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EXHIBIT 10.19
MEGO MORTGAGE CORPORATION
WAREHOUSING CREDIT AND SECURITY AGREEMENT
AMENDMENT NO. 1
This Agreement, dated as of August 9, 1996 (this "Agreement"), is between
Mego Mortgage Corporation, a Delaware corporation, and The First National Bank
of Boston. The parties agree as follows:
1. Credit Agreement; Definitions. This Agreement amends the Warehousing
Credit and Security Agreement dated as of August 11, 1995 among the parties
hereto (as in effect prior to giving effect to this Agreement, the "Credit
Agreement"). Terms defined in the Credit Agreement as amended hereby (the
"Amended Credit Agreement") and not otherwise defined herein are used with the
meaning so defined.
2. Amendment of Credit Agreement. Effective upon the date all the
conditions set forth in Section 4 hereof are satisfied (the "Amendment Date"),
which conditions must be satisfied no later than August 13, 1996, the Credit
Agreement is amended as follows:
2.1. Amendment of Section 1.1. The definitions of "Balance Sheet
Date," "Termination Date," "Title I Loan" and "Title I Note" in Section
1.1 of the Credit Agreement are amended to read in their entirety as
follows:
Balance Sheet Date means August 31, 1995.
Termination Date means the date which is the earliest to
occur of (i) August 8, 1997, or (ii) the date on which the Bank
accelerates the Obligations as the result of the occurrence of an
Event of Default.
Title I Loan means (i) an individual home improvement loan
insured by the FHA pursuant to Title I, Section 2 of the National
Housing Act, as amended and in effect from time to time, and (ii)
an individual home improvement loan that is not insured by the FHA;
provided, however, that the aggregate principal amount of all such
uninsured individual home improvement loans that
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constitute "Title I Loans" for purposes of the Loan Documents
shall not exceed $5,555,555 at any one time outstanding.
Title I Note means a note, bond or other evidence of
indebtedness (which may be secured by a Mortgage) which constitutes
a Title I Loan and which is in compliance with all Title I
Regulations if it is (or is to be) insured by the FHA.
Paragraphs (i)(d), (vi) and (xi) of the definition of Acceptable Loans
Receivable are amended to read in its entirety as follows:
(i)(d) If required by the Title I Regulations, a transfer of
Note Report, completed in full except for the box requiring the
FHA case number.
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(vi) Such Title I Loan and Title I Collateral is in all
respects as required by and in accordance with all applicable laws
and regulations governing the same, including, without limitation,
the Title I Regulations (if applicable) and the federal Consumer
Credit Protection Act and the regulations promulgated thereunder
and all applicable usury laws and restrictions.
* * *
(xi) The property covered by a Mortgage, if any, for such
Title I Loan is free and clear of all liens except in favor of the
Company (which has assigned any and all such liens to the Bank for
the benefit of the Banks) and except as permitted by the Title I
Regulations or, in the case of Title I Loans not subject to the
Title I Regulations, liens that would be permitted by the Title I
Regulations if such loans were in fact subject to the Title I
Regulations.
Paragraphs (b)(i) and (ii) of the definition of Availability are amended
to read in their entirety as follows:
(b) (i) the sum of
(A) 95% of the then outstanding principal balance of each
Acceptable Loan Receivable with respect to an FHA-insured Title I
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Loan other than Undocumented Title I Collateral, and
(B) 90% of the then outstanding principal balance of each
Acceptable Loan Receivable with respect to Title I Loans that are
not FHA-insured other than Undocumented Title I Collateral; plus
(ii) the lesser of
(A) the sum of (1) 95% of the then outstanding principal balance of
each Acceptable Loan Receivable with respect to an FHA-insured
Title I Loan plus (2) 90% of the then outstanding principal balance
of each Acceptable Loan Receivable with respect to Title I Loans
that are not FHA-insured and, in the case of Title I Loans
described in the foregoing clauses (1) and (2), constituting
Undocumented Title I Collateral as to which an Agreement to Pledge
has been delivered to the Bank and which has not been included in
the calculation of Availability for more than the Undocumented
Period; or
(B) $4,000,000.00;
The definition of Tangible Net Worth is amended by adding at the end
thereof the following provision:
", but not deducting excess servicing rights and mortgage servicing
rights pursuant to clauses (a) and (b) above."
The definition of Transfer of Note Report is amended to read in its
entirety as follows:
Transfer of Note Report means, with respect to each Title I
Note subject to Title I Regulations, the Title I Transfer of Note
Report as contained in the United States Department of Housing and
Urban Development form number HUD-27030 (8-86) or any update or
modification thereof. To the extent permissible under applicable
H.U.D. rules and regulations, one Transfer of Note Report may be
utilized for multiple Title I Notes.
The following definition is added to Section 1.1:
1996 Credit Agreement means the Credit Agreement dated June
28, 1996, as from time to time in effect, between Mego
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Mortgage Corporation and The First National Bank of Boston, as
Agent for itself and certain other lenders.
2.2. Amendment of Section 4.2. Section 4.2(a)(i) of the Credit
Agreement is amended to read in its entirety as follows:
(i) the sum of (A) ninety-five percent (95%) of the proceeds
of any sale of Title I Collateral representing insured Title I
Loans made pursuant to Section 4.1 above, plus (B) ninety percent
(90%) of the proceeds of any sale of Title I Collateral
representing uninsured Title I Loans made pursuant to Section 4.1
above, or
2.3. Amendment of Section 6.5. Section 6.5 of the Credit Agreement
is amended by replacing the date "August 31, 1994" with the date "August
31, 1995."
2.4. Amendment of Section 6.16. Section 6.16 of the Credit
Agreement is amended to read in its entirety as follows:
6.16. Representations Under Master Purchase Agreement. The
Company remakes and reaffirms all of its representations set forth
in the Master Purchase Agreement as if set forth at length herein,
other than representations that (a) the Title I Loans are not
subject to liens since the Company has granted liens to the Bank,
(b) the Title I Loans are all subject to the Title I Regulations
since Greenwich Capital has accepted non-FHA insured home
improvement loans under the Master Purchase Agreement and (c) are
not applicable to loans that are not subject to the Title I
Regulations.
2.5. Amendment of Section 8.1. Section 8.1(a) of the Credit
Agreement is amended to read in its entirety as follows:
(a) Indebtedness to the Bank arising under any of the Loan
Documents or Indebtedness arising under the 1996 Credit Agreement;
2.6. Amendment of Section 8.2. Clause (ii) of Section 8.2 of the
Credit Agreement is amended to read in its entirety as follows:
(ii) the encumbrances granted to the Bank hereunder and the
encumbrances granted under the 1996 Credit Agreement;
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Clause (iv) of Section 8.2 of the Credit Agreement is amended by
replacing the figure "$1,000,000.00" with "$2,000,000.00".
2.7. Amendment of Section 9. Section 9(a) of the Credit Agreement
is amended to read in its entirety as follows:
(a) The Company will not at any time permit its Tangible Net
Worth to be less than the sum of (a) $12,500,000 plus (b) the
amount by which Tangible Net Worth has been increased after August
31, 1995 as a result of capital contributions, the issuance of
capital stock or partnership interests of the Company or any of its
Subsidiaries, the issuance of warrants, options or other rights to
acquire such capital stock or partnership interest plus (c) 50% of
net income (determined in accordance with GAAP) (if positive) for
the period beginning on May 1, 1996 and ending with the most
recently completed month.
2.8. Amendment of Section 12.1. Section 12.1 of the Credit
Agreement is amended so that:
(a) the figure "$1,000,000.00" in paragraph (f) is replaced
with "$500,000",
(b) the figure "$250,000.00" in paragraph (h) is replaced
with "$500,000";
(c) paragraph (j) reads in its entirety as follows:
(j) Mego Financial Corp. shall cease to own legal and
beneficial title to at least two-thirds of the outstanding
capital stock of the Company;
(d) paragraph (m) reads in its entirety as follows:
(m) Mego Financial Corp. shall cease to own legal and
beneficial title to at least two-thirds of the outstanding
capital stock of Preferred Equities Corporation;
2.9. Amendment of Exhibit D. Exhibit D to the Credit Agreement is
amended to read as set forth in Exhibit D hereto.
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3. Representations and Warranties. The Company represents and
warrants as follows:
3.1. Legal Existence, Organization. The Company is duly organized
and validly existing and in good standing under the laws of the
jurisdiction of its organization, with all power and authority,
corporate, partnership or otherwise, necessary (a) to enter into
and perform this Agreement, the Amended Credit Agreement and the other
Loan Documents to which it is party and (b) to own its properties and
carry on the business now conducted or proposed to be conducted by it.
The Company has taken all corporate or other action required to make the
provisions of this Agreement and the Amended Credit Agreement the valid
and enforceable obligations they purport to be.
3.2. Enforceability. The Company has duly authorized, executed and
delivered this Agreement. Each of this Agreement and the Amended Credit
Agreement is the legal, valid and binding obligation of the Company and
is enforceable against it in accordance with its terms.
3.3. No Legal Obstacle to Agreements. Neither the execution,
delivery or performance of this Agreement, nor the performance of the
Amended Credit Agreement, nor the consummation of any other transaction
referred to nor contemplated by this Agreement, nor the fulfillment of
the terms hereof or thereof, has constituted or resulted in or will
constitute or result in:
(1) any breach or termination of the provisions of any agreement,
instrument, deed or lease to which the Company is a party or by which it
is bound, or of the charter documents or by-laws of the Company;
(2) the violation of any law, judgment, decree or governmental
order, rule or regulation applicable to the Company;
(3) the creation under any agreement, instrument, deed or lease of
any encumbrance (other than encumbrances on the Collateral which secure
the Obligations) upon any of the assets of the Company; or
(4) any redemption, retirement or other repurchase obligation of
the Company under any charter document, by-law, agreement, instrument,
deed or lease.
No approval, authorization or other action by, or declaration to or
filing
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with, any governmental or administrative authority or any other
Person is required to be obtained or made by the Company in connection
with the execution, delivery and performance of this Agreement or the
performance of the Amended Credit Agreement, or the consummation of the
transactions contemplated hereby or thereby.
3.4. Defaults. Immediately before and after giving effect to the
amendments set forth in Section 2, no Default will exist.
3.5. Incorporation of Representations and Warranties. The
representations and warranties set forth in Section 6 of the Amended
Credit Agreement are true and correct on the date hereof as if originally
made on and as of the date hereof.
4. Conditions. The effectiveness of this Agreement shall be subject to
the satisfaction of the following conditions, which conditions must be
satisfied prior to August 14, 1996 or this Agreement shall terminate:
4.1. Legal Opinion. On the Amendment Date, the Bank shall have
received from Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx, P.A.,
special counsel for the Company, their opinion with respect to the
transactions contemplated by this Agreement, which opinion shall be in
form and substance satisfactory to the Bank. The Company authorizes and
directs its counsel to furnish the foregoing opinion.
4.2. Perfection of Security. The Company shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such UCC financing statements, security agreements, notices,
transfer powers and other instruments as the Bank may have requested in
order to perfect the security interests and encumbrances purported or
required pursuant to the Loan Documents to be created in the Collateral.
4.3. Officer's Certificate. The representations and warranties of
the Company set forth or incorporated by reference herein shall be true
and correct as of the Amendment Date as if originally made on and as of
the Amendment Date; no Default shall have occurred on or prior to the
Amendment Date or hereby; and the Bank shall have received a certificate
to these effects signed by an officer of the Company in the event the
Amendment Date occurs after the date hereof.
4.4. Proper Proceedings. This Agreement, each other Loan Document
and the transactions contemplated hereby and thereby shall
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have been authorized by all necessary proceedings of the Company and any
of its Affiliates party thereto. All necessary consents, approvals and
authorizations of any governmental or administrative agency or any other
Person with respect to any of the transactions contemplated hereby or by
any other Loan Document shall have been obtained and shall be in full
force and effect. The Bank shall have received copies of all documents,
including certificates, records of corporate and partnership proceedings
and opinions of counsel, which the Bank may have reasonably requested in
connection therewith, such documents where appropriate to be certified by
proper corporate, partnership or governmental authorities.
5. Further Assurances. The Company will, promptly upon the request of
the Bank and from time to time, execute, acknowledge, deliver, file and record
all such instruments and notices, and take all such other action, as the Bank
deems necessary or advisable to carry out the intent and purposes of this
Agreement.
6. General. The Amended Credit Agreement and all of the Loan Documents
are each confirmed as being in full force and effect. This Agreement, the
Amended Credit Agreement and the other Loan Documents referred to herein or
therein constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. Each of this Agreement
and the Amended Credit Agreement is a Loan Document and may be executed in any
number of counterparts, which together shall constitute one instrument, and
shall bind and inure to the benefit of the parties and their respective
successors and assigns, including as such successors and assigns all holders of
any Note. This Agreement shall be governed by and construed in accordance with
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
MEGO MORTGAGE CORPORATION
By /s/
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Title:
THE FIRST NATIONAL BANK OF BOSTON
By /s/
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Title:
Each of the undersigned consents to the foregoing amendment and confirms
that the Loan Documents to which it is party remain in full force and effect:
MEGO FINANCIAL CORP.
By /s/
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Title:
PREFERRED EQUITIES CORPORATION
By /s/
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Title:
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The undersigned consents to the foregoing amendment and confirms that (a)
the Loan Documents to which it is party, including the Master Purchase
Agreement and the related Collateral Assignment and Pricing Letters remain in
full force and effect and (b) non-FHA insured home improvement loans pledged
under the Credit Agreement are included in the Master Purchase Agreement and
the related Collateral Assignment and Pricing Letters:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By /s/
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Title:
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