Document:

Exhibit 10.58

 

Execution Copy

 

LIMITED GUARANTY AGREEMENT

 

This LIMITED GUARANTY AGREEMENT (this “Agreement”) made as of June 25,
2010 by FirstCity Financial Corporation, a Delaware corporation (the “Guarantor”),
in favor of Bank of Scotland Plc, acting through its New York Branch, as Agent
(in such capacity, and including its successors and assigns in such capacity,
the “Agent”), for the benefit of the lenders (the “Lenders”) from
time to time party to the Reducing Note Facility Agreement referred to below.  Unless otherwise defined herein, capitalized
terms shall have the respective meanings assigned to them in the Reducing Note
Facility Agreement.

 

W I T N E S S E T H :

 

WHEREAS, FirstCity Commercial Corporation, a Texas corporation, FH
Partners LLC, a Texas limited liability company (together with FirstCity
Commercial Corporation, the “Borrowers”, and each individually, a “Borrower”),
FLBG Corporation, a Texas corporation, Bank of Scotland Plc, acting through its
New York Branch (the “Agent”), and the financial institutions party
thereto (the “Lenders”) are party to the Reducing Note Facility
Agreement dated as of the date hereof (the “Reducing Note Facility Agreement”);

 

WHEREAS,
the Guarantor will derive substantial direct and indirect benefit from the execution
and delivery by the Borrowers of the Reducing Note Facility Agreement; and

 

WHEREAS,
in connection with the execution and delivery of the Reducing Note Facility
Agreement, and as a condition precedent to the effectiveness thereof, the
Guarantor is required to enter into this Guaranty Agreement;

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each party hereto hereby agrees as follows:

 

1.             The Guaranty.  (a)  Subject to the limitation of Section 1(b),
the Guarantor hereby unconditionally and irrevocably guarantees as primary
obligor and not merely as surety the full and prompt payment when due and
payable (whether upon maturity, by acceleration or otherwise) of the
obligations of each of the Borrowers (including without limitation all interest
which may be payable thereon prior to or during the pendency of any insolvency
or similar proceeding with respect to such Borrower) with respect to payment of
the indebtedness under the Reducing Note Facility Agreement as evidenced by the
notes executed pursuant to the terms of the Reducing Note Facility Agreement
and letters of credit under the Reducing Note Facility Agreement (the “Guarantied
Obligations”).  If any or all of such
Guarantied Obligations become due and payable, the Guarantor unconditionally
promises to pay such indebtedness to the Agent on behalf of the Lenders, or
order, on demand, together with any and all expenses which may be incurred by
the Lenders or the Agent in collecting any of the indebtedness which is part of
the Guarantied Obligations, subject to the terms of Section 1(b).  If the Agent or the Lenders are prevented by
law from accelerating any of the indebtedness in accordance with the terms of
any 

 

 

agreement
or instrument governing same, the Agent shall be entitled to receive hereunder
from the Guarantor, upon demand therefor, the sum which would have otherwise
been due had such acceleration occurred. 
The word “indebtedness” is used in this Agreement in its most
comprehensive sense and includes any and all advances, debts, obligations and
liabilities of each of the Borrowers which are part of the Guarantied
Obligations, in each case heretofore, now or hereafter made, incurred or
created, whether voluntarily or involuntarily, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether or not such
indebtedness is from time to time reduced, or extinguished and thereafter
increased or incurred, whether such Borrower may be liable individually or
jointly with others, whether or not recovery upon such indebtedness may be or
hereafter become barred by any statute of limitations, and whether or not such
indebtedness may be or hereafter become otherwise unenforceable.  Without limiting the generality of the
foregoing, the Guarantor acknowledges that this guaranty is a guaranty of
payment, not a guaranty of collection.

 

(b)           Anything herein
or in any other Loan Document to the contrary notwithstanding, the maximum
liability of the Guarantor hereunder and under the other Loan Documents (said
maximum liability, its “Maximum Guaranteed Amount”) shall in no event
exceed the lesser of (i) such amount which can be guaranteed by the
Guarantor under applicable federal and state laws relating to the insolvency of
debtors and (ii) 75,000,000 plus an amount equal to any losses incurred by
Lenders arising from the failure of the Guarantor to pay federal income taxes
as required in Section 10(q) which result in a levy or other
enforcement proceeding by the United States Internal Revenue Service that
reduces the cash flow from or results in a loss of Collateral or security
interests or pledges securing the Guarantied Obligations (and any expenses of
the Collateral Agent and Lenders related to defense of the Collateral from any
such enforcement proceedings).

 

(c)           The Guarantor
agrees that the indebtedness may at any time and from time to time exceed the
Maximum Guaranteed Amount without impairing this Agreement or affecting the rights
and remedies of the Agent and the Lenders hereunder; provided that under no
circumstance shall the liability of the Guarantor exceed the Maximum Guaranteed
Amount.

 

(d)           No payment or
payments made by any Borrower, any other guarantor or any other Person or
received or collected by the Agent or any Lender from any Borrower, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time in reduction
of or in payment of the indebtedness shall be deemed to modify, reduce, release
or otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made to the
Agent by the Guarantor or payments received or collected by the Agent from the
Guarantor, remain liable for the indebtedness up to its Maximum Guaranteed
Amount until the indebtedness is indefeasibly paid in full; provided that all
such payments are applied to the Guarantied Obligations.

 

(e)           Notwithstanding
any other provision of this Agreement, the Guarantor and the Agent agree that
payments made to the Guarantor, FirstCity Diversified Holdings LLC or FirstCity
Servicing Corporation pursuant to Section 5.3 of the Reducing Note
Facility Agreement are not in violation of this Agreement, and that no such
payment shall increase the liability of Guarantor to pay the Guarantied
Obligations subject to the Maximum Guaranteed

 

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Amount,
nor shall any such payment be required to be returned, paid or delivered to the
Agent for any reason.

 

2.             Bankruptcy.  Additionally, the Guarantor unconditionally
and irrevocably guarantees the payment of any and all Guarantied Obligations of
each of the Borrowers, subject to the Maximum Guarantied Amount, whether or not
due or payable, upon the occurrence in respect of such Borrower of any of the
events specified in Section 9 of the Reducing Note Facility Agreement
(including, without limitation, Section 9.8 thereof) and unconditionally
promises to pay such Guarantied Obligations, subject to the Maximum Guaranteed
Amount, to the Agent on behalf of the Lenders, or order, on demand, in lawful
money of the United States, without setoff or counterclaim.

 

3.             Nature of
Liability.  The
liability of the Guarantor hereunder is exclusive and independent of any
security or other guaranty of the indebtedness of any Borrower whether executed
by the Guarantor or by any other party, and the liability of the Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Borrower or by any other party, (b) any
other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the indebtedness of any Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution or termination of any Borrower, or (e) any payment made to the
Agent or to any or all Lenders on the indebtedness which such Agent, Lender or
Lenders are required to repay to any Borrower, whether pursuant to a court
order, in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding and the Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.

 

4.             Independent
Obligation.  (a) 
The obligations of the Guarantor hereunder are independent of the obligations
of any other guarantor or any Borrower, and any security for or other guarantee
of the indebtedness of any Borrower, and a separate action or actions may be
brought and prosecuted against the Guarantor whether or not action is brought
against any other guarantor or any Borrower or any security held by the Agent
and without pursuing any other remedy, and whether or not any other guarantor
or any Borrower be joined in any such action or actions.  The Guarantor waives to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. 
Any payment by any Borrower or other circumstance which operates to toll
any statute of limitations as to any Borrower shall operate to toll the statute
of limitations as to the Guarantor.  The
rights of the Agent and the Lenders under this Agreement will not be exhausted
by any action or inaction by the Agent or the Lenders until all of the
indebtedness has been indefeasibly paid in full.

 

(b)           The liability
of the Guarantor hereunder is not affected or impaired by any direction or
application of payment by any Borrower or by any other party, or by any other
guarantee or undertaking of any other guarantor or any other party as to the
indebtedness of any Borrower, by any payment on, or in reduction of, any such
other guarantee or undertaking, by the termination, revocation or release of
any obligations under the Reducing Note Facility Agreement or of any other
guarantor, or by any payment made to the Agent or the Lenders on the
indebtedness which the Agent or the Lenders repay to any Borrower or any other
guarantor or other person or entity, whether pursuant to court order, in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding or any other fact or circumstance which would otherwise excuse the
obligation of a guarantor or surety, and the Guarantor waives 

 

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any right to the deferral or modification of the
Guarantor’s obligations hereunder by reason of any such proceeding, fact or
circumstance.  This Agreement shall
continue to be effective in accordance with its terms, or be reinstated, as the
case may be, if at any time payment, or any part thereof, of or with respect to
any of the indebtedness is rescinded or must otherwise be restored or returned
by the Agent or a Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or any other payor thereof, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Borrower or any other payor thereof
or any substantial part of its property, or otherwise, all as though such
payments had not been made.

 

5.             Authorization.  The Guarantor authorizes the Agent and the
Lenders without notice or demand, and without affecting or impairing the
Guarantor’s liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of, the Guarantied Obligations of any
Borrower or any part thereof, including any increase or decrease of the rate of
interest thereon, (b) take and hold security from any Borrower, any
guarantor or any other party for the payment of this guaranty or the
indebtedness and subordinate, compromise, exchange, enforce, waive and release
any such security or accept additional or substituted security, (c) apply
such security and direct the order or manner of sale thereof as the Agent or
Collateral Agent in its discretion may determine and (d) release, add or
substitute any one or more endorsers, guarantors or other obligors.  Any modifications, renewals and extensions of
the indebtedness may be made at any time by the Agent on behalf of the Lenders,
and the Guarantor shall be fully liable for any such modifications, renewals or
extensions.  The Agent on behalf of the
Lenders may take any of the foregoing actions upon any terms and conditions as
the Agent may elect, without giving notice to the Guarantor or obtaining the
consent of the Guarantor and without affecting the liability of the Guarantor
to the Agent or the Lenders.

 

6.             Reliance.  It is not necessary for the Lenders or the
Agent to inquire into the capacity or powers of any Borrower or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder. 
The Guarantor assumes full responsibility for keeping fully informed of
the financial condition of each Borrower and all other circumstances affecting
such Borrower’s ability to perform its obligations to the Agent and the
Lenders, and agrees that neither the Agent nor any Lender will have any duty to
report to the Guarantor any information which the Agent or any Lender receives
about any Borrower’s financial condition or any circumstances bearing on its
ability to perform, and expressly waives any right to receive such information
and any defense based upon failure to receive such information.

 

7.             Subordination.  Notwithstanding the indebtedness of the
Borrowers as set forth in the Reducing Note Facility Agreement, any
indebtedness of any Borrower now or hereafter held by the Guarantor, whether in
connection with this Agreement or whether completely independent of this
Agreement and the indebtedness, is hereby subordinated to the indebtedness of
the Borrowers to the Lenders; and such indebtedness of any Borrower to the
Guarantor shall be collected, enforced and received by the Guarantor as trustee
for the Lenders and be paid over to the Lenders on account of the indebtedness
of such Borrower to the Lenders, but without affecting or impairing in any
manner the liability of the Guarantor under the other provisions of this
Agreement.  The Guarantor further agrees
that it will not assert any claim against any 

 

4

 

Borrower
until all indebtedness to the Agent and the Lenders has been completely
satisfied.  Prior to the transfer by the
Guarantor of any note or negotiable instrument evidencing any indebtedness of
any Borrower to the Guarantor, the Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.

 

8.             Waivers of
Defenses.  The
Guarantor waives, except as otherwise provided in this Agreement:

 

(a)           all statutes of
limitation as to the indebtedness, this Agreement or otherwise as a defense to
any action brought against the Guarantor by the Agent or any Lender, to the
fullest extent permitted by law;

 

(b)           any defense
based upon any legal disability of any Borrower or any discharge or limitation
of the liability of any Borrower to the Agent or the Lenders, whether
consensual or arising by operation of law or any bankruptcy, insolvency, or
debtor-relief proceeding, or from any other cause;

 

(c)           presentment,
demand, protest and notice of any kind;

 

(d)           any defense
based upon or arising out of any defense which any Borrower may have to the
payment or performance of any part of the indebtedness;

 

(e)           any defense
based upon any disbursements by the Agent or the Lenders to any Borrower
pursuant to any agreements or instruments governing the indebtedness whether
same be deemed an additional advance or be deemed to be paid out of any special
interest or other fund accounts, as constituting unauthorized payments
hereunder or amounts not guaranteed by this Agreement;

 

(f)            all rights to
participate in any security held by the Agent or the Lenders for the
indebtedness;

 

(g)           irregularity or
unenforceability of any agreement or instrument representing or governing the
indebtedness;

 

(h)           any request
that the Agent or a Lender be diligent or prompt in making demands hereunder or
under any agreement or instrument representing or governing the indebtedness;
and

 

(i)            any other
defense in law or equity (except the defense that the indebtedness has been
indefeasibly paid in full) which, under applicable law, would release the
obligation of a guarantor or surety, until the indebtedness has been
indefeasibly paid in full.

 

9.             Representations
and Warranties.  In order to
induce the Lenders to accept this Agreement the Guarantor makes the following
representations, covenants and warranties, which representations, covenants and
warranties shall survive the execution and delivery of this Agreement and the
other documents and instruments referred to herein:

 

5

 

9.1          Organization.

 

The Guarantor is and at all times hereafter shall be a corporation,
duly organized and validly existing and in good standing under the laws of the
State of Delaware and qualified or licensed to do business and in good standing
in all states in which the laws thereof require the Guarantor to be so
qualified and/or licensed and in which the failure so to qualify could have a
Material Adverse Effect, including, without limitation, the State of
Texas.  Schedule 9.1(a) identifies
each jurisdiction in which the Guarantor has qualified or been licensed to do
business and describes the nature and current status of any such qualification
or license.

 

9.2          Entity Power.

 

The Guarantor has the right, power and capacity and is duly authorized
and empowered to enter into, execute, deliver and perform this Agreement.

 

9.3          Violation of
Charter Documents.

 

The execution, delivery and/or performance by the Guarantor of this Agreement
and the consummation of the transactions contemplated hereunder have been duly
authorized by all necessary corporate and shareholder action and none of such
execution, delivery, performance or consummation shall, by the lapse of time,
the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
the Guarantor, or contained in any agreement, instrument or document to which
the Guarantor is now or hereafter a party or by which it or any of its Assets
is or may become bound, other than agreements, instruments or documents that
are immaterial to the Guarantor the breach of which could not have a Material
Adverse Effect.

 

9.4          Enforceability.

 

This Agreement is and will be the legal, valid and binding agreement of
the Guarantor, enforceable in accordance with its terms, except as enforcement
thereof may be subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally, and to general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).

 

9.5          Ownership.

 

(a)           Schedule 9.5(a) sets
forth all classes of stock of the Guarantor, as of December 31, 2009, the
shareholders thereof (other than members of the general public), addresses of
each shareholder, and number of shares owned as of such date.

 

(b)           Schedule 9.5(b) sets
forth all classes of stock and/or other Equity Interests (other than options,
warrants and rights to acquire Stock or other Equity Interests) issued by each
Primary Obligor, each Portfolio Entity and each Related Entity, the
shareholders and other equity holders thereof, and the addresses, number of
shares and/or partnership interests owned.

 

(c)           Schedule 9.5(c) sets
forth all options, warrants and other rights to acquire Stock or other Equity
Interests of the Guarantor, any Primary Obligor, any Portfolio Entity, any
Related Entity and any other Pledged Entity, the nature of such option, warrant
or right and the 

 

6

 

conditions for the exercise thereof.  Lenders hereby expressly consent to the
transfer, issuance or conveyance of Stock and/or other Equity Interests of the
Guarantor in accordance with such options, warrants and rights; provided that
the same does not result in a Change of Control.

 

(d)           All Equity
Interests of the Guarantor, each Primary Obligor, each Portfolio Entity, each
Related Entity and each other Loan Party have been duly and validly issued, are
fully paid and are non-assessable.

 

9.6          Financial
Warranty.

 

The Guarantor (i) is paying its debts as they mature, (ii) owns
property which, at a fair valuation, is greater than the sum of its debt, and (iii) has
capital sufficient to carry on its business and transactions and all businesses
and transactions in which it is about to engage.

 

9.7          Proceedings.

 

Except as set forth on Schedule 9.7, there are no actions or
proceedings which are pending or threatened against the Guarantor which could
reasonably be expected to have a Material Adverse Effect.  None of the actions or proceedings referred
to on Schedule 9.7 could have a Material Adverse Effect.

 

9.8          Adequate
Licenses.

 

The Guarantor possesses adequate Assets, licenses, patents, copyrights,
trademarks and tradenames to continue to conduct its business as previously
conducted by it and as contemplated in the foreseeable future except such
licenses, patents, copyrights, trademarks and trade names the failure of which
to obtain could not be reasonably expected to have a Material Adverse Effect.

 

9.9          Government
Permits;  Approvals and Consents.

 

(a)           Except for
matters which could not result in a Material Adverse Effect, the Guarantor has
been and is in good standing with respect to all governmental permits,
certificates, consents and franchises necessary to continue to conduct its
business as previously conducted prior to the date hereof to own or lease and
operate its properties as now owned or leased by it.  None of said permits, certificates, consents
or franchises contain any term, provision, condition or limitation more
burdensome than such as are generally applicable to Persons engaged in the same
or similar business as the applicable Person.

 

(b)           The Guarantor
does not require the approval, consent, waiver, order, permission, license,
authorization, registration or validation of, or filing with or exemption by,
any Government Authority or any other Person (including but not limited to
shareholders, partners, members, equity owners, holders of Indebtedness
Instruments, or any owner of any lien upon the Assets of any one or more of
them or their Affiliates) for the execution and delivery of, and the
consummation of the transactions contemplated by, this Agreement.

 

7

 

9.10        Restrictions.

 

(a)           The Guarantor
is not a party to (nor are any of its Assets otherwise subject to) any contract
or agreement or restriction, judgment, decree or order that could have a
Material Adverse Effect.

 

(b)           The Guarantor
is not subject to (nor are any of its Assets otherwise subject to) any Charge.

 

9.11        Compliance with
Laws.

 

Except for matters which could not result in a Material Adverse Effect,
the Guarantor is not in violation of any applicable statute, regulation, order
or ordinance of the United States of America, of any state, city, town,
municipality, county or of any other jurisdiction, or of any agency thereof,
including the Federal Reserve Board, in any respect.

 

9.12        Compliance with
Indebtedness Instruments.

 

The Guarantor is not in default under any Indebtedness Instrument or
any other material agreement to which it is a party.

 

9.13        Financials.

 

The Financial Statements delivered by the Guarantor to Agent fairly and
accurately present the Assets, liabilities and financial conditions and results
of operations of the Guarantor, and such other Persons described therein as of
and for the periods ending on such dates and have been prepared in accordance
with GAAP and such principles have been applied on a basis consistently
followed in all material respects throughout the periods involved.

 

9.14        Tax Returns.

 

The Guarantor has filed or caused to be filed all tax returns which are
required to be filed, and has paid all Charges shown to be due and payable on
said returns or on any assessments made against it or any of its property, and
all other Charges imposed on it or any of its properties by any Governmental
Authority.

 

9.15        No Material
Adverse Change.

 

Since December 31, 2009, no event or circumstance has occurred
that had, has or could reasonably be expected to have a Material Adverse
Effect.

 

9.16        No Indebtedness.

 

The Guarantor (i) has no Indebtedness except for Indebtedness
reflected in the most recent Financial Statements (except for any such Indebtedness
(x) incurred since such most recent Financial Statements were delivered
and identified on Schedule 9.15, or (y) constituting unsecured
trade payables arising in the ordinary course of business since the dates
reflected in the December 31, 2009 Financial Statements) or (ii) has
guaranteed any indebtedness or entered into or issued any Guaranty Equivalent
(other than as a result of the endorsement of any 

 

8

 

instrument
of items of payment for deposit or collection in the ordinary course of
business or as otherwise expressly permitted pursuant to the terms hereof) in
respect of the obligations of any Person.

 

9.17        Affiliates.

 

Schedule 9.17 attached hereto is a true, accurate and
complete schedule of the Guarantor’s Affiliates, together with a description of
the Guarantor’s relationship to each such Affiliate.

 

9.18        Investment
Company Act and Public Utility Holding Company Act.

 

Neither the Guarantor nor the issuance of this Agreement is subject to
any of the provisions of the Investment Company Act of 1940, as amended.  The Guarantor is not a “holding company” as
defined in the Public Utility Holding Company Act of 1935, as amended, or
subject to any other federal or state statute or regulation limiting its
ability to incur Indebtedness for money borrowed.

 

9.19        SEC Filings.

 

The Guarantor has filed and made available to the Agent and Lenders
each form, registration statement, schedule, report, proxy statement and
document required to be filed by the Guarantor with the SEC since January 1,
2006 (collectively, the “SEC Reports”).  Except as set forth on Schedule 9.19,
the SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in the SEC Reports or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.  Since January 1, 2006,
the Guarantor has made all filings with the SEC in a timely manner (except as
set forth on Schedule 9.19, each of which filing deficiencies was
subsequently cured in a manner that brought the Guarantor into full compliance
with law) as required by law and no event has occurred that requires an
additional filing or any amendment to a prior filing, which has not been made
or filed.

 

10.          Waiver of
Subrogation; Certain Covenants of Guarantors.

 

(a)           The Guarantor
hereby irrevocably waives (but only until the final indefeasible payment and
satisfaction of all Guarantied Obligations due to the Agent and the Lenders)
any claim or other rights which it may now have or hereafter acquire against
any Borrower or any other guarantor that arise from the existence, payment,
performance or enforcement of the Guarantor’s obligations under this Agreement
or any other Loan Document, including (without limitation) any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Lenders and the Agent
against any Borrower or any other guarantor or any collateral which the Agent
or any Lender now has or hereafter acquires, whether or not such claim, remedy
or right arises in equity, or under contract, statute or common law including
(without limitation) the right to take or receive from such Borrower, directly
or indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights.  If any amount shall be paid 

 

9

 

to the Guarantor in violation of the preceding
sentence and the Guarantied Obligations shall not have been paid in full, such
amount shall be deemed to have been paid to the Guarantor for the benefit of,
and held in trust for the benefit of, the Lenders and the Agent and shall forthwith
be paid to the Agent on behalf of the Lenders to be credited and applied upon
the Guarantied Obligations, whether matured or unmatured in accordance with the
terms of the Reducing Note Facility Agreement. 
The Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Reducing Note
Facility Agreement and that the waiver set forth in this Agreement is knowingly
made in contemplation of such benefits.

 

(b)           The Guarantor
and the Agent agree that any payments made to Guarantor, FirstCity Diversified
Holdings LLC and FirstCity Servicing Corporation pursuant to Section 5.3
of the Reducing Note Facility Agreement are not paid in violation of this Section 10(a) and
no such payment shall be required to be returned, paid or delivered to the
Agent or the Lenders for any reason.

 

(c)           The Guarantor
hereby agrees that it shall, at the end of each fiscal quarter:

 

(i)            maintain a
Tangible Net Worth equal to or greater than an amount equal to $60,000,000 for
the last day of the fiscal quarter then ended.

 

(d)           The Guarantor
hereby agrees that it shall give Agent notice within forty-five (45) days after
it merges with or acquires an interest in any Person.

 

(e)           The Guarantor
shall at all times cause the Consolidated Group to be comprised of the entities
constituting the Consolidated Group as of the date hereof and shall permit only
those mergers, dispositions or other transactions among such entities as are
permitted by the Facility Agreement; provided that this provision shall not
prohibit the formation of REO Affiliates.

 

(f)            Concurrently
with delivery to its stockholders, the Guarantor shall deliver to Agent copies
of all financial and other information delivered by the Guarantor to such
stockholders, including, without limitation, its proxy statements and annual
reports to stockholders.  Within two (2) Business
Days after delivery to the SEC by the Guarantor, which in all case shall be on
a timely basis in accordance with the applicable document and the Securities
Laws, copies of all reports and other filings filed by the Guarantor with the
SEC, including, without limitation, all reports on Forms 10K, 10Q or 8K
promulgated under the Securities Exchange Act of 1934, as amended, and all
registration statements and amendments thereto filed under the Securities Act
of 1933, as amended.

 

(g)           The Guarantor
shall notify Agent promptly after obtaining knowledge of:

 

(i)            any event or
occurrence which the Guarantor has determined could have a Material Adverse
Effect.  “Material Adverse Effect” shall
mean an effect that would result in a Material Adverse Change.  “Material Adverse Change” shall mean a
material adverse change in the business, properties, operations, prospectus or
condition (financial or otherwise) of the Guarantor;

 

(ii)           the institution
of (x) any suit or administrative proceeding which if determined adversely
to the Guarantor is reasonably likely to or could reasonably be expected to 

 

10

 

result
in a Material Adverse Effect, and (y) any other suit or administrative
proceeding against the Guarantor in which the uninsured amount involved is
$5,000,000 or more, such notice to be given on or prior to the end of the
calendar month in which the applicable event occurs;

 

(iii)          The Guarantor
becoming subject to any Charge, restriction, judgment, decree or order which
could reasonably be expected to have a Material Adverse Effect;

 

(iv)          the
commencement of any lockout, strike or walkout relating to any labor contract
to which the Guarantor is a party, if the same could reasonably be expected to
have a Material Adverse Effect;

 

(v)           any event or
occurrence in respect of the Guarantor which could reasonably be expected to
have a Material Adverse Effect;

 

(vi)          the occurrence
of (x) a default by the Guarantor under any agreement, document or
instrument to which the Guarantor is a party which could reasonably be expected
to have a Material Adverse Effect, or (y) any default by the Guarantor
which could reasonably be expected to materially and adversely affect the
Guarantor’s ability to perform its obligations under this Agreement;

 

(vii)         the filing of a
petition by or against the Guarantor under any section or chapter of the United
States Bankruptcy Code or any similar law or regulation or if the Guarantor
shall make an assignment for the benefit of its creditors or if any case or
proceeding is filed by or against the Guarantor for its dissolution or
liquidation; and

 

(viii)        the making of
an application for the appointment of a receiver, trustee or custodian for any
of the Assets of the Guarantor.

 

(h)           Insurance.  The Guarantor, at its sole cost and expense,
shall keep and maintain: (i) policies of insurance against all hazards and
risks ordinarily insured against by other owners or users of properties in
similar business; and (ii) public liability insurance relating to the
Guarantor’s ownership and use of its Assets; provided, however, the Guarantor
shall not be required to maintain the insurance referred to in clause (i) as
to any Asset if the Net Present Value of the Asset is less than $100,000.

 

(i)            Preservation of
Existence.  The
Guarantor will maintain and preserve its corporate existence, rights,
privileges and franchises in the State of Delaware, and qualify and remain
qualified to do business in, and maintain its rights, privileges and franchises
in each other jurisdiction which in the opinion of its board of directors
continue to be advantageous to it and shall comply in all material respects
with all applicable Legal Requirements. 
Without limiting the generality of the foregoing, the Guarantor agrees
to qualify to do business as a foreign corporation in each jurisdiction where
the nature of its business and the operations conducted by it therein require
it to be so qualified.

 

(j)            Preservation of
Assets.  The Guarantor will keep its
property material to the conduct of its business in good repair, working order
and condition and from time to time make all needful and proper repairs,
renewals, replacements, extensions, additions, betterments 

 

11

 

and improvements thereto, so that the business
carried on by it may be conducted at all times in accordance with prudent
business management.

 

(k)           Inspection of
Books and Assets.  The
Guarantor shall permit Agent, Lenders and each of their respective
representatives reasonable access during normal business hours to its
properties and personnel, and shall disclose and make available to Agent and
Lenders all books, papers and records relating to the Assets, stock ownership,
properties, operations, obligations, and liabilities of the Guarantor,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational documents, bylaws,
material contracts and agreements, filings with any regulatory authority,
accountants’ work papers (other than those that are the property of its
independent outside auditors), litigation files, loan files, plans affecting
employees, and any other business or prospects in which Lenders may have a
reasonable interest in connection with the Facility Agreement and this
Agreement, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that any of the foregoing
are in the control of any third party, the Guarantor shall use its reasonable
best efforts to cause such third party to provide access to such materials to
Agent and Lenders who shall request the same. 
In the event that the Guarantor is prohibited by law from providing any
of the access referred to in the preceding sentence to Agent and Lenders, it shall
use its commercially reasonable efforts to obtain waivers thereof promptly so
as to permit such access.  The Guarantor
shall make its directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) to
confer with Agent and Lenders and their respective representatives, provided
that (i) such access shall be reasonably related to the transactions
contemplated hereby and not unduly interfere with normal operations and (ii) unless
a Default or Event of Default exists, counsel to the Guarantor shall be
permitted to be present at any meeting between the Guarantor’s independent
public accountants and Agent or Lenders.

 

(l)            Compliance with
Laws.  The Guarantor shall comply
with all laws, rules, regulations and governmental orders (federal, state and
local), including all Environmental Laws, having applicability to it or to the
business or businesses at any time conducted by it, where the failure to so
comply would have, or could reasonably be expected to have, a Material Adverse
Effect.

 

(m)          Dissolution;
Existence.  The
Guarantor shall not wind up, liquidate or dissolve its affairs or fail to
maintain its corporate, existence.

 

(n)           Adverse
Transactions.  The
Guarantor shall not enter into any transaction which materially and adversely
affects its ability to perform its obligations under this Agreement.

 

(o)           Accounting
Changes.  The Guarantor will not make
any significant change in (x) accounting treatment and reporting practices
except as permitted or required by GAAP or Legal Requirements or (y) unless
Agent consents thereto in writing (which consent shall not be unreasonably
withheld), its Fiscal Year.

 

(p)           Dividends.  The Guarantor will not authorize, declare, or
pay any dividends or return any capital to its stockholders as such or
authorize or make any other distribution, payments or delivery of property or
cash to its stockholders as such, or redeem, 

 

12

 

retire, purchase or otherwise acquire, directly or
indirectly, for a consideration any shares of any class of its capital stock
now or hereafter outstanding or any options, warrants or other securities (now
or hereafter outstanding) convertible into or exercisable for any equity or
other securities of the Guarantor or set aside funds for any of the foregoing
and the Guarantor will not permit any Subsidiary or any Portfolio Entity-50% to
purchase any Equity Interests of the Guarantor, or set aside funds for any of
the foregoing.

 

(q)           Tax Returns.  The Guarantor shall timely file or caused to
be filed all federal tax returns which are required to be filed, and pay all
Charges shown to be due and payable on said returns or on any assessments made
against it or any of its property.

 

11.          Default.  The Agent may declare the Guarantor in
default under this Agreement, and may exercise all of its rights hereunder and
demand payment of the Guarantied Obligations subject to the Maximum Guaranteed
Amount; if:

 

(a)           the Guarantor
fails to perform any of its obligations under, or meet any covenant of the
Guarantor provided in, Section 10(c), 10(p) or 10(q) of this
Agreement, or fails to perform any of its other obligations under this
Agreement or meet any other covenant of the Guarantor provided for herein,
which as to any such other obligation or other covenant other than a monetary
payment obligation of the Guarantor could be reasonably expected to materially
and adversely affect the Guarantor’s ability to perform its payment obligations
under this Agreement;

 

(b)           any Event of
Default under any other Loan Document occurs and is continuing that involves a
payment default by the Borrowers or that results in the acceleration of the
Guarantied Obligations;

 

(c)           any
Indebtedness of the Guarantor in excess of $30,000,000 (whether evidenced by a
single facility or in the aggregate by more than one facility) (i) shall
be declared to be or shall become due and payable prior to the stated maturity
thereof and, if a cure period is applicable thereto, such default shall not be
cured within the applicable cure period, or (ii) shall not be paid as and
when the same becomes due and payable, and, in either case, could be reasonably
expected to materially and adversely affect the Guarantor’s ability to perform
its payment obligations under this Agreement, and;

 

(d)           the Guarantor
becomes the subject of any bankruptcy, insolvency, arrangement, reorganization,
moratorium, or other debtor-relief proceeding under any law, whether now
existing or hereafter enacted, or upon the appointment of a receiver for, or
the attachment, restraint of or making or levying of any order of court or
legal process affecting, the property of such Guarantor; or

 

(e)           any
representation, warranty, statement, report or certificate made or delivered by
the Guarantor or any officer, director, manager or authorized employee or agent
thereof herein or in any other Loan Document or otherwise in writing by such
Person in connection with any of the foregoing or in any certificate, report or
other statement furnished pursuant to or in connection with any of the
foregoing, shall be breached or shall prove to be untrue in any material
respect, but only in the event that such breach or falsity could be reasonably
expected to materially and adversely affect the Guarantor’s ability to perform
its payment obligations under this Agreement; or

 

13

 

(f)            a Change in
Control shall occur (for purposes hereof, a Change in Control shall mean the
occurrence of any of the following events after the date hereof:  (i) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)),
is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly, or indirectly, of more than fifty percent
(50%) of the aggregate voting power of all classes of Capital Stock of the
Guarantor entitled to vote generally in an election of directors; (ii) the
Guarantor is merged with or into another corporation or another corporation is
merged with or into the Guarantor with the effect that immediately after such
transaction the stockholders of the Guarantor immediately prior to such
transaction hold less than a majority in interest of the total voting power
entitled to vote in the election of directors, managers or trustees of the
entity surviving the transaction; or (iii) to the extent not otherwise
then constituting an Event of Default, all or substantially all of the Assets
of the Guarantor are sold to any person or persons (as an entirety in one
transaction or a series of related transactions) (for purposes hereof, “Capital
Stock” of any Person means any and all shares, interests, participations or
other equivalents in the equity (however designated) of such Person and any
rights (other than debt securities convertible into an equity interest),
warrants or options to acquire an equity interest in such Person).

 

12.          Right of Setoff.  In addition to all rights of setoff or lien
against any moneys, securities or other property of the Guarantor given to the
Agent and the Lenders by law, upon the occurrence of any default under any
agreement or instrument governing any of the Indebtedness or under this
Agreement, the Agent and each Lender is authorized at any time and from time to
time following an Event of Default, without notice to the Guarantor or to any
other person or entity, any such notice being hereby expressly waived by the
Guarantor, to set-off and apply any and all deposits (general) and any other
indebtedness at any time held or owing by the Agent or any Lender to or for the
credit or the account of the Guarantor against and on account of the
obligations of the Guarantor under this Agreement, irrespective of whether or
not the Agent or such Lender shall have made any demand hereunder or any demand
for payment of any Indebtedness and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.

 

13.          Costs and
Expenses.  Guarantor
agrees to pay the Agent’s and the Lenders’ reasonable and documented
out-of-pocket costs and expenses, including but not limited to reasonable legal
fees and disbursements, incurred in any effort to collect or enforce this
Agreement, whether or not any lawsuit is filed (the “Enforcement Costs”).

 

14.          Cumulative
Remedies.  No delay or
failure by the Agent or any Lender to exercise any right or remedy against, or
to require performance by, any Borrower or the Guarantor or any other party
shall be construed as a waiver of that right, remedy or requirement.  All remedies of the Agent and the Lenders
against each Borrower and the Guarantor are cumulative.  All powers of the Agent and the Lenders to
exercise any right or remedy against, or to require performance by, any Loan
Party shall remain in full force and effect until specifically waived or
released by an instrument in writing executed by the Agent and the Lenders.

 

15.          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION.

 

14

 

16.          Jurisdiction.  The Guarantor hereby agrees that ANY LEGAL
ACTION OR PROCEEDING AGAINST THE GUARANTOR WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER AGREEMENTS OR DOCUMENTS CONTEMPLATED HEREBY OR REFERRED TO HEREIN MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS THE AGENT MAY ELECT, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE GUARANTOR ACCEPTS AND CONSENTS
FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE
EXCLUSIVE, unless waived by the Agent in writing, with respect to any action or
proceeding brought by it against the Agent or any Lender and any questions
relating to usury, and further consents (to the extent permitted by applicable
law) to the service of process in any such action or proceeding being made upon
the Guarantor by mail at the address stated alongside its name on the signature
page hereof or at such other address as the Agent is notified of in
writing in accordance with Section 19 hereof.  Nothing herein shall limit the right of the
Agent or the Lenders to bring proceedings against the Guarantor in the courts
of any other jurisdiction.  The Guarantor
covenants that it is and will remain subject to service of process in the State
of New York so long as any of the indebtedness is outstanding.

 

17.          Severability.  If any one or more of the provisions
contained in this Agreement or any document executed in connection herewith
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.

 

18.          Taxes.  All payments hereunder shall be made by the
Guarantor to the Agent without setoff or counterclaim and in such amounts as
may be necessary in order that all such payments received by the Agent, after
withholding for or on account of any present or future taxes, levies, imposts,
duties or other similar charges of whatsoever nature imposed on the amounts
payable by the Guarantor hereunder by any government or any political
subdivision or taxing authority thereof shall not be less than the amount
required to be received by the Agent hereunder. 
In addition, the Guarantor shall on demand indemnify the Agent for all
income taxes on additional amounts paid pursuant to the preceding
sentence.  With respect to each such deduction or withholding, the
Guarantor shall promptly (and in no event later than 30 days thereafter)
furnish to the Agent such certificates, receipts and other documents as may be
required to establish any tax credit, exemption or reduction in rate related
thereto.

 

19.          Notices,
Requests, Demands, Etc.  Except as otherwise expressly provided
herein, all notices, requests, demands or other communications to or upon the
respective parties hereto shall be deemed to have been duly given or made when
delivered if sent by Federal Express or other similar overnight delivery
service, or three Business Days after mailing (when mailed, postage prepaid, by
registered or certified mail, return receipt requested) or (in the case of
telex, telegraphic, telecopier or cable notice) when delivered to the telex,
telegraph, telecopier or cable company, or (in the case of telex or telecopier
notice sent over a telex or telecopier owned or operated by a party hereto)
when sent; in each case addressed to the party entitled to receive same to the
address stated alongside its name on the signature page hereto (or to such
other address as any party hereto may hereafter specify to the other in
writing); provided that communications with respect to a change of
address shall be deemed to be effective when actually received.

 

15

 

20.          Amendment.  No provisions of this Agreement shall be
waived, amended or supplemented except by a written instrument executed by the
Agent and the Guarantor.

 

21.          Miscellaneous.  The provisions of this Agreement will bind
and benefit the successors and assigns of the Guarantor, the Agent and the
Lenders.  The term “Borrowers” will mean
both the named Borrowers and any other person or entity at any time assuming or
otherwise becoming primarily liable on all or any part of the
Indebtedness.  The descriptive headings
used in this Agreement are for convenience only and shall not be deemed to
affect the meaning or construction of any provision hereof.

 

22.          Waiver of
Claims.  The Guarantor hereby
acknowledges, agrees and affirms that it possesses no claims, defenses,
offsets, recoupment or counterclaims of any kind or nature against or with
respect to the enforcement of this Agreement or any other Loan Document or any
amendments thereto (collectively, the “Claims”), nor does the Guarantor
now have knowledge of any facts that would or might give rise to any
Claims.  If facts now exist which would
or could give rise to any Claim against or with respect to the enforcement of
this Agreement or any other Loan Document, as any of the foregoing may have
been amended by the amendments thereto, the Guarantor hereby unconditionally,
irrevocably and unequivocally waives and fully releases any and all such Claims
as if such Claims were the subject of a lawsuit, adjudicated to final judgment
from which no appeal could be taken and therein dismissed with prejudice.

 

23.          Counterparts.  This Agreement may be executed in any number
of counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Telecopied signatures hereto shall be of the
same force and effect as an original of a manually signed copy.

 

24.          WAIVER OF JURY
TRIAL.  EACH OF THE AGENT AND THE
GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL
RIGHTS EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER AGREEMENT OR DOCUMENT RELATED HERETO, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
AGENT, THE LENDERS, ANY BORROWER, THE GUARANTOR OR ANY OTHER LOAN PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE AGENT ENTERING INTO THIS AGREEMENT AND SUCH OTHER AGREEMENTS AND DOCUMENTS
AND FOR THE LENDERS AND THE ISSUER ENTERING INTO THE REDUCING NOTE FACILITY
REFERRED TO ON THE FIRST PAGE HEREOF.

 

25.          Attorney’s Fees.  If any legal action is brought by the
Guarantor or the Agent, it is expressly agreed that the prevailing party in
such legal action shall be entitled to recover from the other party reasonable
attorneys’ fees in addition to any other relief that may be awarded.

 

26.          Integration.

 

THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES HERETO WITH 

 

16

 

RESPECT
TO THE MATTERS COVERED HEREBY AND THEREBY AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[remainder of page intentionally left blank]

 

17

 

IN
WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed as of the date first above written.

 

Address:

 

	
  6400
  Imperial Drive (delivery only)

  	
   

  	
  FIRSTCITY
  FINANCIAL CORPORATION

  
	
  Waco,
  Texas 76710

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  P.O. Box
  8216 (mail)

  	
   

  	
   

  	
  Name:

  
	
  Waco,
  Texas 76714-8216

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  254-761-2953
  (telecopier)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank
  of Scotland Plc, acting through its New York Branch, in its capacity as Agent
  under this Agreement and agent under the Reducing Note Facility Agreement. 

  	
   

  	
  1095
  Avenue of the Americas

  
	
   

  	
  New
  York, New York 10036

  
	
   

  	
   

  
	
   

  	
   

  	
  (212)
  883-6610 (telecopier)

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

[Signature
page to Guaranty Agreement]Exhibit
10.59

 

THE
COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE
COMMISSION.  OMITTED PORTIONS ARE
INDICATED IN THIS EXHIBIT WITH “*****”.

 

INVESTMENT AGREEMENT

 

THIS
INVESTMENT AGREEMENT (the “Agreement”)
is made and entered into this 29th day of June 2010, to be effective as of
the 1st day of April , 2010 (the “Effective Date”), by and between FC
Diversified Holdings LLC, a Texas limited liability company (“FC Diversified”) and FirstCity
Servicing Corporation, a Texas corporation (“Servicing”),
on the one hand, and Värde Investment Partners, L.P., a Delaware limited
partnership (“Värde”), on the other hand
(each of FC Diversified, Servicing and Värde, a “Party,” and collectively, the “Parties”).

 

W I T N E S
S E T H

 

WHEREAS, FirstCity Affiliates may from time to time
receive invitations to participate in Investment Opportunities;

 

WHEREAS, the Parties intend that Värde and its
Affiliates will have the exclusive right to participate in all Qualified
Investment Opportunities up to an amount equal to SEVEN HUNDRED FIFTY MILLION
AND NO/100 DOLLARS (U.S. $750,000,000.00) in the manner provided herein, which
participation will be within the sole and absolute discretion of Värde; and

 

WHEREAS, the Parties intend that Servicing will
conduct and manage due diligence with respect to Investments on behalf of FC
Diversified, Värde and each Acquisition Entity, as provided in this Agreement,
in consideration of certain compensation set forth in this Agreement, provided
that such conduct and management shall not be a delegation of authority to
Servicing or any other FirstCity Affiliate regarding Värde’s decision as to
whether or not to participate in a Qualified Investment Opportunity;

 

NOW, THEREFORE, in consideration of the
covenants and agreements herein contained, the Parties agree as follows:

 

ARTICLE 1.           DEFINITIONS.

 

As
used in this Agreement, the following terms shall have the following meanings:

 

“Acquisition” means a transaction
involving the direct or indirect acquisition of, or making of a loan or other
investment with respect to, an Investment by an Acquisition Entity, or any
other transaction which Värde and FC Diversified agree in writing is to
constitute an Acquisition.

 

“Acquisition Entity” means each entity formed by
Värde or one or more Affiliates of Värde and a Prospective Acquirer for the
purpose of acquiring Investments.

 

“Affiliate” means with respect to any
Person, any Person:

 

 

(a)           which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, such Person;

 

(b)           which beneficially owns or
holds 50% or more of any class of the Voting Equity of such Person; or

 

(c)           of which 50% or more of the
Voting Equity is beneficially owned or held by such Person.

 

The
term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Equity, other voting securities, by
contract or otherwise.

 

“Agreed Budget” has the meaning specified
in Section 2.8.D.i. of this Agreement.

 

“Agreement” has the meaning specified
in the introduction to this Agreement.

 

“Bankruptcy Code” means
Title 11 of the United States Code, 11. U.S.C. §§ 101 et. seq.

 

“Bid” has the meaning specified in Section 2.8.D.
of this Agreement.

 

“Business Day” means any day on which
banks are open for business in Connecticut, Minnesota, and Texas.

 

“Debtor Relief Law”
means applicable liquidation, conservatorship, receivership, bankruptcy,
moratorium, rearrangement, insolvency, reorganization, or similar law,
proceeding, or device, including, without limitation, the Bankruptcy Code,
providing for the relief of debtors from time to time in effect and generally
affecting the rights of creditors.

 

“Dollar,” “dollar,” “$,” “U.S. dollar/Dollar,” and “USD” each means the lawful currency of the
United States of America.

 

“Due Diligence Expenses” shall mean and include all
and only the following third party expenses incurred by any party hereto, to
the extent set forth in the Agreed Budget: (i) external legal and other
third party and out-of-pocket expenses incurred for the benefit of the
Acquisition Entity in connection with the review and analysis of the
Investments or incurred by the Parties or their Affiliates in connection with
analysis of the Qualified Investment Opportunity or negotiation with the Seller
(but shall not include payroll expenses and overhead); and (ii) any
external legal or third party or out-of-pocket expenses incurred in connection
with the Seller negotiations or preparation of definitive documentation
(including, without limitation, if applicable, the purchase agreement).

 

“Effective Date” has the meaning specified
in the introduction to this Agreement.

 

“Excluded Investment” means (a) an
Investment Opportunity involving an expected Investment Amount of less than the
Investment Threshold, (b) the acquisition of the stock or other equity
ownerships of a Person if the primary purpose of the acquisition is other than
the 

 

Investment
Agreement between FC Diversified Holdings LLC, FirstCity Servicing Corporation

and
Värde Investment Partners, L.P. dated June 29, 2010

 

2

 

acquisition
of distressed assets or investments, (c) any distressed loan portfolio
investment opportunity presented to FC Diversified or a FirstCity Affiliate by
a third-party investor, provided a FirstCity Affiliate is presently
participating in such loan portfolio investment opportunity, (d) investments
or loans made by American Business Lending, Inc., FirstCity Denver
Investment, Inc., FirstCity Denver Investment Corp. (or any other
FirstCity Affiliate formed with Crestone Principal Investors LLC or its
Affiliates), FirstCity Mexico, S.A. de C.V, FirstCity Investimentos Ltda., HMCS
Investment GmbH, HMCS Real Estate GmbH, MCS et Associes, SA, Servicios
Integrales de Cobranza, S.A. Chile, UBN, SAS or any entity in which one or more
of those Persons own 50% or more of the equity interests of such entity,
provided such distressed loan portfolios and similar assets is not offered or
available to any other FirstCity Affiliate, (e) any product for which
Värde shall have delivered to FC Diversified a negative Transaction Response or
a Värde Withdrawal Notice, or failed to deliver a Transaction Response on or
before the Transaction Response Date, from and after the date of delivery of
such response or notice to FC Diversified, or after the Transaction Response
Date, as applicable; provided that if any FirstCity Affiliate presents any such
Excluded Investment to Värde in a Transaction Notice, the Excluded Investment
included in the Transaction Notice shall constitute an Investment for all
purposes of this Agreement, but only as to that Investment Opportunity and any
resulting Acquisition related to that Investment Opportunity, (f) any real
estate that is to be occupied by a FirstCity Affiliate for operational (as
opposed to investment) purposes; and (g) Investment Opportunities that are
exercised by one or more Key Principals solely for their personal account.

 

“FC Diversified” has the meaning specified
in the introduction to this Agreement, and any permitted successors and assigns
as provided herein.

 

“FirstCity Affiliates” means FC Diversified, Servicing,
FirstCity Financial, the Key Principals, and any Affiliates of FC Diversified,
Servicing, FirstCity Financial or the Key Principals.

 

“FirstCity Financial” means FirstCity
Financial Corporation, a Delaware corporation.

 

“FirstCity Withdrawal Notice” has the meaning specified
in Section 2.3(a) of this Agreement.

 

“Incentive Fee” has the meaning contained in Section 2.9
of this Agreement.

 

“Investment” means the subject of any
Investment Opportunity other than with respect to Excluded Investments.

 

“Investment Amount” means the aggregate
contributions made by the Prospective Acquirer and Värde or an Affiliate of
Värde to an Acquisition Entity in connection with an Investment, including the
initial Acquisition and subsequent contributions or loans made by the members
of the Acquisition Entity related to the Investment, not to include any
borrowing incurred by the Acquisition Entity upon the initial acquisition of
the Investment.

 

“Investment Opportunity” means an
opportunity to participate in single and bulk asset purchases of real estate,
financial assets, equity or debt investments in entities or financial
institutions and other potential investments reviewed by any FirstCity
Affiliate.

 

3

 

“Investment Period” means periods determined as
follows:

 

(i)            The initial “Investment Period” will be the
period between the Effective Date and the earlier to occur of October 1,
2010, the Termination Date or the date on which the aggregate amount of the
Investment Amounts first equals or exceeds $250,000,000.

 

(ii)           Each subsequent
“Investment Period” will commence on
the date immediately following the end of the preceding Investment Period and
will end on the earlier to occur of the date that is six (6) months after
the commencement date of such Investment Period, the Termination Date or the
date on which the aggregate amount of the Investment Amounts made after such
commencement date first equals or exceeds $250,000,000. In no event will an
Investment Period extend beyond the Termination Date.

 

“Investment Pool” means all Investments acquired as the result of
Acquisitions made during an Investment Period.

 

“Investment Threshold” means $3,000,000.

 

“Key Principals” means James Sartain, James Moore, James
Holmes, Terry DeWitt or Mark Horrell.

 

“Material Adverse Circumstance” means any event, condition,
obligation, liability or circumstance or set of events, conditions,
obligations, liabilities or circumstances or any change(s), including, without
limitation, changes in federal or state laws or regulations, which (i) has,
had or would reasonably be expected to have any material adverse effect upon or
change in the profitability, validity or enforceability of this Agreement or
the transactions contemplated by this Agreement, taken as a whole, or (ii) has
been or would reasonably be expected to materially impair the ability of FC
Diversified or Servicing to perform their respective obligations under this
agreement or the transactions contemplated hereby.

 

“Monthly Retainer” means a monthly payment
from Värde to Servicing in the amount of $200,000 per month through the Termination Date as compensation
for the right of first refusal in favor of Värde contained in Article 2 of
this Agreement.

 

“Notice(s)” has the meaning specified
in Section 6.9 of this Agreement.

 

“Party” and “Parties” have the meanings specified
in the introduction to this Agreement.

 

“Person” means an individual,
partnership, corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated association, joint venture
or other entity, or a foreign or domestic state or political subdivision
thereof or any agency of such state or subdivision.

 

“Prospective Acquirer” has the meaning specified
in Section 2.2(a) of this Agreement.

 

4

 

“Qualified Investment Opportunity” means an Investment Opportunity with respect to an Investment.

 

“Representing Party “ has the meaning specified
in Article IV of this Agreement.

 

“Seller” means the seller of an
Investment in the case of an asset purchase, or the borrower, in the case of an
Investment that is a loan origination.

 

“Servicing” has the meaning specified
in the introduction to this Agreement, and any permitted successors and assigns
as provided herein.

 

“Servicing Agreement” has the meaning specified
in Section 2.8.C. of this Agreement.

 

“Stock Purchase Agreement” means the Stock Purchase Agreement
in the form attached hereto as Exhibit D.

 

“Termination Date” has the meaning specified
in Section 2.1(c) of this Agreement.

 

“Transaction Notice” has the meaning specified
in Section 2.2(a) of this Agreement.

 

“Transaction Response” has the meaning specified
in Section 2.2(a) of this Agreement.

 

“Transaction Response Date” has the meaning specified
in Section 2.2(a) of this Agreement.

 

“Värde Withdrawal
Notice” has the meaning specified in Section 2.3(b) of this
Agreement.

 

“Värde” has the
meaning specified in the introduction to this Agreement, and any permitted
successors and assigns as provided herein.

 

“Voting Equity” means securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions) of such corporation or, in the case of a
Person which is not a corporation, securities or similar equity or partnership
interests which entitle the holder thereof to elect, select or control the
management or policies of such Person.  “Voting
Equity” does not include warrants prior to the exercise of such warrants.

 

ARTICLE 2.           VÄRDE RIGHT
OF FIRST REFUSAL.

 

Section 2.1            General Scope.

 

(a)           From the
Effective Date through the Termination Date, no FirstCity Affiliate shall
purchase or otherwise acquire a direct or indirect interest in, any Investment
or hold discussions with any party other than a FirstCity Affiliate, Värde or
an Affiliate of Värde regarding investment or co-investment in a Qualified
Investment Opportunity, except in accordance with the terms of this Article 2
or with an express written waiver from Värde.

 

5

 

(b)           The terms of this Agreement are applicable to
Acquisitions made on or after the Effective Date. Värde, FC Diversified and
Servicing acknowledge that the following acquisitions made after the Effective
Date are Acquisitions pursuant to the terms and conditions of this Agreement
for all purposes: (a) the acquisition on May 25, 2010 of the
Intervest Portfolio from Intervest National Bank and Intervest Mortgage
Corporation by VFC Partners 4, LLC; and (b) the acquisition on June 11,
2010 by VFC Partners 5 LLC of the Waterfield Bank portfolio from the Federal
Deposit Insurance Corporation as receiver of Waterfield Bank. Notwithstanding
anything to the contrary herein, the purchase of the “Purchased Shares” as
defined in that certain Investment Agreement dated as of May 21, 2010 by
and among Värde Investment Partners, L.P., Intervest Bancshares
Corporation and FC Highway 6 Holdings LLC will not be subject to the terms of
this Agreement.

 

(c)           The “Termination Date” means June 30,
2015, but will be subject to consecutive automatic one-year extensions without
any action on the part of the Parties on July 1 of each year beginning July 1,
2015; provided, however, that the “Termination Date,” including any such extensions, may be
accelerated as provided in this Agreement or by the mutual written agreement of
the Parties.

 

Section 2.2            Notice Procedures.

 

(a)           In the event that any FirstCity Affiliate (a “Prospective Acquirer”) shall obtain a
Qualified Investment Opportunity prior to the Termination Date, such
Prospective Acquirer or Servicing shall promptly first give written notice to
Värde by delivering a notice substantially in the form of Exhibit A
hereto containing the information set forth in Section 2.7 (the “Transaction Notice”). Thereafter, on or
before the fifth (5th) Business Day after delivery of a duly
completed Transaction Notice to Värde (the “Transaction Response Date”), together with all required
supporting information, Värde shall complete and return to the Prospective
Acquirer or Servicing the cover page of the Transaction Notice (the “Transaction Response”) indicating
whether Värde has an interest in the subject Investment Opportunity.  Upon execution of an affirmative Transaction
Response, Värde shall be responsible for payment of its pro rata share (based
on the investment percentages set forth in the Transaction Notice) of the Due
Diligence Expenses incurred and contracted for with respect to the Qualified
Investment Opportunity, subject to the terms and limitations expressly set
forth in this Agreement.  Upon execution
of an affirmative Transaction Response, regardless of whether of not the
Termination Date has passed, unless and until Värde delivers a Withdrawal
Notice in accordance with Section 2.3(b), no FirstCity Affiliate shall
hold discussions with Persons other than Affiliates of Värde regarding such
Qualified Investment Opportunity or participate in such Qualified Investment
Opportunity other than as contemplated by the Transaction Notice. In the event
that Värde fails to timely return the Transaction Response or Värde responds
negatively in the Transaction Response, then Värde and any Affiliate of Värde
shall be free to proceed with the acquisition of the Qualified Investment
Opportunity, directly or indirectly, either by itself or with any other Person,
regardless of whether or not any FirstCity Affiliate pursues such Qualified
Investment Opportunity.

 

(b)           Nothing in this Agreement,
any Servicing Agreement or any organizational document with respect to an
Acquisition Entity is or shall be intended to constitute a delegation of any
authority to any FirstCity Affiliate by Värde or any Affiliate of Värde with
respect to the decision to participate in a Qualified Investment Opportunity,
which decision shall be within the 

 

6

 

sole and absolute discretion of Värde.  In no event will this Agreement be construed
as a “sub-advisory agreement” as that term is used in the Investment Company
Act of 1940.

 

Section 2.3            Due Diligence/Withdrawal.

 

(a)           Notwithstanding
anything to the contrary in Section 2.2 above, if after delivery of a
Transaction Notice to Värde, for which Värde has timely returned (or
subsequently timely returns) a Transaction Response, the Prospective Acquirer
determines through due diligence or otherwise that the Prospective Acquirer has
no further interest in pursuing the possible acquisition of such Qualified
Investment Opportunity, the Prospective Acquirer or Servicing shall advise
Värde in writing that the Prospective Acquirer has withdrawn its interest in
participating in the acquisition of the Investment, such notice to be in the
form of Exhibit B hereto (a “FirstCity
Withdrawal Notice”) and shall not thereafter acquire any
interest in such Investment, except with Värde’s prior written consent. Upon
receiving a FirstCity Withdrawal Notice from any Prospective Acquirer or
Servicing, then (i) Värde shall be free to proceed with the Qualified
Investment Opportunity, directly or indirectly, either by itself or with any
other Person and the determination of whether such Investment will be acquired
by an Acquisition Entity and/or serviced by Servicing will be made by Värde in
its sole and absolute discretion, and (ii) if Värde or any Affiliate of
Värde acquires the subject Investment, such Investment will not be included in
an Investment Pool and no Incentive Fee will be payable with respect to such
Investment. The Prospective Acquirer shall have no responsibility for any Due
Diligence Expenses contracted for by Värde or any Affiliate of Värde in
connection with such Investment after receipt of such FirstCity Withdrawal
Notice.  If Värde or any Affiliate of
Värde acquires such Investment, Värde shall reimburse the Prospective Acquirer
for any Due Diligence Expenses paid or reimbursed by the Prospective Acquirer
with respect to such Investment in accordance with the applicable Agreed
Budget.

 

(b)           Notwithstanding
anything to the contrary in Section 2.2 above, if after Värde has timely
returned a Transaction Response, Värde determines through due diligence or
otherwise that Värde has no further interest in pursuing the Qualified
Investment Opportunity, Värde shall advise the Prospective Acquirer or
Servicing in writing that it has withdrawn its interest in pursuing the
Qualified Investment Opportunity in the form of Exhibit C hereto (a
“Värde Withdrawal Notice”)
and shall not thereafter acquire any interest in such Investment, except with
the Prospective Acquirer’s prior written consent.  Värde shall have no responsibility for any Due Diligence
Expenses contracted for by any FirstCity Affiliate in connection with such
Investment after receipt of such Värde Withdrawal Notice.  If any FirstCity Affiliate acquires such
Investment, Servicing or FC Diversified shall reimburse Värde for any Due
Diligence Expenses paid or reimbursed by Värde with respect to such Investment
in accordance with the applicable Agreed Budget.

 

(c)           Notwithstanding
anything to the contrary in Section 2.2 or subparts (a) and (b) of
this Section 2.3, neither Värde nor any Affiliate of Värde nor any
FirstCity Affiliate may withdraw from an offer to acquire an Investment (i) after
submission of a bid for the purchase of the Investment unless the Seller has
informed the Prospective Acquirer that the Seller does not or will not accept
such bid, or (ii) after such bid has been accepted by the Seller unless
the other Party consents in writing to the withdrawal.  Any withdrawal under this Section 2.3
shall be effective upon the receipt by the other Party of the written notice of
withdrawal or upon the date of such consent, as the case may be.  Any Party so electing to withdraw under this
Section 2.3

 

7

 

agrees
not to hinder or compete in any way with the other Party’s efforts to proceed
with the acquisition of the Investment and further agrees that the remaining
other Party may bid for the Investment on terms satisfactory to the remaining
Party without the withdrawing Party’s participation.  Any Party electing to withdraw from a bid for
the acquisition of Investment shall pay its pro rata share (relative to its
equity percentage described in the Transaction Notice) of the Due Diligence Expenses
for all expenses incurred or accrued through the date of receipt by the other
Party of the written notice to withdraw or upon the date of such consent, as
applicable.

 

Section 2.4            Expenses. Subject to Section 2.3, for any Qualified
Investment Opportunities for which Värde has completed an affirmative
Transaction Response, each of Värde and FC Diversified agree to bear their pro
rata share (relative to their respective equity percentages described in the
Transaction Notice) of the Due Diligence Expenses related to such Investment
Opportunity.  Out-of-pocket Due Diligence
Expenses may be reimbursed to Servicing in full or in part, by the investing
entities or the Acquisition Entity, in which case Servicing shall refund any
portion of such expenses previously reimbursed to it.  Except as it may otherwise be agreed between
the Parties, reimbursement of Servicing and refunds by Servicing for domestic
transaction expenses previously reimbursed to it shall be in U.S. Dollars.

 

Section 2.5            Rejection/Deemed Rejection.  If
Värde rejects the proposal contained in the Transaction Notice, fails to
deliver a Transaction Response by the Transaction Response Date, or delivers a
Värde Withdrawal Notice, the Prospective Acquirer or any other FirstCity
Affiliate shall be free to proceed with the acquisition of the Investment (a “Rejected
Transaction”) and may participate in the Investment Opportunity, directly or
indirectly, either by itself or with any other Person.  The rejection by Värde of a Transaction
Notice from any one Prospective Acquirer shall not be considered as or deemed
to be a rejection by Värde of a Transaction Notice from any other Prospective
Acquirer, nor shall Värde’s failure to deliver a Transaction Response or
delivery of a Värde Withdrawal Notice to Servicing or any one Prospective
Acquirer be considered as or deemed to be a failure to deliver a Transaction
Response or delivery of a Värde Withdrawal Notice to any other Prospective
Acquirer.

 

Section 2.6            Estoppel.

 

(a)           In the event that Värde indicates an
affirmative interest in an Investment by returning an affirmative Transaction
Response to a Prospective Acquirer, each Prospective Acquirer may rely on such
interest or notice as indicating that Värde is not, either directly or
indirectly, attempting to, and Värde agrees that neither Värde, nor any Värde
Affiliate will, acquire an interest in the subject Investment, unless the
Prospective Acquirer has delivered a FirstCity Withdrawal Notice pursuant to Section 2.3(a).

 

(b)           In the event that Prospective Acquirer or
Servicing submits a Transaction Notice to Värde, Värde may rely on such
Transaction Notice as indicating that no FirstCity Affiliate is directly or
indirectly, attempting to, and FirstCity agrees that no FirstCity Affiliate
will, acquire an interest in the subject Investment, unless the Transaction
Notice has been, or is deemed to be, rejected pursuant to Section 2.2(a) or
Värde has delivered a Värde Withdrawal Notice pursuant to Section 2.3(b).

 

Section 2.7            Terms of Transaction Notice.  The
Transaction Notice shall describe, in reasonable detail, the subject Investment
and shall set forth the terms relating to the Qualified Investment Opportunity,
and in addition: (a) an investment percentage in the Qualified

 

8

 

Investment Opportunity to
be acquired by the Prospective Acquirer (through the Acquisition Entity), which
investment percentage shall not be less than 5% or more than 25% unless
otherwise agreed by Värde; and (b) other material terms related to the
Qualified Investment Opportunity then known by Servicing.

 

Section 2.8            Terms of Acquisition.  The Acquisition of any Investment pursuant to
a Transaction Notice will be subject to the following terms and conditions:

 

A.    Acquisition Entities. Each
Acquisition Entity will be a Delaware limited liability company, or other form
of entity agreed to by Värde and FC Diversified, which will be formed pursuant
to a mutually agreed form of limited liability company agreement. Each
Acquisition Entity will establish a collection account at a bank approved by
Värde.

 

B.    Transaction Notice.  The Acquisition will be pursuant to the terms
set forth in the Transaction Notice, except as mutually agreed in writing by
the Parties.

 

C.    Servicing Agreement. Servicing and
each Acquisition Entity will enter into a mutually agreed form of Servicing
Agreement (each, a “Servicing Agreement”).

 

D.    Development
of Bid.  The
Parties agree to work together in good faith to determine the amount of, and to
submit to the Seller a bid for or offer to purchase any Investment (a “Bid”) for which Värde has submitted an
affirmative Transaction Response.  The
Parties agree to take the following actions in connection with any Bid:

 

i.              Värde,
Servicing and FC Diversified, or the Prospective Acquirer if other than FC
Diversified, in the event that a FirstCity Affiliate is contemplated to invest
in the Investment Opportunity, will endeavor to mutually agree to develop and
revise, as needed the Agreed Budget. In addition, Servicing will promptly
provide to Värde when available, copies of any sale or other transactional
materials related to the Qualified Investment Opportunity, and Servicing will
provide and update Värde with estimates of Due Diligence Expenses to be
incurred in connection with the subject Investment (the “Agreed Budget”). Any
revisions to the Agreed Budget must be approved in writing by Värde.

 

ii.             The Parties
will obtain from the Seller additional information necessary to make a
preliminary pricing decision for the Bid. The Parties shall share with each
other all such information obtained from the Seller and will cooperate in good
faith to make a preliminary determination of the amount of the Bid and will
otherwise cooperate and work in good faith together during the due diligence
process.

 

iii.            Based upon the
preliminary pricing for the Bid, Värde and FC Diversified, or the Prospective
Acquirer if other than FC Diversified, will determine if there needs to be any
adjustment of the ownership percentages as set forth in the Transaction Notice.

 

9

 

iv.            Servicing will
keep Värde apprised as to the identity and cost of third party service
providers proposed to be utilized in connection with the implementation of the
Asset Business Plan.

 

v.             Upon conclusion
of final due diligence, Värde and FC Diversified, or the Prospective Acquirer
if other than FC Diversified, will evaluate the results. A conclusion will be
reached by the Parties as to which course of action to pursue: (i) submit
the Bid based on final due diligence results, or (ii) decline to submit
any Bid. At this time, or at any time prior thereto, if Värde or FC
Diversified, or the Prospective Acquirer if other than FC Diversified, does not
agree with the course of action to pursue, then it may opt by written notice to
the other Parties not to participate further, in the Investment Opportunity
subject to and in accordance with Section 2.3 of this Agreement.

 

vi.            Upon concluding
the final due diligence, negotiating the investment amounts for each Party (in
the event a FirstCity Affiliate is participating as an investor in the
Investment Opportunity), and an affirmative decision by the Parties to make the
Bid, the Bid will be made to the Seller. The Bid will be made subject to the
terms of the bid package or other conditions made by or agreed with the Seller
and will have such other terms, provisions, pricing and conditions as the
Parties shall mutually agree.

 

Section 2.9            Incentive Fee. Provided the aggregate
amount of the Investment Amounts, for one more Investment Pools, equals or
exceeds $250,000,000, Värde agrees that it will pay or cause to be paid to FC
Diversified an amount (the “Incentive Fee”) equal to *****(1) of
all distributions (“Member Distributions”) paid to the members of the
Acquisition Entity or Acquisition Entities with respect to each Investment Pool
after such members have received (i) a return of all capital contributions
made with respect to the Investments in such Investment Pool plus
(ii) *****(1) per annum return thereon.  The Incentive Fee will be paid quarterly in
arrears on each April 15, July 15, October 15 and
January 15.  For the sake of clarity, to the
extent that there have been Member Distributions prior to the date on which the
aggregate amount of the Investment Amounts for such Investment Pool(s) equals
or exceeds $250,000,000, then the first payment of the Incentive Fee shall
include payment of any deferred Incentive Fee with respect to such Member
Distributions. All Incentive Fee payments hereunder shall be made by wire
transfer or ACH of immediately available U.S. funds to an account or accounts
designated by FC Diversified.  In the
event that the due date of any payment is not a Business Day, then the due date
of the payment shall be the next Business Day.

 

(1)  THE COMPANY HAS REQUESTED AN ORDER
FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL
TREATMENT TO SELECTED PORTIONS. 
ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS
EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS
EXHIBIT WITH “*****”.

 

10

 

ARTICLE 3.           PORTFOLIO
DUE DILIGENCE; MONTHLY RETAINER AND TRANSACTION EXPENSES.

 

Section 3.1            Identification of Qualified Investment
Opportunities; Due Diligence.

 

(a)           From the Effective Date through the
Termination Date, Servicing will use commercially reasonable efforts to
identify and present to Värde Qualified Investment Opportunities.

 

(b)           With respect to Qualified
Investment Opportunities that are subject to an accepted Transaction Notice,
Servicing agrees to conduct due diligence with respect to the subject Qualified
Investment Opportunity for the benefit of FC Diversified, Värde (but subject to
Section 2.2(b)) and the respective Acquisition Entity in a diligent
manner.  Such due diligence duty shall
include such responsible investigation as FC Diversified and Värde shall deem
appropriate to satisfy the investment objectives of FC Diversified and Värde,
as shall be expressed from time to time. Servicing shall make available
sufficient personnel having appropriate training, skill and experience to
conduct and direct all such due diligence on Qualified Investment Opportunities.  Servicing shall cause any material
information available to Servicing with respect to such Qualified Investment
Opportunities to be made available to the other Parties on a timely basis and
each Party shall make any due diligence findings by such Party with respect to
such Qualified Investment Opportunities available to the other Parties on a
timely basis.

 

Section 3.2            Monthly Retainer; Payments by Värde.  Värde
agrees that, from the Effective Date through the Termination Date, Värde will
pay Servicing the Monthly Retainer as compensation for the right of first
refusal in favor of Värde contained in Article 2 of this Agreement.  The Monthly Retainer for the period
commencing on the Effective Date and ending on May 31, 2010 in the amount
of $400,000 and the Monthly Retainer for June 2010 in the amount of
$200,000 shall be paid to Servicing simultaneously with the execution of this
Agreement; thereafter, the Monthly Retainer to be paid by Värde to Servicing
shall be due and paid in arrears on or before the fifth (5th) day of each
month.  The Monthly Retainer shall be
paid in U.S. Dollars.  In addition, Värde
shall reimburse Servicing for any Due Diligence Expenses incurred and
contracted for with respect to the Qualified Investment Opportunity as set
forth in Section 2.4, which reimbursement shall be due to Servicing within
thirty (30) days of date of invoice and provided such invoice contains
reasonable supporting information.  All
payments due to Servicing hereunder shall be made by wire transfer or ACH of immediately
available U.S. funds to an account or accounts designated by Servicing.  In the event that the due date of any payment
is not a day upon which banks are open in the United States, then the due date
of the payment shall be the next Business Day.

 

ARTICLE 4.           CERTAIN
COVENANTS, REPRESENTATIONS AND WARRANTIES.

 

Each Party as a “Representing Party” makes the following representations
and warranties to the other Parties as of the date first written above and as
of the Effective Date and covenants that the following representations and
warranties will be continually reaffirmed and remain true and correct at all
times during the term of this Agreement:

 

(a)           Organization and Standing.  The Representing Party is a duly
organized and validly legal entity under the laws of its state of organization
as first described above and in good standing under the laws of such state with
all requisite power and authority to own and operate its properties and assets
and to conduct the businesses in which it is engaged or proposes to engage.

 

(b)           Power and Authority.  The Representing Party has all
requisite power and authority to execute, deliver and carry out the terms and
provisions of this Agreement, and the 

 

11

 

Representing Party has duly and properly taken all
necessary action to permit and authorize the execution, delivery and
performance of this Agreement.  This
Agreement has been duly authorized, executed and delivered by the Representing
Party, and constitutes a legal, valid and binding obligation of the
Representing Party, enforceable against it in accordance with its terms,
subject to the effect, if any, of general principles of equity.

 

(c)           Compliance with Other
Instruments.  The Representing Party is not in violation
of, or in default under, any terms of its organizational documents, or any
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets are subject, or any judgment, decree,
order, statute, rule or governmental regulation applicable to it, which
violation or default would have a material adverse effect on the Representing
Party or its ability to perform its duties under this Agreement.  The execution, delivery and performance of
this Agreement, the consummation of the transactions contemplated herein and
the compliance with the terms and provisions hereof, will not contravene any
material provision of law, statute, rule or regulation to which the
Representing Party or any Affiliate of the Representing Party is subject or any
material judgment, decree, franchise, order, governmental regulation or permit
applicable to the Representing Party or any Affiliate of the Representing Party
and will not violate, conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, mortgage, pledge or
encumbrance upon any of the property or assets of the Representing Party or any
Affiliate of the Representing Party pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which the
Representing Party or any Affiliate of the Representing Party is a party or by
which it or its properties or assets are bound or may be subject.

 

(d)           Compliance with Laws.  The Representing Party has duly
complied with, and its assets, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to the Representing Party
and its assets or the conduct of its businesses.

 

(e)           Litigation.  There are no actions, suits,
proceedings or investigations pending, or to the knowledge of the Representing
Party, threatened against or affecting the Representing Party, any Affiliate of
the Representing Party, or their property or assets, nor is there any
outstanding judgment, order, writ, injunction, decree or award affecting the
Representing Party or any Affiliate of the Representing Party before any court
or before any federal, state, municipal or other governmental department,
commission, board, bureau or agency, which, either separately or in the
aggregate, could have a material adverse effect on the Representing Party or
its ability to perform its duties under this Agreement.

 

(f)            No Materially
Adverse Contracts, Etc.  Neither the Representing Party nor any
Affiliate of the Representing Party is obligated under any contract or
agreement or under any law, regulation or decree, which materially and
adversely affects its ability to perform its obligations under this Agreement.

 

ARTICLE 5.           DEFAULT;
REMEDIES.

 

Section 5.1            An “Event of Default”
shall exist on the part of a Party if any of the following occurs:

 

12

 

(i)              Payment Default.  If a Party or any Affiliate of a Party fails
to make any payment required to be made under this Agreement within three (3) Business
Days after written notice of nonpayment by the Party hereunder to whom such
payment is required to be made.

 

(ii)             Covenant
Defaults. Other than subparts (iv), (v) and (vi) of
this Article 5, if a Party or an Affiliate of a Party fails fully and
timely to perform or observe any non-monetary covenant, agreement, or warranty
contained in this Agreement for thirty (30) calendar days following the
occurrence of such failure.

 

(iii)            Warranties or
Representations. If any statement or representation made by or on
behalf of a Party or an Affiliate of a Party in this Agreement or any other
item furnished to another Party pursuant to this Agreement, is false,
misleading, or incorrect in any material respect as of the date made or
reaffirmed.

 

(iv)           Insolvency. If a Party
becomes insolvent or otherwise generally unable to pay its debts as and when
they become due or payable.

 

(v)             Involuntary
Proceedings. If a case is commenced or a petition is filed
against a Party under any Debtor Relief Law or if a receiver, conservator,
liquidator, or trustee of a Party or of any material asset of a Party is
appointed by court order and such order remains in effect for more than thirty
(30) days, or if any material asset of a Party is sequestered by court order
and such order remains in effect for more than thirty (30) days.

 

(vi)            Voluntary
Proceedings. If a Party voluntarily seeks, consents to, or
acquiesces in the benefit of any provision of any Debtor Relief Law, whether
now or hereafter in effect, consents to the filing of any petition against it
under such law, makes an assignment for the benefit of its creditors, admits in
writing its inability to pay its debts generally as they become due, or
consents to or suffers the appointment of a receiver, trustee, liquidator, or
conservator for it or any part of its assets.

 

(vii)           Key Principals. If any Key
Principal (or any replacement(s) approved by Värde in writing, which
approval shall not be unreasonably withheld, conditioned or delayed) shall fail
to have a material managerial or administrative role in the transactions
contemplated by this Agreement.

 

(viii)          Affirmative
Misconduct. The occurrence of fraud, intentional
misrepresentation, theft or criminal conduct on the part of any FirstCity
Affiliate in connection with performance of its duties or obligations under
this Agreement or the transactions contemplated by this Agreement.

 

(ix)          Affirmative Misconduct
with Conditions. The occurrence of fraud,
intentional misrepresentation, theft or criminal conduct on the part of any
FirstCity Affiliate in connection with performance of its duties or obligations
under this Agreement or the transactions contemplated by this Agreement,
provided that (A) such fraud, intentional misrepresentation, theft or
criminal conduct results in financial loss to Värde or any Affiliate of Värde
of $250,000.00 or more, (B) a FirstCity Affiliate does not reimburse Värde
for such financial loss within ten (10) days following notice from Värde
to FC Diversified, and (C) such fraud, intentional misrepresentation,
theft or criminal conduct continues following notice from Värde to FC
Diversified; provided, however, that the preceding subparts (B) and (C) shall
not apply to the

 

13

 

extent that the fraud, intentional
misrepresentation, theft or criminal conduct was conceived by, or conducted
with the knowledge of, any Key Principal.

 

Section 5.2            Remedies.

 

(a)           Upon the occurrence of an Event of Default on
the part of FC Diversified or Servicing, in addition to any other remedies
available to Värde hereunder, Värde may accelerate the Termination Date.  In addition, if the Event of Default is
pursuant to subpart (ix) of Article and Värde shall have no further
obligation to pay the Incentive Fee or the Monthly Retainer.

 

(b)           Upon the occurrence of an Event of Default on
the part of Värde, in addition to any other remedies available to FC
Diversified and Servicing hereunder, FC Diversified may accelerate the
Termination Date.

 

(c)           Upon the acceleration of
the Termination Date, with or without cause, all rights, covenants, agreements
representations and warranties shall survive, except to the extent such rights,
covenants, agreements representations and warranties expressly terminate on the
Termination Date.  All rights, covenants,
agreements representations and warranties shall survive the creation of each
Acquisition Entity and the closing of the acquisition of each Investment.

 

(d)           In addition to the matters specified in
Sections 5.2(a) and 5.2(b), each Party to this Agreement shall have all
remedies available to it by applicable statute or at common law, including,
without limitation all equitable rights and remedies, provided that no party to
this Agreement shall be liable for any punitive, consequential or special
damages.  In the event that any party
pursues its rights and remedies under this Agreement, the prevailing party shall
be entitled to recover all reasonable costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred in its successful prosecution or
defense of any claim or action.  FC
Diversified, Servicing and Värde acknowledge that a breach of a provision(s) of
this Agreement hereof will cause irreparable harm to the other party, for which
there may be no adequate remedy at law and for which the ascertainment of
damages would be difficult. Therefore, the non-breaching party shall be
entitled, in addition to, and without having to prove the inadequacy of, other
remedies at law (including without limitation damages for prior breaches
hereof), to specific performance of this Agreement, as well as injunctive
relief (without being required to post bond or other security).

 

Section 5.3            Acceleration of Termination Date Without Cause
or Material Adverse Change.

 

(a)           Prior to June 30,
2011, Värde may accelerate the Termination Date without cause by providing one
hundred eighty (180) days prior written notice to FC Diversified and Servicing,
which acceleration shall be effective upon the later of (i) the date that
is one hundred eighty (180) days after the receipt of the notice of such
acceleration by FC Diversified and Servicing, and (ii) such later date as
is specified in the notice, but not later than December 31, 2011.  In addition, commencing November 1,
2011, any Party may accelerate the Termination Date without cause by providing
not less than sixty (60) days prior written notice to the other Parties.

 

(b)           Värde may
accelerate the Termination Date upon the occurrence of a Material Adverse
Circumstance by providing sixty (60) days prior written notice to FC
Diversified and Servicing of the occurrence of a Material Adverse Circumstance,
which acceleration shall be

 

14

 

effective
upon the later of (i) the date that is sixty (60) days after the receipt
of the notice of such acceleration by FC Diversified and Servicing, and (ii) such
later date as is specified in the notice.

 

(c)           Except as provided in the last sentence of Section 5.2(a),
Värde shall remain liable for and continue to pay Incentive Fees as to any
Acquisition made prior to the Termination Date, when such Incentive Fees would
be payable under this Agreement, notwithstanding the termination of this
Agreement pursuant to subparts (a) or (b) of this Section 5.3.  The Monthly Retainer payable to Servicing
will be paid through the accelerated Termination Date.

 

Section 5.4            Indemnification.

 

(a)           Each Party, as the “Indemnifying Party” will indemnify,
defend and hold harmless the other Parties and their successors and assigns (as
the “Indemnified Parties”)
from and against any and all actual costs, expenses, losses, claims (including
claims of third parties), damages, and liabilities to the extent that such
actual cost, expense, loss, claim, damage, or liability arose as a direct
result of the Indemnifying Party’s breach of the terms, covenants or
undertakings on the part of this Agreement which, if true or proven, would
constitute such a breach, or as a direct result of any negligence, gross
negligence or other willful misconduct of the Indemnifying Party (“Indemnified Claims”).

 

(b)           The Indemnifying Party
shall be entitled to participate in the Indemnified Claim at their own expense
and, except as otherwise provided below, to the extent Indemnifying Party so
desires, they may assume the defense thereof with counsel mutually satisfactory
to the Indemnifying Party and the Indemnified Parties. After notice from the
Indemnifying Party to the Indemnified Parties of its election to assume the
defense thereof, Indemnifying Party shall not be liable to Indemnified
Parties under this Agreement or otherwise for any expenses subsequently
incurred by Indemnified Parties in connection with the defense of such
Indemnified Claim other than reasonable costs of investigation, payment for
time spent by Indemnified Parties as provided herein or as otherwise provided
herein. Indemnified Party shall have the right to employ its own counsel in
such Indemnified Claim, but all expenses related thereto incurred after notice
from Indemnifying Party of its assumption of the defense shall be at
Indemnified Party’s expense unless: (i) the employment of counsel by
Indemnified Party has been authorized by the Indemnifying Party, (ii) Indemnified
Party has provided an opinion of counsel reasonably satisfactory to
Indemnifying Party to the effect that there may be a conflict of interest
between Indemnified Party and Indemnifying Party in the defense of the
Indemnified Claim, or (iii) Indemnifying Party shall not have employed
counsel promptly to assume the defense of such Indemnified Claim.

 

(c)           Indemnification under this
Section 5.4 will include reasonable fees and expenses of external counsel
and expenses of litigation and is in addition to any other remedy available to
the Indemnified Party under this Agreement. 
If an Indemnifying Party will have made any indemnity payments pursuant
to this Section 5.4 and the Indemnified Party thereafter collects any of
such amounts from others, the Indemnified Party will promptly repay such
amounts to the Indemnifying Party, without interest.  Under no circumstances shall an Indemnifying
Party hereunder be liable to the Indemnified Party where the Indemnified Party’s
losses are due entirely to the Indemnified Party’s own gross negligence or
willful misconduct.  Indemnitor shall not
settle any Indemnified Claim in any manner that would impose any admission,
fine,

 

15

 

damages, penalty or limitation on, or otherwise
adversely affect, the Indemnified Party without Indemnified Party’s written
consent.

 

ARTICLE 6.           MISCELLANEOUS.

 

Section 6.1            Effective Date.  This
Agreement shall become effective as of the Effective Date.  It is a condition to the effective delivery
of this Agreement that the Stock Purchase Agreement be fully executed and
delivered by all parties thereto.

 

Section 6.2            Confidentiality.  The
Parties agree that the terms of this Agreement and the transactions described
herein are confidential (the “Confidential
Information”). The Parties each agrees that they shall not
disclose any Confidential Information other than (1) to Affiliates and
investors having a reasonable basis to receive the Confidential Information and
who are advised of the confidential nature of the Confidential Information, (2) employees,
representatives, managers, officers, directors attorneys, and accountants of
the Parties and their Affiliates and investors, (2) as may be required by
law (including tax reporting) or by a court of law, and (3) to the extent
such information is in the public domain. The Parties shall direct each of
their representatives to comply with the terms of this Section 6.2 and
shall be responsible for any breaches thereof. 
No Party will use another Party’s name in any advertising or promotional
materials without the prior written consent of the Party whose name is proposed
to be used.

 

Section 6.3            Amendments. This Agreement may not be amended or modified and
the provisions hereof may not be waived without the prior written consent of
all the Parties.

 

Section 6.4            Transferability of Agreement.  This
Agreement shall be binding upon the Parties and their respective successors and
permitted assigns. No interest in this Agreement shall be transferable without
the written consent of all the other Parties, except that (i) Värde may
assign its interest in this Agreement to Värde or any Affiliate of Värde
without such written consent, (ii) Värde may not unreasonably withhold,
condition or delay consent to an assignment by FC Diversified of its interest
in this Agreement to a FirstCity Affiliate, and (iii) Värde may not
unreasonably withhold, condition or delay consent to an assignment by Servicing
of its rights, duties and obligations under this Agreement to another directly
or indirectly wholly-owned subsidiary of FirstCity Financial Corporation.  No assignment of this Agreement shall relieve
any Party of any liability or responsibility for the covenants, agreements,
representations or warranties of such Party under this Agreement.

 

Section 6.5            Governing Law; Jurisdiction; Venue. This Agreement and any questions concerning
the interpretation or enforcement thereof shall be governed by and construed in
accordance with the laws of the State of Minnesota (the “Governing State”).  The Parties each hereby irrevocably submit to
the jurisdiction of any state or federal court sitting in the Governing State
over any suit, action or proceeding arising out of or relating to this
Agreement. The Parties irrevocably waives, to the fullest extent permitted by
law, any objection that the Parties may now or hereafter have to the laying of
venue of any such suit, action or proceeding brought in any such court and any
claims that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

Section 6.6            Enforceability of Agreement. 
Should any one or more of the provisions of this Agreement be determined
to be illegal or unenforceable, all other provisions, nevertheless, shall
remain effective and binding on the Parties.

 

16

 

Section 6.7            Nature of Obligations.  The
obligations of all the Parties shall be considered to be several and not joint
obligations.

 

Section 6.8            Titles.  Titles of
the Sections of this Agreement are merely for convenience in reading and shall
not be construed to alter, modify or interpret the meaning of the provisions
under said titles.

 

Section 6.9            Notices.

 

(a)           Unless otherwise required or provided by this
Agreement, all demands, notices, approvals and other communications hereunder
(individually and collectively, “Notice(s)”)
shall be in writing and shall be served personally, delivered by facsimile or
sent by a national overnight delivery or courier company, or by United States
registered or certified mail, postage prepaid return receipt requested, and
addressed as set forth below.  Any such
Notices shall be deemed delivered upon delivery or refusal to accept delivery
as indicated in writing by the Person attempting to make personal service, on
the United States Postal Service return receipt, or by similar written advice
from the overnight delivery company; provided, however, that if any such Notice
shall be sent by telecopier to the telecopier number, if any, set forth above,
such Notice shall be deemed given at the time and on the date of machine
transmittal (except if sent after 5:00 p.m. recipient’s time, then the
notice shall be given at 9:00 a.m. on the next Business Day) if the sending
party receives a written send verification on its machine and sends a duplicate
Notice on the same day or the next Business Day by personal service, registered
or certified United States mail, or overnight delivery in the manner described
above. Each party hereto shall make an ordinary, good faith effort to ensure
that it will accept or receive Notices that are given in accordance with this Section 6.9,
and that any Person to be given Notice actually receives such Notice. Any party
to whom Notices are to be sent pursuant to this Loan Agreement may from time to
time change its address and/or facsimile number for future communication
hereunder by giving Notice in the manner prescribed herein to all other
Parties, provided that the address and/or facsimile number change shall not be
effective until five (5) Business Days after the Notice of change has been
given.

 

	
  If
  to FC Diversified or any FirstCity Affiliate:

  	
   

  	
  If
  to Servicing:

  
	
   

  	
   

  	
   

  
	
  FC
  Diversified Holdings LLC

  	
   

  	
  FirstCity
  Servicing Corporation

  
	
  P.
  O. Box 8216 (mail)

  	
   

  	
  P.
  O. Box 8216 (mail)

  
	
  Waco,
  Texas 76714-8216

  	
   

  	
  Waco,
  Texas 76714-8216

  
	
  6400
  Imperial Drive (delivery only)

  	
   

  	
  6400
  Imperial Drive (delivery only)

  
	
  Attention:  Legal Department

  	
   

  	
  Attention:  James C. Holmes

  
	
  Facsimile
  No.:  (254) 761-2953

  	
   

  	
  Facsimile
  No.:  (254) 761-2953

  
	
   

  	
   

  	
   

  
	
  E-mail
  address if specified herein:

  	
   

  	
  E-mail
  address if specified herein:

  
	
  jholmes@fcfc.com

  	
   

  	
  jholmes@fcfc.com

  

 

	
  If
  to Värde:

  	
   

  	
  With
  a Copy to:

  

 

17

 

	
  Värde
  Investment Partners, L.P.

  	
   

  	
  Leonard,
  Street and Deinard

  
	
  c/o Värde Partners, L.P.

  	
   

  	
  Professional
  Association

  
	
  8500 Normandale Lake Blvd.

  	
   

  	
  150
  South Fifth Street, Suite 2300

  
	
  Suite 1500

  	
   

  	
  Minneapolis,
  MN 55402

  
	
  Minneapolis,
  MN 55437

  	
   

  	
  Attention: Andrew Lee

  
	
  Attention: Christopher
  N. Giles and Jeffrey Thuringer

  	
   

  	
  Facsimile
  No.:  (612) 335-1657

  
	
  Facsimile
  No.:  (952) 893-9613

  	
   

  	
   

  
	
   

  	
   

  	
  Copies
  not required for electronic mail deliveries.

  
	
  E-mail
  address if specified herein:

  	
   

  	
   

  
	
  cgiles@varde.com
  and jthuringer@varde.com

  	
   

  	
   

  

 

(b)           Notwithstanding anything
to the contrary herein, delivery of Transaction Notices, Transaction Reponses,
FirstCity Withdrawal Notices and Värde Withdrawal Notices may be made by
electronic mail if delivered to the e-mail address(es) specified in Section 6.9(a).  Such materials shall be deemed received on
the later of: (i) the same Business Day of transmittal, as shown on the
sender’s confirmation of transmittal, if the transmittal time is shown as 2PM
Central Time or earlier, or (ii) the Business Day following the day shown
on the sender’s confirmation of transmittal, if the transmittal time is shown
as being after 2PM Central Time, or (iii) the next Business Day, if the
transmittal day shown on the sender’s confirmation of transmittal is not a
Business Day.

 

Section 6.10         Not a Partnership or Joint Venture.  This
Agreement is not intended to evidence or create a partnership or joint venture
relationship between any of the Parties

 

Section 6.11         Independent Activities.

 

(a)           Except as provided in Section 2.2(a) of
this Agreement, neither this Agreement nor any obligation undertaken pursuant
hereto shall prohibit or restrict Värde or Affiliates of Värde from engaging
in, or advising other parties in connection with, any investments, business
activities or projects of any kind, regardless of whether or not such
investments, business activities or projects are competitive with the
activities of any FirstCity Affiliate.

 

(b)           Nothing in this Agreement
is intended to restrict any FirstCity Affiliate from raising capital in a
FirstCity Affiliate through debt or equity.

 

Section 6.12         Entire Agreement. This Agreement shall constitute the full and
entire understanding and agreement of the Parties and there are no further or
other agreements or undertakings written or oral, in effect between the Parties
relating to the subject matter hereof unless expressly referred to herein. All
prior negotiations, agreements, representations, warranties, statements and
undertakings concerning the subject matter hereof between the Parties are
superseded by this Agreement.

 

Section 6.13         Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different Parties in separate counterparts, each of which
when so 

 

18

 

executed and delivered shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.

 

[End of Page - Signature Page to Follow]

 

19

 

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

 

 

	
   

  	
   

  	
  FC DIVERSIFIED HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIRSTCITY SERVICING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VÄRDE
  INVESTMENT PARTNERS, L.P., a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Investment Partners G.P., LLC, a Delaware limited liability company,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, L.P., a Delaware limited partnership, its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, Inc., a Delaware corporation, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  

 

20

 

EXHIBIT A

 

TRANSACTION NOTICE

 

FCSC#

PACKAGE NAME

BID DATE

BOOK/REO VALUE

NO. OF ASSETS

ASSET TYPE

ESTIMATED CLOSING DATE

VÄRDE
PARTICIPATION (75% to 95%)

FIRSTCITY PARTICIPATION (5% to 25%)

COLLECTION FEE

 

NOTICE
DATE:
                                      20

 

TO:                                                                           Värde
Investment Partners, L.P.

c/o Värde Partners, L.P.

8500 Normandale Lake Blvd., Suite 1500

Minneapolis, MN 55437

Attention:  
Christopher N. Giles

 

VIA
FACSIMILE:               (952) 893-9613

 

FROM:                                                       FirstCity
Servicing Corporation

 

Attached
hereto is information regarding an Investment Opportunity (as such term is
defined in that certain Investment Agreement effective as of April 1, 2010
(the “Agreement”) between FC Diversified Holdings LLC, FirstCity Servicing
Corporation and Värde Investment Partners, L.P. 
[                                              ,
as the Prospective Acquirer, has received the Investment Opportunity and
intends to participate as an investor as set forth in this Transaction Notice. Insert and complete if a FirstCity Affiliate will be participating in
the Investment Opportunity.]

 

Please
indicate in the space below whether you have an interest in the subject
Investment Opportunity.

 

	
   

  	
   

  	
  FirstCity Servicing Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  

 

21

 

o                                                            Yes, we have an
interest in pursuing the Investment Opportunity and will be responsible for
payment of our pro rata share of the due diligence expense as set forth in the
Agreement.

 

o                                                            No, we do not
have any interest in the subject Investment Opportunity.

 

 

	
   

  	
   

  	
  VÄRDE
  INVESTMENT PARTNERS, L.P., a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Investment Partners G.P., LLC, a Delaware limited liability company,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, L.P., a Delaware limited partnership, its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, Inc., a Delaware corporation, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  

 

22

 

EXHIBIT B

 

FIRSTCITY WITHDRAWAL NOTICE

 

JHC#

PACKAGE NAME

BID DATE

 

NOTICE
DATE:
                                      20

 

TO:                                                                           Värde
Investment Partners, L.P.

c/o Värde Partners, L.P.

8500 Normandale Lake Blvd., Suite 1500

Minneapolis, MN 55437

Attention:  
Christopher N. Giles

 

VIA
FACSIMILE:               (952) 893-9613

 

FROM:

 

FirstCity
Servicing Corporation submitted to you a Transaction Notice with respect to the
above referenced package for which you sent an affirmative Transaction
Response. FC Diversified Holdings LLC and its Affiliates have determined that
they have no further interest in pursuing the possible acquisition of the
Investment Opportunity and provide this Withdrawal Notice to you pursuant to Section 2.3(a) of
that certain Investment Agreement dated effective as of April 1, 2010,
between FC Diversified Holdings LLC, FirstCity Servicing Corporation, and Värde
Investment Partners, L.P.  Neither FC
Diversified Holdings LLC, FirstCity Servicing Corporation, nor any FirstCity
Affiliate will be responsible for any Due Diligence Expenses contracted for by
Värde or any Affiliate of Värde after your receipt of this Withdrawal Notice.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  

 

 

EXHIBIT C

 

VÄRDE WITHDRAWAL NOTICE

 

FCSC#

PACKAGE NAME

BID DATE

 

NOTICE
DATE:
                                      20

 

TO:                                                                           FirstCity
Services Corporation

P.
O. Box 8216 (mail)

Waco,
Texas  76714-8216

6400
Imperial Drive (delivery only)

Attention:   Legal
Department

 

VIA
FACIMILE: (254) 761-2953

 

FROM:                                                       Värde
Investment Partners, L.P.

 

FirstCity
Servicing Corporation submitted to Värde Investment Partners, L.P. (“Värde”) a
Transaction Notice with respect to the above referenced package for which Värde
sent an affirmative Transaction Response. 
Värde has determined that it has no further interest in pursuing the
possible acquisition of the Investment Opportunity and provides this Withdrawal
Notice to you pursuant to Section 2.3(b) of that certain Investment
Agreement effective as of April 1, 2010, between FC Diversified Holdings
LLC, FirstCity Servicing Corporation and Värde Investment Partners, L.P.

 

 

Värde
will not be responsible for any Due Diligence Expenses contracted for by any
FirstCity Affiliate after your receipt of this withdrawal notice.

 

 

	
   

  	
   

  	
  VÄRDE
  INVESTMENT PARTNERS, L.P., a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Investment Partners G.P., LLC, a Delaware limited liability company,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, L.P., a Delaware limited partnership, its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  Värde Partners, Inc., a Delaware corporation, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  

 

25

 

EXHIBIT D

 

FORM OF STOCK PURCHASE AGREEMENT

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