Document:

Exhibit 10.1

 

EXECUTION VERSION

 

December 20, 2012

 

Hotspurs Holdings LLC
 8500 Normandale Lake Blvd., Suite 1500
 Minneapolis, MN 55437
 Attn:      Jeff Thuringer

 

Re: Hotspurs Equity Commitment Letter

 

Ladies and Gentlemen:

 

Reference is made to the Agreement and Plan of Merger, dated as of even date herewith (as the same may be amended from time to time, the “Merger Agreement”), among FirstCity Financial Corporation, a Delaware corporation (the “Company”), Hotspurs Holdings LLC, a Delaware corporation (“Parent”), and Hotspurs Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”), pursuant to which Parent will acquire the Company by causing Merger Subsidiary to merge with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement. Capitalized terms herein used but not defined shall have the meanings ascribed to them in the Merger Agreement. This letter agreement is being delivered to Parent in connection with the execution of the Merger Agreement today by Parent, Merger Subsidiary and the Company, to induce the Company to enter into the Merger Agreement.

 

1.             Commitment. This letter agreement confirms the commitment of each of the undersigned (each, an “Investor” and collectively, the “Investors”), severally and not jointly, subject to the conditions expressly set forth herein, to purchase equity of Parent, on or prior to the Closing, for the purpose of enabling (a) Parent to pay or cause to be paid (x) the aggregate Merger Consideration due under Sections 3.1(b) and 3.3(b) of the Merger Agreement at the Effective Time, (y) the aggregate Option Consideration due under Section 3.3(a) of the Merger Agreement upon Company request and (z) the aggregate fair value amounts payable for Dissenting Shares under Section 3.4 of the Merger Agreement upon Company request (the aggregate amounts in clauses (x), (y) and (z) collectively referred to as the “Merger Amount”), and (b) Parent and Merger Subsidiary to pay for any and all fees and expenses payable by such parties in connection with the Merger Agreement and the transactions contemplated therein, in each case, in an aggregate amount equal to the percentage of the Aggregate Commitment set forth opposite such Investor’s name on Exhibit A hereto (such amount with respect to each Investor is such Investor’s “Maximum Investor Commitment”); provided, that no Investor shall, under any circumstances, be obligated to purchase equity from Parent or otherwise provide any funds to Parent in an amount exceeding the amount of such Investor’s Maximum Investor Commitment and the Investors, collectively, shall not, under any circumstances, be obligated to purchase equity from Parent or otherwise provide any funds to Parent in an amount exceeding the Aggregate Commitment. The term “Aggregate Commitment” means an amount equal to ONE HUNDRED AND SEVEN MILLION ONE HUNDRED AND NINE THOUSAND SIX HUNDRED AND FORTY FIVE DOLLARS ($107,109,645). Each Investor hereby represents and warrants to the Parent (and to the Company as a third party beneficiary under this letter

 

 

agreement) that (a) Investor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (b) Investor has the requisite power and authority to enter into, execute and deliver this letter agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this letter agreement; (c) this letter agreement has been duly and validly executed and delivered by the Investor and (assuming due authorization, execution and delivery hereof by the other parties hereto) constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency or other Laws affecting creditors’ rights generally or by legal principles of general applicability governing the availability of equitable remedies, (d) except as set forth in this letter agreement, there are no conditions precedent, limitations or other contingencies related to or affecting the funding of the Merger Amount and (e) it has (and will continue to have) immediately available funds or uncalled capital in an amount not less than such Investor’s Maximum Investor Commitment and no internal or other approval is required for such Investor to fulfill its obligations hereunder. The representations and warranties in the immediately prior sentence shall survive termination of this letter agreement.

 

2.             Termination. Each Investor’s obligation to fund its Maximum Investor Commitment is subject to the terms of this letter agreement and (a) the execution and delivery of the Merger Agreement by the Company, (b) the satisfaction or waiver of the conditions to Parent and Merger Subsidiary’s obligations to effect the closing as set forth in Sections 7.1 and 7.2 of the Merger Agreement (other than conditions that by their nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or waiver of such conditions at Closing), subject to the terms of Section 7.4 thereof and (c) the substantially simultaneous closing of the Merger in accordance with the terms of the Merger Agreement. The obligation of each Investor to fund its Maximum Investor Commitment will terminate automatically and immediately upon the earliest to occur of (1) the consummation of the Closing, (2) a valid termination of the Merger Agreement in accordance with its terms, (3) the funding of the Aggregate Commitment as contemplated in and for the purposes set forth in the Merger Agreement, (4) the payment by the Investors of their Guaranteed Obligations (as defined in the Limited Guarantee) under the Limited Guarantee on the terms and subject to the conditions thereof, (5) the assertion by the Company or any of its Affiliates of any claim against any Investor or any Investor Related Party (as defined below) thereof in connection with this letter agreement, the Merger Agreement, the Limited Guarantee or any of the transactions contemplated hereby or thereby (including in respect of any oral representations made or alleged to be made in connection herewith or therewith) and (6) July 31, 2013; provided, that with respect to clauses (5) and (6) of this Section 2, no such termination shall be effective if the Company or any of its Affiliates is seeking specific performance of Parent’s obligation to fund the Equity Financing pursuant to its rights under Section 9.11(e) of the Merger Agreement, under this letter agreement or pursuing its rights under the Limited Guarantee. Sections 3, 4, 5, 6, 7 and 11 hereof shall survive any such termination.

 

3.             No Recourse.

 

(a)           In connection with the execution and delivery of this letter agreement, the Investors are concurrently executing and delivering to the Company a limited guarantee related to certain obligations of Parent and Merger Subsidiary under the Merger Agreement (the

 

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“Limited Guarantee”).  Except for Company’s rights set forth in Section 8.3(f)(i) of the Merger Agreement, the Company’s remedies against the Guarantors (as defined in the Limited Guarantee) and any Affiliates of the Guarantors (other than Parent and Merger Sub) in respect of the Guaranteed Obligations (as defined in the Limited Guarantee) shall be the sole and exclusive remedies available to the Company against any Guarantor or any Affiliate of a Guarantor (other than Parent and Merger Subsidiary) in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, or the transactions contemplated thereby, whether or not Parent’s or Merger Subsidiary’s breach is caused by any Investor’s breach of its obligations under this letter agreement.  Except as expressly provided herein or in the Limited Guarantee, the undersigned investors acknowledge and agree that under no circumstances shall the Company or its Affiliates or any of their respective former, current or future direct or indirect directors, officers, employees, agents, partners, managers, members, securityholders, stockholders, controlling Persons, assignees or Representatives have any liabilities or obligations to the Investors or the Investor Related Parties arising under, or in connection with, this letter agreement, the Merger Agreement, or the transactions contemplated hereby or thereby (or in respect of any oral representations made or alleged to be made in connection herewith or therewith).

 

(b)           Notwithstanding anything that may be expressed or implied in this letter agreement, Parent, by its acceptance hereof, covenants, acknowledges and agrees that no Person other than the undersigned shall have any obligation hereunder and that, (a) notwithstanding that any of the undersigned and their permitted assignees hereunder may be a partnership or limited liability company, no recourse (whether at law, in equity, in contract, in tort or otherwise) hereunder or under any documents or instruments delivered in connection herewith, or in respect of any oral representations made or alleged to be made in connection herewith or therewith, shall be had against any former, current or future direct or indirect director, officer, employee, agent, partner, manager, member, securityholder, Affiliate, stockholder, controlling Person, Representative or other financing source of the undersigned, other than permitted assignees of the Investors, and Parent, Merger Subsidiary or their permitted assignees under the Merger Agreement (any such Person, other than (x) the undersigned and their permitted assignees hereunder, or (y) Parent, Merger Subsidiary or their permitted assignees under the Merger Agreement, an “Investor Related Party”), or any Investor Related Party of any of such undersigned’s Investor Related Parties (including, without limitation, in respect of any liabilities or obligations arising under, or in connection with, this letter agreement or the transactions contemplated hereby (or in respect of any oral representations made or alleged to be made in connection herewith or therewith) or with respect to any action (whether at law, in equity, in contract, in tort or otherwise), including, without limitation, in the event Parent or Merger Subsidiary breaches its obligations under the Merger Agreement and including whether or not Parent’s or Merger Subsidiary’s breach is caused by the breach by any Investor of its obligations under this letter agreement) whether by the enforcement of any judgment or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable Law, and (b) no personal liability whatsoever will attach to, be imposed on or otherwise incurred by any Investor Related Party of any of the undersigned or any Investor Related Party of any of the undersigned’s Investor Related Parties under this letter agreement or any documents or instruments delivered in connection herewith (or in respect of any oral representations made or alleged to be made in connection herewith or therewith) or for any action (whether at law, in equity, in contract, in tort or otherwise) based on, in respect of, or by reason of such obligations

 

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hereunder or by their creation. Nothing in this letter agreement, express or implied, is intended to or shall confer upon any Person, other than Parent, the Company (as set forth in Section 5 hereof) and the undersigned, any right, benefit or remedy of any nature whatsoever under or by reason of this letter agreement.

 

4.             Assignment; Reliance. This letter agreement, Parent’s rights, interests or obligations hereunder and each Investor’s commitment hereunder shall not be assignable to any other Person without the prior written consent of the other parties hereto and the Company and any attempted assignment without such consent shall be null and void and of no force and effect, except that (a) Parent may assign its rights hereunder to a permitted assignee of Parent’s rights and obligations under the Merger Agreement made in accordance with the terms thereof or (b) each Investor may assign its commitments hereunder to an affiliate of such Investor; provided, however, that notwithstanding any such assignment, each Investor shall remain fully liable to perform all of its obligations hereunder. Each Investor acknowledges that the Company has entered into the Merger Agreement in reliance upon, among other things, the commitment of the Investors set forth herein.

 

5.             Binding Effect. This letter agreement may be relied upon only by Parent; provided that the Company may rely upon this letter as an express third party beneficiary. Except as set forth in the preceding sentence, nothing set forth in this letter agreement shall be construed to confer upon or give any Person other than Parent and the Company any benefits, rights or remedies under or by reason of, or any rights to enforce or cause Parent to enforce, the Aggregate Commitment or any Maximum Investor Commitment or any provisions of this letter agreement. Parent may only enforce this letter agreement at the direction of the Sponsor in its sole discretion, and Parent shall have no right to enforce this letter agreement unless directed to do so by the Company or Sponsor in its sole discretion. For purposes of this letter agreement, “Sponsor” shall mean The Värde Fund X (Master), L.P. The Company may in its discretion, as permitted under Section 9.11 of the Merger Agreement, directly seek to enforce Parent’s rights under this letter agreement.  For the avoidance of doubt, while the Company may pursue both specific performance as permitted by Section 9.11 of the Merger Agreement and the payment of the Parent Termination Fee and Expenses payable pursuant to Section 8.3(d) of the Merger Agreement, (i) in no event shall the Company be entitled to specific performance of the Merger Agreement, the Limited Guarantee, this letter agreement from and after such time as the Company has received the Parent Termination Fee and Expenses payable pursuant to Section 8.3(d) of the Merger Agreement and (ii) under no circumstances shall the Company be entitled to receive both (A) a grant of specific performance pursuant to Section 9.11 of the Merger Agreement to effect the consummation of the Merger and (B) the Parent Termination Fee and any Expenses payable pursuant to Section 8.3(d) of the Merger Agreement.  For the avoidance of doubt and notwithstanding anything to the contrary contained herein or in the Merger Agreement, and notwithstanding that this letter agreement is referred to in the Merger Agreement, no party other than Parent (and the Company as an express third party beneficiary) shall have any rights against the Investors pursuant to this letter agreement.

 

6.             Confidentiality. This letter agreement shall be treated as strictly confidential and is being provided to Parent solely in connection with the Merger Agreement and the transactions contemplated thereby. This letter agreement may not be used, circulated, quoted or otherwise referred to in any document, except with the written consent of each of the Investors.

 

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Notwithstanding the foregoing, this letter agreement may be provided to the Company and its advisors who have been directed to treat this letter agreement as confidential, and the Company shall cause such advisors to so treat this letter agreement as confidential, and this letter agreement may be disclosed as required by applicable law or governmental or judicial process or order.

 

7.             Governing Law; Venue.

 

(a)           This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of law hereof.

 

(b)           The parties hereto, on their behalf and on behalf of their respective Affiliates, irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such Court or the Delaware Supreme Court determines that the Court of Chancery does not have or should not exercise subject matter jurisdiction over such matter, the Superior Court of the State of Delaware) and the federal Courts of the United States of America located in the State of Delaware (and of the appropriate appellate Courts therefrom) in connection with any dispute arising out of, in connection with, in respect of, or in any way relating to:

 

(i)            the negotiation, execution and performance of this letter agreement and the transactions contemplated hereby;

 

(ii)           the interpretation and enforcement of the provisions of this letter agreement and the documents referred to in this letter agreement, or

 

(iii)          any actions of or omissions by any Covered Party (as defined below) in any way connected with, related to or giving rise to any of the foregoing matters (the foregoing clauses (i), (ii) and (iii) collectively, the “Covered Matters”),and hereby waive, and agree not to assert as a defense in any Legal Proceeding with regard to or involving a Covered Matter, that such Legal Proceeding may not be brought or is not maintainable in said Courts or that venue thereof may not be appropriate or that this letter agreement or any such document may not be enforced in or by such Courts, and the parties hereto, on their behalf and on behalf of their respective Affiliates, irrevocably agree that all claims with respect to such Legal Proceeding shall be heard and determined exclusively by such a Delaware state or federal Court.  The parties hereto, on their behalf and on behalf of their respective Affiliates, hereby consent to and grant any such Court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with such Legal Proceeding in the manner provided in Section 9.1 of the Merger Agreement or in such other manner as may be permitted by law shall be valid and sufficient service thereof.

 

(c)           In addition, by entering into this letter agreement, each party hereto, on their behalf and, to the fullest extent permissible by applicable Law, on behalf of their respective equityholders, partners, members, directors, Affiliates, officers or agents, as the case may be, covenants, agrees and acknowledges, that it shall not bring any Legal Proceeding (regardless of

 

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the legal theory or claim involved or the procedural nature of any such Legal Proceeding) with regard to any Covered Matter against any Covered Party, other than the parties hereto.

 

(d)           The parties hereto acknowledge and agree that (i) the agreements contained in this Section 7 are an integral part of this letter agreement and the transactions contemplated hereby, and that, without these agreements, the parties would not enter into this letter agreement, (ii) any breach of this Section 7 would result in irreparable harm and that monetary damages would not be a sufficient remedy for any such breach and (iii) that any breach of this Section 7 will be deemed a material breach of this letter agreement.  Accordingly, each Covered Party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach by a party (or any affiliate of such party) and in case of any such breach, the non-breaching party shall be excused from its performance obligations under this letter agreement.

 

For the purposes of this Section 7, “Covered Party” shall mean (i) any party hereto, (ii) any such parties’ officers, directors, managers, agents, employees, or Affiliates or (iii) any officer, director, manager, agent, or employee of any such Person, all of whom are intended third party beneficiaries of this Section 7.

 

8.             Counterparts; Delivery by Facsimile or Email. This letter agreement may be signed in any number of counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This letter agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

9.             Entire Agreement; Amendment. This letter agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this letter agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto.  Except as otherwise expressly provided in this letter agreement, neither this letter agreement nor any provision hereof is intended to confer upon any Person other than the parties hereto (and the Company as an express third party beneficiary hereof) any rights or remedies hereunder except for Section 7, which is intended for the benefit of the Covered Parties.  Except as otherwise expressly provided in this letter agreement, this letter agreement may be enforced only against, and any claims or causes of action that may be based upon, arise out of or relate to this letter agreement, or the negotiation, execution or performance of this letter agreement may be made only against the entities that are expressly identified as parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, equityholder, agent, attorney or representative of any party hereto shall have any liability for any obligations or liabilities of the parties to this letter agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby or any claim related to tort or contract theories of Law. The parties hereto acknowledge that this letter agreement cannot be modified, amended nor terminated (except as permitted in Section 2 above) in any manner whatsoever, nor any of the provisions hereof waived, without the prior written approval of Company, in its sole discretion.

 

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10.          Severability. If any term or other provision of this letter agreement is invalid, illegal or unenforceable, all other terms and provisions of this letter agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

 

11.          Specific Performance. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this letter agreement were not performed in accordance with the terms hereof on a timely basis or were otherwise breached.  It is accordingly agreed that, subject to the provisions of this Section 11, the parties (and the Company as an express third party beneficiary hereof) shall be entitled to an injunction or injunctions to prevent breaches of this letter agreement and to enforce specifically the terms and provisions of this letter agreement in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in the Federal Court of the United States of America sitting in the State of Delaware), without proof of actual damages or otherwise.  This right is in addition to any other remedy at law or in equity.  The parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy.

 

12.          Headings. The headings contained in this letter agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this letter agreement.

 

13.          Mutual Drafting. Each party has participated in the drafting of this letter agreement, which each party acknowledges is the result of extensive negotiations between the parties; accordingly, in the event an ambiguity or question of intent or interpretation arises, this letter agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this letter agreement.

 

14.          Further Assurances. Parent, Merger Subsidiary and the Investors will execute and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations, to perform their respective obligations under this letter agreement.

 

15.          Interpretation. In this letter agreement, unless otherwise specified, the following rules of interpretation apply:

 

(a)           references to Sections, Exhibits, clauses and Parties are references to sections or sub-sections, exhibits and clauses of, and parties to, this letter agreement;

 

(b)           references to any Person include references to such Person’s successors and permitted assigns;

 

(c)           words importing the singular include the plural and vice versa;

 

(d)           words importing one gender include the other gender;

 

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(e)           references to the word “including” shall be deemed to be followed by the words “without limitation” in each case where such words do not follow the word “including”;

 

(f)            the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this letter agreement, refer to this letter agreement as a whole and not to any particular provision of this letter agreement;

 

(g)           references to “$” or “dollars” refer to U.S. dollars; and

 

(h)           “or” is not exclusive;

 

(i)            a defined term has its defined meaning throughout this letter agreement and in each Exhibit and Schedule to this letter agreement, regardless of whether it appears before or after the place where it is defined.

 

16.          No Agreement Until Executed. This letter agreement shall not be effective unless and until (i) the Merger Agreement is executed by all parties thereto, and (ii) this letter agreement is executed by all parties hereto.

 

17.          Obligations Several and Not Joint. The obligations of each party hereunder shall be several and not joint, and no party shall be liable for any breach of the terms of this letter agreement by any other party.

 

[Signature Page Follows]

 

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Very truly yours,
    
	
 
    	
 
    
	
 
    	
THE VÄRDE FUND X (MASTER), L.P.
    
	
 
    	
By: 
    	
The Värde Fund X (GP), L.P., Its   General Partner
    
	
 
    	
By: 
    	
The Värde Fund X GP, LLC, Its   General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    
	
 
    	
VÄRDE INVESTMENT PARTNERS, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    
	
 
    	
VÄRDE INVESTMENT PARTNERS (OFFSHORE)   MASTER, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    
	
 
    	
THE VÄRDE FUND VI-A, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
					

 

Signatures continue on the following page

 

Signature page to Equity Commitment Letter

 

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Accepted and Agreed
    	
 
    
	
 
    	
 
    
	
HOTSPURS HOLDINGS LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Jason R. Spaeth
    	
 
    
	
Name:
    	
Jason R. Spaeth
    	
 
    
	
Title:
    	
President and Chief Executive Officer
    	
 
    

 

 

Signature page to Equity Commitment Letter

 

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EXHIBIT A

 

	
Investor
    	
 
    	
Percentage of the
   Aggregate Commitment
    	
 
    
	
The Värde Fund   X (Master), L.P.
    	
 
    	
84
    	
%
    
	
Värde   Investment Partners, L.P.
    	
 
    	
8
    	
%
    
	
Värde   Investment Partners (Offshore) Master, L.P.
    	
 
    	
5
    	
%
    
	
The Värde Fund   VI-A, L.P.
    	
 
    	
3
    	
%Exhibit 10.2

 

EXECUTION VERSION

 

LIMITED GUARANTEE

 

Limited Guarantee, dated as of December 20, 2012 (this “Limited Guarantee”), by the parties listed on Exhibit A hereto (each a “Guarantor” and collectively, the “Guarantors”), in favor of FirstCity Financial Corporation, a Delaware corporation (the “Guaranteed Party”). Reference is hereby made to the Agreement and Plan of Merger, dated as of even date herewith (as the same may be amended from time to time, the “Merger Agreement”), among the Guaranteed Party, Hotspurs Holdings LLC, a Delaware corporation (“Parent”), and Hotspurs Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”). Capitalized terms used herein but not otherwise defined have the meanings ascribed to them in the Merger Agreement.

 

1.             Limited Guarantee. Each Guarantor hereby absolutely, irrevocably and unconditionally guarantees, severally and not jointly, to the Guaranteed Party, on the terms and subject to the conditions expressly set forth herein, the payment and performance of Parent’s payment obligation of (x) the Parent Termination Fee and (y) the Guaranteed Party’s Expenses as provided in Section 8.3(d)(ii) of the Merger Agreement in an amount not to exceed $1,000,000 (collectively, the “Guaranteed Obligations”) to the Guaranteed Party arising under, or in connection with and, in all cases, on the terms and subject to the conditions set forth in, the Merger Agreement; provided, however, that each such Guarantor’s obligation to pay the Guaranteed Obligations shall be limited to an amount equal to the percentage of the Maximum Aggregate Amount set forth opposite such Guarantor’s name on Exhibit A hereto (such amount with respect to each Guarantor is such Guarantor’s “Maximum Guarantor Amount”); and, further provided, that the maximum liability of each Guarantor hereunder shall not exceed such Guarantor’s Maximum Guarantor Amount and the maximum aggregate liability of all of the Guarantors hereunder shall not exceed $6,000,000 (“Maximum Aggregate Amount”), and it being further understood that this Limited Guarantee may not be enforced without giving full and absolute effect to the Maximum Aggregate Amount and each Maximum Guarantor Amount. The Guaranteed Party hereby agrees that the Guarantors shall in no event be required to pay to the Guaranteed Party in the aggregate more than the Maximum Aggregate Amount (and that no Guarantor shall be required to pay to the Guaranteed Party in the aggregate more than such Guarantor’s Maximum Guarantor Amount) under, or in respect of, or in connection with this Limited Guarantee or the Merger Agreement and no Guarantor shall have any obligation or liability to the Guaranteed Party under this Limited Guarantee or the Merger Agreement other than as expressly set forth herein and in the Equity Commitment Letter (pursuant to and subject to Section 5 thereof and the terms set forth in the Merger Agreement).

 

2.             Terms of Limited Guarantee.

 

(a)           This Limited Guarantee is one of payment and performance, not collection, and a separate action or actions may be brought and prosecuted against the Guarantors to enforce this Limited Guarantee, irrespective of whether any action is brought against Parent or any other Person or whether Parent or any other Person is joined in any such action or actions.

 

(b)           The liability of the Guarantors under this Limited Guarantee shall, to the fullest extent permitted under applicable Law, be absolute, irrevocable and unconditional, irrespective of:

 

 

(i)            any change in the corporate existence, structure or ownership of Parent, or any insolvency, bankruptcy, reorganization, liquidation or other similar proceeding of Parent or affecting any of its assets;

 

(ii)           any change in the manner, place or terms of payment or performance, or any change or extension of the time of payment or performance of, renewal or alteration of, any Guaranteed Obligation, any liability incurred directly or indirectly in respect thereof, or any amendment or waiver of or any consent to any departure from the terms of the Merger Agreement or the documents entered into in connection therewith, in each case, made in accordance with the terms thereof;

 

(iii)          the existence of any claim, set-off or other right that the Guarantors may have at any time against Parent, whether in connection with any Guaranteed Obligation or otherwise, or that Parent may have against the Guaranteed Party;

 

(iv)          any action or inaction on the part of the Guaranteed Party that is not in violation of the Equity Commitment Letter of the Guarantors, dated as of even date herewith (the “Equity Commitment Letter”).

 

(c)           In the event that any payment to the Guaranteed Party in respect of any Guaranteed Obligation is rescinded or otherwise must be and is returned to the Guarantors for any reason whatsoever, the Guarantors shall remain liable hereunder with respect to the Guaranteed Obligation on the terms and subject to the conditions hereof as if such payment had not been made.

 

(d)           The Guarantors hereby expressly waive any and all rights or defenses arising by reason of any law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantors waive promptness, diligence, notice of acceptance of this Limited Guarantee and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the incurrence of any Guaranteed Obligations and all other notices of any kind (except for notices to be provided to Parent and in accordance with Section 9.1 of the Merger Agreement), all defenses which may be available by virtue of any stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of Parent or any other person interested in the transactions contemplated by the Merger Agreement, and all suretyship defenses generally (other than fraud or willful misconduct by the Guaranteed Party or any of its Subsidiaries, payment defenses expressly provided for under the Merger Agreement to Parent or Merger Subsidiary or breach by the Guaranteed Party of this Limited Guarantee). The Guarantors acknowledge that they will receive substantial direct and indirect benefits from consummation of the transactions contemplated by the Merger Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefit.

 

3.             Sole Remedies. The Guaranteed Party acknowledges and agrees that the sole cash asset of Parent is cash in a de minimis amount and that no additional funds are expected to be contributed to Parent unless and until the Closing occurs. No Guarantor shall have any obligation or liability to any Person relating to, arising out of or in connection with the Merger Agreement, this Limited Guarantee, the Equity Commitment Letter or the transactions contemplated thereby other than as expressly set forth herein and therein. The Guaranteed Party further agrees that it has

 

2

 

and shall have no right of recovery against any of the Guarantors, any former, current or future assignee of any of the Guarantors or any current or future, direct or indirect director, partner, principal, officer, employee, agent, or other financing source, Representative or Affiliate of any of the Guarantors, any former, current or future, direct or indirect holder of any equity interests or securities of any of the Guarantors (whether such holder is a limited or general partner, member, stockholder, securityholder or otherwise), any former, current or future director, partner, principal, officer, employee, agent, general or limited partner, manager, member, stockholder, securityholder, Affiliate, controlling Person or other financing source, Representative of any of the foregoing other than permitted assignees of the Guarantors, and Parent, Merger Subsidiary or their permitted assignees under the Merger Agreement (any such person or entity, other than (x) the undersigned and their permitted assignees hereunder or (y) Parent, Merger Subsidiary or their permitted assignees under the Merger Agreement, a “Guarantor Related Person”), through Parent or otherwise, whether by or through attempted piercing of the corporate, limited liability company or limited partnership veil, by or through a claim by or on behalf of Parent against the Guarantors or any Guarantor Related Person, or otherwise, except for its rights against the Guarantor entities that are expressly identified as parties hereto under this Limited Guarantee and pursuant to the terms and subject to the conditions hereof and its rights in connection with the enforcement of the Equity Commitment Letter (pursuant to and subject to Section 5 thereof) and the enforcement of its rights set forth in Sections 8.3(f)(i) and 9.11(e) of the Merger Agreement. Recourse against the Guarantor entities that are expressly identified as parties hereto under this Limited Guarantee shall be the sole and exclusive remedy (whether at law, in equity, in contract, in tort or otherwise) of the Guaranteed Party and all of its Affiliates against the Guarantors and any Guarantor Related Person in respect of any breach, loss or damage arising under, or in connection with, the Merger Agreement or the transactions contemplated thereby (including in respect of any oral representations made or alleged to be made in connection therewith), other than any remedies available to the Guaranteed Party pursuant to the terms of the Equity Commitment Letter (pursuant to and subject to Section 5 thereof) and under the terms set forth in the Merger Agreement. The Guaranteed Party hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates not to institute, any proceeding or bring any other claim (whether at law, in equity, in contract, in tort or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letter or the transactions contemplated thereby, or in respect of any oral representations made or alleged to be made in connection herewith, against any of the Guarantors or any Guarantor Related Person, except for claims of the Guaranteed Party against the Guarantor entities that are expressly identified as parties hereto (and their permitted assignees) under this Limited Guarantee and claims permitted pursuant to the terms of the Equity Commitment Letter (subject to Section 5 thereof) and the terms set forth in Sections 8.3(f)(i) and 9.11(e) of the Merger Agreement.  Without prejudice to any right to specific performance that the Guaranteed Party may have under the Merger Agreement or the Equity Commitment Letter (including the right to cause the Guarantors to fund the Equity Financing, as permitted under Section 9.11 of the Merger Agreement, or rights set forth in Section 8.3(f)(i) of the Merger Agreement), the Guaranteed Party further covenants and agrees that it shall not have the right to recover, and shall not recover, and it shall not institute, directly or indirectly, and shall cause its controlled Affiliates not to institute, any proceeding or bring any other claim to recover, more than the Maximum Aggregate Amount in aggregate from the Guarantor entities that are expressly identified as parties hereto, their permitted assignees and Parent or the applicable Maximum Guarantor Amount from each Guarantor entity that is expressly identified as a party hereto and its

 

3

 

permitted assignees in respect of any liabilities or obligations of the Guarantors, Parent or Merger Subsidiary arising under or in connection with the Merger Agreement, this Limited Guarantee or the transactions contemplated hereby or thereby, and the Guaranteed Party shall promptly return all monies paid to it or its controlled Affiliates in excess of such liabilities or obligations. Nothing set forth in this Limited Guarantee shall confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, including the Guarantors, except as expressly set forth herein. The Guaranteed Party acknowledges that each Guarantor is agreeing to enter into this Limited Guarantee in reliance on the provisions set forth in this Section 3. This Section 3 shall survive termination of this Limited Guarantee.

 

4.             Representations and Warranties. Each Guarantor hereby represents and warrants with respect to itself that:

 

(a)           this Limited Guarantee constitutes a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms except as enforcement may be limited by applicable bankruptcy, insolvency or other Laws affecting creditors’ rights generally or by legal principles of general applicability governing the availability of equitable remedies; and

 

(b)           such Guarantor has as of the date of this Limited Guaranty, and shall have at all times thereafter, readily available capital in an amount not less than such Guarantor’s Maximum Guarantor Amount.

 

5.             Termination. This Limited Guarantee shall terminate and the Guarantors shall have no further obligation under this Limited Guarantee as of the earliest to occur of (a) the Effective Time; (b) a valid termination of the Merger Agreement in accordance with its terms in any circumstances other than pursuant to which Parent would be obligated to make any payment under Section 8.3(d) of the Merger Agreement; (c) six (6) months after a valid termination of the Merger Agreement in accordance with its terms if the Merger Agreement is terminated by the Guaranteed Party in any of the circumstances pursuant to which Parent would be obligated to make a payment pursuant to Section 8.3(d) of the Merger Agreement and (d) the payment of the Guaranteed Obligations on the terms and subject to the conditions set forth in the Merger Agreement. Except as expressly set forth herein, upon any termination of this Limited Guarantee, no Person shall have any rights or claims against any of Parent, the Guarantors or their respective Related Parties under the Merger Agreement, this Limited Guarantee, the Equity Commitment Letter, in respect of any oral representations made or alleged to be made in connection herewith or therewith or, in respect of the transactions contemplated hereby or thereby, whether at law or equity, in contract, in tort or otherwise, and none of Parent, the Guarantors or their respective Related Parties shall have any further liability or obligation relating to or arising out of the Merger Agreement, this Limited Guarantee, the Equity Commitment Letter, in respect of the transactions contemplated hereby or thereby or in respect of any oral representations made or alleged to be made in connection herewith or therewith. In the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation (whether at law, in equity, in contract, in tort or otherwise) relating to this Limited Guarantee that the provisions of Section 1 hereof limiting the Guarantors’ liability with respect to the Maximum Aggregate Amount or any Guarantor’s liability to such Guarantor’s Maximum Guarantor Amount or the provisions of Section 3 hereof are illegal, invalid or unenforceable, in whole or in part, or asserts any theory of liability against any Guarantor or any of its Guarantor

 

4

 

Related Persons with respect to the transactions contemplated by the Merger Agreement (including in respect of any oral representations made or alleged to be made in connection therewith) other than liability of the Guarantors under this Limited Guarantee (as limited by the provisions of Section 1) or the liability of the Guarantors under the Equity Commitment Letter (pursuant to and subject to the conditions set forth therein), (i) the obligations of each of Guarantor under this Limited Guarantee shall terminate forthwith and shall thereupon be null and void, (ii) if any of the Guarantors has previously made any payments under this Limited Guarantee, such Guarantor shall be entitled to recover such payments from the Guaranteed Party, and (iii) neither the Guarantors nor any Related Party shall have any liability to the Guaranteed Party or any former, current or future assignee of any of the Guaranteed Party or any current or future, direct or indirect director, partner, principal, officer, employee, agent, or other financing source, Representative or Affiliate of any of the Guaranteed Party, any former, current or future, direct or indirect holder of any equity interests or securities of any of the Guaranteed Party (whether such holder is a limited or general partner, member, stockholder, securityholder or otherwise), any former, current or future director, partner, principal, officer, employee, agent, general or limited partner, manager, member, stockholder, securityholder, Affiliate, controlling Person or other financing source, Representative of any of the foregoing with respect to the transactions contemplated by the Merger Agreement, the Equity Commitment Letter or under this Limited Guarantee (including in respect of any oral representations made or alleged to be made in connection therewith). Notwithstanding the foregoing, if on the date of termination of this Limited Guarantee any proceeding to enforce this Limited Guarantee has been commenced or the Guaranteed Party has provided the Guarantors with written notice of a claim under this Limited Guarantee, each Guarantor’s obligations hereunder shall survive such termination until such proceeding or claim is finally and conclusively resolved.

 

6.             Continuing Guarantee. Except to the extent terminated pursuant to the provisions of Section 5 hereof, this Limited Guarantee is a continuing one and shall remain in full force and effect until the payment and satisfaction in full of the Guaranteed Obligations, shall be binding upon the Guarantors, their permitted successors and assigns, and shall inure to the benefit of, and be enforceable by, the Guaranteed Party and its successors, transferees and assigns. All obligations to which this Limited Guarantee applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon.

 

7.             Entire Agreement. This Limited Guarantee constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Limited Guarantee.  No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto.  For the avoidance of doubt, while the Guaranteed Party may pursue both specific performance as permitted by Section 9.11 of the Merger Agreement and the payment of the Parent Termination Fee and Expenses payable pursuant to Section 8.3(d) of the Merger Agreement, (i) in no event shall the Guaranteed Party be entitled to specific performance of the Merger Agreement, this Limited Guarantee, and the Equity Commitment Letter  from and after such time as the Guaranteed Party has received the Parent Termination Fee and Expenses payable pursuant to Section 8.3(d) of the Merger Agreement and (ii) under no circumstances shall the Guaranteed Party be entitled to receive both (A) a grant of specific performance pursuant to Section 9.11 of the

 

5

 

Merger Agreement to effect the consummation of the Merger and (B) the Parent Termination Fee and any Expenses payable pursuant to Section 8.3(d) of the Merger Agreement.

 

8.             Amendments and Waivers.

 

(a)           Any provision of this Limited Guarantee may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by each of the Guarantors and the Guaranteed Party or, in the case of a waiver, by the party against whom the waiver is to be effective; provided, that any waiver or amendment shall be effective against a party only if the Board of Directors of such party approves such waiver or amendment, if applicable.

 

(b)           No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

9.             Counterparts. This Limited Guarantee may be signed in any number of counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Limited Guarantee shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

10.          Notices. All notices and other communications under this Limited Guarantee shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) on the date sent by facsimile or by email of a PDF document (with written confirmation of transmission) if sent during the normal business hours of the recipient and the next Business Day if sent after the normal business hours of the recipient, or (iii) one Business Day following the day sent by nationally recognized overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision).

 

If to any Guarantor, to it at:

 

c/o Hotspurs Holdings LLC

8500 Normandale Lake Blvd., Suite 1500

Minneapolis, MN 55437

Attn: Jeff Thuringer

Phone: 952-646-2071

Fax: 952-893-9613

E-Mail: jthuringer@varde.com

 

with a copy (which shall not constitute notice) to:

 

6

 

Mayer Brown LLP

71 South Wacker Drive

Chicago, IL 60606

Attn: Andrew J. Noreuil

Phone: 312-782-0600

Fax: 312-701-7711

E-Mail: anoreuil@mayerbrown.com

 

If to the Guaranteed Party, to it at:

 

c/o FirstCity Financial Corporation

6400 Imperial Drive

Waco, TX 76712

Attn: James Sartain

Telephone: 254-761-2800

Facsimile: 254-761-2950

E-Mail: jsartain@fcfc.com

 

with a copy (which shall not constitute notice) to:

 

c/o Haynes and Boone, LLP

201 Main Street, Suite 2200

Fort Worth TX 76102-3126

Attn: Brian D. Barnard

Telephone: (817) 347-6605

Facsimile: (817) 348-2303

E-Mail: brian.barnard@haynesboone.com

 

or such other address or telecopy number as such party may hereafter specify for the purpose by notice to the other parties hereto.

 

11.          Governing Law; Jurisdiction; Venue.

 

(a)           This Limited Guarantee shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of law hereof.

 

(b)           The parties hereto, on their behalf and on behalf of their respective Affiliates, irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such Court or the Delaware Supreme Court determines that the Court of Chancery does not have or should not exercise subject matter jurisdiction over such matter, the Superior Court of the State of Delaware) and the federal Courts of the United States of America located in the State of Delaware (and of the appropriate appellate Courts therefrom) in connection with any dispute arising out of, in connection with, in respect of, or in any way relating to:

 

7

 

(i)            the negotiation, execution and performance of this Limited Guarantee and the transactions contemplated hereby;

 

(ii)           the interpretation and enforcement of the provisions of this Limited Guarantee and the documents referred to in this Limited Guarantee, or

 

(iii)          any actions of or omissions by any Covered Party (as defined below) in any way connected with, related to or giving rise to any of the foregoing matters (the foregoing clauses (i), (ii) and (iii) collectively, the “Covered Matters”),

 

and hereby waive, and agree not to assert as a defense in any Legal Proceeding with regard to or involving a Covered Matter, that such Legal Proceeding may not be brought or is not maintainable in said Courts or that venue thereof may not be appropriate or that this Limited Guarantee or any such document may not be enforced in or by such Courts, and the parties hereto, on their behalf and on behalf of their respective Affiliates, irrevocably agree that all claims with respect to such Legal Proceeding shall be heard and determined exclusively by such a Delaware state or federal Court.  The parties hereto, on their behalf and on behalf of their respective Affiliates, hereby consent to and grant any such Court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with such Legal Proceeding in the manner provided in Section 10 or in such other manner as may be permitted by law shall be valid and sufficient service thereof.

 

(c)           In addition, by entering into this Limited Guarantee, each party hereto, on their behalf and, to the fullest extent permissible by applicable Law, on behalf of their respective equityholders, partners, members, directors, Affiliates, partners, principals, officers or agents, as the case may be, covenants, agrees and acknowledges, that it shall not bring any Legal Proceeding (regardless of the legal theory or claim involved or the procedural nature of any such Legal Proceeding) with regard to any Covered Matter against any Covered Party, other than the parties hereto.

 

(d)           The parties hereto acknowledge and agree that (i) the agreements contained in this Section 11 are an integral part of this Limited Guarantee and the transactions contemplated hereby, and that, without these agreements, the parties would not enter into this Limited Guarantee, (ii) any breach of this Section 11 would result in irreparable harm and that monetary damages would not be a sufficient remedy for any such breach and (iii) that any breach of this Section 11 will be deemed a material breach of this Limited Guarantee.  Accordingly, each Covered Party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach by a party (or any affiliate of such party) and in case of any such breach, the non-breaching party shall be excused from its performance obligations under this Limited Guarantee.

 

For the purposes of this Section 11, “Covered Party” shall mean (i) any party hereto, (ii) any such parties’ officers, directors, partners, principals, agents, managers, employees, or Affiliates or (iii) any officer, director, partner, principal, agent, or employee of any such Person, all of whom are intended third party beneficiaries of this Section 11.

 

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12.          No Assignment. Neither the Guarantors nor the Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (except by operation of law) without the prior written consent of the Guaranteed Party (in the case of an assignment by the Guarantors) or each of the Guarantors (in the case of an assignment by the Guaranteed Party), except that if a portion of any Guarantor’s commitment under the Equity Commitment Letter is assigned in accordance with the terms thereof, then a corresponding portion of such Guarantor’s Obligations hereunder may be assigned to the same assignee without the prior written consent of the Guaranteed Party except that the undersigned shall not be released from such portion of the Guaranteed Obligations.

 

13.          No Third Party Beneficiaries. This Limited Guarantee is not intended to, and does not, confer upon any Person other than the Persons who are signatories hereto any rights or remedies hereunder, except that each Guarantor Related Person of the Guarantors shall be considered a third party beneficiary of the provisions of Section 3 hereof.

 

14.          Severability. If any term or other provision of this Limited Guarantee is invalid, illegal or unenforceable, all other terms and provisions of this Limited Guarantee shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

 

15.          Interpretation. In this Limited Guarantee, unless otherwise specified, the following rules of interpretation apply:

 

(a)           references to Articles, Sections, Exhibits, clauses and Parties are references to sections or sub-sections, exhibits and clauses of, and parties to, this Limited Guarantee;

 

(b)           references to any Person include references to such Person’s successors and permitted assigns;

 

(c)           words importing the singular include the plural and vice versa;

 

(d)           words importing one gender include the other gender;

 

(e)           references to the word “including” shall be deemed to be followed by the words “without limitation” in each case where such words do not follow the word “including”;

 

(f)            the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Limited Guarantee, refer to this Limited Guarantee as a whole and not to any particular provision of this Limited Guarantee;

 

(g)           references to “$” or “dollars” refer to U.S. dollars; and

 

(h)           “or” is not exclusive;

 

(i)            a defined term has its defined meaning throughout this Limited Guarantee and in each Exhibit and Schedule to this Limited Guarantee, regardless of whether it appears before or after the place where it is defined.

 

9

 

16.          Confidentiality. This Limited Guarantee shall be treated as strictly confidential and is being provided to the Guaranteed Party solely in connection with the Merger Agreement and the transactions contemplated thereby. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document, except with the written consent of each of the Guarantors. Notwithstanding the foregoing, this Limited Guarantee may be provided to the Guaranteed Party’s advisors who have been directed to treat this Limited Guarantee as confidential, and the Guaranteed Party shall cause such advisors to so treat this Limited Guarantee as confidential, and this Limited Guarantee may be disclosed as required by applicable law or governmental or judicial process or order.

 

17.          Payments; Availability of Funds. All payments to be made hereunder by the Guarantors shall be made in lawful money of the United States of America at the time of payment, shall be made in immediately available funds, and shall be made without deduction (whether for taxes or otherwise), offset, defense, claim or counterclaim of any kind. For so long as this Limited Guarantee shall remain in effect in accordance with Section 3, each Guarantor shall have available to it all funds necessary for it to satisfy all of its obligations under this Limited Guarantee, including its Maximum Aggregate Amount of the Guaranteed Obligations.

 

18.          No Presumption Against Drafting Party. Each of the parties hereto acknowledges that each party to this Limited Guarantee has been represented by counsel in connection with this Limited Guarantee and the transactions contemplated by this Limited Guarantee. Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Limited Guarantee against the drafting party has no application and is expressly waived.

 

19.          Waiver of Jury Trial.

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS LIMITED GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

10

 

IN WITNESS WHEREOF, the parties have caused this Limited Guarantee to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

	
 
    	
THE VÄRDE FUND X (MASTER), L.P.
    
	
 
    	
By: 
    	
The Värde Fund X (GP), L.P., Its   General Partner
    
	
 
    	
By: 
    	
The Värde Fund X GP, LLC, Its   General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VÄRDE INVESTMENT PARTNERS, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VÄRDE INVESTMENT PARTNERS (OFFSHORE)   MASTER, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
				

 

 

Signatures continue on the following page

 

Signature page to Limited Guarantee

 

11

 

	
 
    	
THE VÄRDE FUND VI-A, L.P.
    
	
 
    	
By: 
    	
Värde Investment Partners G.P.,   LLC, Its General Partner
    
	
 
    	
By: 
    	
Värde Partners, L.P., Its Managing   Member
    
	
 
    	
By: 
    	
Värde Partners, Inc., Its   General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason R. Spaeth
    
	
 
    	
Name:
    	
Jason R. Spaeth
    
	
 
    	
Title:
    	
Managing Principal
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FIRSTCITY FINANCIAL CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ James T. Sartain
    
	
 
    	
Name:
    	
James T. Sartain
    
	
 
    	
Title:
    	
President and Chief Executive Officer
    
				

 

 

Signature page to Limited Guarantee

 

12

 

EXHIBIT A

 

	
Guarantor
    	
 
    	
Percentage of the Maximum
   Aggregate Amount
    	
 
    
	
The Värde Fund   X (Master), L.P.
    	
 
    	
84
    	
%
    
	
Värde   Investment Partners, L.P.
    	
 
    	
8
    	
%
    
	
Värde   Investment Partners (Offshore) Master, L.P.
    	
 
    	
5
    	
%
    
	
The Värde Fund   VI-A, L.P.
    	
 
    	
3
    	
%

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