Document:

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                                                                  EXHIBIT 10.221

                              AMENDED AND RESTATED

                              EMPLOYMENT AGREEMENT

        AGREEMENT made as of the 10th day of November, 2000, by and between MEGO
FINANCIAL CORP., a New York corporation (herein called "Company"), and JEROME J.
COHEN (herein called "Employee").

                             BACKGROUND OF AGREEMENT

        The Company and the Employee entered into an Employment Agreement dated
as of September 1, 1996, pursuant to which the Employee was engaged by the
Company as an executive officer of the Company (the "Original Agreement"). The
term of the original agreement was to run from September 1, 1996, through
January 31, 2002, and the Company and the Employee wish to extend the term of
the Initial Agreement and make certain other modifications thereto, as set forth
in this Amended and Restated Employment Agreement (the "Agreement").

        NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, and in consideration of the mutual covenants herein contained, agree as
follows:

        1.   EMPLOYMENT

             The Company hereby continues to employ the Employee, and the
Employee hereby accepts such continued employment, upon the terms and conditions
set forth herein.

        2.   DUTIES

             The Employee shall be an executive officer of the Company, and his
duties and powers in such capacity shall be such as may be determined by the
Board of Directors of the

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Company; provided that until action by the said Board of Directors, the powers
and duties shall be those of President of the Company and its subsidiaries, and
such powers and duties shall only be determined so that they are at all times
consistent with those of an executive officer. During the term of this
Agreement, the Employee shall also serve, without additional compensation, as a
Director or Officer of the Company or any of its subsidiaries.

        3.   EXTENT OF SERVICES

             Employee agrees to devote as much time to the Company's business as
necessary to fulfill his fiduciary responsibility. During the term of this
Agreement, Employee agrees not to be engaged in the operation of any other
business requiring any substantial amount of his business time, and except for
such time as may be approved in connection with the affairs of such other
companies as are approved by the Board of Directors of the Company. However,
this provision shall not be deemed to prevent the Employee from investing and
managing his assets in such form or manner as will not unreasonably interfere
with the services to be rendered by Employee hereunder, or to prevent him from
acting as a director, trustee, or officer of, or upon a committee of, any other
firm, trust or corporation where such positions do not unreasonably interfere
with the services to be rendered by the Employee hereunder.

        4.   COMPENSATION

             4.1 As compensation for all services rendered by Employee to
Company and its subsidiaries during the term hereof, Company agrees to pay and
Employee agrees to accept the Basic Salary (as hereinafter defined) set forth in
Section 4.2 hereof and the Incentive Bonus (as hereinafter defined) set forth in
Section 4.3 hereof. However, neither the provisions for the

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Basic Salary or the Incentive Bonus nor any other provision of this Agreement
shall be deemed to preclude Employee from being eligible to receive, or to
participate in or to continue to participate in, any supplemental employee
benefits which the Board of Directors of the Company may, from time to time,
generally make available to, or provide for, executive and management employees
of the Company or of any one or more of its subsidiaries, including such benefit
plans as are now in force.

             4.2 The Basic Salary (herein called "Basic Salary") for the term of
this Agreement shall be $300,000 per annum payable in agreed monthly
installments or otherwise as mutually agreed. Notwithstanding the foregoing, the
Employee's Basic Salary may be reduced in accordance with the provisions of
Section 6 below.

             4.3 For each fiscal year of the Company, commencing with fiscal
1997 and ending with fiscal 2004, the Employee shall receive, in addition to the
Basic Salary as hereinabove defined, a sum of money (herein called the
"Incentive Bonus") in an amount equal to two and one-half percent (2-1/2%) of
the Incentive Income of the Company as defined in, and calculated pursuant to,
the Executive Incentive Compensation Plan of the Company adopted by the
Company's Board of Directors on June 22, 1994, a copy of which is attached
hereto as Exhibit "A". Such amount shall be due and payable whether or not the
Company's Executive Incentive Compensation Plan shall be in effect for such
fiscal year, and shall be paid no later than ninety days after the amount of
Incentive Income can be calculated. Notwithstanding the foregoing, the
Employee's Incentive Bonus may be reduced or eliminated in accordance with the
provisions of Section 6 below.

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        5.   TERM

             5.1 The term of this Agreement, as amended and restated, shall
commence as of November 10, 2000, and shall continue until January 31, 2005. The
Company may terminate this Agreement for any reason on 60 days prior written
notice to the Executive, provided, however, that in the event of, and as a
condition to, such termination, the Company shall enter into the Termination
Agreement attached as Exhibit "A" and made a part hereof with the Employee to be
effective as of the date of such termination.

             5.2 In the event that (i) the company shall effect a
reorganization, consolidation with, or merger into, any other corporation,
partnership, organization or other entity (each a "Transaction") and the
shareholders of the Company immediately prior to the Transaction own less than
50% of the common stock of the surviving entity in substantially the same
proportions as their ownership in the Company immediately prior to the
Transaction, or (ii) 50% or more of the common stock of the Company is sold to
any other party or group of parties, or (iii) the Company sells all or
substantially all of its assets, then the Company and the Employee, and the
successor or purchasing entity, shall enter into the Termination Agreement
attached as Exhibit A hereto and made a part hereof, and this Employment
Agreement shall be terminated.

        6.   DISABILITY

             In the event that, while this Agreement is in force, Employee shall
become disabled for any reason whatsoever so as to prevent him from performing
his duties hereunder, and such disability shall continue for any consecutive
period of six months or more, Company

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shall pay and Employee shall accept, from and after the end of such six-month
period, (the "Disability Date") for the balance of the remaining term of this
Agreement, an annual income benefit equal to one-half of the Basic Salary which
was being received hereunder by Employee at the commencement of such six-month
period. During such six-month period, Employee shall be entitled to compensation
payable pursuant to Section 4 hereof. In addition, for the fiscal year in which
the Disability Date may occur, the Incentive Bonus due and payable to the
Employee shall be reduced to an amount calculated by multiplying the amount of
the Incentive Bonus which would otherwise be due and payable to the Employee had
be not become disabled, by a fraction, the numerator of which is the number of
days from the commencement of the fiscal year through the Disability Date and
the denominator of which is 365. The Employee shall not be entitled to any
Incentive Bonus for a fiscal year commencing after the Disability Date.

        7.   EXPENSES

             The parties recognize that in the course of performing his duties
hereunder, Employee will necessarily incur expenses in connection with his
duties. Company agrees to reimburse Employee upon presentation of vouchers for
reasonable expenses incurred by Employee in performance of his duties hereunder.
Moreover, while this Agreement shall be in force, Company shall provide Employee
with appropriate offices, in Las Vegas, Nevada, secretarial help, administrative
staff and automobile and other transportation facilities in Las Vegas.

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        8.   VACATION

             For and during each year of employment, Employee shall be entitled
to reasonable vacation periods consistent with his position with the Company.

        9.   MEDICAL EXPENSES

             In addition to any other benefits which may be due to Employee,
Company shall, to the extent that any medical insurance program established by
Company, the premiums for which are to be paid by the Company, shall be
insufficient to meet any medical expenses of Employee incurred from and after
September 1, 1996, and prior to January 31, 2005, expend and pay over or
reimburse to Employee the full amount by which such medical expenses shall
exceed the benefits provided by such Insurance.

        10.  SITUS

             This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

        11.  ENTIRE AGREEMENT

             This Agreement constitutes the full and complete understanding and
agreement of the parties and, effective as of November 10, 2000, supersedes all
prior understandings and agreements between Employee and the Company or any of
its subsidiaries concerning the subject matter of this Agreement, and may not be
modified or amended orally, but only by an agreement in writing, signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

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        12.  BINDING EFFECT

             This Agreement and all of the terms hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors, administrators and assigns.

        13.  SEVERABILITY

             In the event that it shall be determined, to the mutual
satisfaction of the parties hereto, or by a final order of a court of competent
jurisdiction, that any term or provision herein set forth is prohibited by, or
is unlawful or unenforceable under any applicable law of any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.

             IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.

ATTEST:                                 MEGO FINANCIAL CORP.

-----------------------------------     -----------------------------------
Jon A. Joseph                              Robert Nederlander
Secretary                                  Chairman of the Board &
                                           Chief Executive Officer

                                           --------------------------------
                                           Jerome J. Cohen
                                           Employee

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                              TERMINATION AGREEMENT

        THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into
effective as of [        ], [         ], by and among MEGO FINANCIAL CORP., A
New York corporation ("Mego"), [              ], a [            ] corporation,
[as successor to][as the purchaser of more than 50% of the common stock of] Mego
(collectively referred to herein as the "Company") and JEROME J. COHEN
("Cohen"). This Agreement is intended to replace that certain Amended and
Restated Employment Agreement, dated as of November 10, 2000, by and between
Mego and the Consultant (the "Employment Agreement"). Accordingly, effective as
of the Commencement Date hereof as that term is hereafter defined, the
Employment Agreement shall be terminated and declared null and void.

                                   RECITATIONS

        A. The Company recognizes that Cohen has performed substantial services
for Mego which have contributed to the growth of Mego.

        B. The Company and Cohen now each desire to terminate their existing
business relationship on the terms and conditions set forth in this Agreement.

                              OPERATIVE PROVISIONS

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        In consideration of the foregoing recitations, the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, the parties hereto, intending to
be legally bound, hereby covenant agree as follows:

                                    ARTICLE I

                              TERMINATION AGREEMENT

        1.1 TERMINATION FEE. In consideration for prior services provided by
Cohen to Mego and for the termination of Cohen's Employment Agreement, the
Company shall pay a fee to Cohen equal to Seven Hundred Fifty Thousand Dollars
($750,000), payable in thirty six (36) equal consecutive monthly installments of
Twenty Thousand Eight Hundred and Thirty-Three Dollars and Thirty-Three cents
($20,833.33) per month, commencing [insert the effective date] (the
"Commencement Date"). In the event of Cohen's death prior to the entire
distribution of the fee set forth in this Section 1.1, the remaining amounts
shall be paid to the beneficiary designated by Cohen, in writing, to the
Company, or if no such beneficiary shall be designated, then to Cohen's estate,
at such times and in such amounts as if Cohen had not died.

        1.2 OTHER BENEFITS.

             (a) Medical Insurance Coverage. During the period commencing on the
Commencement Date and ending on [insert the date that is thirty six months after
the

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commencement date] (the "Coverage Period"), Cohen and his Spouse shall continue
to be covered under that certain Equitable Life Assurance Society of the United
States medical insurance policy, number PPB N 86 803 722 (the "Policy"), and the
Company shall pay the premiums thereon that are allocable to the Coverage
Period. In addition, the Company shall reimburse Cohen for any medical expenses
incurred by Cohen (but not for those medical expenses incurred by his Spouse)
during the Coverage Period that are not covered under the Policy including,
without limitation, any amounts that are not covered by the reason of the
deductible and/or copayment provisions of the Policy. Reimbursements made by the
Company to Cohen shall be made on a quarterly basis and the amount of the
quarterly reimbursement shall be based upon invoices submitted by Cohen to the
Company during such quarter. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay any medical expenses incurred by Cohen
that are not covered by the Policy by reason of their being in excess of the
maximum amount of covered expenses under the Policy.

             (b) Occupancy of Office. During the period beginning on the
Commencement Date and ending on the last day of the third calendar month that
begins after the Commencement Date (as defined in Section 1.1 hereof) (the
"Office Period"), the Company shall continue to lease, and pay the rent and
utility costs of, and Cohen shall have the right to continue utilizing, the
Company's office space in Miami, Florida (the "Miami Office") where Cohen
previously performed services for Mego. In addition, as of the Commencement
Date, Cohen shall be entitled to keep any office furniture, furnishings or
equipment located in the Miami Office. During the Office Period, Cohen shall
organize all records, files and transaction bibles of the Company, and arrange
to have those documents packaged and shipped, at the Company's expense, to the
Company's offices in Las Vegas, Nevada. Cohen shall be entitled to keep or
discard any such documents that the Company does not wish to have shipped as
aforesaid.

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                                   ARTICLE II

                             RESTRICTIVE COVENANTS.

        2.1 NON-COMPETITION. For the three (3) year period ending on the third
anniversary of the Commencement Date (the "Restricted Period") and provided that
the Company is not in breach of any of its obligations under Sections 1.1, 1.2
or 3.4 of this Agreement, Cohen shall not, directly or indirectly, engage in or
have any interest in any sole proprietorship, corporation, company, partnership,
association, venture or business or any other person or entity (whether as an
employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that directly or indirectly (or through any affiliated
entity) competes with the Company's business (for this purpose, the Company's
business shall mean any business that engages in time share sales in North
America); provided that such provision shall not apply to Cohen's ownership of
Common Stock of the Company or the acquisition by Cohen, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as Cohen does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of, more than five percent of any class of
capital stock of such corporation.

        2.2 NONSOLICITATION OF EMPLOYEES. During the Restricted Period, and
provided that the Company is not in breach of any of its obligations under
Sections 1.1, 1.2, or 3.4 of this Agreement,

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Cohen shall not, directly or indirectly, for himself or for any other person,
firm, corporation, partnership, association or other entity employ or attempt to
employ or enter into any contractual arrangement with any employee or former
employee of the Company, unless such employee or former employee has not been
employed by the Company for a period in excess of six months.

        2.3 ACKNOWLEDGMENT BY COHEN. Cohen acknowledges and confirms that (i)
the restrictive covenants contained in this Article II are reasonably necessary
to protect the legitimate business interests of the Company, and (ii) the
restrictions contained in this Article II (including without limitation the
length of the term of the provisions of this Article II) are not overbroad,
overlong, or unfair and are not the result of overreaching, duress or coercion
of any kind. Cohen further acknowledges and confirms that his full, uninhibited
and faithful observance of each of the covenants contained in this Article II
will not cause him any undue hardship, financial or otherwise, and that
enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. Cohen acknowledges and confirms that his special knowledge of the
business of the Company is such as would cause the Company serious injury or
loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Article
II. Cohen further acknowledges that the restrictions contained in this Article
II are intended to be, and shall be, for the benefit of and shall be enforceable
by, the Company's successors and assigns.

        2.4 REFORMATION BY COURT. In the event that a court of competent
jurisdiction shall determine that any provision of this Article II is invalid or
more restrictive than permitted under the

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governing law of such jurisdiction, then only as to enforcement of this Article
II within the jurisdiction of such court, such provision shall be interpreted
and enforced as if it provided for the maximum restriction permitted under such
governing law.

        2.5 SURVIVAL. The provisions of this Article II shall survive the
payment by the Company to Cohen of the Lump Sum Payment pursuant to Article II
hereof.

        2.6 INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by Cohen of any of the covenants contained in Article II of
this Agreement will cause irreparable harm and damage to the Company, the
monetary amount of which may be virtually impossible to ascertain. As a result,
Cohen recognizes and hereby acknowledges that the Company shall be entitled to
an injunction from any court of competent jurisdiction enjoining and restraining
any violation of any or all of the covenants contained in Article II of this
Agreement by Cohen or any of his affiliates, associates, partners or agents,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other remedies the Company may possess.

                                   ARTICLE III

                                  MISCELLANEOUS

        3.1 ENTIRE AGREEMENT: AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, among the parties hereto. This

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Agreement may not be amended or modified in any way except by a written
instrument executed by the Company and Cohen.

        3.2 NOTICE. All notices under this Agreement shall be in writing and
shall be given by personal delivery, or by registered or certified United States
mail, postage prepaid, return receipt requested, to the address set forth below:

        If to Cohen:                        Jerome J. Cohen

                                            [             ]

                                            [             ]

                                            [             ]

        with copy to:

        If to the Company or a              MEGO FINANCIAL CORP.

        Successor Corporation

                                            Attn:  [             ], President

                                            [                    ]

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                                            Attn:  [             ], President

or to such other person or persons or to such other address or addresses as
Cohen and the Company or their respective successors or assigns may hereafter
furnish to the other by notice similarly given. Notices, if personally
delivered, shall be deemed to have been received on the date of delivery, and if
given by registered or certified mail, shall be deemed to have been received on
the fifth business day after mailing.

        3.3 GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Florida, without
giving effect to the conflict of laws principles of each State. With respect to
any disputes concerning federal law, such disputes shall be determined in
accordance with the law as it would be interpreted and applied by the United
States Court of Appeals for the Eleventh Circuit.

        3.4 ASSIGNMENT: SUCCESSORS AND ASSIGNS. Neither Cohen nor the Company
may make an assignment of this Agreement or any interest herein, by operation of
laws or otherwise, without the prior written consent of the other party. This
Agreement shall inure to the benefit of, and be binding upon, the Company and
Cohen, his heirs, personal representatives, executors, legal representatives,
successors and their permitted assigns, if any. In the event that the Company
shall effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity, or transfer all or
substantially all of its properties or assets to any other corporation,
partnership, organization or other entity, or if more than fifty percent (50%)
of its stock shall be sold, transferred or issued to another party

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or parties, the Company shall immediately pay Cohen the balance of the $750,000
fee set forth in Section 1.1 hereof not previously paid by the monthly payments
provided for in the said Section 1.1 hereof (such payment being referred to as
the "Lump Sum Payment"). Upon payment by the Company of the Lump Sum Payment in
accordance with the foregoing sentence of this Section 3.4, then the Coverage
Period for the continued payment of health insurance premiums and reimbursement
of medical expenses under Section 1.2(a) hereof shall cease for expenses
incurred after the date on which the Company has made the Lump Sum Payment to
Cohen.

        3.5 WAIVER. The waiver by any party hereto of the other party's prompt
and complete performance or breach or violation of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
or violation, and the waiver by any party hereto to exercise any right or remedy
which he or it may possess shall not operate nor be construed as the waiver of
such right or remedy by such party or as a bar to the exercise of such right or
remedy by such party upon the occurrence of any subsequent breach or violation.

        3.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part thereof, all of which are inserted conditionally on their being
valid in law, and, in the event that any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in this Agreement shall be
declared invalid by a court of competent jurisdiction, then this Agreement shall
be construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, section or sections, or subsection or subsections
had not been inserted.

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        3.7 DAMAGES. Nothing contained herein shall be construed to prevent the
Company or Cohen from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys' fees of the other.

        3.8 CONSENT TO JURISDICTION. In the event any controversy or claim
arises out of or relates to this Agreement or the breach thereof, the parties
hereby consent to the jurisdiction of the Supreme Court of Florida, the Florida
District Court of Appeal, and the United States District Court for the District
of Florida. Accordingly, with respect to any such court action, Cohen and the
Company each (i) submit to the personal jurisdiction of such courts; (ii)
consent to service of process; and (iii) waive any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.

        3.9 GENDER AND NUMBER. Wherever the context shall so require, all words
herein in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural and all plural words shall
include the singular.

        3.10 SECTION HEADINGS. The section or other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of any or all of the provisions of this Agreement.

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        3.11 NO THIRD PARTY BENEFICIARY OTHER THAN COMPANY. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, firm, corporation, partnership, association or other entity,
other than the parties hereto and each of their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

                                      THE COMPANY:

                                      MEGO FINANCIAL CORP., a New York
                                      corporation

                                      ---------------------------------
                                      [                             ], President

                                      [                    ].,a[               ]

                                      corporation

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                                      ---------------------------------
                                      [                             ], President

                                      COHEN:

                                      ----------------------------------
                                      JEROME J. COHEN

                                       19<PAGE>   1

                                                                  EXHIBIT 10.222

                SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

       THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Seventh
Amendment" or "Amendment"), made as of the 15th day of December, 2000, by and
among PREFERRED EQUITIES CORPORATION, a Nevada Corporation, having an address of
4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as
"Preferred"); and

       COLORADO LAND AND GRAZING CORP., a Colorado Corporation, having an
address of 4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to
as "CLGC") (Preferred and CLGC are hereinafter collectively referred to as the
"Borrower" and any documents required to be executed by (or prepared for) the
Borrower pursuant to this Amendment shall be executed by (or prepared for) each
Borrower); and

       MEGO FINANCIAL CORP., a New York corporation having an address of 4310
Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as "Guarantor");
and

       DORFINCO CORPORATION, a Delaware Corporation, having an address of 40
Westminster Street, P.O. Box 6687, Providence, Rhode Island
02940-6687(hereinafter referred to as "Lender").

                                   WITNESSETH:

       WHEREAS, On August 9, 1991, Preferred executed in favor of Lender a note
evidencing a revolving line of credit loan (the "Loan") in the maximum principal
sum of Five Million Dollars ($5,000,000.00) which note was amended by a First
Amendment to Promissory Note dated June 30, 1993, which amendment, inter alia,
increased the maximum amount of the Loan to Seven Million Five Hundred Thousand
Dollars ($7,500,000.00) and by a Second Amendment to Promissory Note dated
August 23, 1994 and by a Third Amendment to Promissory Note dated September 30,
1995 and by a Fourth Amendment to Promissory Note dated as of November 29, 1996
and by a Fifth Amendment to Promissory Note of even date herewith (collectively,
"Note Amendment") (Said note, as amended, being hereinafter referred to as the
"Note"); and

       WHEREAS, the above described Note evidences sums advanced or to be
advanced pursuant to a Loan and Security Agreement dated July 31, 1991, which
agreement was amended by a First Amendment dated January 8, 1992, and by Second
Amendment to Loan and Security Agreement dated June 30, 1993 and by a Third
Amendment to Loan and Security Agreement and Assumption Agreement dated August
23, 1994 which amendment inter alia, added CLGC as a Borrower and by a Fourth
Amendment to Loan and Security Agreement dated September 30, 1995 and by a Fifth

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Amendment to Loan and Security Agreement dated November 29, 1996 and a Sixth
Amendment to Loan and Security Agreement dated as of June 30, 1999 (the Loan and
Security Agreement, as so amended, being hereinafter referred to as the "Loan
Agreement"); and

       WHEREAS, Preferred is currently marketing residential lots (the "HSR
Lots") in a subdivision known as Hartsel Springs Ranches, located in Park
County, Colorado (the HSR Subdivision").

       WHEREAS, Preferred and CLGC have requested that Lender modify the terms
of the Loan, upon the terms and provisions hereinafter set forth, in order to
amend the definition of Eligible Notes Receivables to include Eligible Notes
Receivables generated from the sale of the HSR Lots, to extend the Term and the
Revolving Credit Period as well as certain other provisions.

       NOW THEREFORE, in consideration of the foregoing recitals, and in further
consideration of the mutual covenants contained herein, and intending to be
legally bound hereby, the parties hereto mutually agree as follows:

I.     AMENDMENTS

       1. The date of this Seventh Amendment is referred to as the "Seventh
Amendment Date."

       2. The parties hereto mutually agree that all references to the Uniform
Commercial Code of the State of Nevada as contained in Paragraph 1.1 (h) of the
Loan Agreement shall be deemed to refer to the Uniform Commercial Code of the
State of Colorado, when pertaining to the procedures for perfecting any security
interest in any Collateral and for enforcement of any remedy against Collateral
in each case located within or subject to the laws of the State of Colorado
including but not limited to any Pledged Deeds of Trust or Eligible Notes
Receivable generated by the Sale of the SPR Lots or of HSR Lots. In all other
respects the parties hereto agree that the Uniform Commercial Code of the State
of Nevada shall govern.

       3. The parties hereto mutually agree that Section 1.1 (p) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (p) DEED OF TRUST. A deed of trust and an assignment of
              rents, executed and delivered by a Purchaser to Borrower, securing
              that Purchaser's Note Receivable and constituting a Lien upon the
              fee simple estate and interest of the Purchaser in and to its Lot.
              Said deed of trust and assignment shall be in substantially the
              form attached hereto as Exhibit "M-1" for any Lot located in the
              state of Nevada, and in substantially the

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              form attached hereto as Exhibit "M-2" for any SPR Lot located in
              the state of Colorado and in substantially the form attached
              hereto as Exhibit "M-3" for any HSR Lot located in the State of
              Colorado. Any reference in this Agreement to Exhibit "M" shall be
              deemed to refer to Exhibit "M-1" if the Lot is located in the
              State of Nevada, and to Exhibit "M-2" if SPR Lot and to Exhibit
              "M-3" if a HSR Lot."

       4. The parties hereby mutually agree that the Loan Agreement is hereby
amended by adding thereto, Exhibit M-3 which shall be in the form of Deed of
Trust attached hereto and made a part hereof and marked Exhibit "B (M-3)".

       5. The parties hereto mutually agree that Section 1.1 (u) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (u) FINAL MATURITY DATE. December 31, 2005."

       6. The parties hereto mutually agree that Paragraph 1.1 (ee) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (ee) LOAN YEAR. A period of twelve calendar months,
              commencing with the first day of the first full month following
              the Seventh Amendment Date, and each twelve (12) month period
              thereafter, provided that the period from the Seventh Amendment
              Date through the last day of the month in which the Seventh
              Amendment occurs shall constitute a part of the first Loan Year."

       7. The parties hereto mutually agree that Section 1.1 (ss) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof, the following
provision is inserted:

              "1.1 (ss) REVOLVING CREDIT PERIOD. The period from the Seventh
              Amendment Date to June 30, 2002."

       8. The parties hereto mutually agree that Section 1.1 (vv) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (vv) TERM. The period commencing on the Seventh Amendment
              Date and continuing until December 31, 2005. The Term includes
              both the

                                       3
<PAGE>   4

              Revolving Credit Period and the period during which no Advances
              are permitted."

       9. The parties hereto mutually agree that Schedule 1.1 (gg) (Lot) of the
Loan Agreement is hereby amended by substituting therefor Revised Schedule 1.1
(gg) which is attached and made a part hereof, and marked Exhibit "A (1.1
(gg))".

       10. The parties hereto mutually agree that Section 1.1 (kk) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (kk) NOTE RECEIVABLE. A promissory note, substantially in the
              form attached hereto as Exhibit "L-1" where such note pertains to
              the sale of any Lot located in the State of Nevada, and in
              substantially the form attached hereto as Exhibit "L-2" or "L-3"
              where such note pertains to the sale of any SPR Lot located in the
              State of Colorado and is substantially the form attached hereto as
              Exhibit "L-4" where such note pertains to the sale of any HSR Lot
              located in the State of Colorado. Any reference in this Agreement
              to Exhibit "L" shall be deemed to refer to Exhibit "L-1" if the
              Lot is located in the State of Nevada, and to Exhibit "L-2" or
              "L-3" if a SPR Lot and to Exhibit "L-4" or Exhibit "L-5" if a HSR
              Lot.

       11. The parties hereto mutually agree that the Loan Agreement is hereby
amended by adding thereto Exhibit "L-4", Exhibit "L-5" which shall be the form
of either promissory note applicable to the sale of a HSR Lot attached hereto,
made a part hereof and marked Exhibit "C (L-4) and (L-5)".

       12. The parties hereto mutually agree that Paragraph 1.1 (uu) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (uu) SUBDIVISION. One of seven subdivisions (NRS 278.320) in
              a planned community called Calvada located in Pahrump, Nye County,
              Nevada, known as Calvada Valley, Calvada Valley North, Calvada
              Meadows, Country View Estates, Country Place II, Vegas Acres Unit
              2 and Golden Spring Ranch, and a subdivision known as South Park
              Ranches located in Park County, Colorado (the "SPR Subdivision")
              and a subdivision known a Hartsel Springs Ranches consisting of
              parcels of land within such subdivision known as either Estates of
              Colorado or Hartsel

                                       4
<PAGE>   5

              Ranch located in Park County, Colorado (the "HSR Subdivision")."

       13. The parties hereto mutually agree that Section 1.1 (ww) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "1.1 (ww) TITLE COMPANY. Chicago Title Insurance Corporation or
              Security Title Guaranty Co. or any other reputable title insurer
              acceptable to Lender and doing business in Nye County, Nevada or
              Park County, Colorado."

       14. The parties hereto mutually agree that Section 2.2 of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "2.2 NON-REVOLVING PERIOD. Notwithstanding anything contained
              herein to the contrary, no Advances of the Loan will be made after
              June 30, 2002."

       15. The parties hereto mutually agree that Section 2.5 (a) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "2.5 (a) VOLUNTARY PREPAYMENTS. Subject to the provisions of
              Section 2.5 (b), Borrower may not prepay the Loan, in whole or in
              part, prior to December 31, 2001; subject to the terms of this
              Agreement and to the payment of the applicable premium set forth
              below, at any time on or after December 1, 2001, Borrower may
              prepay the Loan, in whole but not in part, upon thirty (30) days'
              prior written notice to Lender. Any such prepayment must include
              all outstanding principal, accrued but unpaid interest, accrued
              but unpaid fees and charges (if any), and the applicable
              prepayment premium provided below."

       16. The parties hereto mutually agree that Section 2.5 (b) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "2.5 (b) PERMITTED PREPAYMENTS. Borrower may prepay the Loan (i)
              as a result of any payments or prepayments made under the Pledged
              Notes Receivable; or (ii) in connection with a Mandatory
              Prepayment required under Section 2.5 (c)."

                                       5
<PAGE>   6

       17. The parties hereto mutually agree that Section 2.5 (d) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "2.5 (d) PREMIUMS. Any prepayment of the Loan pursuant to Section
              2.5 (a) above and not pursuant to Section 2.5(b) must be
              accompanied by a premium calculated as follows:

<TABLE>
<CAPTION>
              Date of Prepayment                           Premium
              ------------------                           -------
<S>                                                <C>
              On or after December 31, 2001        one percent (1%) of the
                                                   _____ outstanding principal
                                                   balance of the Loan.
</TABLE>

       18. The parties hereto mutually agree that Section 3.5 (b) of the Loan
Agreement is hereby deleted in its entirety, and in lieu thereof the following
provision is inserted:

              "3.5 (b) Attached hereto as Exhibits L-1, L-2, L-3 L-4, M-1, M-2
              and M-3, respectively, are true, accurate and complete copies of
              the forms of Note Receivable and the Deed of Trust in use by the
              Borrower. Attached hereto as Exhibit N-1 is a true, accurate and
              complete copy of the form of Grant, Bargain, Sale Deed conveying
              fee simple interest to a purchaser in use by Borrower in the State
              of Nevada. Attached hereto as Exhibit N-2 and N-3 is a true,
              accurate and complete copy of the form of Special Warranty Deed
              conveying fee simple interest to a purchaser in use by Borrower
              for SPR Lot and HSR Lot respectively in the State of Colorado. All
              references in this Agreement to Exhibit "N" shall be deemed to
              refer to Exhibit "N-1" when dealing with Lots in the State of
              Nevada, and to Exhibit "N-2" when dealing with SPR Lots and to
              Exhibit "N-3" when dealing with HSR Lots in the State of
              Colorado."

       19. The parties hereto mutually agree that the Loan Agreement is hereby
amended to add thereto Exhibit N-3, which shall be the form of Special Warranty
Deed attached hereto and made a part hereof and marked Exhibit "D (N-3)".

       20. The parties hereto mutually agree that Section 4.1 (1) (vii) of the
Loan Agreement is hereby deleted in its entirety and in lieu thereof, the
following provision is inserted:

                                       6
<PAGE>   7

              "(vii) FINANCING STATEMENTS. UCC Financing Statements governing
              the Collateral in form and substance satisfactory to Lender and
              its counsel to be recorded in Nye County, Nevada and with the
              Nevada Secretary of State (if the Collateral was generated by the
              sale of lots in Nye County Nevada) or in Park County, Colorado and
              with the Colorado Secretary of State (if the Collateral was
              generated from the Sale of SPR Lots or HSR Lots)."

       21. The parties hereto mutually agree that Section 4.1 (o) (i) is hereby
deleted in its entirety and in lieu thereof, the following provision is
inserted:

              "(i) the current registration with and approval from the Real
              Estate Division of the Department of Commerce of the State of
              Nevada (for Lots located or sold in the State of Nevada) and
              registration with and the approval of the Colorado Real Estate
              Commission of the State of Colorado (for Lots located in the State
              of Colorado), to sell the Lots."

       22. The parties hereto mutually agree that Schedule 4.1 (p) of the Loan
Agreement is hereby amended by adding thereto the Liens affecting the HSR Lots
as set forth on Exhibit "E (4.1 (p))" attached hereto and made a part hereof.

       23. Notwithstanding the language contained in Section 5.1 (c) (i) of the
Loan Agreement, the Assignments of Notes Receivable pertaining to the sale of
HSR Lots shall be in the form attached hereto, made a part hereof, and marked
Exhibit "F (H.3)".

       24. The parties hereto mutually agree that Section 5.1 (c) (ii) of the
Loan Agreement is hereby deleted in its entirety, and in lieu thereof the
following provision is inserted:

              "5.1 (c) (ii) delivered to Title Company, with a copy to Lender
              and Custodian (or if Lender shall instruct, to Lender) a list of
              all Pledged Deeds of Trust and the Lots encumbered thereby, which
              are to be the subject of such requested advance, together with an
              executed and acknowledged Assignment of Deeds of Trust relating
              thereto in the form attached hereto, made a part hereof and marked
              Exhibit "H.2-1" (for Deeds of Trust encumbering Lots in the State
              of Nevada), and in the form attached hereto, made a part hereof
              and marked Exhibit "H.2-2" (for Deeds of Trust encumbering SPR
              Lots) and in the form attached hereto made a part hereof and
              marked Exhibit "H.2-3" (for Deeds of Trust encumbering HSR Lots),
              and such additional information as Lender may in good faith

                                       7
<PAGE>   8

              request. All references contained herein to Exhibit "H.2" shall be
              deemed to refer to Exhibit H.2-1 when referring to Deeds of Trust
              encumbering Lots in the State of Nevada, and to Exhibit H.2-2 and
              H.2-3 when referring to Deeds of Trust encumbering SPR Lots and
              HSR Lots respectively in the State of Colorado."

       25. The parties hereto mutually agree that the Loan Agreement is hereby
amended by adding thereto as Exhibit "H.2-3" the form of Assignment of Deed of
Trust attached hereto as Exhibit "G (H.2-3)".

       26. The parties hereto mutually agree that Section 7.1 (w) of the Loan
Agreement is hereby deleted in its entirety and in lieu thereof the following
provision is inserted:

              "7.1 (w) FORM OF NOTE RECEIVABLE: Instruments in substantially the
              form of Exhibits L-1 and L-2 or L-3 or L-4 or L-5 attached hereto
              shall be used by Borrower for all Notes Receivable transactions
              which may be entered into in the future during the term of the
              Loan. Borrower will not modify, amend or otherwise alter the form
              or any of the terms of the Notes Receivable or any other documents
              relating thereto without Lender's prior written consent, except as
              required by law or regulatory agency. Borrower will promptly
              notify Lender of any such modification, amendment or alteration
              required by any law or regulatory agency."

       27. The parties hereto mutually agree that Schedule 6.5 (a) of the Loan
Agreement is hereby amended by adding thereto, the covenants, conditions,
restrictions and easements of record pertaining to the HSR Subdivision, as set
forth on Exhibit "I (6.5(a))", attached hereto and made a part hereof. All
references in the Agreement to Exhibit I shall be deemed to refer to Exhibit I-1
when dealing with the SPR Subdivision and to Exhibit I-2 when dealing with the
HSR Subdivision.

       28. The parties hereto mutually agree that the Loan Agreement is hereby
amended to add thereto Exhibit I-2 which shall relate to the HSR Subdivision
attached and made a part hereof and marked "Exhibit H (I-2).

II.    REAFFIRMATIONS

       1. Nothing contained herein shall be construed in any manner so as to
affect the validity or priority lien of any security interest held by Lender,
its successors and assigns, in any Collateral described in the Loan Agreement.
Borrower acknowledges and agrees that the Note, Loan Agreement, Custodial
Agreement, Lockbox Agreement,

                                       8
<PAGE>   9

Assignment, Environmental Indemnification Agreement and all other Loan Documents
(as modified herein) shall remain in full force and effect, unimpaired by this
Amendment and that they are valid, binding and enforceable documents, duly
executed and delivered by Borrower, and that Borrower has no offsets or defenses
to the enforcement of the terms and provisions contained therein.

       2. Borrower, and as applicable, the Guarantor, hereby reaffirm, restate
and incorporate by this reference all of their respective representations,
warranties and covenants as updated hereunder made in the Loan Agreement
(including as amended hereby), as if the same were made as of this date and with
reference to the Loan Agreement as amended hereby. In addition, Borrower (and,
as applicable, the Guarantor) represents and warrants as follows:

              a. This Amendment (and the Note Amendment) has been duly
authorized by Borrower and is the legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its terms subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting creditor's rights and remedies
generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and, as
applicable with respect to the Guarantor, this Amendment is the legal, valid and
binding obligation of the Guarantor, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

              b. The execution, delivery and performance of this Amendment and
the documents, instruments and materials to be delivered in connection herewith
and the transactions contemplated hereby do not and will not result in any
breach of, or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon the Collateral or the Subdivisions pursuant to, any
provision of law, or any indenture, agreement or instrument to which Borrower or
the Guarantor is a party or by which the Borrower or the Guarantor may be bound
or affected except for liens in favor of Lender and the Deeds of Trust.

              c. There are no Defaults or Events of Default pursuant to the Loan
Documents; Lender has fully performed its obligations under the Loan Documents
which Lender is required to perform as of the date hereof, and neither Borrower
nor the Guarantor has any defense, set-offs, claims, counterclaims or
recoupments against Lender or with respect to the Loan.

       3. Borrower and the Guarantor hereby reaffirm their respective
obligations, agreements and undertakings as set forth in the Loan Documents, and
acknowledge that the Indebtedness, or with respect to the Guarantor, the
guaranteed Obligations defined in

                                       9
<PAGE>   10

the Guaranty, are the valid, legally binding and enforceable obligations of
Borrower, and the Guarantor, respectively.

III.   CLOSING CONDITIONS AND ADDITIONAL TERMS

       1. The obligation of Lender to enter into this Amendment and, in addition
to all of the other conditions precedent set forth in the Loan Agreement or the
other Loan Documents, to fund any further Advance pursuant to the terms hereof,
shall be subject to the satisfaction of each of the following conditions
precedent by no later than January 15, 2001 (the "Expiration Date").

              a. Simultaneously with the first advance after the Seventh
Amendment Date, Borrower shall pay to Lender a commitment fee equal to $50,000
("Seventh Amendment Commitment Fee").

              b. Commencing with the first Advance after the Seventh Amendment
Date, Borrower shall pay to Lender an advance fee equal to one percent of any
advances over $5,000,000 in aggregate advances ("Advance Fee"). Such Advance Fee
shall be payable at the time of each applicable advance.

              c. Simultaneously with the first Advance after the Seventh
Amendment Date, Borrower shall pay Lender Five Thousand Dollars ($5,000) toward
attorney's fees and costs incurred by Lender in connection with the preparation
of this Seventh Amendment and related documentation.

              d. Lender shall have received from Borrower the original executed
Note Amendment, and a fully executed original or executed counterpart originals
of this Amendment.

              e. Lender shall have received from Ballard Spahr Andrews and
Ingersoll, LLP, Colorado Counsel for the Borrower, Jon Joseph, counsel for the
Borrower and Mego Financial Corp., a New York corporation ("Guarantor"), or
other counsel reasonably acceptable to Lender, closing opinions in form and
substance reasonably acceptable to Lender, dated as of the Seventh Amendment
Date.

              f. Except for information contained in certificates provided
pursuant to Article III(1)(i) hereof, the representations and warranties
contained in the Loan Agreement and in this Amendment, and in the certifications
and closing documents delivered in connection herewith, shall be true and
correct in all material respects, and all covenants and agreements to have been
complied with performed by Borrower (or Guarantor), shall have been fully
complied with and performed to the satisfaction of Lender.

                                       10
<PAGE>   11

              g. Neither Borrower nor Guarantor shall have taken any action or
permitted any condition to exist which would have been prohibited by any
provision of the Loan Documents.

              h. No Default or Event of Default shall exist immediately prior to
the closing hereof, or after giving effect to such closing, or immediately after
the making of any Advance requested in connection with such closing.

              i. Lender shall have received a certificate or certificates in
form and substance satisfactory to it, dated as of the Seventh Amendment Date
and signed by the president or other authorized officer of the Borrower,
certifying that the conditions specified in this Amendment have been fulfilled,
and "bringing down" the representations and warranties contained in the Loan
Agreement.

              j. Borrower shall deliver to Lender, and Lender shall have
approved, by no later than the Seventh Amendment Date or Expiration Date:

                     i. A certificate of current good standing for the Borrower,
       together with copies of any amendments to the certificate of
       incorporation or bylaws of the Borrower since November 29, 1996,
       certified to be true, correct and complete by the Borrower, its secretary
       or assistant secretary, or the Nevada or Colorado Secretary of State, as
       applicable;

                     ii. Evidence satisfactory to Lender that all taxes and
       assessments, including without limitation, those specified in Section 4.1
       (q) of the Loan Agreement, owed by or for which Borrower is responsible
       for collection have been paid or will be paid prior to delinquency;

                     iii. A certificate of secretary or assistant secretary of
       Borrower certifying the adoption by the Board of Directors thereof of a
       resolution authorizing specified officers of Borrower to enter and
       execute this Amendment, the Note Amendment and all other documents,
       certificates and instruments to be executed and delivered in connection
       with the Amendment closing, and to consummate the transactions
       contemplated hereunder;

                     iv. A certificate of the secretary or assistant secretary
       of the Borrower certifying the incumbency of, and verifying the
       authenticity of the signatures of, the officers of Borrower authorized to
       sign this Amendment, the Note Amendment and the other documents,
       instruments and materials to be executed and delivered in connection
       herewith;

                     v. A certificate of the secretary or assistant secretary of
       Guarantor certifying the adoption by the Board of Directors thereof of a
       resolution authorizing specified officers of the Guarantor to enter and
       execute this Amendment and all other documents, certificates and
       instruments to be executed

                                       11
<PAGE>   12

       and delivered in connection with this Amendment closing, and to
       consummate the transactions contemplated hereunder;

                     vi. A certificate of the secretary or assistant secretary
       of the Guarantor certifying the incumbency of, and verifying the
       authenticity of signatures of, the officers of the Guarantor authorized
       to sign this Amendment and the other documents, instruments and materials
       to be executed and delivered in connection herewith;

                     vii. To the extent any of the same have not previously been
       delivered to Lender, true, correct and complete copies of any amendments
       since the Seventh Amendment Date, to any of the Lot Sale Documents (as
       defined in Section 4.1 [o] of the Loan Agreement) including but not
       limited to those Lot Sale Documents applicable to the HSR Lots, together
       with such copies of any Lot Sale Documents, or required governmental
       permits or licenses obtained, subsequent to the Seventh Amendment Date
       and not previously delivered to Lender; and

                     viii. Such updated litigation and UCC searches as Lender
       may require.

                     vix. An updated Lockbox Account Agreement and/or Blocked
       Account Agreement if deemed necessary by Lender and Lockbox Agent.

              k. All actions taken in connection with the execution or delivery
of this Amendment, all documents, certificates, instruments and materials
relating hereto, shall be reasonably satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of such documents and papers
as Lender or such counsel may reasonably request in connection herewith all in
form and substance satisfactory to Lender and its counsel.

              l. Borrower shall have paid all fees and expenses required to be
paid prior to or at the closing pursuant to this Amendment.

IV.    GUARANTOR'S OBLIGATIONS

       1.     The Guarantor:

              a. has reviewed this Amendment with counsel of its choice, and
accepts and consents to the terms of this Amendment and the transactions
provided for herein;

              b. acknowledges and agrees that it receives material benefit and
valuable consideration as a result of the transactions provided for herein or
contemplated hereunder;

                                       12
<PAGE>   13

              c. ratifies and reaffirms the Guaranty, and all of the terms,
provisions, agreements, conditions and undertakings contained in the Guaranty or
any of the Loan Documents (as applicable to the Guarantor), all of which remain
unmodified except as modified herein and in full force and effect;

              d. acknowledges and confirms its continuing obligations under the
Guaranty and agrees to be bound by the terms thereof, and that it has been since
July 31, 1991 and remains liable with respect to the guaranteed Obligations as
defined and provided in the Guaranty;

              e. acknowledges and agrees that the guaranteed Obligations
encompass and apply to all Advances, including Advances from and after the
Seventh Amendment Date, and to all Obligations, including Obligations arising
pursuant to this Amendment;

              f. is fully aware of the financial and other conditions of the
Borrower and the HSR Subdivision, and is executing and delivering this Amendment
based solely upon its own independent investigation and not upon any
representation or statement of Lender;

              g. except for information contained in certificates provided
pursuant to IV(1)(i) hereof reaffirms, restates and incorporates by this
reference all of the representations, warranties and covenants made in the
Guaranty as if the same were made as of this date;

              h. acknowledges that its agreements, consents and acknowledgments
contained herein, and the provisions of the Guaranty (which are reaffirmed by
Guarantor), are a material inducement to Lender to enter into this Amendment,
and that, but for the Guaranty, and the Guarantor's agreements as set forth
herein, Lender would decline to enter into this Amendment; and

              i. shall deliver to Lender a certificate or certificates in form
and substance satisfactory to it, dated as of the Seventh Amendment Date and
signed by the president or other authorized officer of the Guarantor, certifying
that the conditions specified in this Amendment have been fulfilled, and
"bringing down" the representations and warranties contained in the Guaranty.

V.     MISCELLANEOUS

       1. This Amendment is entered into for the benefit of the parties hereto,
and is binding on the respective heirs, successors or assigns; provided that
Borrower may not transfer or assign any of its rights or obligations under this
Amendment without the prior written consent of Lender or as permitted under the
Loan Agreement, as amended. Guarantor is a party to this Amendment solely for
the purposes of affirming its obligations in accordance with Article IV hereof.

                                       13
<PAGE>   14

       2. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Amendment shall become effective upon Lender's receipt of one
or more counterparts hereof timely executed by Borrower, the Guarantor and
Lender. This Amendment may not be amended or modified, and no term or provision
hereof may be waived, except by written instrument signed by the parties hereto.

       3. Section headings have been inserted in this Amendment as a matter of
convenience of reference only; such headings are not part of this Amendment and
shall not be used in the interpretation of this Amendment.

       4. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH OF BORROWER, THE GUARANTOR AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY ANY RIGHT,
POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHER
SOUNDING IN TORT OR CONTRACT OF OTHERWISE, OR WITH RESPECT TO ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY. EACH OF BORROWER, THE GUARANTOR AND LENDER
FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL
CANNOT OR HAS NOT BEEN WAIVED UNLESS SUCH FAILURE TO CONSOLIDATE WOULD RESULT IN
INABILITY TO ENFORCE A CLAIM. FURTHER, BORROWER AND THE GUARANTOR HEREBY CERTIFY
THAT NO REPRESENTATIVE OR AGENT OF LENDER, NOR LENDER'S COUNSEL, HAS REPRESENTED
EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER AND THE
GUARANTOR ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS AMENDMENT AND THE OTHER LOAN
DOCUMENTS.

       5. This Agreement and all other Loan Documents shall be governed by the
laws of the State of Nevada in all respects, including matters of construction,
performance and enforcement, except to the extent that the procedural laws of
the State of Colorado govern the enforcement of any remedy against Collateral or
property located in the State of Colorado, and excluding principles governing
conflicts of laws.

                                       14
<PAGE>   15

       6. Capitalized terms used herein which are not otherwise defined shall
have the meaning ascribed in the Note and/or the Loan Agreement.

       7. Whenever possible, the terms of this Amendment and the terms of all
prior amendments shall be read together, but to the extent of any irreconcilable
conflict, the terms of this Amendment shall govern.

       IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have set their hands and seals the day and year first above written.

ATTEST:                                 BORROWER:
                                        PREFERRED EQUITIES CORPORATION

   /s/ [Signature Illegible]            By:   /s/ GREGG McMURTRIE
-----------------------------              -------------------------------------

                                        COLORADO LAND AND GRAZING
                                        CORP.

   /s/ [Signature Illegible]            By:   /s/ GREGG McMURTRIE
-----------------------------              -------------------------------------

                                        GUARANTOR:
                                        MEGO FINANCIAL CORP.

   /s/ [Signature Illegible]            By:   /s/ CHARLES BALTUSKONIS
-----------------------------              -------------------------------------

                                        LENDER:
                                        DORFINCO CORPORATION

   /s/ [Signature Illegible]            By:
-----------------------------              -------------------------------------

The address of the within named Lender is:
40 Westminster Street
P.O. Box 6687
Providence, Rhode Island 02940-6687

-------------------------------
on behalf of Lender

                                       15
<PAGE>   16

                            CORPORATE ACKNOWLEDGMENT

STATE 0F   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
GREGG McMURTRIE, who acknowledged himself to be the EXEC. VICE PRESIDENT of
PREFERRED EQUITIES CORPORATION, being authorized to do so, executed the
foregoing instrument for the purposes therein contained by signing the name of
the corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public

My commission expires:
                                            ===================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ===================================

                            CORPORATE ACKNOWLEDGMENT

STATE OF   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
GREGG McMURTRIE, who acknowledged himself to be the PRESIDENT of COLORADO LAND
AND GRAZING CORP., being authorized to do so, executed the foregoing instrument
for the purposes therein contained by signing the name of the corporation by
himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public

My commission expires:
                                            ===================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ===================================

                                       16
<PAGE>   17

                            CORPORATE ACKNOWLEDGMENT

STATE OF   NEVADA    :
        -------------
COUNTY OF   CLARK    :
        -------------

       ON THIS, the 19th day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
CHARLES BALTUSKONIS, who acknowledged himself to be the SR. VICE PRESIDENT of
MEGO FINANCIAL CORP., being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                            /s/ SYONJA L. GARCIA
                                            -----------------------------------
                                            Notary Public

My commission expires:                      ====================================
                                                       NOTARY PUBLIC
                                                      STATE OF NEVADA
                                                      County of Clerk
                                                      SYONJA L. GARCIA
                                                   Appt. No. 00-64553-1
                                              My Appt. Expires Aug. 24, 2004
                                            ====================================

                            CORPORATE ACKNOWLEDGMENT

STATE OF             :
        -------------
COUNTY OF            :
        -------------

       ON THIS, the ___ day of December, 2000 before me, a Notary Public in and
for the State and County aforesaid, the undersigned officer, personally appeared
_________________, who acknowledged himself to be the _____________________ of
DORFINCO CORPORATION, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself/herself as such officer.

       IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                            -----------------------------------
                                            Notary Public

My commission expires:

                                       17
<PAGE>   18

                                    EXHIBITS

<TABLE>
<S>                   <C>
EXHIBIT A             REVISED LOT SCHEDULE 1.1 (gg)

EXHIBIT B             EXHIBIT M-3 DEED OF TRUST

EXHIBIT C             EXHIBIT L-4 PROMISSORY NOTE/EXHIBIT L-5
                      PROMISSORY NOTE

EXHIBIT D             EXHIBIT N-3 WARRANTY DEED

EXHIBIT E             EXHIBIT 4.1 (p) LIENS AFFECTING LOTS INCLUDING HSR

EXHIBIT F             EXHIBIT H.3 ASSIGNMENT OF NOTES RECEIVABLE - HSR
                      LOTS

EXHIBIT G             EXHIBIT H.2-3 ASSIGNMENT OF DEED OF TRUST

EXHIBIT H             EXHIBIT I-2 HSR SUBDIVISION RESTRICTIONS
</TABLE>

                                       18
<PAGE>   19

                                    EXHIBIT A

                          REVISED LOT SCHEDULE 1.1 (gg)

                                       19
<PAGE>   20

                                    EXHIBIT B

                            EXHIBIT M-3 DEED OF TRUST

                                       20
<PAGE>   21

                                    EXHIBIT C

             EXHIBIT L-4 PROMISSORY NOTE/EXHIBIT L-5 PROMISSORY NOTE

                                       21
<PAGE>   22

                                    EXHIBIT D

                            EXHIBIT N-3 WARRANTY DEED

                                       22
<PAGE>   23

                                    EXHIBIT E

               EXHIBIT 4.1 (p) LIENS AFFECTING LOTS INCLUDING HSR

                                       23
<PAGE>   24

                         EXHIBIT F TO SEVENTH AMENDMENT
                                   EXHIBIT H-3

                    COLLATERAL ASSIGNMENT OF NOTES RECEIVABLE
                             (HARTSEL SPRINGS RANCH)

       AGREEMENT, made and executed this ____ day of ____________ ___, between
PREFERRED EQUITIES CORPORATION, a Nevada corporation ("Borrower") and DORFINCO
CORPORATION, a Delaware corporation ("Lender").

                              W I T N E S S E T H:

       WHEREAS, Borrower and Lender have entered into a Loan and Security
Agreement, dated as of August 9, 1991, as amended, (the "Loan Agreement"),
pursuant to which it is contemplated that Lender will lend an amount not to
exceed $7,500,000.00 (the "Loan") on a revolving basis to Borrower to be secured
by a lien and security interest granted by Borrower to Lender in respect to
certain Notes Receivable (the "Pledged Notes Receivable") of which Borrower is
the payee. The Pledged Notes Receivable are to be delivered to Custodian.

       NOW, THEREFORE, to secure the payment of the Indebtedness owed by
Borrower to Lender under the Loan Agreement and the performance of all
obligations owed by Borrower to Lender under the Loan Agreement, and in
consideration of the extension of the Loan to Borrower, Borrower hereby, subject
to all conditions, representations and warranties, covenants and obligations of
Borrower under the Loan Agreement, conveys, assigns, transfers and sets over
unto Lender all of its right, title and interest in and to the Pledged Notes
Receivable set forth on SCHEDULE "A" HEREOF, together with all of Borrower's
right, title and interest in and to the following (together with the Pledged
Notes Receivable collectively the "Collateral"):

              All amendments, extensions, renewals and replacements of, and
       substitutions for, the Pledged Notes Receivable;

              All proceeds (cash and non-cash), property, property rights,
       privileges and benefits pertaining to, or arising from the enforcement
       of, the Pledged Notes Receivable, including, without limitation, proceeds
       in the form of all funds held in any accounts pursuant to any agency or
       lockbox agreement or similar arrangement related to any of the Pledged
       Notes Receivable to the extent such funds represent or arise from any of
       the foregoing, accounts, accounts receivable, chattel paper, contract
       rights, general intangibles and other receivables arising under or
       arising in connection with the Pledged Notes Receivable, instruments and
       documents, and all payments made from time to time on the Pledged Notes
       Receivable in whatever form, including cash, checks, notes, drafts and
       other instruments for the payment of money, all property returned by or
       reclaimed or repossessed from Account Debtors, all rights of foreclosure,
       termination, repossession, dispossession, all documents, instruments,
       contracts, liens and security instruments and guaranties relating to the
       Pledged Notes Receivable, all collateral, security deposits, tax escrows
       (to the extent the same may be pledged under applicable law) or other
       security securing the obligations of any Person under or relating to the
       Pledged Notes Receivable;

                                       24
<PAGE>   25

              Documents, instruments, pledged assets and chattel paper relating
       to the Pledged Notes Receivable; and

              All books, records, computer tapes and disks summarizing or
       evidencing the Collateral.

       Borrower hereby warrants and represents to Lender that, to the extent the
Collateral assigned hereby constitutes Primary Collateral, it is held and owned
by Borrower free and clear of all prior liens, security interests, charges and
encumbrances. Borrower covenants and agrees with Lender not to take any action
with respect to the Collateral which may be prejudicial to the rights of Lender
hereunder except actions which are specifically permitted under the Loan
Agreement.

       All capitalized used herein, but not defined herein, shall have the
meanings assigned to them in the Loan Agreement.

       This assignment shall be binding upon the Borrower and its successors and
assigns, and shall inure to the benefit of Lender and its successors and
assigns. This instrument is governed by and shall be construed under the laws of
the State of Colorado.

       IN WITNESS WHEREOF, Borrower has duly executed this Collateral Assignment
of Notes Receivable as of the date first written above.

                                        Borrower:

                                        PREFERRED EQUITIES CORPORATION, a
                                        Nevada corporation

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

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

STATE OF ___________________ }
                             }  ss.
COUNTY OF __________________ }

       On _______________ ______, personally appeared before me, a notary
public, personally known (or proved) to me to be the person whose name is
subscribed to the above instrument (Collateral Assignment of Notes Receivable)
who acknowledged that he/she executed the above instrument.

                                        ------------------------------------
                                                   Notary Public

                                       25
<PAGE>   26

                         EXHIBIT G TO SEVENTH AMENDMENT
                                  EXHIBIT H2-3

                          ASSIGNMENT OF DEEDS OF TRUST
                             (HARTSEL SPRINGS RANCH)

       FOR VALUE RECEIVED, the undersigned, PREFERRED EQUITIES CORPORATION,
hereby grants, assigns and transfers to DORFINCO CORPORATION, a Delaware
corporation, all beneficial interest in, to and under those certain Deeds of
Trust (and the Promissory Notes secured thereby), listed on EXHIBIT "A" attached
hereto and made a part hereof, executed by Borrowers, as grantor to The Public
Trustee of Park County, Colorado, as Trustee recorded, as set forth on EXHIBIT
"A", in the official Records in the office of the Clerk and Recorder of Park
County, State of Colorado.

       TOGETHER, with the note or notes therein described or referred to, the
money due and to become due thereon with interest, and all rights accrued or to
accrue under said Deeds of Trust.

       Dated this _____ day of __________ __________.

                                        PREFERRED EQUITIES CORPORATION,
                                        a Nevada corporation

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

                                        Name:
                                             -----------------------------------

                                        Title:
                                              ----------------------------------

                                                 -------------------------------
STATE OF NEVADA }                                 Escrow No. __________________
                } ss.                             WHEN RECORDED MAIL TO:
COUNTY OF CLARK }
                                                  Preferred Equities Corporation
On _________________, ______, personally          4310 Paradise Road
appeared before me, a notary public,              Las Vegas, NV 89109
______________________________, personally        Attention:  Mark Prasse
known to me to be the person whose name is
subscribed to the above instrument who
acknowledged that he executed the above
instrument.

------------------------------
NOTARY PUBLIC

                                       26
<PAGE>   27

                                    EXHIBIT H

                    EXHIBIT I-2 HSR SUBDIVISION RESTRICTIONS

                                       27

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