reference therein does not, and any
amendment or supplement thereto will not, contain any 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 not misleading. Each document incorporated by reference
into the Offering Memorandum complies in all material respects
with the requirements of the Exchange Act, and the Commission's
rules and regulations thereunder ("Exchange Act Regulations")
and, when read together with the other information in the
Offering Memorandum, does 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.
4.5. Legal Proceedings. There are no actions,
suits, investigations or proceedings pending or threatened other
than as disclosed in the Offering Memorandum (including the
documents incorporated by reference therein and provided to the
Purchasers) to which the Company or any of its subsidiaries is a
party or to which any of their properties is subject before or by
any court or governmental agency or both which is reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect; and to the knowledge of the Company, no such
actions, suits, investigations or proceedings are threatened by
any person, corporation or governmental agency or body.
4.6. No Material Adverse Change. Subsequent to
the respective dates as of which information is given in the
Offering Memorandum, and except as specifically described
therein, there has not been (i) any material adverse change in
the business, properties or assets described or referred to in
the Offering Memorandum, or the results of operations, condition
(financial or otherwise) earnings, operations, business or
business prospects, of the Company and its subsidiaries, taken as
a whole, (ii) any transaction entered into (whether binding or
nonbinding) by the Company and/or its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole,
except transactions in the ordinary course of business, (iii) any
obligation that is material to the Company and its subsidiaries,
direct or indirect, contingent or noncontingent, matured or
unmatured, absolute or otherwise, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary course
of business, (iv) any change in the capital stock (other than
upon the exercise of stock options described in the Offering
Memorandum) or outstanding indebtedness of the Company or its
subsidiaries (other than indebtedness incurred in the ordinary
course of business consistent with past practice), (v) any
dividend or distribution of any kind declared, paid or made on
the capital stock of the Company or any of its subsidiaries, or
(vi) any change in senior management or key employees, and no
such change or event is reasonably expected.
4.7. Law and Regulation. The Company and its
subsidiaries are in compliance with, and conduct their respective
businesses in conformity with all applicable laws and
governmental regulations governing the businesses conducted by
the Company and its subsidiaries, as the case may be, except for
failures to comply or conform which would not have a Material
Adverse Effect.
4.8. Accounting Matters. Deloitte & Touche LLP
("D&T"), which has audited the financial statements, together
with the related notes, of the Company as of August 31, 1997 and
1996, and for each of the three years ended August 31, 1997,
1996, and 1995, which are included in the Offering Memorandum,
are independent public accountants as required by the Securities
Act of 1933, as amended (the "Securities Act") and the Securities
Act Regulations (as if the Offering Memorandum was a prospectus
filed as part of a registration statement filed under the
Securities Act).
The financial statements included or incorporated by
reference in the Offering Memorandum comply as to form in all
material respects with applicable accounting requirements of the
Securities Act, the Securities Act Regulations, the Exchange Act,
and the Exchange Act Regulations, including Regulation S-X under
the Securities Act (as if such financial statements were filed
with or incorporated by reference in a registration statement
under the Securities Act), and said financial statements present
fairly the financial position of the Company and its Subsidiaries
on a consolidated basis as of the dates indicated and the results
of their operations for the periods specified; except as
otherwise stated in the Offering Memorandum, such financial
statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and
such financial statements are consistent in all material respects
with financial statements and other reports filed by the Company
and its Subsidiaries with the Commission; the supporting
schedules included are incorporated by reference in the Offering
Memorandum and present fairly the information required to be
stated therein. The selected and summary financial and
statistical data included in the Offering Memorandum present
fairly the information shown therein and have been compiled on a
basis consistent with the audited financial statements presented
therein.
The Company and each of its subsidiaries (i) make and
keep books and records which, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of assets;
(ii) maintain a system of internal accounting controls sufficient
to provide reasonable assurance that: (a) transactions are
executed in accordance with management's general or specific
authorizations, (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets, (c) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect thereto,
and (d) access to assets is permitted only with management's
general or specific authorization; and (iii) otherwise conform to
the requirements of the Exchange Act, Section 13(b) and
Regulation 13b-2 thereunder and shall continue to do so for so
long as Purchaser holds any Shares.
4.9. Compliance with Securities Laws. Assuming
(i) the accuracy of the representations and warranties of FBR and
the Purchasers as set forth in the Placement Agreement and the
Purchase Agreements, and (ii) that the Purchaser, the Other
Purchasers and the participants in the Exchange Offer are either
"qualified institutional buyers" (as defined in Rule 144A under
the Securities Act) or "accredited investors" (as defined in Rule
501(a) under the Securities Act) (the Company having received
representations from such persons to such effect), the Company
has complied with all applicable federal and state securities or
Blue Sky laws in connection with the Offerings and the Offerings
are or will be exempt from registration under such laws.
4.10. Intangibles. The Company owns or
possesses adequate and enforceable rights to use all trademarks,
trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business as described in the
Offering Memorandum. The Company has not received any notice of,
nor to its best knowledge is aware of, any infringement of or
conflict with asserted rights of others with respect to any
Intangibles which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
4.11. Title. The Company has good title to
each of the items of personal property which are reflected in the
financial statements referred to in Section 4.8 or are referred
to in the Offering Memorandum as being owned by it and valid and
enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Offering
Memorandum as being leased by it, in each case free and clear of
all liens, encumbrances, claims, security interests and defects,
other than those described in the Offering Memorandum and those
which do not and will not have a Material Adverse Effect.
4.12. Contracts. Each material contract or
agreement to which the Company is a party is in full force and
effect and is valid and enforceable by and against the Company in
accordance with its terms, assuming the due authorization,
execution and delivery thereof by each of the other parties
thereto. Except as disclosed in the Offering Memorandum, neither
the Company, nor to the best knowledge of the Company, any other
party is in default in the observance or performance of any term
or obligation to be performed by it under any such agreement, and
no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which default
or event would have a Material Adverse Effect. Except as
described in the Offering Memorandum, no default exists, and no
event has occurred which with notice or lapse of time or both
would constitute a default, in the due performance and observance
of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by
which it or its properties or business may be bound or affected
which default or event would have a Material Adverse Effect.
4.13. No Violation. The Company is not in
violation of any term or provision of its Certificate of
Incorporation or Bylaws or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse
Effect.
4.14. Transactions with Affiliates. No
transaction has occurred or is contemplated between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that would have been
required to be described in the Offering Memorandum if it were
part of a Registration Statement under the Securities Act and is
not described in the Offering Memorandum.
4.15. No Manipulation. The Company has not
taken, nor will it take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or
result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of any
of the Shares.
4.16. Taxes. The Company or its former
parent, Mego Financial Corp., has filed all Federal, state, local
and foreign tax returns which are required to be filed by the
Company through the date hereof, or has received extensions
thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same are
material and have become due.
4.17. Investment Company Act of 1940. The
Company is not, and will not become upon the issuance and sale of
the Securities and the application of net proceeds therefrom as
described in the Offering Memorandum under the caption "Use of
Proceeds," an "investment company" or, assuming FBR is not an
"investment company," an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
4.18. Use of Proceeds. The Company will apply
the proceeds from the Offerings as set forth in the Offering
Memorandum.
4.19. Certificates. Any certificates signed
by any officer of the Company or its subsidiaries, and delivered
to the Purchasers or to counsel for the Purchasers pursuant to
the terms of this Agreement shall be deemed a representation and
warranty by the Company to the Purchaser as to the matters
covered thereby.
4.21. Other Transactions. The material terms
of all of the transactions relating to the Recapitalization are
accurately disclosed in the Offering Memorandum.
4.22. Best Efforts. The Company shall
cooperate with Purchaser and shall use its reasonable best
efforts to do or cause to be done all things necessary or
appropriate on its part in order to effect the consummation of
the transactions contemplated under this Agreement.
4.23. Due Diligence. In order to permit
Purchaser to perform further due diligence, the Company shall
give to Purchaser and its accountants, counsel and other
authorized representatives reasonable access during normal
business hours throughout the period prior to the Closing Date to
all of its properties, books, records, contracts and other
documents relating to its business as Purchaser may reasonably
request, subject to the obligation of Purchaser and its
authorized representatives to maintain the confidentiality of all
non-public information concerning the Company obtained by reason
of such access.
Section 5. Representations, Warranties and
Covenants of Purchaser. Purchaser hereby represents, warrants
and covenants to the Company as follows:
5.1. Compliance with United States Securities
Laws. Purchaser understands and acknowledges that the Shares
have not been registered under the Securities Act, and that the
Shares may not be offered or sold in the United States or to, or
for the account or benefit of, any "U.S. person" (as defined in
Regulation S under the Securities Act), unless such Securities
are registered under the Securities Act or such offer or sale is
made pursuant to an exemption from the registration requirements
of the Securities Act. The Shares are being offered and sold in
reliance on an exemption from registration pursuant to Section
4(2) of the Securities Act and Rule 506 promulgated thereunder.
Purchaser further represents that it has read and understands the
investor notices and legends set forth in the Offering
Memorandum.
5.2. Status of Purchaser. Purchaser is purchasing
the Shares for its own account or for persons or accounts as to
which it exercises investment discretion. Such Purchaser is an
"accredited investor" (as defined in Rule 501(a) under the
Securities Act) and is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with
respect to investments in restricted securities and has
requested, received, reviewed and considered all information it
deems relevant in making a decision to execute this Purchase
Agreement and to purchase the Shares. Purchaser has agreed to
purchase the Shares for investment and not with a view to
distribution. To the extent that any certificate representing
the Shares is registered in the name of Purchaser's nominee,
Purchaser confirms that such nominee is acting as custodian for
Purchaser of the Shares represented thereby.
5.3. Restrictions on Re-Sale. Purchaser
understands that the Shares are only transferable on the books
and records of the Company and its Transfer Agent and Registrar
and that the Company and the Transfer Agent and Registrar will
not register any transfer of the Shares which the Company in good
faith believes violates the restrictions set forth in this
Section 5.3 or violates any state or federal securities laws.
Purchaser will not, directly or indirectly, voluntarily offer,
sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of)
its rights under this Purchase Agreement or the Shares otherwise
than in compliance with the Securities Act, any applicable state
securities or blue sky laws and any applicable securities laws of
jurisdictions outside the United States, and the rules and
regulations promulgated thereunder.
Purchaser understands that the Company intends to
register the Shares under the Securities Act as contemplated in
the Registration Rights Agreement. After registration of the
Shares under the Securities Act, Purchaser agrees to comply with
the prospectus delivery and all other requirements of the
Securities Act in connection with any sale or other disposition
of the Shares. Purchaser agrees that Purchaser or its broker
will deliver to each transferee a copy of a current prospectus
until the Company gives written notice to the Purchaser that
delivery of a current prospectus is no longer required.
Purchaser agrees to confirm with the Company that the prospectus
is in fact current and that the Shares may be lawfully sold prior
to any sale or other disposition by Purchaser.
5.4. Due Execution, Delivery and Performance of
the Purchase Agreement and Other Obligations. Upon approval of
this Agreement and the transactions contemplated herein by its
Board of Directors: Purchaser will have full right, power,
authority and capacity to enter into this Purchase Agreement and
to consummate the transactions contemplated hereby; the
execution, delivery and performance of this Purchase Agreement by
Purchaser will have been duly authorized by all requisite
corporate action of Purchaser; upon the execution and delivery of
this Purchase Agreement by Purchaser, this Purchase Agreement
shall constitute the legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with its
terms except insofar as the enforcement thereof may be limited by
bankruptcy law or other laws relating to or affecting the
enforcement of creditors' rights generally or by general
equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and except as
rights to indemnity and contribution may be limited under
applicable law.
5.5. Representations, Warranties and Covenants at
Closing. Each of the representations and warranties contained in
this Section 5 is true and correct as of the date of this
Purchase Agreement and will be true and correct as of the Closing
Date with the same effect as though such representations and
warranties had been made on and as of such date. Each of the
covenants contained in this Section 5 will have been performed as
of the Closing Date if performance is required as of such date by
this Section 5.
Section 6. Survival of Representations, Warranties,
Covenants and Agreements. Notwithstanding any investigation made
by either party to this Purchase Agreement, all representations,
warranties, covenants and agreements made by the Company and
Purchaser herein shall survive the execution of this Purchase
Agreement, the delivery of certificates representing the Shares
and the receipt of payment for the Shares.
Section 7. Conditions to Closing. The obligations
of the Purchaser hereunder are subject to (i) the accuracy of the
representations and warranties on the part of the Company in all
material respects on the date hereof, at the Closing Date, (ii)
the performance by the Company of its obligations hereunder in
all material respects, and (iii) the following further
conditions:
7.1. Exchange Offer. The Company shall have
consummated the Exchange Offer with respect to at least $76
million in aggregate principal amount of Original Notes.
7.2. Additional Equity. The Company shall have
consummated or sale of additional shares of Common Stock and
Series A Preferred Stock pursuant to the Offerings for aggregate
gross proceeds to the Company of not less than $30,000,000.
7.3. Waiver of Change of Control Payments. All
current and former directors, officers, employees and consultants
of the Company or any subsidiary who would be entitled as a
result of the consummation of the Recapitalization to receive
payments or other benefits pursuant to "change of control"
provisions of any agreement between such person and the Company
or any subsidiary shall have irrevocably waived their rights to
receive such payments or benefits and the Company shall have
irrevocably determined not to make such payments.
7.4. Registration Rights Agreement. The Company
and the Placement Agent shall have entered into the Registration
Rights Agreement as described in the Offering Memorandum.
7.5. Opinion of Greenberg Traurig. The Company
shall have furnished to the Placement Agent on the Closing Date
an opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A., counsel for the Company, addressed to the Purchaser and
dated the Closing Date and in form reasonably satisfactory to the
Purchaser, stating that:
(a) the authorized shares of capital stock
of the Company conform as to legal matters to the
description thereof contained in the Offering Memorandum
under the heading "Description of Capital Stock"; the
Company has an authorized capitalization as set forth in the
Offering Memorandum under the caption "Capitalization"; the
issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and
are fully paid and non-assessable; to such counsel's
knowledge, except as set forth in the Offering Memorandum,
there are no outstanding (i) securities or obligations of
the Company convertible into or exercisable or exchangeable
for any shares of capital stock of the Company, (ii)
warrants, rights, or options to subscribe for or purchase
from the Company any shares of capital stock or any such
convertible or exchangeable securities or obligations, or
(iii) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable
securities or obligation, or any such warrants, rights, or
options; the Shares have been duly authorized, and, when
issued and sold pursuant to this Purchase Agreement, will be
duly and validly issued, fully paid and nonassessable.
(b) the Company has been duly incorporated
and is validly existing and in good standing under the laws
of the State of Delaware with all requisite corporate power
and authority to own, lease and license its assets and
properties and conduct its business as now being conducted
and as described in the Offering Memorandum and to enter
into, deliver and perform this Agreement, the Purchase
Agreements and the Other Transaction Documents;
(c) the Company is duly qualified in or
registered by and in good standing as a foreign corporation
in each jurisdiction in which it conducts business excpet
where such failre to qualify would not have a material
adverse effect on the business of the Company;
(d) to such counsel's knowledge, except as
described in the Offering Memorandum, the Company is not in
breach of, or in default under (nor has any event occurred
that with notice, lapse of time, or both would constitute a
breach of or default under) its Certificate of Incorporation
or in the performance or observation of any obligation,
agreement, covenant, or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit
agreement, or any other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries
is a party or by which any of them or their respective
properties may be bound or affected or under any law,
regulation, or rule or any decree, judgment, or order
applicable to the Company or any of its subsidiaries, except
such breaches or defaults that are not reasonably likely to
have a Material Adverse Effect;
(e) the execution, delivery, and performance
of this Agreement and the Other Transaction Documents by the
Company and the consummation by the Company of the
transactions contemplated under this Agreement and the Other
Transaction Documents, as the case may be, do not and will
not conflict with, or result in any breach of, or constitute
a default under (nor constitute any event that with notice,
lapse of time, or both would constitute a breach of or
default under) (i) any provisions of the Company's
certificate of incorporation or by-laws, (ii) any provision
of any license, indenture, mortgage, deed of trust, loan or
credit agreement, or other agreement or instrument known to
such counsel and to which the Company or any subsidiary is a
party or by which any of them or their respective properties
may be bound or affected, or (iii) to such counsel's
knowledge, assuming (x) the accuracy of the representations
and warranties of the Company, FBR and the Purchasers set
forth in the Placement Agreement, the Purchase Agreements
and the Other Transaction Documents, and (y) that the
Purchaser, the Other Purchasers and the participants in the
Exchange Offer are either "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act) or
"accredited investors" (as defined in Rule 501(a) under the
Securities Act), any law or regulation or any decree,
judgment, or order applicable to the Company or any
subsidiary, except in the case of clause (ii) for such
conflicts, breaches, or defaults that have been waived or
individually or in the aggregate are not reasonably likely
to have a Material Adverse Effect;
(f) the Company has full corporate power,
and authority to enter into and perform this Agreement and
the Other Transaction Documents and to consummate the
transactions contemplated herein; this Agreement and the
Other Transaction Documents have been duly authorized,
executed, and delivered by the Company and will constitute
valid and binding agreements of the Company enforceable
against the Company in accordance with their terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights
generally, and by general principles of equity, whether
considered at law or in equity, and except as rights to
indemnity or contribution may be limited under applicable
law;
(g) assuming (x) the accuracy of the
representations and warranties of the Company, FBR and the
Purchasers set forth in the Placement Agreement, the
Purchase Agreements and the Other Transaction Documents, and
(y) that the Purchaser, the Other Purchasers and the
participants in the Exchange Offer are either "qualified
institutional buyers" (as defined in Rule 144A under the
Securities Act) or "accredited investors" (as defined in
Rule 501(a) under the Securities Act), no approval,
authorization, consent, or order of or filing with any
federal or, to such counsel's knowledge, state governmental
or regulatory commission, board, body, authority, or agency
is required in connection with the execution, delivery, and
performance by the Company of this Agreement and the Other
Transaction Documents or the consummation of the
transactions contemplated hereby and thereby by the Company,
or the sale and delivery of the Shares by the Company as
contemplated hereby, other than (i) the filing of a
certificate of designation of the Series A Preferred Stock
with the Secretary of State of Delaware, (ii) the filing of
a Current Report on Form 8-K, (iii) filings required
pursuant to the terms of the Registration Rights Agreement
and any other registration rights agreements entered into
pursuant to the Offerings and the Exchange Offer, and (iv)
as may be required pursuant to any state securities laws;
(h) to such counsel's knowledge, each of the
Company and its subsidiaries has all necessary licenses,
authorizations, consents, and approvals and has made all
necessary filings required under any federal, state, or
local law, regulation or rule, and has obtained all
necessary authorizations, consents, and approvals from other
persons, required to conduct their respective businesses, as
described in the Offering Memorandum, except to the extent
that any failure to have any such licenses, authorizations,
consents, or approvals would not, individually or in the
aggregate, have a Material Adverse Effect; to such counsel's
knowledge, neither the Company nor any of its subsidiaries
is in violation of, in default under, or has received any
notice regarding a possible violation, default, or
revocation of any such license, authorization, consent, or
approval or any federal, state, local, or foreign law,
regulation, or decree, order, or judgment applicable to the
Company or any of its subsidiaries, which would result in a
Material Adverse Effect; and no such license, authorization,
consent, or approval contains a materially burdensome
restriction that is not adequately disclosed in the Offering
Memorandum;
(i) the issuance and sale of the Shares by
the Company is not subject to preemptive or other similar
rights arising by operation of law, under the Certificate of
Incorporation or Bylaws of the Company or under any
agreement known to such counsel to which the Company or any
of its subsidiaries is a party;
(j) the form of certificate used to evidence
the shares complies in all material respects with all
applicable statutory requirements, with any applicable
requirements of the Certificate of Incorporation and Bylaws
of the Company and the requirements of The Nasdaq National
Market;
(k) the statements under the captions
"Business -- Government Regulation," "Description of the
Original Notes," "Description of the New Notes,"
"Description of Capital Stock" and "Certain Federal Income
Tax Consequences" in the Offering Memorandum, insofar as
such statements constitute a summary of the legal matters
referred to therein, constitute accurate summaries thereof
in all material respects;
(l) except as described in the Offering
Memorandum, to such counsel's knowledge, there are no
actions, suits, investigations or proceedings pending to
which the Company or any of its subsidiaries is a party or
to which any of their properties is subject before or by any
court or governmental agency or both, which is reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect,
(m) neither the Company nor any of its
subsidiaries is, or solely as a result of transactions
contemplated hereby and the application of the proceeds from
the sale of the Shares or the consummation of the
Recapitalization, will become an "investment company" or,
assuming that FBR is not an "investment company," a company
"controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "1940
Act").
In addition, such counsel shall state that they have
participated in conferences with the directors, officers and
employees of the Company and its independent public accountants
at which the contents of the Offering Memorandum were discussed
and, although such counsel is not passing upon and does not
assume responsibility for the accuracy, completeness, or fairness
of the statements contained in the Offering Memorandum (except as
and to the extent stated above), they have no reason to believe
that the Offering Memorandum, as of its date and as of the date
of such counsel's opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that,
in each case, such counsel need express no view with respect to
the financial statements and other financial and statistical data
included in the Offering Memorandum).
7.6. Comfort Letter. The Placement Agent shall
have received from Deloitte & Touche LLP, letters relating to the
Offering Memorandum dated as of the Closing Date addressed to the
Purchaser and in form and substance satisfactory to it.
7.7. Offering Memorandum. The Offering
Memorandum, as amended or supplemented after the date hereof,
shall not, in Purchaser's reasonable judgment, (i) disclose a
material change in the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company and its subsidiaries taken as a whole, as described
in the Offering Memorandum dated June 9, 1998, or (ii) contain an
untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
7.8. Other Transactions. There shall have been,
in Purchaser's reasonable judgment, no material change in the
terms of the transactions described in the Offering Memorandum.
7.9. No Material Adverse Effect. Between the time
of execution of this Agreement and the Closing Date no event
shall have occurred which has had or is reasonably likely to have
a Material Adverse Effect.
7.10. Certificates. The Company will, on the
Closing Date deliver to the Purchaser a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company
to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth in this
Agreement are true and correct as of such date and the conditions
set forth in Sections 7.1, 7.2, 7.3, 7.8, 7.9, and 7.11 of this
Agreement have been met. The Company shall have furnished to the
Purchaser such other documents and certificates as to the
accuracy and completeness of any statement in the Offering
Memorandum, the representations, warranties and statements of the
Company contained herein, and the performance by the Company of
its covenants contained herein, and the fulfillment of any
conditions contained herein as of the Closing Date as the
Purchaser may reasonably request.
7.11. Consents. The Company shall have
obtained in writing all consents of third parties necessary to
permit the consummation of the transactions contemplated by this
Agreement and the Other Transaction Documents and no such consent
shall contain any term or condition that Purchaser reasonably
deems to be materially disadvantageous to the Company or
Purchaser.
Section 8. Conditions to Closing. The obligations
of the Company hereunder are subject to (i) the accuracy of the
representations and warranties on the part of the Purchaser in
all material respects on the date hereof, at the Closing Date,
and (ii) the performance by the Purchaser of its obligations
hereunder in all material respects.
Section 9. Compliance with the Securities Act.
9.1. Information Available. So long as Purchaser
holds any shares of the Company's capital stock, the Company will
furnish to each Purchaser:
(a) as soon as practicable after available,
one copy of (i) its Annual Report to Shareholders, and (ii)
if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K, and (iii) each
of its Quarterly Reports to Shareholders and its Quarterly
Reports on Form 10-Q, and
(b) upon the reasonable request of
Purchaser, all other information of a kind that is generally
available to the public.
9.2. Legend Requirement. Purchaser hereby agrees
that the Shares will be subject to Section 5.3 hereof and to that
effect the following legend will appear on the Shares until such
time as the Company may deem such legend to be no longer required
under the federal or state securities laws:
The Securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, of
the United States of America (the "Act") and
may have been issued in reliance upon the
exemption set forth in Section 4(2) of the
Securities Act and Rule 506 promulgated
thereunder. The Securities represented by
this certificate may not be offered, sold,
transferred or otherwise disposed of in the
United States or to, of for the account or
benefit of, any "U.S. person" (as defined in
Regulation S) unless registered under the Act
or an exemption from the registration
requirements of the Act is available.
Section 10. Broker's Fee. .Purchaser acknowledges
that the Company has advised it that the Company intends to pay
FBR, the placement agent: (i) a fee (the "Offerings Fee") equal
to 6.0% of the gross proceeds received from the sale of the
shares of Common Stock (except for those shares sold to the
Purchaser) and Series A Preferred Stock sold in the Offerings and
shares of Common Stock (except for those shares sold to the
Purchaser or his affiliates) sold in the Rights Offering; and
(ii) a fee (the "Advisory Fee") of $1,000,000 as financial
advisor in connection with the Recapitalization. Purchaser
further acknowledges that the Company has advised it that the
Offering Fee is payable upon consummation of the Offerings in
Common Stock valued at the Offering Price and the Advisory Fee is
payable upon consummation of the Rights Offering in Common Stock
valued at the Offering Price. Purchaser further acknowledges
that the Company as advised it that the Company has also agreed:
(i) to reimburse FBR on request by the FBR for the FBR out-of-
pocket expenses, including, among other things, the fees and
expenses of legal counsel; and (ii) to indemnify FBR against
certain liabilities, including liabilities under the Securities
Act, and other liabilities incurred in connection with the
Offerings, and to contribute to payments FBR may be required to
make in respect thereof. The parties hereto hereby represent
that there are no other brokers or finders entitled to
compensation in connection with the sale of the securities
contemplated hereby.
Section 11. Notices. All notices, requests,
consents and other communications hereunder shall be in writing,
shall be mailed by registered air mail, postage prepaid, or sent
by facsimile transmission with a confirmation copy sent by
registered mail, and shall be deemed given when so mailed:
(a) if to the Company, to 1000 Parkwood
Circle, Atlanta, Georgia 30339, Attention: Jeffrey S.
Moore, or to such other person at such other place as the
Company shall designate to the Purchaser in writing;
(b) if to Purchaser, to T. Rowe Price
Recovery Fund II, L.P., 100 East Pratt Street, Baltimore,
Maryland 21202, Attention: H.M. Stiles, Jr., or at such
other address or addresses as Purchaser may have furnished
to the Company; or
(c) if to any transferee or transferees of
Purchaser, at such address or addresses as shall have been
furnished to the other parties hereto at the time of the
transfer or transfers, or at such other address or addresses
as may have been furnished by such transferee or transferees
to the other parties hereto in writing.
Section 3. Amendments. No amendment,
interpretation or waiver of any of the provisions of this
Purchase Agreement shall be effective unless made in writing and
signed by the parties to this Purchase Agreement.
Section 4. Headings. The headings of the sections,
subsections and subparagraphs of this Purchase Agreement are used
for convenience only and shall not affect the meaning or
interpretation of the contents of this Purchase Agreement.
Section 5. Enforcement. The failure to enforce or
to require the performance at any time of any of the provisions
of this Purchase Agreement shall in no way be construed to be a
waiver of such provisions, and shall not affect either the
validity of this Purchase Agreement or any part hereof or the
right of any party thereafter to enforce each and every provision
in accordance with the terms of this Purchase Agreement.
Section 6. Governing Law. This Purchase Agreement
and the relationships of the parties in connection with the
subject matter of this Purchase Agreement shall be governed by
and determined in accordance with the laws of the State of
Georgia in the United States of America.
Section 7. Severability. If any severable
provision of this Purchase Agreement is held to be invalid or
unenforceable by any judgment of a tribunal of competent
jurisdiction, the remainder of this Purchase Agreement shall not
be affected by such judgment, and the Purchase Agreement shall be
carried out as nearly as possible according to its original terms
and intent.
Section 8. Counterparts. This Purchase Agreement
may be executed in counterparts, all of which shall constitute
one agreement, and each such counterpart shall be deemed to have
been made, executed and delivered on the date set out at the head
of this Purchase Agreement without regard to the dates or times
when such counterparts may actually have been made, executed or
delivered.
Section 9. Assignment. This Purchase Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit of, as the case may be, and be enforceable by and
against the parties hereto and their respective successors and
assigns, but neither this Purchase Agreement nor any of the
rights, interests or obligations of the parties hereunder shall
be assigned by any of the parties hereto without the prior
written consent of each of the other parties.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
the day and year first above written.
MEGO MORTGAGE CORPORATION
By: /s/ Jeffrey S. Moore
Name: Jeffrey S. Moore
Title: President, CEO and
Director
T. ROWE PRICE RECOVERY FUND II,
L.P.
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
President
T. Rowe Price Recovery Fund II
Associates, L.L.C. as general
partner
<PAGE>
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, Ramsey & 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, Ramsey & 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
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.
"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 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 S-1, S-2, S-3 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"), 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.
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 preceeding
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 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 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 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 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 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
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 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 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 of West Virginia and Emanuel J.
Friedman) 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 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 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.
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.
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:
(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
1000 Parkwood Circle
Atlanta, Georgia 30339
Telecopier No.: (800) 694-6346
Attention: Edward B. Meyercord
With a copy to:
Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22209
Telecopier No.: (703) 312-9698
Attention: F. Burke Dempsey
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.
(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
<PAGE>
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.
MEGO MORTGAGE CORPORATION
By:
Name: Jeffrey S. Moore
Title: President and Chief
Executive Officer
FRIEDMAN, BILLINGS, RAMSEY & CO.,
INC.
By:
Name: F. Burke Dempsey
Title: Managing Director
