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Exhibit 10.56
AGREEMENT REGARDING SUBSERVICING
This Agreement Regarding Subservicing ("Agreement") is made as of June
20, 1997 by and among MEGO MORTGAGE CORPORATION ("Borrower"), PREFERRED EQUITIES
CORPORATION ("PEC") and THE FIRST NATIONAL BANK OF CHICAGO, as agent ("Agent")
for itself and the other "Lenders" from time to time under a Revolving Credit
Agreement of even date herewith among Agent, Borrower and certain banks which
are parties thereto (the "Credit Agreement").
Borrower and PEC have entered into a Loan Program Sub-Servicing
Agreement dated as of September 1, 1996, as amended by a side letter dated
December 1, 1996, copies of which are attached hereto as Exhibit A (as amended,
the "Subservicing Agreement"), pursuant to which PEC has, among other things,
agreed to perform certain accounting, payment processing and other
administrative services with respect to certain "Loans" (as defined in the
Subservicing Agreement) originated or purchased by Borrower from time to time.
Borrower, Agent and the Lenders have entered into the Credit Agreement
pursuant to which the Lenders have agreed to provide secured financing for the
Borrower's origination, acquisition and warehousing of certain of such Loans.
The Lenders have requested that this Agreement be executed and
delivered to confirm the terms under which PEC will, at the election of the
Agent following a "Default" (as defined under the Credit Agreement), continue to
service the Loans for First Chicago National Processing Corporation, in its
capacity as the "Collateral Agent" (as defined under the Credit Agreement), any
entity which purchases the Loans from the Collateral Agent, or any other
designee or nominee of the Collateral Agent.
THEREFORE, in consideration of the foregoing, PEC, Borrower and the
Agent, for itself and on behalf of the Lenders, agree as follows:
1. Termination of Subservicing Agreement; New Subservicing Agreement.
(a) Borrower and PEC agree that, notwithstanding the provisions of
Article 8 of the Subservicing Agreement, the Subservicing Agreement shall
terminate as to the Collateral and be of no further force or effect at the
election of the Agent following a Default under the Credit Agreement. Such
termination, if any, shall be effective upon PEC's receipt of notice from the
Agent that a Default has occurred and the Agent has elected to terminate the
Subservicing Agreement as to the Collateral.
(b) PEC agrees that, at the election of the Agent following a Default
under the Credit Agreement, PEC shall enter into an agreement (a "New
Subservicing Agreement") with any entity other than the Borrower which owns any
or all of the Loans constituting Collateral (each such entity being a "Successor
Owner"). Each such New Subservicing Agreement shall be in the form of the
Subservicing Agreement attached hereto as Exhibit A (provided that, at the
election of the Successor Owner, the New Subservicing Agreement shall be in the
form of the Subservicing Agreement prior to the modification by the December 1,
1996 side letter), with such modifications as are necessary to reflect the fact
that the Successor Owner (rather than Borrower) is the owner of the Loans and
such other modifications as may be mutually agreed upon by PEC and the Successor
Owner and with a modification of Section 8D of the Subservicing Agreement to
replace the phrase "ninety (90)" with the phrase "one hundred eighty (180)". The
Borrower hereby irrevocably directs and authorizes PEC to enter into such New
Subservicing Agreements at the request of the Agent upon presentation of a
statement by the Agent that a Default has occurred under the Credit
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Agreement, without any obligation on the part of PEC to inquire into the
existence of such a Default or to require any further confirmation or direction
from the Borrower.
2. No Current Assumption. None of the Agent, the Lenders or the
Collateral Agent shall be deemed by virtue of this Agreement to have assumed any
of the obligations of the Borrower under the Subservicing Agreement, each of
which obligations the Borrower covenants and agrees with the Lenders to perform
and observe as if this Agreement had not been made. None of the Agent, the
Lenders or the Collateral Agent are under any liability of any kind to PEC
under, pursuant to, or in respect of the Subservicing Agreement.
3. Agreements Regarding Subservicing Agreement. Borrower and PEC hereby
confirm to the Agent that the Subservicing Agreement is in full force and effect
and has not been amended, and, to the best knowledge of Borrower and PEC, no
breach or default on the part of either party now exists under the Subservicing
Agreement. PEC agrees that it will furnish to the Agent copies of all written
notices given to the Borrower with respect to any default of the Borrower under
the Subservicing Agreement, simultaneously with the giving of such notice to the
Borrower. The Borrower and PEC covenant and agree that except with the prior
written consent of the Agent on behalf of the Lenders in each instance, the
Borrower and PEC will not amend, change, modify, or terminate the Subservicing
Agreement, nor will the Borrower waive any provision thereof which would in any
material respect reduce the obligations of PEC thereunder.
4. Notices. All demands, notices and communications hereunder shall be
in writing and shall be given by registered or certified mail, return receipt
requested, by private delivery service or by telecopier at the following
addresses or telephone numbers, as the case may be, as follows:
a. if to the Borrower:
Mego Mortgage Corporation
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
President
with a copy to:
Xxxxxx X. Xxxxx
Mego Mortgage Corporation
0000 X.X. 000xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
b. if to the Agent or the Lenders:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
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with a copy to:
Xxxxxxx X. Xxxxx
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
c. if to PEC:
Preferred Equities Corporation
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Executive Vice
President and Chief Operating Officer
Fax No.: (000) 000-0000
or such other address or telephone number as may hereafter be furnished to the
other parties by like notice. Any such demand, notice or communication hereunder
shall be deemed to have been received on the date delivered to or received at
the premises of the addressee (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt).
5. Severability Clause. Any provision of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. To the extent permitted by applicable law, the
parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
6. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
7. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Illinois without regard to any conflicts of law
provisions and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with the laws of the State of Illinois, except
to the extent preempted by federal law.
8. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
9. Waivers. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.
10. Exhibits. The exhibits to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement.
11. Further Agreements. The parties each agree to execute and deliver
to the other such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or
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appropriate to effectuate the purposes of this Agreement.
12. Entire Agreement. This Agreement, together with the Credit
Agreement, and the Subservicing Agreement, constitutes the entire agreement of
the parties and supersedes all prior agreements, oral and written, between the
parties with respect to the subject matter hereof.
In witness of the foregoing the parties have executed and delivered
this Agreement as of the date first above written.
MEGO MORTGAGE CORPORATION THE FIRST NATIONAL BANK OF
CHICAGO, as agent for the Lenders
By: By:
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Name: Name:
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Title: Title:
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PREFERRED EQUITIES CORPORATION
BY:
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Name:
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Title:
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EXHIBIT A
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