MEGO FINANCIAL CORP
EXHIBIT 10.211
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<TYPE>EX-10.211
<SEQUENCE>2
<FILENAME>a66375ex10-211.txt
<DESCRIPTION>EXHIBIT 10.211
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                                                                  EXHIBIT 10.211


                 SEVENTH AMENDMENT TO FORBEARANCE AGREEMENT AND
               AMENDMENT NO. 12 TO SECOND AMENDED AND RESTATED AND
                    CONSOLIDATED LOAN AND SECURITY AGREEMENT


             This Seventh Amendment to Forbearance Agreement and Amendment No.
12 to Second Amended and Restated and Consolidated Loan and Security Agreement
("Amendment") is made and entered into this ___ day of July, 2000 (the
"Effective Date"), by and among FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA" or "Lender"), PREFERRED EQUITIES CORPORATION, a Nevada
corporation ("Borrower") and MEGO FINANCIAL CORP., a New York corporation
("Guarantor") and has reference to the following facts:

             A. Lender and Borrower entered into a Second Amended and Restated
and Consolidated Loan and Security Agreement dated as of May 15, 1997 (the
"Original Loan Agreement") that evidences a loan from Lender to Borrower. The
Original Loan Agreement was amended by the Hartsel Springs Side Letter dated
February 18, 1998 (the "First Amendment"); by the Letter Agreement [Biloxi
Property] dated March 20, 1998 (the "Second Amendment"); by the Letter Agreement
[Headquarters Readvance] dated September 29, 1998 (the "Third Amendment"); by
the Amendment No. 4 to Second Amended and Restated and Consolidated Loan and
Security Agreement dated November 6, 1998 (the "Fourth Amendment"); by that
certain Forbearance Agreement and Amendment No. 5 to Second Amended and Restated
and Consolidated Loan and Security Agreement dated December 23, 1998 ("Amendment
5"), as the same was amended by a Letter Agreement dated February 8, 1999 (the
"Release Fee Letter") (the Amendment 5 and Release Fee Letter are collectively
called the "Fifth Amendment"); by a First Amendment to Forbearance Agreement and
Amendment No. 6 to Second Amended and Restated and Consolidated Loan and
Security Agreement dated May 7, 1999 (the "Sixth Amendment"); by a Second
Amendment to Forebearance Agreement and Amendment No. 7 to Second Amended and
Restated and Consolidated Loan and Security Agreement dated August 6, 1999 (the
"Seventh Amendment"); by a September 7, 1999 letter agreement regarding the
Additional Advance Note (the "Additional Advance Letter"); by a Third Amendment
to Forebearance Agreement and Amendment No. 8 to Loan and Security Agreement
dated November 9, 1999 (the "Eighth Amendment"); by a letter agreement dated
December 3, 1999 between the Borrower and Lender (the "Receivable Loan Lot Cap
Letter"); by a Fourth Amendment to Forebearance Agreement and Amendment No. 9 to
Loan and Security Agreement dated December 17, 1999 (the "Ninth Amendment"); by
a Fifth Amendment to Forebearance Agreement and Amendment No. 10 to Loan and
Security Agreement dated February 25, 2000 (the "Tenth Amendment"); and, a Sixth
Amendment to Forbearance Agreement and Amendment No. 11 to Second Amended and
Restated and Consolidated Loan Agreement (the "Eleventh Amendment"). The
Original Loan Agreement, First Amendment, Second Amendment, Third Amendment,
Fourth Amendment, Fifth Amendment, Sixth Amendment, Seventh Amendment,
Additional Advance Letter, Eighth


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Amendment, the Receivable Loan Lot Cap Letter, Ninth Amendment, Tenth Amendment
and Eleventh Amendment are collectively called the "Loan Agreement." Capitalized
terms used in this Amendment which are defined in the Loan Agreement shall have
the same meaning and definition when used herein.

             B. Borrower has requested the Lender to make certain modifications
to the Loan Agreement and the Loan, which the Lender is willing to do, upon and
subject to the terms and conditions set forth in this Amendment.

             Now, therefore, in consideration of the foregoing and for the good
and valuable consideration provided herein, Lender, Borrower and Guarantor agree
as follows:

             1. On the Effective Date, Exhibit I-C of the Loan Agreement is
deleted in its entirety and replaced with the Exhibit I-C that is attached to
this Amendment, and by this reference incorporated herein.

             2. The obligations of the Lender under this Amendment are
conditioned upon the satisfaction of the following conditions:

                    (a) This Amendment has been fully signed by the Borrower and
        Guarantor;

                    (b) The Borrower executing and delivering to the Lender such
        additional documents or instruments as required and approved by the
        Lender so as to fully perfect the liens and security interest of Lender
        granted under the Loan Agreement and this Amendment; and

                    (c) Borrower shall have reimbursed Lender for all of
        Lender's out-of-pocket costs and expenses including, without limitation,
        attorney's, engineers' and other consultants' fees and costs, incurred
        in connection with the documentation and closing of this Amendment.

             3. Borrower and Guarantor each represents and warrants that:

                    (a) All financial information and other documents it has
        provided to Lender in connection with this Amendment are true, complete
        and correct as of the date provided and the date hereof;

                    (b) There exists no Event of Default or Incipient Default,
        after giving effect to the then applicable provisions of this Amendment
        and other than the Existing Events of Default and the Unsolidified Lot
        Sales Default;

                    (c) After giving effect to this Amendment, there has been no
        material adverse change in any real property or in the business or
        financial condition



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        of Borrower and Guarantor since the date of the last financial
        statements submitted to Lender; and

                    (d) After giving effect to this Amendment (including the
        disclosures contained herein) and the most recent financial and
        litigation reports supplied to Lender, all representations and
        warranties by Borrower and Guarantor remain true, complete, and correct,
        in all material respects as of the date hereof.

             4. Guarantor acknowledges and agrees that (i) the Guarantee shall
remain in full force and effect, (ii) the obligations of the Guarantor under the
Guarantee are joint and several with those of each other Obligor (as that term
is defined in the Guarantee), (iii) Guarantor's liability under the Guarantee
shall continue undiminished by and shall include the obligations of the Borrower
under this Amendment and any other documents and instruments executed by
Borrower in connection with this Amendment and each of the other Documents, as
amended through the date hereof and (iv) all terms, conditions and provisions
set forth in this Amendment and any other documents and instruments executed by
Borrower in connection with this Amendment and each of the other Documents, as
amended through the date hereof, are hereby ratified, approved and confirmed.

             5. Borrower and Guarantor acknowledge and agree that they have no
defenses, counterclaims, setoffs, recoupments or other adverse claims or causes
of action in tort, contract or of any other kind existing against Lender or with
respect to the Documents, including without limitation, claims regarding the
amount, validity, perfection, priority and enforceability of the Documents.

             6. The Documents shall be deemed amended by the provisions of this
Amendment, as and when applicable and any conflict or inconsistency between this
Amendment and the Documents shall be resolved in favor of this Amendment. Except
as so amended, all other consistent terms and conditions of the Documents will
remain in full force and effect, and are hereby ratified and affirmed.

             7. Except as may be expressly provided herein, Borrower's and
Guarantor's respective obligations under the Documents shall remain in full
force and effect and shall not be waived, modified, superseded or otherwise
affected by this Amendment. This Amendment is not a novation, nor is it be
construed as a release, waiver, extension of forbearance or modification of any
of the terms, conditions, representations, warranties, covenants, rights or
remedies set forth in any of the Documents, except as expressly stated herein.

             8. This Amendment in no way acts as a waiver of any default of
Borrower or as a release or relinquishment of any of the liens, security
interests, rights or remedies securing payment and Performance of the Borrower's
Obligations or the enforcement thereof. Such liens, security interests, rights
and remedies are hereby ratified, confirmed, preserved, renewed and extended by
Borrower in all respects. Further, Lender's execution of this Amendment shall
not constitute a waiver (either express or implied) of the requirement that


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any further forbearance under or modification of the Loan Agreement or any other
Document shall require the express written approval of Lender. No such approval
(either express or implied) has been given as of the date hereof.

             9. Borrower and Guarantor acknowledge that Lender has performed,
and is not in default of, its obligations under the Documents; that there are no
offsets, defenses or counterclaims in tort, contract or otherwise, with respect
to any of Borrower's or Guarantor's or other party's obligations under the
Documents; and that Lender has not directed Borrower to pay or not pay any of
Borrower's payables.

             10. Borrower and Guarantor will execute and deliver such further
instruments and do such things as in the judgment of Lender are necessary or
desirable to effect the intent of this Amendment and to secure to Lender the
benefits of all rights and remedies conferred upon Lender by the terms of this
Amendment and any other documents executed in connection herewith.

             11. If any provision of this Amendment is held to be unenforceable
under present or future laws effective while this Amendment is in effect (all of
which invalidating laws are waived to the fullest extent possible), the
enforceability of the remaining provisions of this Amendment shall not be
affected thereby. In lieu of each such unenforceable provision, there shall be
added automatically as part of this Amendment a provision that is legal, valid
and enforceable and is similar in terms to such unenforceable provisions as may
be possible.

             12. Any further discussions by and among Borrower, Guarantor and
Lender, if any, and all such discussions in the past, together with any other
actions or inactions taken by and among Borrower, Guarantor and Lender, shall
not cause a modification of the Documents, establish a custom or waive (unless
Lender made such express waiver in writing), limit or condition the rights and
remedies of Lender under the Documents, all of which rights and remedies are
expressly reserved. All of the provisions of the Documents, including, without
limitation, the time of the essence provision, are hereby reiterated and if ever
waived are hereby reinstated (unless Lender made such express waiver in
writing), except as expressly provided herein. Notwithstanding anything to the
contrary contained herein or in any other instrument executed by the parties and
notwithstanding any other action or conduct undertaken by the parties on or
before the date hereof, the agreements, covenants and provisions contained
herein and the Loan Agreement shall constitute the only evidence of Lender's
agreement to forbear or to modify the Loan Agreement. Accordingly, no express or
implied consent to any further forbearances or modifications shall be inferred
or implied by Lender's execution of this Amendment. The Loan Agreement and this
Amendment, together with the other Documents, constitute the entire agreement
and understanding among the parties relating to the subject matter hereof, and
supersedes all prior proposals, negotiations, agreements and understandings
relating to such subject matter. In entering into this Amendment, Borrower
acknowledges that it is relying on no statement, representation, warranty,
covenant or agreement of any kind made


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by the Lender or any employee or agent of the Lender, except for the agreements
of Lender set forth herein.

             13. This Amendment shall not be binding upon Lender until accepted
by Borrower and Guarantor as provided for below. This Amendment may be executed
in counterpart, and any number of which have been executed by all parties shall
be deemed to constitute one original. Lender, its attorneys and agents may also
integrate into a single Amendment signature pages from separate counterpart
Amendments. The telecopied signature of a person shall be deemed an original
signature, may be relied upon by others and shall be binding upon the signer for
all purposes provided however that Borrower, Guarantor or any person otherwise
consenting hereto by telecopied signature shall confirm its telecopied signature
by signing and returning to Lender a copy of this Amendment with an original
signature.

             14. Borrower's and Guarantor's representatives are experienced and
knowledgeable business people and have been represented by independent legal
counsel who are experienced in all matters relevant to this Amendment,
including, but not limited to, bankruptcy and insolvency law. The parties hereto
have accepted and agreed to this Amendment after being fully aware and advised
of the effect and significance of all of its terms, conditions, and provisions.

             15. Unless otherwise specifically stipulated elsewhere in the
Documents, if a matter is left in the Documents or this Amendment to the
decision, right, requirement, request, determination, judgment, opinion,
approval, consent, waiver, satisfaction, acceptance, agreement, option or
discretion of Lender, its employees, Lender's counsel or any agent for or
contractor of Lender, such action shall be deemed to be exercisable by Lender or
such other person in its sole and absolute discretion and according to standards
established in its sole and absolute discretion. Without limiting the generality
of the foregoing, "option" and "discretion" shall be implied by use of the words
"if" or "may."

             16. The Recitals in this Amendment are incorporated into the body
hereof as fully set forth herein.

             17. THIS AMENDMENT HAS BEEN EXECUTED AND DELIVERED AND SHALL BE
PERFORMED IN THE STATE OF ARIZONA. THE PROVISIONS OF THIS AMENDMENT AND ALL
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA AND TO
THE EXTENT THEY PREEMPT SUCH LAWS, THE LAWS OF THE UNITED STATES. EACH OF
BORROWER, GUARANTOR AND LENDER: (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE
PROCESS, JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA
COUNTY, AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF ARIZONA, FOR THE PURPOSES OF SUIT, ACTION OR
OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO ANY DOCUMENT OR THE


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SUBJECT MATTER THEREOF, OR, IF LENDER SHALL INITIATE SUCH ACTION, IN THE COURT
IN WHICH SUCH ACTION IS INITIATED PROVIDED THAT SUCH COURT HAS JURISDICTION, AND
THE CHOICE OF SUCH VENUE SHALL IN ALL INSTANCES BE AT LENDER'S ELECTION; AND (B)
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT
TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
THE ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN ANY
INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH OF BORROWER, GUARANTOR AND LENDER HEREBY WAIVE THE RIGHT TO
COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM.

                            [SIGNATURE PAGE FOLLOWS]



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LENDER:

FINOVA CAPITAL CORPORATION,
a Delaware corporation


By:
   -----------------------------------

    Its:
        ------------------------------

BORROWER:

PREFERRED EQUITIES CORPORATION,
a Nevada corporation


By: /s/ Jon A. Joseph
   -----------------------------------

    Its: Vice President
        ------------------------------
Signed in the presence of:


--------------------------------------

GUARANTOR:

MEGO FINANCIAL CORP.,
a New York corporation


By: /s/ Jon A. Joseph
   -----------------------------------

    Its: Vice President
        ------------------------------

Signed in the presence of:


--------------------------------------



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STATE OF NEVADA              )
                             ) ss.
County of Clark              )

             The foregoing instrument was acknowledged before me this 13th day
of July 2000 by Jon A. Joseph as Vice President of PREFERRED EQUITIES
CORPORATION, a Nevada corporation, on behalf of the corporation.

                                       Janese Doyle
                                       ------------------------------------
                                                  Notary Public

My Commission Expires:

May 21, 2003


STATE OF NEVADA              )
                             ) ss.
County of Clark              )

             The foregoing instrument was acknowledged before me this ____ day
of July 2000, by Jon A. Joseph as Vice President of MEGO FINANCIAL CORP., a New
York corporation, on behalf of the corporation.

                                       Janese Doyle
                                       ------------------------------------
                                                  Notary Public

My Commission Expires:

May 21, 2003


STATE OF ARIZONA          )
                          ) ss.
County of Maricopa        )

             This instrument was acknowledged before me this ___ day of July
2000, by ______________________, as _______________ of FINOVA CAPITAL
CORPORATION, a Delaware corporation, on behalf of the corporation.



                                       ------------------------------------
                                       Notary


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