Document:

<PAGE>   1
                                                                   EXHIBIT 10.21

                            CROSS-LICENSE AGREEMENT

        This Cross-License Agreement (the "Agreement") is made and entered into
as of July 24, 1995, between Simplex Solutions, Inc. ("Simplex"), a California
corporation with principal offices at 2540 N. First Street, Suite 302, San Jose,
CA 95131 ("Simplex"), and Chris Terman, an individual with a principal address
at 60 Cedar Street, Newton Centre, MA 02159 ("Terman").

                                     RECITAL

        A. The parties wish to enter into a cross-license arrangement pursuant
to which each party will grant to the other party certain rights with respect to
proprietary technologies of the granting party.

        NOW THEREFORE, the parties agree as follows:

        1. Definitions.

               (a) "Documentation" shall mean the documentation and supporting
materials in hard copy form relating to a party's Licensed Technology hereunder.

               (b) "Source Code" means the human readable embodiment of a
product's computer code, which implements specific algorithms from which the
product is derived, whether such embodiment is fixed on paper or magnetic
medium, in electronic impulses, or any other medium of expression from which it
can be perceived, copied, or communicated.

               (c) "Object Code" means the computer executable embodiment of a
product's computer code, which is derived from the Source Code by a process
normally referred to as compilation or any other process that translates the
Source Code or some intermediate code derived from the Source Code into a form
that can be understood and acted upon by a computer, regardless of the medium in
which such code is fixed or embodied.

               (d) "Simplex Programs" shall mean the commercially released
versions of Simplex's [*] software programs.

               (e) "Terman Code" shall mean the proprietary Source Code modules
identified on Exhibit A attached hereto.

               (f) "Simplex Licensed Technology" shall mean the Simplex Programs
and their associated Documentation.

               (g) "Terman Licensed Technology" shall mean the Terman Code and
its associated Documentation, as each exists on the date of this Agreement.

*Certain information on this page has been omitted and filed separately with
 the Commission. Confidential treatment has been requested with respect to the
 omitted portions.
<PAGE>   2

        2. License Grants.

               (a) Simplex License Grants. Simplex hereby grants to Terman under
Simplex's intellectual property rights in the Simplex Licensed Technology, and
Terman accepts, a worldwide, nonexclusive, perpetual, fully paid-up license to
use the Simplex Software.

               (b) Terman License Grants. Terman hereby grants to Simplex under
Terman's intellectual property rights in the Terman Licensed Technology, and
Simplex accepts, a worldwide, nonexclusive, perpetual, fully paid-up license,
with right of sublicense, to use, modify, reproduce, sell or otherwise
distribute the Terman Licensed Technology, and to prepare, use, reproduce, sell
or otherwise directly or indirectly distribute derivative works based thereon.

               (c) License Restrictions. Neither party will use, modify, adapt,
prepare derivative works of, reproduce, disclose, distribute or sublicense the
other party's Licensed Technology in any circumstances or manner except as
expressly authorized herein or as expressly agreed to in writing by the
licensing party.

        3. Proprietary Notices. All copyright or trademark notices placed on a
party's Licensed Technology by the licensing party must be reproduced and
included with any copy of any portion of such Licensed Technology.

        4. Technology Transfer. Upon execution of this Agreement, Terman shall
deliver to Simplex one complete copy of the Terman Licensed Technology. Within
thirty (30) days after the first commercial sale of a Simplex Program, Simplex
shall deliver to Terman one complete copy of the Simplex Licensed Technology
associated with such commercially released Simplex Program. Terman shall deliver
the Terman Licensed Technology via internet wire transfer.

        5. Ownership and Future Provisions.

               (a) Ownership Representation. Each party hereto represents and
warrants, and the other party hereby acknowledges, that it has sufficient right,
title and interest in and to the technology ostensibly being licensed by it to
the other party hereunder to give full force and effect to the license grants
set forth in Section 2 above.

               (b) Ownership Covenant. Subject to the licenses granted to
Terman herein, the Simplex Licensed Technology and all intellectual property
rights associated therewith are and shall remain the exclusive property of
Simplex. As between the parties hereto and subject to the licenses granted to
Simplex herein, the Terman Licensed Technology and all intellectual property
rights associated therewith are and shall remain the exclusive property of
Terman and Simplex shall own all rights, title and interest in all improvements
of, modifications to or derivative works based on the Terman Licensed Technology
made by or for Simplex.

               (c) Upgrades and Updates. Simplex and Terman may in their
discretion provide limited enhancements of their respective Licensed Technology
to each other during the term of this Agreement, but no obligation to do so
shall be created hereunder. The parties acknowledge and agree that Terman and
Simplex have entered into or are contemplating entering

                                      -2-
<PAGE>   3

into a consulting arrangement whereby Terman would provide certain programming
services to Simplex in connection with the Terman Licensed Technology.

        6. Support Obligations. Each party's Licensed Technology is provided "AS
IS" with reasonable maintenance or support services available.

        7. Term and Termination.

               (a) Term. This Agreement and the licenses granted herein shall be
effective from the date of this Agreement and shall continue in perpetuity,
unless earlier terminated pursuant to the mutual written consent of the parties
or otherwise in accordance with the terms of this Section 7.

               (b) Termination for Breach. Notwithstanding the terms of
subsection (a) above, this Agreement may be terminated by one party if the other
party materially fails to perform or comply with this Agreement or any provision
hereof. Termination shall be effective thirty (30) days after delivery of notice
of termination to the defaulting party if the default(s) have not been cured
within such thirty (30) day period.

               (c) Survival and Return of Materials.

                    (i) General. The rights and obligations of the parties
contained in Section 5(b) (Ownership Covenant), Section 8 (Confidentiality),
Section 10 (Disclaimer of Warranties) and Section 11 (Limitation of Liability)
shall survive the termination of this Agreement.

                    (ii) Return. Upon the termination of this Agreement, each
party shall return to the other party or destroy, at such other party's sole
discretion, all copies of the other party's Licensed Technology.

        8. Confidentiality.

               (a) Obligation of Confidentiality. Each party represents and
covenants, unless otherwise agreed to by the other party in writing, that it
will, for a period of five (5) years after receipt of confidential information,
keep confidential and will not divulge or publish to any other person or entity,
or use for its own benefit any technical, marketing or other business
information of the other party acquired by it in the course of its performance
of this Agreement except as is necessary in the performance of or expressly
permitted by this Agreement, provided that the disclosing party has designated
in writing or reduced oral disclosure to writing within thirty (30) days of oral
disclosure to the receiving party that such information constitutes confidential
proprietary information or a trade secret of the disclosing party. The
information protected by this section shall in all cases include but not be
limited to the Licensed Technology made available by one party by the other
party hereto.

               (b) Exclusions to Confidentiality. This Section shall impose no
obligation upon the receiving party with respect to any proprietary information
which (i) is now or which

                                      -3-
<PAGE>   4

subsequently becomes generally known or available by publication, general use,
or otherwise; (ii) was known by the receiving party prior to the time of
disclosure as showed by the receiving party's files and records immediately
prior to the time of disclosure; (iii) is furnished by the disclosing party to
third parties without restriction on disclosure; (iv) is subsequently rightfully
furnished to the receiving party by a third party without restriction on
disclosure; or (v) is independently developed by the receiving party as
demonstrated by such party's files and records created contemporaneously with
such developments, provided that the person or persons developing same have not
had access to the proprietary information.

               (c) Return of Confidential Information. Each party agrees to
return or destroy any and all confidential information to the disclosing party
upon the disclosing party's request. However, the disclosing party acknowledges
and understands that upon such return or destruction the receiving party is
relieved from fulfilling those, and only those, obligations that required the
use of the returned confidential information. Information marked with
"returnable" shall not be destroyed.

        9. Indemnification.

               (a) Intellectual Property Indemnity. Each party hereto represents
that it has the sufficient right, title and interest in its Licensed Technology
to enter into this Agreement and to grant the license rights as stated in
Section 2 above. Each party (the "Indemnifying Party") agrees, at its own
expense, to defend the other party (the "Indemnified Party") and hold the
Indemnified Party harmless against any suit, claim, or proceeding brought
against the Indemnified Party alleging that any use, distribution or any other
exercise of the rights of the Indemnified Party or its customers of the
Indemnifying Party's Licensed Technology infringes any copyright or trademark or
any trade secrets of any third parties, provided that the Indemnified Party (i)
promptly notifies the Indemnifying Party in writing of any such suit, claim or
proceeding; (ii) allows the Indemnifying Party to defend, settle or otherwise
dispose of such suit or proceeding and, at its expense, to direct the defense of
such suit, claim, or proceeding; (iii) gives the Indemnifying Party sole
authority, full information and assistance necessary to defend such suit, claim,
or proceeding; and, (iv) does not enter into any settlement of any such suit,
claim or proceeding without the Indemnifying Party's written consent. This
obligation will not cover (A) any claim that any of the Indemnifying Party's
Licensed Technology infringes any third party's rights as used solely in
combination with products or technology not supplied by Indemnifying Party, if
that claim could have been avoided by the use of the Product in combination with
such other products or technology; (B) any claim that arises out of the use of
software, hardware or other technology supplied by the Indemnified Party or its
representatives, sublicensees or resellers.

               (b) Remedies. Following written notice of a suit, claim or
proceeding or a threat of suit, claim or proceeding requiring said
indemnification, or in the event the Indemnifying Party desires to minimize its
liabilities hereunder, the Indemnifying Party shall have the right, at its sole
discretion, to either (i) substitute a full equivalent, noninfringing
technology; (ii) modify the infringing technology so that it no longer infringes
but remains functionally equivalent; or (iii) obtain for the Indemnified Party
at the Indemnifying Party's

                                      -4-
<PAGE>   5

expense the right to continue the use of such technology. THE FOREGOING STATES
THE ENTIRE LIABILITY OF EACH PARTY FOR PATENT, COPYRIGHT OR PROPRIETARY RIGHTS
INFRINGEMENT.

               (c) General Indemnity. The Indemnifying Party agrees to indemnify
and hold harmless the Indemnified Party from any claims, suits, or proceedings
including without limitation the payment of the Indemnified Party's reasonable
attorney's fees incurred in connection therewith, made or brought against the
Indemnified Party as a result of the negligence, misrepresentation, misconduct
or error or omission on the part of the Indemnifying Party or its
representatives, sublicensees or resellers.

        10. Disclaimer of Warranties. OTHER THAN AS EXPRESSLY SET FORTH ABOVE,
EACH PARTY IS PROVIDING ITS LICENSED TECHNOLOGY "AS IS" AND WITHOUT ANY
WARRANTY. EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES WITH RESPECT TO ITS
LICENSED TECHNOLOGY, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

        11. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION
WITH OR ARISING OUT OF ITS PERFORMANCE OR FAILURE TO PERFORM PURSUANT TO THIS
AGREEMENT EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE. Both parties
release the other from all obligation, liability, claims or demands in excess of
the limitations provided in this Section 11.

        12. U.S. Government Restricted Rights. Each party's Licensed Technology
is being provided to the other party with RESTRICTED RIGHTS. Use, duplication or
disclosure by the Government is subject to restrictions as set forth in
(c)(1)(ii) of The Rights in Technical Data and Computer Software clause at DFARS
252.227-7013 or subparagraphs (c)(1) and (2) of the Commercial Computer
Software--Restricted Rights at 48 CFR 52.227-19, as applicable.
Contractor/manufacturer in the case of the Simplex Licensed Technology is
Simplex Solutions, Inc., 2540 N. First Street, Suite 302, San Jose, CA 95131,
and in the case of the Terman Licensed Technology is Chris Terman, 60 Cedar
Street, Newton Centre, MA 02159.

        13. Notices. All notices shall be sent to the address set forth in the
introductory paragraph to this Agreement, or to such other address as one party
notifies the other of in writing. All notices required under this Agreement
shall be deemed given when sent by fax with subsequent confirmation, or mailed
by certified mail, return receipt, postage prepaid; or courier service or
equivalent.

        14. General Provisions.

               (a) Severability. If any term or provision of the Agreement shall
be found to be illegal or unenforceable therein, this Agreement shall remain in
full force and effect and such term or provision shall be deemed stricken and
the parties will endeavor to substitute similar language that is as consistent
as possible with the original intent.

                                      -5-
<PAGE>   6

               (b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to that body of law controlling conflicts of law.

               (c) Entire Agreement: Amendment. This Agreement, including
Exhibit A attached hereto, which is hereby incorporated by reference, represents
the entire Agreement between the parties relating to it subject matter and
supersedes all prior representations, discussions, negotiations and agreements,
whether written or oral. No amendment to this Agreement shall be effective
unless it is in writing, dated subsequent hereto, refers explicitly to this
Agreement and is duly executed.

               (d) Waiver. No waiver will be implied from a party's conduct or
failure to enforce its rights thereunder. No waiver will be effective unless in
writing signed on behalf of the party against whom the waiver is asserted.

               (e) Relationship of the Parties. The parties to this Agreement
are independent contractors. There is no relationship of agency, partnership,
joint venture, employment or franchise between the parties. Neither party has
the ability to bind the other or to incur any obligation on its behalf.

               (f) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

               (g) Injunctive Relief. Since unauthorized use or transfer of a
party's Licensed Technology and any information contained therein will diminish
substantially the value to Simplex or Terman of their respective trade secrets
and other proprietary rights that are the subject of this Agreement, each party
shall, if the other party breaches any of its obligations with respect to
limited use or confidentiality of the Licensed Technology, be entitled to obtain
equitable relief in addition to money damages to protect its interests therein,
including but not limited to injunctive relief. Each party's rights and remedies
as set forth in this Agreement are not exclusive, and are in addition to any
other rights and remedies provided by law.

        IN WITNESS WHEREOF, the parties have executed this Cross-License
Agreement as of the date first written above.

SIMPLEX SOLUTIONS, INC.                  CHRIS TERMAN

By:   [SIGNATURE]                        By: /s/ CHRIS TERMAN
   ---------------------------------        ------------------------------------

Title:   Vice President
      ------------------------------

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<PAGE>   7

                                   EXHIBIT A
                                  TERMAN CODE

[*]

*Certain information on this page has been omitted and filed separately with
 the Commission. Confidential treatment has been requested with respect to the
 omitted portions.<PAGE>   1

                                                                  EXHIBIT 10.225

                               FIRST AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

       This First Amendment to Loan and Security Agreement (this "AMENDMENT") is
made and entered into as of November 30, 2000, by and between PREFERRED EQUITIES
CORPORATION, a Nevada corporation ("BORROWER"), and DORFINCO CORPORATION, a
Delaware corporation ("LENDER").

                               FACTUAL BACKGROUND

       A. Under a Loan and Security Agreement dated as of August 12, 1998,
between Lender as lender and Borrower as borrower (as now or hereafter amended,
the "LOAN AGREEMENT"), Lender agreed to make a loan in the principal amount of
Four Million and 00/100 Dollars ($4,000,000.00) (as defined in the Loan
Agreement and herein, the "LOAN") to Borrower. Capitalized terms used herein
without definition have the meanings given to them in the Loan Agreement.

       B. The Loan is guaranteed by Mego Financial Corp., a New York corporation
("GUARANTOR"), in accordance with that certain Guaranty Agreement, dated August
12, 1998, from Guarantor to Lender.

       C. Borrower is a wholly-owned subsidiary corporation of Guarantor. It is
of material and substantial benefit to Guarantor that the Loan was made to
Borrower, and each of Guarantor and Borrower acknowledges that it has received
full and adequate consideration for the incurrence by it of the obligations to
Lender as set forth in this Amendment.

       D. Certain intra-company debt obligations of Borrower to Guarantor have
been subordinated to the repayment by Borrower of the Loan in accordance with
that certain Subordination Agreement, dated August 12, 1998, among Guarantor,
Borrower and Lender.

       E. Pursuant to paragraph 4 of the Note, Borrower elected to extend the
term of the Loan for the Extended Term (as defined in the Note) to the Extended
Maturity Date.

       F. This Amendment is a "LOAN DOCUMENT" as defined in the Loan Agreement.

       G. Lender and Borrower entered into a letter agreement dated as of
September 18, 2000 (the "LETTER AGREEMENT"), pursuant to which they agreed,
inter alia, that certain terms and provisions relating to the Loan Agreement,
the Note, the Subordination Agreement and the Deed of Trust were amended and
that Lender, Borrower and/or Guarantor would enter into this Amendment and the
other amendments required hereunder to reflect the amendments and agreements set
forth in the Letter Agreement.

<PAGE>   2

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

       1. RECITALS. The recitals set forth above in the Factual Background are
true, accurate and correct.

       2. REAFFIRMATION OF LOAN AGREEMENT AND LOAN DOCUMENTS. Borrower reaffirms
all of its obligations under the Loan Agreement and the Loan Documents, and
Borrower acknowledges that it has no claims, offset or defenses with respect to
the payment of any sum due under the Loan Agreement or any other Loan Documents.
Borrower hereby acknowledges and regrants for the benefit of Lender all of the
grants of liens, encumbrances and security interests and the assignments
contained in the Loan Agreement and the other Loan Documents.

       3. AMENDMENT. The Loan Agreement is hereby amended as follows:

              (a) The third full paragraph under "WITNESSETH:" on the first page
       of the Loan Agreement is hereby amended and restated in its entirety as
       follows:

                            NOW, THEREFORE, IN CONSIDERATION of the mutual
                     covenants and promises of the parties and subject to the
                     following terms and conditions, Borrower agrees to borrow
                     from Lender, and Lender agrees to loan to Borrower, the
                     Loan for the purposes provided herein. The Loan shall be
                     evidenced by a Promissory Note bearing even date herewith,
                     as amended by that certain First Amendment to Promissory
                     Note, dated as of November 30, 2000 (as amended, the
                     "NOTE"), and repayment thereof shall be secured by a Deed
                     of Trust, Security Agreement and Fixture Filing, as amended
                     by that certain First Amendment to Deed of Trust, Security
                     Agreement and Fixture Filing, dated as of November 30, 2000
                     (as amended, the "DEED OF TRUST"), this Agreement and, as
                     described in on Exhibit "B" hereof, that certain loan and
                     security agreement and that certain deed of trust, pursuant
                     to a First Amendment to Loan and Security Agreement and a
                     Third Amendment to Deed of Trust, respectively
                     (collectively, the "AMENDMENTS"), and guaranteed by MEGO
                     Financial Corp., a New York corporation (the "GUARANTOR"),
                     by the execution of a Guaranty Agreement in form and
                     content acceptable to Lender (the "GUARANTY"). This
                     Agreement, the Note, the Deed of Trust, the Amendments, the
                     Guaranty, any assignment of rents or leases, or both, and
                     any

                                       2
<PAGE>   3

                     and all other documents now or hereafter executed by
                     Borrower or any other affiliated person or party in
                     connection with or to evidence or secure payment of the
                     Loan are sometimes hereafter collectively referred to as
                     the "LOAN DOCUMENTS".

              (b) Section A.5 is hereby amended and restated in its entirety as
       follows:

                     MATURITY DATE. The outstanding principal balance of the
                     Loan, together with all accrued and unpaid interest then
                     due and owing and any other amounts then due and owing
                     under any of the Loan Documents, shall be due and payable
                     on December 31, 2001.

              (c) A new Section B.7 is hereby added to the Loan Agreement:

                            B.7 PAYMENTS TO GUARANTOR AND ITS SHAREHOLDERS
                     PROHIBITED. From and after the occurrence of any failure by
                     Borrower to make the payments when due under Section 4 of
                     the Note or the failure by Borrower to pay the entire
                     outstanding principal balance of the Note, together with
                     accrued but unpaid interest thereon, on the Maturity Date
                     (regardless of whether Lender elects to exercise any of its
                     remedies with respect to any such failure under any of the
                     Loan Documents), Borrower shall not directly or indirectly,
                     permit any payment, prepayment or redemption to be made in
                     respect of any indebtedness, liabilities or obligations,
                     direct or contingent, of Borrower to Guarantor or any
                     shareholder of Guarantor without the prior written consent
                     of Lender.

       4. CONDITIONS PRECEDENT. Before this Amendment becomes effective and any
party becomes obligated under it, all of the following conditions shall have
been satisfied at Lender's sole cost and expense in a manner acceptable to
Lender in the exercise of Lender's sole judgment:

              (a) Documents. Lender shall have received fully executed and
acknowledged originals of this Amendment, the attached consent signed by
Guarantor, the First Amendment to Promissory Note in the form attached hereto as
Exhibit "A", the First Amendment to Subordination Agreement in the form attached
hereto as Exhibit "B", the First Amendment to Deed of Trust, Security Agreement
and Fixture Filing in the form attached hereto as Exhibit "C", and any other
documents which Lender may require or request in accordance with this Amendment
or the other Loan Documents.

                                       3
<PAGE>   4

              (b) Payments. Lender shall have received payment of an amendment
fee in the amount of Thirty Three Thousand and 00/100 Dollars ($33,000.00), and
reimbursement, in immediately available funds, of all costs and expenses
incurred by Lender in connection with this Amendment, including charges for
title insurance (including endorsements), recording, filing and escrow charges,
fees for appraisal services, and legal fees and expenses of Lender's counsel.
Such costs and expenses may include the actual costs for services for Lender's
in-house staffs, such as legal and appraisal services.

       5. BORROWER'S REPRESENTATION AND WARRANTIES. Borrower represents and
warrants to Lender as follows:

              (a) Accuracy. All representations and warranties made and given by
Borrower herein are true, accurate and correct.

              (b) No Default. No Default or Event of Default has occurred and is
continuing under the Loan Agreement or this Amendment, and no event has occurred
and is continuing which, with notice or the passage of time or both, would be a
Default or Event of Default.

              (c) Property. Borrower continues to lawfully possess and hold
title to the property encumbered by the Loan Agreement, as amended by this
Amendment, and the other Loan Documents, and the security interests, collateral
assignments and other collateral transfers made by Borrower in the Loan
Agreement and the other Loan Documents as amended constitute a first and prior
security interest encumbering that property, subject to permitted exceptions to
title approved by Lender.

       6. NO PREJUDICE: RESERVATION OF RIGHTS. This Amendment shall not
prejudice any rights or remedies of Lender under the Loan Documents. Lender
reserves, without limitation, all rights which it has against any indemnitor,
guarantor, or endorser of the promissory note secured by the Loan Agreement and
the other Loan Documents.

       7. NO IMPAIRMENT. Except as specifically hereby amended, the Loan
Agreement shall remain unaffected by this Amendment, and the Loan Agreement
shall remain in full force and effect. Nothing in this Amendment shall impair
the security interests, collateral assignments or other collateral transfers
arising under the Loan Agreement or other Loan Documents, which shall remain a
security agreement, creating a first priority security interest in the property
described therein, subject to permitted exceptions to title approved by Lender.

       8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.

       IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
the day and year first above written.

                                       4
<PAGE>   5

                                   BORROWER:

                                   PREFERRED EQUITIES CORPORATION,
                                   a Nevada corporation

WITNESS:
                                   By:
                                      ------------------------------------------
                                   Name:
                                        ----------------------------------------
                                   Title:
---------------------------              ---------------------------------------

                                   LENDER:

                                   DORFINCO CORPORATION, a Delaware corporation

WITNESS:
                                   By:
                                      ------------------------------------------
                                   Name:
                                        ----------------------------------------
                                   Title:
---------------------------              ---------------------------------------

                                       5
<PAGE>   6

                               GUARANTOR'S CONSENT

       The undersigned Guarantor hereby consents to the terms, conditions and
provisions of the foregoing First Amendment to Loan and Security Agreement and
the transactions contemplated by it. Guarantor hereby affirms the full force and
effectiveness of the Guarantees (as defined therein) and its unconditional
obligations thereunder with respect to any indebtedness and obligations of
Borrower to Lender or any of its affiliates guaranteed by Guarantor under each
and every one of the "Loan Documents", as that term is defined in the Loan
Agreement, as amended pursuant to the foregoing First Amendment to Loan and
Security Agreement and as hereafter from time to time amended. Further,
Guarantor, with the advice of counsel, hereby waives any and all rights it may
have to assert any defense to enforcement of the Guarantees. Guarantor
acknowledges and reasserts all of the waivers contained in the Guarantees and
acknowledges that it has no claims, offset or defenses with respect to its
obligations under the Guarantees.

Dated: November ___, 2000.

                                   GUARANTOR:

                                   MEGO FINANCIAL CORP.,
                                   a New York corporation

WITNESS:
                                   By:
                                      ------------------------------------------
                                   Name:
                                        ----------------------------------------
                                   Title:
---------------------------              ---------------------------------------

                                       6
<PAGE>   7

                                   EXHIBIT "A"

                       FIRST AMENDMENT TO PROMISSORY NOTE

       THIS First Amendment to Promissory Note (this "AMENDMENT") is entered
into as of November 30, 2000, between DORFINCO CORPORATION, a Delaware
corporation ("LENDER"), and PREFERRED EQUITIES CORPORATION, a Nevada corporation
("MAKER").

                                    RECITALS

       This Amendment is made with reference to, and in reliance on, the
following facts:

       A. Lender and Maker entered into a Loan and Security Agreement dated as
of August 12, 1998 (as amended, the "LOAN AGREEMENT") pursuant to which Lender
agreed to advance to Maker $4,000,000.00 (the "LOAN") on terms and conditions
set forth in the Loan Agreement. Capitalized terms used herein without
definition have the meanings given to them in the Loan Agreement.

       B. To evidence the obligations of Maker with respect to the Loan, Maker
executed, inter alia, a Promissory Note dated as of August 12, 1998 (as amended,
the "NOTE") in the original principal sum of $4,000,000.00.

       C. Pursuant to paragraph 4 of the Note, Maker elected to extend the term
of the Loan for the Extended Term (as defined in the Note) to the Extended
Maturity Date.

       D. Lender and Maker have entered into a First Amendment to Loan and
Security Agreement of even date herewith (the "FIRST LOAN AMENDMENT") for the
purpose of further extending the maturity of the Loan and amending certain other
terms and provisions of the Loan Documents.

       E. A condition precedent, inter alia, to the effectiveness of the First
Loan Amendment is that Maker execute and deliver to Lender this Amendment.

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

       1. PRINCIPAL BALANCE. Lender and Maker each acknowledge that the
principal balance outstanding under the Note as of November 30, 2000 is
$3,332,546 and that such amount is due and owing to Lender without defense,
set-off or counterclaim.

                                       7
<PAGE>   8

       2. AMENDMENT. The Note is hereby amended as follows:

              (a) The definition of "SECURITY DOCUMENTS" appearing in Section 1
is amended in its entirety as follows: "(all of the aforementioned documents, as
the same shall now or hereafter be amended or modified, shall herein be referred
to as "SECURITY DOCUMENTS")."

              (b) Paragraph 2(b) of Section 2 is hereby amended and restated in
its entirety as follows:

                     Commencing on the first (1st) day of September, 1998 and
                     continuing on the first (1st) day of each and every month
                     thereafter through and including the Maturity Date, all
                     interest accrued at the Basic Interest Rate shall be due
                     and payable monthly in arrears.

              (c) Paragraph 2(c) of Section 2 is hereby amended and restated in
its entirety as follows:

                     On December 31, 2001 (the "MATURITY DATE"), or on such
                     earlier date as this Note becomes due and payable, whether
                     by acceleration or otherwise, the entire outstanding
                     principal balance hereof, together with accrued by unpaid
                     interest thereon, and all other sums owing to Holder
                     hereunder or under the Security Documents, shall be due and
                     payable in full.

              (d) Section 4 of the Note is hereby amended and restated in its
entirety as follows:

                     During the term hereof, monthly payments shall be made in
                     arrears equal to the interest accrued at the Basic Interest
                     Rate plus fixed principal payments in the following amounts
                     and on the following dates:

                            (i) On January 31, 2001, an installment of principal
                            in an amount necessary and sufficient to cause the
                            total outstanding principal balance remaining under
                            the Note to be Two Million Five Hundred Thousand
                            Dollars ($2,500,000.00) or less;

                            (ii) On July 31, 2001, an installment of principal
                            in an amount necessary and sufficient to cause the
                            outstanding principal balance remaining under the
                            Note to be One Million Five Hundred Thousand Dollars
                            ($1,500,000.00) or less;

                                       8
<PAGE>   9

                            (iii) On the Maturity Date, the entire outstanding
                            principal balance of the Loan, plus all accrued and
                            unpaid interest thereon and any other amounts then
                            due and payable under this Note or any of the other
                            Loan Documents shall be due and payable; and

                            (iv) In addition to the mandatory principal payments
                            above, Maker shall pay a monthly principal payment
                            commencing on October 1, 2000 in an amount equal to
                            $13,900 or such amount as is determined based on a
                            twenty (20) year amortization together with the
                            interest payment payable under Section 2 of this
                            Note.

       3. EFFECTIVENESS OF NOTE. Except as amended hereby, the terms of the Note
shall remain in full force and effect as originally executed, and the same is
confirmed by Lender and Maker.

       4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.

       IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
the day and year first above written.

                                   LENDER:

                                   DORFINCO CORPORATION,
                                   a Delaware corporation
WITNESS:

                                   By:

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

                                       9
<PAGE>   10

                                   MAKER:

                                   PREFERRED EQUITIES CORPORATION,
                                   a Nevada corporation
WITNESS:

                                   By:
                                   Title:
---------------------------

                                   Acknowledged and Agreed to:

                                   GUARANTOR:

                                   MEGO FINANCIAL CORP.,
                                   a New York corporation
WITNESS:

                                   By:
                                      ------------------------------------------
                                   Name:
                                        ----------------------------------------
                                   Title:
---------------------------              ---------------------------------------

                                       10
<PAGE>   11

                                   EXHIBIT "B"

                               FIRST AMENDMENT TO
                             SUBORDINATION AGREEMENT

       THIS First Amendment to Subordination Agreement (this "AMENDMENT") is
made and entered into as of November 30, 2000, by and among PREFERRED EQUITIES
CORPORATION, a Nevada corporation ("DEBTOR"), MEGO FINANCIAL CORP., a New York
corporation ("CREDITOR"), and DORFINCO CORPORATION, a Delaware corporation
("LENDER").

                                    RECITALS

       A. Debtor and Lender entered into a Loan and Security Agreement dated as
of August 12, 1998 (as amended, the "LOAN AGREEMENT") pursuant to which Lender
agreed to advance to Debtor $4,000,000.00 (the "LOAN") on terms and conditions
set forth in the Loan Agreement. Capitalized terms used herein without
definition have the meanings given to them in the Loan Agreement.

       B. In connection with the Loan, Debtor, Creditor and Lender entered into
a Subordination Agreement dated as of August 12, 1998 (as now or hereafter
amended, the "SUBORDINATION AGREEMENT").

       C. Debtor and Lender have entered into a First Amendment to Loan and
Security Agreement of even date herewith (the "FIRST LOAN AMENDMENT") for the
purpose of extending the maturity of the Loan and amending certain other terms
and provisions of the Loan Documents.

       D. A condition precedent, inter alia, to the effectiveness of the First
Loan Amendment is that Debtor and Creditor execute and deliver to Lender this
Amendment.

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

       1. AMENDMENT. Debtor, Creditor and Lender hereby amend Section 2 of the
Subordination Agreement in its entirety to read as follows:

                     2. Creditor agrees with you that the PEC Indebtedness and
                     all security therefor shall be and hereby is subordinated
                     to the obligations of Debtor to you with respect to the
                     Loan (as defined in the Loan Agreement) and all other
                     obligations of Debtor to you under any and all of the Loan
                     Documents (as defined in the Loan Agreement) (collectively,
                     the

                                       11
<PAGE>   12

                     "OBLIGATIONS") to the extent (and only to the extent)
                     hereinafter provided. After the occurrence and during the
                     continuance of an Event of Default under, and as defined
                     in, that certain Loan and Security Agreement, dated as of
                     August 12, 1998, as amended by that certain First Amendment
                     to Loan and Security Agreement, dated as of November 30,
                     2000 (as now or hereafter amended, the "LOAN AGREEMENT"),
                     between you, as lender, and Debtor, as borrower (regardless
                     of whether you elect to exercise any of your remedies with
                     respect to any such Event of Default under any of the Loan
                     Documents [as defined in the Loan Agreement]):

                                   (a) no direct or indirect payment, prepayment
                            or redemption shall be made or permitted in respect
                            of the PEC Indebtedness without your prior written
                            consent until the full payment of the Obligations
                            (including all interest accruing after the date of
                            filing of a petition by or against Debtor under any
                            bankruptcy act or code) of any nature whatsoever now
                            due to you from Debtor or which may hereafter be
                            incurred and become due to you from Debtor has been
                            made.

                                   (b) Creditor will not, without your prior
                            written consent, assert, collect, enforce or release
                            the PEC Indebtedness or any part thereof or take any
                            action to foreclose, realize upon or release any
                            collateral securing the PEC Indebtedness or enforce
                            any security agreements, real estate mortgages, lien
                            instruments, or other encumbrances securing the PEC
                            Indebtedness.

                                   (c) Creditor will hold in trust and
                            immediately pay to you in the same form of payment
                            received from application upon the amount now or
                            hereafter owing to you by Debtor, any amount Debtor
                            pays to Creditor on the PEC Indebtedness.

                                   (d) Creditor will forthwith assign, deliver
                            or cause to be delivered to you any collateral for
                            the PEC Indebtedness now held by Creditor or anyone
                            on its behalf, or in the future received by it or
                            anyone on its behalf.

                                   (e) Creditor, in its capacity hereunder as

                                       12
<PAGE>   13

                            Creditor, agrees that it will not, without your
                            prior written consent, commence, prosecute or
                            participate in any administrative, legal, or
                            equitable action against Debtor for collection of
                            the PEC Indebtedness or in any administrative,
                            legal, or equitable action for collection of the PEC
                            Indebtedness that might adversely affect Debtor or
                            its properties.

                                   (f) Creditor will not permit Debtor to make
                            or permit any direct or indirect payment, prepayment
                            or redemption to be made in respect of any of the
                            PEC Indebtedness or any other indebtedness,
                            liabilities or obligations, direct or contingent, of
                            Debtor to any shareholder of Guarantor without the
                            prior written consent of Lender.

       2. ACKNOWLEDGMENT OF SUBORDINATION. Creditor hereby acknowledges and
remakes for the benefit of Lender the subordination of the Subordinated Debt to
the Senior Debt (as defined in the Subordination Agreement, as amended), subject
to the terms and provisions thereof.

       3. EFFECT OF AMENDMENT. Except as hereby amended, all of the terms and
conditions of the Subordination Agreement shall continue in full force and
effect.

       4. COUNTERPARTS. This Amendment may be executed in any one or more
counterparts, and all of such counterparts, taken together, shall constitute one
instrument.

       IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
the day and year first above written.

                                   DEBTOR:

                                   PREFERRED EQUITIES CORPORATION,
                                   a Nevada corporation

WITNESS:

                                   By:
                                   Name:
                                        ----------------------------------------
                                   Title:
------------------------------

                                       13
<PAGE>   14

                                   CREDITOR:

                                   MEGO FINANCIAL CORP.,
                                   a New York corporation

WITNESS:

                                   By:
                                   Name:
                                        ----------------------------------------
                                   Title:
-----------------------------

                                   LENDER:

                                   DORFINCO CORPORATION,
                                   a Delaware corporation

WITNESS:

                                   By:
                                   Name:
                                        ----------------------------------------
                                   Title:
-----------------------------

                                       14
<PAGE>   15

                                   EXHIBIT "C"

WHEN RECORDED MAIL TO:
DORFINCO CORPORATION
C/O TEXTRON FINANCIAL CORPORATION
40 WESTMINSTER STREET
PROVIDENCE, RHODE ISLAND  02903
ATTENTION:  MARGARET R. HAYES-COTE,
            SENIOR DIVISION COUNSEL

                               FIRST AMENDMENT TO
              DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

       THIS First Amendment to Deed of Trust, Security Agreement and Fixture
Filing (this "AMENDMENT") is made as of November 30, 2000, by and between
PREFERRED EQUITIES CORPORATION, a Nevada corporation ("GRANTOR"), and DORFINCO
CORPORATION, a Delaware corporation ("BENEFICIARY").

                                    RECITALS

       A. Beneficiary and Grantor entered into a Loan and Security Agreement
dated as of August 12, 1998 (as amended, the "LOAN AGREEMENT") pursuant to which
Lender agreed to advance to Grantor $4,000,000.00 (the "LOAN") on terms and
conditions set forth in the Loan Agreement. Capitalized terms used herein
without definition have the meanings given to them in the Loan Agreement.

       B. As partial security for the Loan, Grantor executed and delivered to
Beneficiary that certain Deed of Trust, Security Agreement and Fixture Filing,
dated as of August 12, 1998 and recorded August 13, 1998, in File No. 98123383
as Instrument No. 450693 in the Official Records of the Recorder of Nye County,
Nevada (as now amended and as further amended from time to time, the "DEED OF
TRUST").

       C. Beneficiary and Grantor have entered into a First Amendment to Loan
and Security Agreement of even date herewith (the "FIRST LOAN AMENDMENT") for
the purpose of extending the maturity of the Loan and amending certain other
terms and provisions of the Loan Documents.

       D. A condition precedent, inter alia, to the effectiveness of the First
Loan Amendment is that Grantor execute and deliver to Beneficiary this
Amendment.

                                       15
<PAGE>   16

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

       1. AMENDMENT. Section 1.16(b)(i) of the Deed of Trust is hereby amended
and restated in its entirety as follows:

               ...(i) Grantor shall pay to Beneficiary a release payment equal
                      to 100% of the gross sales proceeds for the applicable
                      parcel of Land (including, without limitation, any
                      deferred, contingent or earn-out portions thereof or any
                      additional consideration to be paid by the purchaser or
                      transferee subsequent to the closing of the acquisition of
                      the applicable parcel of Land), minus a six percent (6%)
                      broker's commission and reasonable closing costs.

                      Notwithstanding the foregoing, if an Event of Default or
                      circumstance that with the passage of time or giving of
                      notice or both would constitute an Event of Default shall
                      then exist and be continuing, Beneficiary may in its sole
                      discretion require that any such release payment be
                      increased. No additional release payment shall be payable
                      upon the repayment and satisfaction in full of the
                      Indebtedness...

       2. ACKNOWLEDGMENT OF GRANTS AND ASSIGNMENTS. Grantor hereby acknowledges
and regrants for the benefit of Beneficiary all of the grants of liens,
encumbrances and security interests and the assignments contained in the Deed of
Trust.

       3. EFFECT OF AMENDMENT. Except as hereby amended, all of the terms and
conditions contained in the Deed of Trust shall remain in full force and effect.

       4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.

       IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
the day and year first above written.

                                       16
<PAGE>   17

                                   GRANTOR:

                                   PREFERRED EQUITIES CORPORATION,
                                   a Nevada corporation

WITNESS:

                                   By:
                                   Name:
                                        ----------------------------------------
                                   Title:
------------------------------

                                   BENEFICIARY:

                                   DORFINCO CORPORATION,
                                   a Delaware corporation

WITNESS:

                                   By:
                                   Name:
                                        ----------------------------------------
                                   Title:
------------------------------

STATE OF NEVADA          )
                         )ss
COUNTY OF CLARK          )

       This instrument was acknowledged before me on ____, 2000, by
___________________________ as ____________________ of PREFERRED EQUITIES
CORPORATION, a Nevada corporation.

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

                                                My Commission Expires: _________

                                       17
<PAGE>   18

STATE OF                     )
                             )ss
COUNTY OF                    )

       This instrument was acknowledged before me on ___, 2000, by
_________________________ as _______________________ of DORFINCO CORPORATION, a
Delaware corporation.

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

                                                My Commission Expires:  ________

                                       18

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