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EXHIBIT 10.57
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of April 17, 1997 (as
amended, supplemented or otherwise modified from time to time, this "PLEDGE
AGREEMENT"), between MEGO MORTGAGE CORPORATION, a Delaware corporation (the
"BORROWER"), having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇; ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC., a Delaware corporation (the "LENDER"), having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇; ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Greenwich Capital Markets, Inc., as Initial Purchaser, the
Borrower, as Seller and Servicer, and Mego Financial Corp. have entered into the
Amended and Restated Master Loan Purchase and Servicing Agreement, dated as of
October 1, 1996 (the "PURCHASE AGREEMENT"), and the other Purchase Documents (as
defined below);
WHEREAS, the Borrower wishes to borrow certain sums from the Lender
hereunder and the Lender is willing, upon the terms and conditions set forth
below and in the Note (as defined below in the Note), to lend such sums to the
Borrower, in order to permit the Borrower to finance residual and interest-only
securities retained by the Borrower or its subsidiaries in connection with
certain securitization transactions entered into by the Borrower or its
subsidiaries;
WHEREAS, the Borrower is executing concurrently herewith the Promissory
Note, dated of even date herewith, to the order of the Lender, evidencing the
Advances (as defined below) made thereunder to the Borrower in a maximum
aggregate principal amount not to exceed $11,000,000.00 (the "NOTE"); and
WHEREAS, the Lender is willing to make the Advances to the Borrower
secured by the pledge by the Borrower of the Collateral (including the
Additional Collateral) (each as defined below);
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrower and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in the Note. As used herein,
the following terms shall have the following meanings:
"BORROWER" shall have the meaning specified in the introductory
paragraph hereof.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banking institutions in New York, New York, Atlanta, Georgia or
Greenwich, Connecticut are authorized or required by law or executive order to
be closed.
"CERTIFICATES" means, collectively, any residual and/or interest-only
securities or instruments retained by the Borrower or any of its subsidiaries
and issued pursuant to any pooling and servicing agreement, indenture or trust
agreement in connection with transactions in which the Lender or any of its
subsidiaries acts as an underwriter or placement agent and any other instrument
which is acceptable to the Lender in its sole discretion and has been confirmed
as such in writing by the Lender.
"COLLATERAL" shall have the meaning specified in Section 2.1 hereof.
"COLLATERAL REQUIREMENT" means, with respect to the Collateral, an
aggregate amount equal to the sum of (i) with respect to Advances made in
respect of any Certificate that is a residual certificate, 166 2/3% of the
aggregate outstanding principal amount of such Advances plus accrued interest
(i.e. a 60% advance rate); and (ii) with respect to Advances in respect of any
Certificate that it is an interest-only certificate, 133 1/3% of the aggregate
outstanding principal amount of such Advances plus accrued interest (i.e. a 75%
advance rate).
"CURRENT MARKET VALUE" means, with respect to any Collateral on any
day, the fair market value of such Collateral on such day as determined in good
faith by the Lender, applying standards of commercial reasonableness that are
customary in the industry.
"DELIVERY" means a delivery of Collateral to the Lender in accordance
with Section 2.2 hereof.
"EVENT OF DEFAULT OF BORROWER" has the meaning set forth in Section
5.1 hereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation, government, or state,
or any political subdivision thereof, or any court, stock exchange, entity or
agency exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"INDEBTEDNESS" means, when used with reference to any Person, any
indebtedness or other obligation created, incurred, assumed or guaranteed by a
party or with respect to which such Person has become liable, directly or
indirectly, contingently, secondarily or otherwise (other than by endorsement of
instruments in the course of collection), including without limitation,
liability by way of agreement to sell and repurchase any asset, liability
relating to the issuance of letters of credit or other forms of payment
guarantee or otherwise to insure a creditor against loss, and any indebtedness
representing or incurred to finance the acquisition
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of any asset acquired by such Person or to enable such Person to make a loan or
extend credit to any other party.
"LENDER" shall have the meaning specified in the introductory
paragraph hereof.
"LOAN DOCUMENTS" means, collectively, the Note, this Pledge Agreement,
the Repurchase Agreement and any other documents evidencing or relating to the
Loan or the Collateral or any other security which may now or hereafter be given
as further security for or in connection with the Loan.
"NOTE" shall have the meaning specified in the recitals hereof.
"PERSON" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, or governmental entity (or any department, agency
or political subdivision thereof), or any other entity.
"PLEDGE AGREEMENT" shall have the meaning specified in the
introductory paragraph hereof.
"PURCHASE DOCUMENTS" shall have the meaning specified in Section 4.6
hereof.
"REPURCHASE AGREEMENT" shall mean that certain PSA Master Repurchase
Agreement, dated as of __________, 1996, between the Borrower and Greenwich
Capital Markets, Inc, an affiliate of the Lender.
ARTICLE II
PLEDGE AND DELIVERY OF COLLATERAL;
MANAGEMENT OF COLLATERAL
2.1 Security. As security for the payment of all obligations,
liabilities and indebtedness of the Borrower to the Lender, whether now or
hereafter owing or existing, including all obligations under this Pledge
Agreement, the Note and the other Loan Documents, and for the payment,
performance and discharge of all other obligations or undertakings now or
hereafter made for the benefit of the Lender under this Pledge Agreement, the
Note, the other Loan Documents or under any other agreement, promissory note or
undertaking now existing or hereafter entered into by the Borrower with or to
the Lender pursuant to the terms hereof, or otherwise, including any guaranty or
surety obligations of the Borrower owed to the Lender, the Borrower hereby
pledges and assigns to the Lender, and grants to the Lender, a continuing lien
and first priority security interest in, all of the Borrower's right, title and
interest in, to and under: (a) the Certificates; (b) the property identified on
any Confirmation of Advance (as defined in the Note) or delivered to the Lender
pursuant to Section 2.4 herein; (c) any other property held by the Lender or any
of its affiliates, from time to time, including any property delivered to
Greenwich Capital Markets, Inc. pursuant to the Repurchase Agreement, or
securing any other obligation of the Borrower
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to the Lender or any of its affiliates; and (d) all proceeds, payments, income,
products and profits derived from or related to the above described property
(all of the foregoing, together with any Additional Collateral (as hereinafter
defined), are collectively referred to herein as the "COLLATERAL").
The above-described security interests shall not be rendered void by
the fact that no obligations, liabilities or indebtedness secured by the
Collateral exist as of any particular date, but shall continue in full force and
effect until the filing of termination statements or statements of partial
release signed by the Lender with respect to the Collateral. The Borrower will
pay all filing, recording, search and other expenses reasonably incurred by the
Lender with respect to perfection of the Lender's security interest under this
Pledge Agreement and the confirmation of the priority of the Lender's security
interest in the Collateral.
2.2 Delivery of Collateral. Delivery of Collateral to the Lender or its
agent under this Pledge Agreement shall be made in the following manner: (i) in
the case of cash proceeds on the Collateral, by wire transfer of immediately
available funds to the Lender; (ii) in the case of certificated securities,
including the Certificates, by physical delivery of the certificates evidencing
such Collateral to the Lender or its designee, whenever possible in the name of
the Lender, and in all other instances, in suitable form for delivery and
transfer, accompanied by duly executed instruments of transfer or assignment in
blank or such other documentation as may be necessary to effect transfer to the
Lender whereupon the Lender may take such steps as it deems necessary to effect
the recordation or re-registration of such Collateral in its name; and (iii) in
the case of any other Collateral (such Collateral to be subject to the written
approval of the Lender, which approval may be withheld in the sole discretion of
the Lender), in such manner as the Lender shall agree to in writing. All
Collateral shall be delivered free and clear of all liens and security interests
other than the lien and security interest created in favor of the Lender under
this Pledge Agreement.
2.3 Initial Collateral. On any day that an Advance is funded, the
Borrower shall make Delivery to the Lender of Collateral satisfactory to the
Lender in an amount so that the Current Market Value of the Collateral
(determined as of the close of business on the Business Day immediately
preceding such Delivery) is at least equal to the Collateral Requirement.
2.4 Additional Collateral. If the Lender notifies the Borrower that the
Current Market Value of the Collateral at the close of business on any Business
Day is below the Collateral Requirement, the Borrower shall, on the next
Business Day, either: (a) prepay such Advances (together with interest thereon)
in part or in whole; or (b) make Delivery to the Lender of additional Collateral
("ADDITIONAL COLLATERAL") in the form satisfactory to the Lender, such that the
aggregate Current Market Value of the Collateral (including the Additional
Collateral) (determined as of the Business Day prior to such Delivery) is not
less than the Collateral Requirement.
2.5 Payments on Collateral. Each of the parties hereto expressly
acknowledge and agree that any and all distributions received by the Borrower in
respect of the Collateral will be required to be remitted directly to the Lender
until the Lender notifies the Borrower in writing that all Advances have been
repaid in full and this Pledge Agreement, the Note and each of the Loan
Documents has terminated.
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2.6 Application of Collections. The Lender will apply all funds
received with respect to the Collateral in accordance with Article III of the
Note.
2.7 Setoff. If an Event of Default of Borrower shall have occurred and
be continuing, the Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set-off and apply any and all
deposits and any and all indebtedness or other amounts at any time owing by the
Lender to or for the credit or the account of the Borrower against any and all
of the obligations of the Borrower now or hereafter existing under this Pledge
Agreement or any other Loan Documents held by the Lender, irrespective of
whether or not the Lender shall have made any demand under this Agreement or
such other Loan Document and although such obligations may be unmatured. The
Lender agrees to notify the Borrower promptly after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity or effectiveness of any such set-off. The rights
of the Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which the Lender may have.
2.8 Rights in the Collateral. The Borrower shall not have the right to
modify, amend or waive any terms or conditions of the Collateral, or any rights
or interest therein, without the Lender's prior written consent. The Lender (if
it has not previously done so) may take such steps as it deems necessary to
effect the recordation or re-registration in its name of any Collateral. Lender
may repledge and rehypothecate the Collateral, on such terms as Lender deems
appropriate in its sole discretion.
2.9 Secured Party. This Pledge Agreement shall constitute a security
agreement, and the Lender shall have all of the rights in the Collateral of a
secured party, under Articles 8 and 9 of the Uniform Commercial Code as enacted
in the State of New York.
ARTICLE III
FURTHER ASSURANCES
The Borrower shall at all times and at its own expense take any and all
necessary actions, including, without limitation, making, executing, delivering,
recording, registering, or filing all such financing statements, continuation
statements, other instruments and documents, acts, deeds, conveyances, pledges,
assignments and transfers, or cause the same to be taken, as may be reasonably
requested by the Lender to assure it with respect to its first priority
perfected security interest in the Collateral granted under this Pledge
Agreement, and in order to fully effect the purposes of this Pledge Agreement,
and the Borrower agrees not to take any actions or suffer to exist any
conditions that could have an adverse effect on the Lender's rights or
privileges (including, without limitation, the security interest in the
Collateral) granted hereunder.
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ARTICLE IV
COVENANTS
4.1 No Liens. Except as permitted pursuant to a release by the Lender
pursuant to Section 2.9 hereof, the Borrower shall not, without the prior
written consent of the Lender, in any manner transfer, assign or further
encumber or permit the encumbrance of the Borrower's interest in the Collateral.
4.2 Delivery of Collateral. The Borrower shall promptly deliver to the
Lender if and when received by the Borrower any document or instrument
evidencing the Collateral in its possession or control not previously delivered
to the Lender.
4.3 Notices. The Borrower covenants that it shall at all times give the
Lender prompt written notice of any material adverse change in the business,
operations, properties, condition (financial or otherwise) or prospects of the
Borrower or any event that with the passage of time, the giving of notice or
both could constitute an Event of Default of Borrower.
4.4 Net Worth. The Borrower shall at all times during the term of this
Pledge Agreement maintain a "NET WORTH" (i.e., the excess of total consolidated
assets over total consolidated liabilities determined in accordance with GAAP)
equal to the greater of (a) $35,000,000.00 and (b) on any date following the
Borrower's fiscal year-end 1997, 80% of the Net Worth (as determined above) of
the Borrower as the end of the Borrower's immediately preceding fiscal year.
4.5 Debt-to-Net Worth Ratio: The Borrower shall at all times during the
term of this Pledge Agreement maintain a debt-to-Net Worth ratio, calculated in
accordance with GAAP (ratio of outstanding indebtedness (including indebtedness
hereunder and including, without duplication, obligations under guarantees of
indebtedness, but excluding indebtedness under any warehouse loan agreements) to
Net Worth) of not more than 2.5:1.
4.6 Purchase Documents. The Borrower shall at all times during the term
of this Pledge Agreement comply with all of the affirmative covenants and
negative covenants contained in the Loan Documents, the "Closing Documents" and
the "Loan Documents" (as each such term is defined in the Purchase Agreement,
collectively, the "PURCHASE DOCUMENTS").
ARTICLE V
EVENTS OF DEFAULT
5.1 Borrower. Any of the following events shall constitute an "EVENT OF
DEFAULT OF BORROWER":
(a) The Borrower shall fail to pay when due any payment of: (i)
principal or interest due under the Note in accordance with the terms thereof,
and such failure continues for a period of one (1) Business Day after the date
such payment is due and the Borrower has
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received written notice of such non-payment; or (ii) any other amounts due to
the Lender hereunder or under the Note and such failure continues for a period
of five (5) Business Days after the date such payment is due and the Borrower
has received written notice of such non-payment; or
(b) The Borrower shall without the prior written approval of the Lender
assign, transfer, encumber or convey, prior to the release of the same from the
security interest created under the Loan Documents, any or all of its rights,
title or interest in or to any item of Collateral or the proceeds thereof; the
Borrower shall attempt to do any of the foregoing; or there shall otherwise
occur any loss of or impairment to the first priority perfected status of the
security interest created under the Loan Documents and the incidents thereof; or
(c) Other than with respect to any failure to pay any amounts when due
hereunder, the Borrower shall fail to perform or to observe any other covenant
or agreement contained herein or in the other Loan Documents, and such failure
continues for a period of 30 days after written notice thereof has been given to
the Borrower by the Lender or the Borrower otherwise has knowledge thereof; or
(d) The Borrower shall default in respect of: (i) any payment
obligation under any loan from Lender or any subsidiary of Lender or any
obligation to pay for securities delivered to Borrower by Lender or a
subsidiary; (ii) the Borrower shall fail to pay any money due under any other
agreement, note, indenture or instrument evidencing, securing, guaranteeing or
otherwise relating to indebtedness of the Borrower for borrowed money, which
failure to pay constitutes an event of default under any such agreement or
instrument or constitutes a default and such default shall continue beyond any
applicable grace periods therein specified or the Borrower shall default in the
observance or performance of any other covenant or condition in any such
agreement or instrument, which default has not been waived by the creditor or
other applicable party thereunder, and such default shall continue beyond any
applicable grace periods therein specified; (iii) any other event shall occur or
condition shall exist if the effect of such event or condition is to accelerate,
or permit the acceleration of, the maturity of such indebtedness; or (iv) any
such indebtedness shall be declared due and payable prior to the stated maturity
thereof; other than, in the case of items (ii) thereof (iv), indebtedness with
respect to which the failure to pay would not, individually or in the aggregate,
be expected to have a material adverse effect on the financial condition,
operations, business or prospects of the Borrower; or
(e) Any Governmental Authority shall take any action, or any other
event shall occur, with respect to the Borrower which has a material adverse
effect on the condition (financial or otherwise) of the Borrower or on the
ability of the Borrower to perform its obligations under any of the Loan
Documents; or
(f) The Borrower shall: (i) become insolvent; (ii) be dissolved; (iii)
fail generally to pay its debts as such debts become due; (iv) commence a
voluntary case under federal bankruptcy, insolvency or other similar law; (v)
consent to the appointment of or taking of possession by a receiver, liquidator,
assignee, trustee, custodian, or sequestrator (or other similar official) of the
Borrower or of any substantial part of its property; (vi) make an
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assignment for the benefit of creditors; or (vii) take any action intended or
likely to result in any event described in the foregoing clauses (i) through
(vi); or
(g) There shall be filed or entered in respect of the Borrower a
petition, decree or order for relief by a court having jurisdiction in the
premises in an involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) of the Borrower or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such petition,
decree or order shall continue undismissed, unstayed and in effect for a period
of 90 days; or
(h) An "Event of Default" (as defined in Article 14 of the Purchase
Agreement) shall have occurred; or
(i) The Lender, in its good faith judgment, has reasonable cause to
believe that there has been a material adverse change in the Collateral or in
the Lender's rights under any Loan Document, the Note or the Purchase Documents
or a material subsidiary adverse change in the condition (financial or
otherwise) of the Borrower; or
(j) On any date of determination, the aggregate amount of all Advances
outstanding plus the aggregate Purchase Price (as defined in the Repurchase
Agreement) of all Purchased Securities held by Greenwich Capital Markets, Inc.
on such date shall exceed the Maximum Commitment Amount (as defined in the
Note).
ARTICLE VI
REMEDIES
6.1 Remedies. If an Event of Default of Borrower shall have occurred
and be continuing, then the Lender may, at its election, to the fullest extent
permitted by applicable law:
(a) By notice to the Borrower declare the entire unpaid principal
balance of the Note, together with interest thereon and all other amounts owing
under the Loan Documents immediately due and payable, whereupon the same shall
become immediately due and payable, and the Lender may exercise all of its
remedies under the Loan Documents with respect to the Collateral or otherwise;
provided that if an Event of Default of Borrower specified in paragraph (f) or
(g) of Section 5.1 of this Pledge Agreement shall occur, the entire unpaid
principal balance of the Note, together with interest thereon and all other
amounts owing under the Loan Documents, shall immediately and automatically
become due and payable without notice or presentment;
(b) Proceed to exercise any other rights or remedies it may have
hereunder or under the Note;
(c) Pursue any rights or remedies it may have at law, equity or
otherwise;
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(d) Cancel or otherwise terminate this Pledge Agreement, the Note and
any other agreement with the Borrower without prior notice to the Borrower (and
the Borrower will be liable to the Lender and its subsidiaries for any resulting
loss, costs and expenses), and the Lender and its subsidiaries may: (i) set off
any obligation to the Borrower hereunder or thereunder against any obligation of
the Borrower to the Lender or its subsidiaries hereunder or thereunder; and (ii)
realize upon property securing any obligation to it or its subsidiaries
hereunder or thereunder;
(e) Upon acceleration of the Note pursuant to the Loan Documents,
exercise all of the rights and remedies available to secured parties under any
applicable Uniform Commercial Code provisions, including, but not limited to,
the Lender's right to: (i) sell any or all of the Collateral in a commercially
reasonable manner and applying the proceeds thereof against any amounts owed to
the Lender by the Borrower; or (ii) in lieu of selling the Collateral, credit
the Current Market Value of the Collateral as determined in a commercially
reasonable manner against any amounts owed by the Borrower to the Lender;
provided, however, that the Borrower shall remain liable for any deficiency and
shall pay interest on such deficiency as prescribed in the Note (the Borrower
agreeing that, to the extent that applicable law requires the giving of notice
by the Lender to the Borrower of any such disposition, the minimum time required
by such law (or if no minimum time is specified, one Business Day) shall
constitute reasonable notice); provided further that, after the application of
all proceeds to or credits against the amounts owed to the Lender hereunder as
provided in this Section 6.1 (e), any surplus thereafter shall be accounted to
the Borrower in accordance with any applicable Uniform Commercial Code
provisions; and
(f) transfer or assign the Loan Documents to any Person without the
prior written consent of the Borrower.
6.2 Cost and Expenses on Default. If an Event of Default of Borrower
shall have occurred, the Lender shall be entitled to collect, in addition to
principal, interest and delinquency charges hereunder, all costs of collection,
including without limitation, reasonable attorneys' fees and disbursements,
incurred in connection with the protection or realization of collateral or in
connection with any of the Lender's collection efforts, whether or not suit on
the Note or any foreclosure proceeding is filed, and all such costs and expenses
shall be payable on demand and until paid shall also be secured by the
Collateral and other Loan Documents and by all other collateral held by the
Lender as security for the Borrower's obligations to the Lender.
ARTICLE VII
CONTINUING SECURITY INTEREST
The Borrower shall not assign or otherwise transfer this Pledge
Agreement or any interest herein without the Lender's prior written consent.
This Pledge Agreement shall create a continuing security interest in the
Collateral and shall: (a) remain in full force and effect until the final
payment in full of all amounts payable under the Note and the other Loan
Documents; (b) bind the Borrower, its successors and permitted assigns; and (c)
inure to the benefit of the Lender and its successors, transferees and assigns.
The Lender may transfer the Loan Documents to any of its successors or assigns,
by notice to the Borrower, and such other person or entity shall thereupon be
vested with all the benefits in
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respect thereof granted to the Lender herein or otherwise; provided that such
successor or assign has agreed in a writing, which shall be delivered to the
Borrower, to assume all of the obligations of the Lender under the Loan
Documents.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties. The Borrower represents and
warrants to the Lender continuously throughout the term of the Loan, as defined
in the Note, that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, and is duly qualified
to do business and in good standing in each jurisdiction where the conduct of
its business or the ownership, lease or operation of its property requires such
qualification, except where the failure to be so qualified could not have
material adverse effect on the business, operations, properties, condition
(financial or otherwise) or prospects of the Borrower or impair the ability of
the Borrower to perform its obligations under any Loan Document. The Borrower
has all requisite power and authority to own and operate its property, to lease
the property it operates as lessee and to carry on its business as now being or
as proposed to be conducted;
(b) It has all requisite power and authority (including full corporate
power and authority) to execute and deliver the Loan Documents, and to perform
its obligations under each Loan Document (other than the Certificates) and has
taken or caused to be taken all necessary corporate action to authorize such
execution, delivery and performance. Each Loan Document (other than the
Certificates) constitutes the legal, valid and binding obligation of the
Borrower and is enforceable against the Borrower in accordance with its
respective terms and conditions, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
by general equitable principles regardless of whether enforcement is sought in a
proceeding in equity or at law;
(c) Neither the execution and delivery of the Loan Documents, nor the
consummation of the transactions contemplated thereby, nor compliance with the
provisions thereof, will: (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Borrower is
subject or any provision of its charter or bylaws; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice (other with respect to any notice contemplated hereunder with
respect to the Collateral to any trustee under any pooling and servicing
agreement, indenture or any similar agreement pursuant to which the Certificates
were issued) under any agreement, contract, lease, license, instrument, or other
arrangement to which the Borrower is a party or by which it is bound or to which
any of its assets is subject;
(d) All approvals, authorizations, consents, orders or other actions or
registrations with or notices to any person or entity required to be obtained,
made or given by the Borrower
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in connection with the execution, delivery and performance of the Loan Documents
and the consummation of the transactions contemplated thereby have been duly and
properly obtained, made or given by the Borrower and are in full force and
effect;
(e) There are no pending or, to the Borrower's knowledge, threatened
actions, suits or other proceedings by or against the Borrower before any court,
arbitrator or other Governmental Authority that challenge or affect the
legality, validity or enforceability of any Loan Document or the transactions
contemplated thereby, or that, whether individually or in the aggregate, could
have a material adverse effect on the business, operations, properties,
condition (financial or otherwise) prospects of the Borrower or impair the
ability of the Borrower to perform its obligations under any Loan Document;
(f) The Borrower has filed or caused to be filed, or Mego Financial
Corp., on behalf or the Borrower, has filed all tax returns (federal, state and
local) (or requests for extension which are routinely granted) which are
required to be filed and has paid all taxes including those which have become
due pursuant to such returns or pursuant to any assessments made against it or
any of its properties, as the case may be, and all other material taxes or other
charges imposed on it or any of its properties by any Governmental Authority;
and no tax liens have been filed;
(g) No proceeds of the Advances will be used, directly or indirectly,
by the Borrower for the purpose of purchasing or carrying any Margin Stock or
for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry Margin Stock or for any other purpose which might
cause the Advances to be a "purpose credit" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System;
(h) The Borrower has obtained any and all permits, licenses, approvals
and consents of any Governmental Authority as may be required to own, purchase,
sell or otherwise dispose of the Collateral, as the case may be, and to conduct
or to transact its business or own, lease or operate its properties and is in
material compliance with all applicable requirements of law;
(i) All financial statements of the Borrower delivered to the Lender
fully and accurately present the financial position of the Borrower, as of the
respective dates thereof in accordance with GAAP. Since November 30, 1996, there
has been no material adverse change in the business, operations, properties,
condition (financial or otherwise) or prospects of the Borrower;
(j) It is, not directly or indirectly, controlled by any Person which
is, an "investment company" within the meaning of the Investment Company Act of
1940, as amended; the Borrower is not subject to any regulation under any
federal or state statute or regulation which limits its ability to incur
Indebtedness;
(k) The lien of this Pledge Agreement constitutes a first priority
perfected and enforceable security interest in the Collateral in favor of the
Lender; on each occasion on which the Borrower makes a Delivery of Collateral to
the Lender, the Borrower will be the sole owner of that Collateral and will have
the right to receive all payments (in accordance
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with the terms of any pooling and servicing agreement, indenture or any similar
agreement pursuant to which the Certificates were issued) on the Collateral, in
each case free and clear of all liens and security interests other than the lien
of this Pledge Agreement;
(l) Except for financing statements contemplated by this Pledge
Agreement, there are no financing statements or other actions required under the
Uniform Commercial Code or similar law of any state or jurisdiction required in
connection with the grants to the Lender set forth in this Pledge Agreement;
(m) Other than as disclosed to the Lender on Schedule 1 attached
hereto, no representation or warranty made by or on behalf of Borrower contained
in any Loan Document and no information (written or oral), certificate,
financial statement or report furnished or to be furnished by or on behalf of
the Borrower thereunder or in connection with the transactions contemplated
thereby, contains or will contain an untrue statement of a material fact, or,
omits or will omit to state any material fact (including without limitation,
whether either Borrower or any of its respective officers or directors (past or
present) is (or during the last five (5) years has been) under civil or criminal
investigation by any Governmental Authority or is under indictment by any
Governmental Authority) necessary to make the statements herein or therein
contained, in light of the circumstances in which made, not misleading;
(n) It does not have any reason to believe that it will not be able to
perform in all material respects all covenants and agreements to be performed by
it under this Agreement and each of the other Loan Documents; and
(o) Each of the representations and warranties of the Borrower
contained in the other Loan Documents and the Purchase Documents is true and
correct.
ARTICLE IX
THE LENDER MAY PERFORM
At any time that an Event of Default of Borrower has occurred and is
continuing, the Borrower hereby appoints any officer or agent of the Lender as
the Borrower's true and lawful attorney-in-fact with full authority in the place
and stead of the Borrower and in the name of the Lender or otherwise, from time
to time in the Lender's discretion, to take any action and to execute any
agreements, documents and instruments which the Lender may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement. The powers
conferred on the Lender hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon the Lender to exercise any such
powers.
ARTICLE X
CONDITIONS PRECEDENT
10.1 Conditions Precedent to Closing. The obligations of Lender to
enter into this Pledge Agreement and the Note and to make any Advance thereunder
are subject to the following conditions:
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(a) The receipt by Lender, concurrently with the signing of this
Pledge Agreement, in form and substance satisfactory to Lender, each of the
following:
(i) Evidence of the authority of the persons executing this Pledge
Agreement, the Note and the other Loan Documents, together with
specimen signatures of such persons; and
(ii) A certified copy of the Borrower's Certificate of Incorporation
and By-laws and a good standing certificate from the State of
Delaware dated as of, or reasonably prior to, the date hereof;
and
(iii) Certified copies of all necessary resolutions of the Board of
Directors of the Borrower authorizing the execution and delivery
and performance under this Pledge Agreement, the Note and the
other Loan Documents; and
(iv) The duly executed, original Note; and
(v) A certificate, as of the date of signing of the Pledge Agreement,
by the President, a Vice President or the Treasurer of the
Borrower certifying that the representations and warranties
contained in Article VIII hereof are true and correct, that
Borrower is in compliance with the covenants set forth in Article
IV and that no Event of Default, and no event which with notice
or lapse of time or both would become an Event of Default, has
occurred and is continuing; and
(vi) The following opinions of counsel in form and substance
reasonably satisfactory to Lender's counsel:
(A) Standard corporate opinions of Borrower regarding due
authorization, execution, consents, material litigation
and noncontravention;
(B) Enforceablility of this Pledge Agreement, the Note and
the other Loan Documents;
(C) Lien, priority and perfection opinions relating to the
pledge of Collateral from the Borrower to Lender; and
(D) Such other opinions as Lender's counsel shall reasonably
request; and
(b) Such other documents, certificates or financial or other
information as Lender may reasonably request.
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10.2 Conditions Precedent to Each Advance. In addition to each of the
conditions precedent set forth in Section 10.1 being met, the obligations of
Lender to extend each Advance hereunder shall be subject to the following
conditions:
(a) There shall not have occurred and be continuing any Event of
Default and Borrower shall be in full compliance with all of its covenants,
representations and warranties and obligations under this Pledge Agreement; and
(b) Lender shall have received a Notice of Borrowing (as defined in
the Note); and
(c) Taking into account the amount of the requested Advance, the
Current Market Value of the Collateral shall be equal to, or in excess of, the
Collateral Requirement for all Advances; and
(d) The Certificates for the Advance requested and any outstanding
Advances, together with such documents, instruments and certificates
contemplated by Section 2.2 and 2.3 hereof, shall have been delivered to Lender
or its designee.
(e) Financing statements on Form UCC-1, in form and substance
reasonably acceptable to the Lender, naming Borrower as "debtor" and Lender as
"secured party" and describing the Collateral as "collateral" thereunder, to be
filed in each jurisdiction in which it is necessary to file to perfect a
security interest in "general intangibles" (as defined in the UCC).
ARTICLE XI
MISCELLANEOUS
11.1 Successors and Assigns: No Third Party Beneficiaries. This Pledge
Agreement shall be binding upon and inure to the benefit of, the parties hereto
and their respective permitted successors and assigns. This Pledge Agreement
shall not confer any rights, obligations, remedies or liabilities upon any
Person other than the parties hereto and their permitted successors and assigns.
11.2 Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
11.3 Notices. All notices, requests, demands, claims and other
communications under this Pledge Agreement shall be in writing (unless otherwise
specified herein) and shall be deemed duly given if (and then two Business Days
after) it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
IF TO BORROWER:
Mego Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇-▇▇▇-▇▇▇-▇▇▇▇
IF TO THE LENDER:
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the General Counsel
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
11.4 Amendments; Waivers. This Pledge Agreement may not be amended,
modified or supplemented except in writing signed by each of the parties hereto.
Each party may, by written notice to the other, extend the time for or waive the
performance of any of the obligations of such other hereunder. The waiver by any
party hereto of a breach of this Pledge Agreement shall not operate or be
construed as a waiver of any other or subsequent breach. No delay, omission or
act by a party shall be deemed a waiver of such party's rights, powers or
remedies. No course of dealing between the parties hereto shall operate as a
waiver of any provision hereof.
11.5 Payment of Expenses; Indemnity. The Borrower shall:
(a) pay or reimburse the Lender on demand for all of its out-of-pocket
costs and expenses incurred in connection with the development, preparation, and
execution of, and any amendment, modification or supplement to, or any waiver
under, any Loan Document and any other document prepared in connection herewith
or therewith, and the consumption of the transactions contemplated thereby,
including without limitation the reasonable fees and disbursements of counsel to
the Lender;
(b) pay on demand all reasonable costs and expenses of the Lender,
including without limitation, the reasonable fees and disbursements of counsel
to the Lender, in connection with the occurrence or continuance of Event of
Default and the enforcement, collection, protection or preservation (whether
through negotiation, legal proceedings or otherwise) of this Agreement or any
other Loan Document, the Collateral, any obligation or any right, remedy, power
or privilege of the Lender hereunder or thereunder;
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(c) pay and hold the Lender harmless from and against any and all
present and future stamp, excise, recording or other similar taxes or fees
payable in connection with the execution, delivery, recording and filing of any
Loan Document and hold the Lender harmless from and against any and all
liabilities with respect to or resulting from ant delay or omission to pay such
taxes or fees; and
(d) indemnify and hold harmless the Lender and its directors,
officers, employees and agents and hold each of them harmless from and against,
any and all liability, losses, damages, penalties, actions, judgments, suits,
claim, costs, expenses and disbursements, including without limitation the
reasonable fees and disbursement of counsel to the Lender and such other
parties, incurred by any of them in connection with, arising out of or in any
way relating to any investigation, claim, litigation or other proceeding,
pending or threatened (whether or not any of them is designated a party
thereto), in connection with, arising out of or in any way related to this
Agreement or any other Document or any of the transactions contemplated herein
or therein or any use of the proceeds of any Loan by the Borrower; provided that
the Lender shall not be entitled to any indemnification for any of the foregoing
resulting from its gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
If, and to the extent that, the indemnity obligations of the Borrower hereunder
may be unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of each of such indemnity
obligations which is permissible under applicable law.
11.6 Limited Liability. No recourse under any Loan Document shall be
had against, and no personal liability shall attach to, any officer, employee,
director, affiliate or shareholder of any party hereto, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise in respect of any of the Loan Documents, it being
expressly agreed and understood that each Loan Document is solely a corporate
obligation of each party hereto, and that any and all personal liability, either
at common law or in equity, or by statute or constitution, of every such
officer, employee, director, affiliate or shareholder for breaches by any party
hereto of any obligation under any Loan Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this Pledge
Agreement.
11.7 Counterparts. This Pledge Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
11.8 Severability; Interpretation. Any term or provision of this Pledge
Agreement that is invalid, illegal or unenforceable. in any situation in any
jurisdiction shall not affect the validity, legality or enforceability of the
remaining terms and provisions hereof or the validity, legality or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the date first above written.
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
-------------------------------
Name:
Title:
MEGO MORTGAGE CORPORATION
By:
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Name:
Title: