Document:

Exhibit 10.3

 

EXECUTION VERSION

 

SUPPORT AGREEMENT

 

This SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A hereto.

 

WHEREAS, as of the date hereof, each stockholder listed on Exhibit A hereto (each a “Stockholder” and together the “Stockholders”) (i) is the record and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of the Shares of the Company set forth opposite such Stockholder’s name on Exhibit A (all such Shares set forth on Exhibit A, together with any Shares of the Company that are hereafter issued to or otherwise acquired or owned by any Stockholder prior to the termination of this Agreement being referred to herein as the “Subject Shares”), (ii) directly or indirectly owns the number of Company Stock Options and Company Restricted Shares set forth opposite such Stockholder’s name on Exhibit A and (iii) Company Stock Options and Company Restricted Shares owned by the Stockholder shall not be considered “Subject Shares” prior to their exercise and subsequent issuance or vesting, as applicable, and Shares of the Company issued upon exercise of the Company Stock Options and vested Company Restricted Shares shall be considered “Subject Shares” upon their issuance or vesting, as applicable.

 

WHEREAS, Parent, Hotspurs Acquisition Corporation, a Delaware corporation (“Merger Subsidiary”) and the Company intend to enter into an Agreement and Plan of Merger, dated as of the date hereof and as it may be amended from time to time (the “Merger Agreement”), which provides, among other things, for the merger of the Company and Merger Subsidiary (the “Merger”), upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement); and

 

WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent has required that each Stockholder, and as an inducement and in consideration therefor, each Stockholder (in such Stockholder’s capacity as a holder of the Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares) has agreed to, enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

 

ARTICLE I.
  REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

 

Each Stockholder represents and warrants to Parent as to such Stockholder, severally but not jointly, that:

 

1.1          Organization; Authorization; Binding Agreement. If such Stockholder is an entity, such Stockholder is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated or constituted (to the extent such concepts are recognized in

 

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such jurisdiction) and the consummation of the transactions contemplated hereby are within such Stockholder’s corporate or organizational powers and have been duly authorized by all necessary corporate or organizational actions on the part of such Stockholder. Such Stockholder has full power and authority to execute, deliver and perform this Agreement. This Agreement has been duly and validly executed and delivered by such Stockholder, and constitutes a legal, valid and binding obligation of such Stockholder enforceable against such Stockholder in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally and general equitable principles (whether in equity or at law).

 

1.2          Non-Contravention. The execution and delivery of this Agreement by such Stockholder does not, and the performance by such Stockholder of such Stockholder’s obligations hereunder and the consummation by such Stockholder of the transactions contemplated hereby will not (i) violate any Law applicable to such Stockholder or such  Stockholder’s Subject Shares or, if applicable, Company Stock Options or Company Restricted Shares, (ii) except as may be required by applicable securities Law, require any consent, approval, order, authorization or other action by, or filing with or notice to, any Person (including any Governmental Authority) under, constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination, cancellation or acceleration under, or result in the creation of any Liens on any of the Subject Shares or, if applicable, Company Stock Options or Company Restricted Shares pursuant to, any contract, agreement, trust, commitment, order, judgment, writ, stipulation, settlement, award, decree or other instrument binding on such Stockholder or any applicable Law, and (iii) if such Stockholder is an entity, violate any provision of such Stockholder’s organizational documents, except, in the case of each of (i), (ii) and (iii), for matters that, individually or in the aggregate, have not or would not reasonably be expected to materially impair the ability of the Stockholder to perform in a timely manner its obligations under this Agreement or consummate the transactions contemplated by this Agreement.

 

1.3          Ownership of Subject Shares, Company Stock Options Company Restricted Shares; Total Shares. Such Stockholder is the record (except to the extent held in nominee or other street name form) or beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such Stockholder’s Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares and has good and marketable title to such Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares free and clear of any Liens, except as (i) provided hereunder, (ii) pursuant to any applicable restrictions on transfer under the Securities Act (collectively, “Permitted Encumbrances”), or (iii) pledged to secure personal credit lines or loans, which pledges will be released not later than the time such Subject Shares are tenedered pursuant to the transactions contemplated by the Merger Agreement. The Subject Shares, Company Stock Options and Company Restricted Shares listed on Exhibit A opposite such Stockholder’s name constitute all of the Equity Securities of the Company beneficially owned by such Stockholder as of the date hereof, and such Stockholder neither holds nor has any beneficial ownership in any other Equity Security in the Company. Except pursuant to this Agreement, no Person has any contractual or other right or obligation to purchase or otherwise acquire any of such Stockholder’s Subject Shares or, if applicable, Company Stock Options or Company Restricted Shares.

 

1.4          Voting Power. Other than as provided in this Agreement, such Stockholder has full voting power, with respect to such Stockholder’s Subject Shares and Company Restricted Shares,

 

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and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such Stockholder’s Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares, except, in each case, as set forth on Exhibit A. None of such Stockholder’s Subject Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Shares, except as provided hereunder.

 

1.5          Reliance. Such Stockholder has had the opportunity to review the Merger Agreement and this Agreement with counsel of such Stockholder’s own choosing. Such Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

 

1.6          Absence of Litigation. With respect to such Stockholder, as of the date hereof, there are no actions, suits or proceedings (including regulatory or administrative proceedings or any proceedings in arbitration) pending against, or, to the knowledge of such Stockholder, threatened against such Stockholder or any of such Stockholder’s properties or assets (including the Subject Shares and, if applicable, Company Stock Options and Company Restricted Shares) that would, individually or in the aggregate, reasonably be expected to prevent or materially delay or impair the consummation by such Stockholder of the transactions contemplated by this Agreement or otherwise adversely impact such Stockholder’s ability to perform its obligations hereunder in any material respect.

 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF PARENT

 

2.1          Organization; Authorization. Parent is duly organized, validly existing and in good standing under the Laws of the State of Delaware. The consummation of the transactions contemplated hereby are within Parent’s corporate powers and have been duly authorized by all necessary corporate actions on the part of Parent. Parent has full corporate power and authority to execute, deliver and perform this Agreement.

 

2.2          Binding Agreement.  This Agreement has been duly authorized, executed and delivered by Parent and (assuming due authorization, execution and delivery hereof by the other party hereto) constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms except as enforcement may be limited by applicable bankruptcy, insolvency or other Laws affecting creditors’ rights generally or by legal principles of general applicability governing the availability of equitable remedies or remedies at law.

 

2.3          Non-Contravention. The execution and delivery of this Agreement by Parent does not, and the performance by Parent of its obligations hereunder and the consummation by Parent of the transactions contemplated hereby will not, (i) violate any Laws applicable to Parent or any of their respective properties is or may be bound or (ii) violate any provision of Parent’s organizational documents, except, in the case of each of (i) and (ii), for matters that, individually or in the aggregate, would not materially impair the ability of the Parent, taken as a whole, to perform in a timely manner their obligations under this Agreement or consummate the transactions contemplated by this Agreement.

 

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ARTICLE III.

ADDITIONAL COVENANTS OF THE STOCKHOLDERS

 

Each Stockholder hereby covenants and agrees, severally but not jointly, that until the termination of this Agreement:

 

3.1          Voting of Subject Shares.  At the Stockholders Meeting and any other meeting of the stockholders of the Company called to adopt of the Merger Agreement by the Required Company Vote or in any other circumstances upon which a vote, consent or other approval (including by written consent) with respect to the Merger Agreement, the Merger or any other transaction contemplated by the Merger Agreement is sought, and at every adjournment or postponement thereof, such Stockholder shall, or shall cause the holder of record on any applicable record date to, appear or otherwise cause such Stockholder’s Subject Shares and Company Restricted Shares, without duplicate counting as Subject Shares once vested, to be counted as present for purposes of establishing a quorum at any such meeting of the Company Stockholders and vote such Stockholder’s Subject Shares and Company Restricted Shares, without duplicate counting as Subject Shares once vested (the “Vote Shares”), (i) in favor of (A) the adoption and approval of the Merger Agreement and the transactions contemplated thereunder, and (B) approval of any proposal to adjourn or postpone the meeting to a later date, if there are not sufficient votes for the adoption and approval of the Merger Agreement and the transactions contemplated thereby on the date on which such meeting is held, (ii) against (A) any action or agreement which would in any material respect impede, interfere with or prevent the Merger, including, but not limited to, any other extraordinary corporate transaction, including, a merger, acquisition, sale, consolidation, reorganization, recapitalization, extraordinary dividend or liquidation involving the Company and any Person (other than Parent or its Affiliates), or any other proposal of any Person (other than Parent or its Affiliates) to acquire the Company or all or substantially all of the assets thereof, (B) any Acquisition Proposal or (C) any action, proposal, transaction or agreement that would reasonably be expected to result in the failure of any conditions contained in Sections 7.1 and 7.2 of the Merger Agreement or result in a breach of any covenant, representation or warranty or any other obligation or agreement of such Stockholder under this Agreement and/or (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement, which is considered at any such meeting of the Company Stockholders.

 

3.2          No Transfer; No Inconsistent Arrangements. Except as provided hereunder (including pursuant to Section 3.1) or under the Merger Agreement, such Stockholder shall not, directly or indirectly, (i) except for already existing liens pledged to secure personal credit lines or loans, which liens and pledges will be released not later than the time such Subject Shares are tenedered pursuant to the transactions contemplated by the Merger Agreement, create or permit to exist any Lien, other than Permitted Encumbrances, on any or all of such Stockholder’s Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares, (ii) except as otherwise permitted below, transfer, sell, assign, gift, hedge, pledge or otherwise dispose (whether by sale, liquidation, dissolution, dividend or distribution) of, or enter into any derivative arrangement with respect to (collectively, “Transfer”), any or all of such Stockholder’s Equity Securities in the Company, including any Subject Shares, Company Stock Options, and Company Restricted Shares or any right or interest therein (or consent to any of the foregoing), (iii) except as otherwise permitted below, enter into any contract, option or other agreement, arrangement or understanding with respect to any Transfer of any or all of such Stockholder’s Subject Shares and,

 

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if applicable, Company Stock Options, and Company Restricted Shares, or any right or interest therein, (iv) grant or permit the grant of any proxy, power-of-attorney or other authorization or consent in or with respect to any or all of such Stockholder’s Subject Shares and, if applicable, Company Stock Options and Company Restricted Shares, (v) deposit or permit the deposit of any or all of such Stockholder’s Equity Securities in the Company, including any Subject Shares, into a voting trust or enter into a voting agreement or arrangement with respect to any of such Equity Securities, including the Subject Shares, or (vi) take or permit any other action that would in any way restrict, limit or interfere with the performance of such Stockholder’s obligations hereunder or the transactions contemplated hereby or otherwise make any representation or warranty of such Stockholder herein untrue or incorrect in any material respect. Any action taken in violation of the foregoing sentence shall be null and void ab initio and such Stockholder agrees that any such prohibited action may and should be enjoined. If any involuntary Transfer of any or all of such Stockholder’s Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares shall occur (including, if applicable, a sale by such Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement. Such Stockholder agrees that it shall not, and shall cause each of its Affiliates not to, become a member of a “group” (as defined under Section 13(d) of the Exchange Act) with respect to any Equity Securities in the Company for the purpose of opposing or competing with or taking any actions inconsistent with the transactions contemplated by the Merger Agreement. Notwithstanding the foregoing, such Stockholder may make Transfers of Subject Shares and, if applicable, Company Stock Options, Company Restricted Shares and any rights or interests therein in each of the foregoing (a) to any “Permitted Transferee” (as defined below), in which case the Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares shall continue to be bound by this Agreement and provided that any such Permitted Transferee agrees in writing to be bound by the terms and conditions of this Agreement prior to the consummation of any such Transfer; (b) with respect to any Company Stock Options or Company Restricted Shares which expire on or prior to an applicable Expiration Date, to the Company for purpose of a net exercise permitted under the documents related to such Company Stock Options or Company Restricted Shares (pursuant to which any Shares issued by the Company would be Subject Shares); or (c) as Parent may otherwise agree in writing in its sole discretion. If so requested by Parent, such Stockholder agrees that the Subject Shares and, if applicable, Company Stock Options or Company Restricted Shares shall bear a legend stating that the respective Subject Shares, Company Stock Options or Company Restricted Shares are subject to this Agreement, provided such legend shall be removed if the Merger Agreement is terminated prior to Effective Time or if this Agreement is otherwise terminated in accordance with the terms hereof. A “Permitted Transferee” means, with respect to any Stockholder, (i) a spouse, lineal descendant or antecedent, brother or sister, adopted child or grandchild, or the spouse of any child, adopted child, grandchild, or adopted grandchild of such Stockholder or a former spouse who is entitled to such transfer pursuant to the terms of a domestic relations order, (ii) any charitable organization described in Section 170(c) of the Code, (iii) any trust, the beneficiaries of which include only one or more of the Persons named in clause (i) or (ii) of this definition, or (iv) any corporation, limited liability company, or partnership, the

 

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stockholders, members, and general or limited partners of which include only the Persons named in clause (i) or (ii) of this definition.

 

3.3          No Exercise of Appraisal Rights; Actions. Such Stockholder (i) waives and agrees not to exercise any appraisal rights in accordance with Section 262 of the DGCL in respect of such Stockholder’s Subject Shares that may arise with respect to the Merger and (ii) agrees not to commence or join in, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Subsidiary, Parent Related Parties the Company or any of their respective successors (x) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (y) alleging breach of any fiduciary duty of any Person in connection with the negotiation and entry into the Merger Agreement.

 

3.4          Documentation and Information. Such Stockholder shall not make any public announcement regarding this Agreement, the Merger Agreement or the transactions contemplated hereby or thereby without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed. Such Stockholder consents to and hereby authorizes Parent and Merger Subsidiary to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure document that Parent or Merger Subsidiary reasonably determines to be necessary in connection with the Merger and any transactions contemplated by the Merger Agreement, such Stockholder’s identity and ownership of the Subject Shares and/or, if applicable, Company Stock Options or Company Restricted Shares, the existence of this Agreement and the nature of such Stockholder’s commitments and obligations under this Agreement, and such Stockholder acknowledges that Parent and Merger Subsidiary may in Parent’s sole discretion, file this Agreement or a form hereof with the SEC or any other Governmental Authority.  Such Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and such Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by it specifically for use in any such disclosure document, if and to the extent that such Stockholder shall become aware that any such information shall have become false or misleading in any material respect.

 

3.5          No Solicitation.

 

(a)           Such Stockholder shall not, nor shall such Stockholder authorize or permit any of such Stockholder’s Representatives to, directly or indirectly, (a) solicit, initiate, knowingly facilitate or knowingly encourage the submission or announcement of any Acquisition Proposal or any inquiries with respect to the submission or announcement of any Acquisition Proposal or (b) except to the extent directed to do so by the Board of Directors of the Company to the extent permitted in the Merger Agreement, participate in discussions or negotiations regarding, or furnish any non-public information relating to, the Company or any of its Subsidiaries with respect to, or otherwise cooperate in any way with, any effort or attempt by any Person (other than Parent or its Affiliates) to make an inquiry in respect of or make any proposal or offer that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, except as permitted by the Merger Agreement.

 

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(b)           Except to the extent directed to do so by the Board of Directors of the Company to the extent permitted in the Merger Agreement, such Stockholder shall and shall instruct its representatives immediately cease and terminate any existing solicitations, discussions, negotiations or other activity with any Person (other than Parent or its Affiliates) being conducted with respect to any Acquisition Proposal or inquiry that may reasonably be expected to lead to, any Acquisition Proposal on the date hereof.

 

3.6          Adjustments. In the event (a) of any stock split, stock dividend, merger, reorganization, recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Company on, of or affecting the Subject Shares or (b) that such Stockholder shall become the beneficial owner of any additional shares of Shares, then the terms of this Agreement shall apply to the Shares held by such Stockholder immediately following the effectiveness of the events described in clause (a) or such Stockholder becoming the beneficial owner thereof as described in clause (b), as though, in either case, they were Subject Shares hereunder. In the event that any such Stockholder shall become the beneficial owner of any other securities entitling the holder thereof to vote or give consent with respect to the matters set forth in Section 3.1 hereof, then the terms of Section 3.1 hereof shall apply to such other securities as though they were Subject Shares hereunder.

 

ARTICLE IV.

MISCELLANEOUS

 

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

 

(a)           if to Parent, to:

 

Hotspurs Holdings LLC

8500 Normandale Lake Blvd., Suite 1500

Minneapolis, MN 55437

Attn: Jeff Thuringer

Phone: 952-646-2071

Fax: 952-893-9613

E-Mail: jthuringer@varde.com

 

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(b)           if to Stockholder, to:

 

FirstCity Financial Corporation

6400 Imperial Drive

Waco, TX 76712

Attn: James Sartain

Telephone: 254-761-2800

Facsimile: 254-761-2950

E-Mail: jsartain@fcfc.com

 

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

 

4.2          Termination. This Agreement shall terminate automatically, without any notice or other action by any Person, upon the first to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, (iii) the date of any material modification, waiver or amendment to any provision of the Merger Agreement that reduces the amount, changes the form or otherwise adversely affects the consideration payable to the Stockholder pursuant to the Merger Agreement as in effect on the date hereof, and (iv) the mutual written consent of all of the parties hereto. Upon termination of this Agreement, no party shall have any further obligations or liabilities under this Agreement; provided, however, that (x) nothing set forth in this Section 4.2 shall relieve any party from liability for any breach of this Agreement prior to termination hereof and (y) the provisions of this Article IV shall survive any termination of this Agreement.

 

4.3          Amendments and Waivers.

 

(a)           Any provision of this Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Stockholder, Parent or, in the case of a waiver, by the party against whom the waiver is to be effective.

 

(b)           No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  Parent shall not waive or amend any provision of any other Support Agreement, dated as of the date hereof, by and between the Parent and any other stockholder of the Company in a manner which is more favorable to such stockholder unless an equivalent amendment or waiver is offered to the Stockholder for its approval under this Agreement.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

4.4          Expenses. All fees and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the party incurring such expenses, whether or not the Merger is consummated.

 

4.5          Binding Effect; Survival; Benefit; Assignment.

 

(a)           The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties, in accordance with and

 

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subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.

 

(b)           The representations and warranties contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time.  This Section 4.5 shall not limit any covenant or agreement of the parties to this Agreement which, by its terms, contemplates performance after the Effective Time.

 

(c)           The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, except as otherwise permitted by Section 1.3, that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto (and which transfer by any party shall not relieve such party of their obligations hereunder in the event of a breach by their transferee).

 

4.6          Governing Law; Venue.

 

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

 

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

 

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

 

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

 

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

 

and hereby waive, and agree not to assert as a defense in any Legal Proceeding with regard to or involving a Covered Matter, that such Legal Proceeding may not be brought or is not maintainable in said Courts or that venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such Courts, and the parties hereto, on their behalf and on behalf of their respective Affiliates, irrevocably agree that all claims with respect to such Legal Proceeding shall be heard and determined exclusively by such a Delaware state or federal Court.  The parties hereto, on their behalf and on behalf of their respective Affiliates, hereby consent to and grant any such Court jurisdiction over the person of such parties and over the subject matter of

 

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such dispute and agree that mailing of process or other papers in connection with such Legal Proceeding in the manner provided in Section 4.1 or in such other manner as may be permitted by law shall be valid and sufficient service thereof.

 

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

 

(d)           The parties hereto acknowledge and agree that (i) the agreements contained in this Section 4.6 are an integral part of this Agreement and the transactions contemplated hereby, and that, without these agreements, the parties would not enter into this Agreement, (ii) any breach of this Section 4.6 would result in irreparable harm and that monetary damages would not be a sufficient remedy for any such breach and (iii) that any breach of this Section 4.6 will be deemed a material breach of this Agreement.  Accordingly, each Covered Party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach by a party (or any affiliate of such party) and in case of any such breach, the non-breaching party shall be excused from its performance obligations under this Agreement.

 

For the purposes of this Section 4.6, “Covered Party” shall mean (i) any party hereto, (ii) any such parties’ officers, directors, agents, managers, employees, or Affiliates or (iii) any officer, director, agent, or employee of any such Person, all of whom are intended third party beneficiaries of this Section 4.6.

 

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

 

4.8          Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto.  Neither this Agreement nor any provision hereof is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder except for Section 4.6, which is intended for the benefit of the Covered Parties.  Except as otherwise expressly provided in this Agreement, this Agreement may be enforced only against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may be made only against the entities that are expressly identified as parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, equityholder, agent, attorney or representative of any party hereto shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in

 

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respect of, or by reason of, the transactions contemplated hereby or any claim related to tort or contract theories of Law.

 

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

 

4.10        Specific Performance. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with the terms hereof on a timely basis or were otherwise breached.  It is accordingly agreed that, subject to the provisions of this Section 4.10, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in the Federal Court of the United States of America sitting in the State of Delaware), without proof of actual damages or otherwise.  This right is in addition to any other remedy at law or in equity.  The parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy.

 

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

 

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

 

4.13        Further Assurances. Parent and each Stockholder will execute and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations, to perform their respective obligations under this Agreement.

 

4.14        Interpretation. In this Agreement, unless otherwise specified, the following rules of interpretation apply:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           “or” is not exclusive;

 

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

 

4.15        Capacity as Stockholder. Each Stockholder signs this Agreement solely in such Stockholder’s capacity as a Stockholder of the Company, and not in such Stockholder’s capacity as an officer or director of the Company or any other capacity and this Agreement shall not limit or otherwise affect the actions of such Stockholder or any affiliate, employee or designee of such Stockholder or any of its affiliates in its capacity, if applicable, as an officer or director of the Company, including in the exercise of such person’s fiduciary duties as a director or officer of the Company.

 

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

 

4.17        No Ownership Interest. Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to vest in Parent or Merger Subsidiary any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares, Company Stock Options or Company Restricted Shares, as applicable. All rights, ownership and economic benefits of and relating to the Subject Shares, Company Stock Options or Company Restricted Shares, as applicable, shall remain vested in and belong to each applicable Stockholder, and neither Parent nor Merger Subsidiary shall have any authority to manage, direct, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct such Stockholder in the voting of any of the Shares, except as otherwise provided herein.

 

4.18        Stockholder Obligations Several and Not Joint. The obligations of each Stockholder hereunder shall be several and not joint, and no Stockholder shall be liable for any breach of the terms of this Agreement by any other Stockholder.

 

4.19        Confidentiality. This Agreement shall be treated as strictly confidential and is being provided by the Stockholder solely in connection with the Merger Agreement and the transactions contemplated thereby. This Agreement may not be used, circulated, quoted or otherwise referred to in any document, except with the written consent of Parent. Notwithstanding the foregoing, this Agreement may be provided to the Stockholder’s advisors who have been directed to treat this Agreement as confidential, and the Stockholder shall cause such advisors to so

 

12

 

treat this Agreement as confidential, and this Agreement may be disclosed as required by applicable law.

 

4.20        Waiver of Jury Trial.

 

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

 

[Signature Page Follows]

 

13

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

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

 

 

Signatures continue on the following page

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ William P. Hendry
    
	
 
    	
Name: William P. Hendry
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Dane Fulmer
    
	
 
    	
Name: Dane Fulmer
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ F. Clayton Miller
    
	
 
    	
Name: F. Clayton Miller
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ James T. Sartain
    
	
 
    	
Name: James T. Sartain
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of James T. Sartain, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Deborah Sartain
    
	
 
    	
Name: Debbie Sartain
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ J. Bryan Baker
    
	
 
    	
Name: J. Bryan Baker
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of J. Bryan Baker, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Suzanne Baker
    
	
 
    	
Name: Suzanne Baker
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Jim W. Moore
    
	
 
    	
Name: Jim W. Moore
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of Jim W. Moore, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Marilyn Moore
    
	
 
    	
Name: Marilyn Moore
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Terry DeWitt
    
	
 
    	
Name: Terry DeWitt
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of Terry DeWitt, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Susan DeWitt
    
	
 
    	
Name: Susan DeWitt
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Mark B. Horrell
    
	
 
    	
Name: Mark Horrell
    

 

All of my stock owned in First City Financial Corp. is separate property owned by me.

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of Mark Horrell, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Ellen Horrell
    
	
 
    	
Name: Ellen Horrell
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ James C. Holmes
    
	
 
    	
Name: James Holmes
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of James Holmes, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Cindy Holmes
    
	
 
    	
Name: Cindy Holmes
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ C. Ivan Wilson
    
	
 
    	
Name: C. Ivan Wilson
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of C. Ivan Wilson, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
/s/ Lola Wilson
    
	
 
    	
Name: Lola Wilson
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Richard E. Bean
    
	
 
    	
Name: Richard E. Bean
    

 

All of my stock owned in First City Financial Corp. is separate property owned by me.

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of Richard E. Bean, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 20, 2012

 

 

	
 
    	
 
    
	
 
    	
Name: Dorothy Bean
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ Robert E. Garrison II
    
	
 
    	
Name: Robert E. Garrison II
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of Robert E. Garrison II, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 20, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 19, 2012

 

 

	
 
    	
/s/ Patti Garrison
    
	
 
    	
Name: Patti Garrison
    

 

 

Signature page to Support Agreement

 

 

	
 
    	
/s/ D. Michael Hunter
    
	
 
    	
Name: D. Michael Hunter
    

 

 

Spousal Consent

 

The undersigned represents that (1) the undersigned is the spouse of D. Michael Hunter, (2) that the undersigned is familiar with the terms of the SUPPORT AGREEMENT (the “Agreement”), dated as of December 19, 2012, by and among Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), and the certain stockholders, including the undersigned’s spouse, of FirstCity Financial Corporation, a Delaware corporation (the “Company”), listed on Exhibit A thereto, and that the undersigned has had an opportunity to consult legal counsel of the undersigned’s choice to review drafts of the Agreement and the Merger Agreement and to advise the undersigned with respect thereto. The undersigned hereby agrees that the interest of the undersigned’s spouse in all property which is the subject of the Agreement shall be irrevocably bound by the terms of the Agreement and by any amendment, modification, waiver or termination signed by the undersigned’s spouse. The undersigned shall not take any action that would (1) have the effect of impairing the ability of the undersigned’s spouse to perform the undersigned’s spouse’s obligations under the Agreement or prevent or delay the consummation of the transactions contemplated under Agreement or (2) result in the Agreement not constituting the valid and binding obligation of the undersigned’s spouse, enforceable against the undersigned’s spouse in accordance with its terms.  The undersigned further authorizes the undersigned’s spouse to amend, modify or terminate the Agreement, or waive any rights thereunder, and that each such amendment, modification, waiver or termination signed by the undersigned’s spouse shall be binding on the community property interest of undersigned in all property which is the subject of the Agreement and on the executors, administrators, heirs and assigns of the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.

 

 

Dated: December 19, 2012

 

 

	
 
    	
/s/ Mary Hunter
    
	
 
    	
Name: Mary Hunter
    

 

 

Signature page to Support AgreementExhibit 10.4

 

SEPARATION AGREEMENT

 

THIS SEPARATION AGREEMENT (this “Agreement”), made and entered into as of December 20, 2012, between Jim W. Moore (“Executive”) and FirstCity Financial Corporation, a Delaware corporation (“Company”);

 

WITNESSETH THAT:

 

WHEREAS, Executive is currently employed by Company as its Executive Vice President, Director of Servicing and Chief Operating Officer;

 

WHEREAS, pursuant to that certain Agreement and Plan of Merger among Hotspurs Holdings LLC (“Parent”), Hotspurs Acquisition Corporation (“Merger Subsidiary”) and Company dated December 20, 2012  (the “Merger Agreement”), Merger Subsidiary will merge with and into Company and Company will continue as the surviving corporation and a wholly-owned subsidiary of Parent;;

 

WHEREAS, following the transactions contemplated by the Merger Agreement, Executive’s employment with Company and its affiliates will terminate as outlined in this Agreement; and

 

WHEREAS, Company has determined that it is appropriate to provide severance benefits to Executive upon his termination of employment and to require from Executive certain agreements and covenants in exchange for such severance, including a mutual release and waiver; and

 

NOW, THEREFORE, the parties agree as follows, all conditioned upon the Closing (as defined in the Merger Agreement) of the transactions contemplated by the Merger Agreement:

 

1.                                      Effective Date.  This Agreement shall become effective on the Closing Date (as defined in the Merger Agreement, the “Effective Date”), which is anticipated to occur during the 2013 calendar year, provided that Executive remains employed by Company through the Closing.  Notwithstanding the foregoing or any other provision of this Agreement, this Agreement is conditioned upon and shall become effective only upon the consummation of the transactions contemplated by the Merger Agreement and if such transactions are not consummated, this Agreement shall be of no force and effect and shall terminate automatically without any further actions of the parties.

 

2.                                      Release Requirements.  In consideration of the Severance Payments (as defined in Section 4 hereof) provided to Executive in accordance with this Agreement, on or before the Termination Date Executive is required to execute a Mutual Release and Waiver, in the form set forth as Exhibit A of this Agreement (as the same may be updated in connection with the Termination Date (as defined in Section 3 hereof)), which Exhibit A is attached to and forms a part of this Agreement (the “Executive Release”), the Executive Release shall become effective, and the Executive Release

 

1

 

shall not be revoked by Executive.  The requirements set forth in this Section 2 are referred to herein as the “Release Requirements”.  Company also agrees to enter into the Executive Release.

 

3.                                      Post-Closing Employment and Termination Date.  Subject to the terms and conditions of this Agreement, Executive’s employment with Company shall continue for ninety (90) days following the Effective Date.  During any period of employment following the Effective Date, Executive shall continue to be paid his base salary, as well as participate in Company employee benefits, at the rate or on the same terms in effect immediately prior to the date of this Agreement and he shall perform such duties for Company as reasonably requested by Company; provided, however, that it is intended that Executive shall provide transition services with respect to his position as Executive Vice President, Director of Servicing and Chief Operating Officer of Company.  Notwithstanding the foregoing, Company or Executive may terminate Executive’s employment with Company at any time on at least 30 days’ advance written notice.  The date on which Executive’s employment with Company terminates for any reason shall be referred to herein as the “Termination Date”.  Executive shall cease to be an officer and/or director of Company and its affiliates as of the Termination Date.  During any period of employment following the Effective Date, Company’s indemnification obligations to Executive, whether by agreement, charter provision or bylaw provision, or pursuant to Company’s directors and officers insurance policy, shall continue in full force and effect on the same terms that existed as of the date of this Agreement.

 

4.                                      Severance.  Subject to the terms and conditions of this Agreement, in consideration of Executive’s past services for Company, the Executive Release and the provisions of Sections 5 and 6 of this Agreement, Executive shall be entitled to the following compensation and other payments and benefits under this Agreement:

 

(a)                                 On the Termination Date or otherwise in accordance with applicable law, Company shall pay to Executive any accrued but unpaid wages and any other accrued but unpaid compensation which is owed to Executive by Company for periods ending on or prior to the Termination Date.  Executive shall be entitled to any compensation and benefits under employee benefit plans and arrangements maintained by Company and its affiliates which have accrued to him as of the Termination Date under the express provisions of such plans and arrangements (including, without limitation, payment for any accrued and unused vacation as of the Termination Date), it being understood that in no event shall this Agreement provide any compensation or benefit in substitution for, or otherwise in lieu of, any compensation or benefit to which Executive is entitled under any such plan or arrangement.

 

(b)                                 On the 8th day following the Termination Date (the “Payment Date”) Company shall pay to Executive, in a lump sum cash payment, the annual bonus amount that Executive would have been entitled to receive under

 

2

 

Company’s 2012 bonus plan had the Termination Date not occurred, to the extent not already paid to Executive on the Payment Date, in accordance with the normal provisions of the 2012 bonus plan (or in an amount and to the extent otherwise determined by the Compensation Committee of Company’s Board of Directors pursuant to the provisions of the 2012 bonus plan); provided, however, that, in the event that, as of the Payment Date, the 2012 bonus has not been paid to executives generally in accordance with the past practices of Company, then the 2012 bonus shall be paid as of the date that such bonus is otherwise paid to executives in accordance with past practices.

 

(c)                                  On the Payment Date, Company shall pay Executive a lump sum cash payment equal to $540,000.

 

(d)                                 If Company terminates Executive’s employment for reasons other than cause prior to the ninety (90) day anniversary of the Effective Date, then, on the Payment Date, Company shall pay Executive a lump sum cash payment equal to the base salary that Executive would have received had he remained employed by Company from the Termination Date through such ninety (90) day period following the Effective Date.  For the avoidance of doubt, Executive shall be entitled to the payments specified in paragraphs 4(a), 4(b) and 4(c) notwithstanding the termination of Executive’s employment by Company or Executive for any reason whatsoever prior to or after the ninety (90) day anniversary of the Effective Date.

 

Notwithstanding the foregoing or any other provision of this Agreement to the contrary, no payments shall be paid to Executive pursuant to paragraphs 4(b), (c) or (d) (collectively, “Severance Payments”) unless the Release Requirements are met as of the Payment Date.  If the Release Requirements are not met by Executive on the Payment Date, Executive shall have no rights to the Severance Payments and Company shall not pay any Severance Payments to Executive.

 

In addition to the foregoing, at the Termination Date, (i) Executive shall be entitled to maintain his cell phone number and Company will cooperate in the transfer of such number into Executive’s name, and (ii) Executive shall be entitled to retain and remove from Company premises any furniture, artwork or mementos owned by him as documented in Schedule 4 attached hereto.

 

5.                                      Confidential Information.  Except as may be required by the lawful order of a court or agency of competent jurisdiction, or except to the extent that Executive has express authorization from Company, Executive agrees that he will keep secret and confidential indefinitely, will not disclose, either directly or indirectly, to any other person, firm, or business entity, and will not use in any way, any non-public information concerning Company and its affiliates which was acquired by or disclosed to him during

 

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the course of his employment with Company, including, without limitation, Company’s or its affiliates’ customers, products, equipment, processes, costs, operations and methods, whether past, current, or planned, as well as knowledge and data relating to processes, business plans, marketing and sales information originated, owned, controlled or possessed by Company or its affiliates.  Nothing in the foregoing provisions of this Section 5 shall be construed so as to prevent Executive from using, in connection with his employment for himself, for an employer (or other recipient of his services), or otherwise, knowledge which was acquired by him during the course of his employment or other engagement by Company or its affiliates and which is generally known to persons of his experience in other companies in the same industry or such information that otherwise becomes publicly available through no fault of Executive.

 

6.                                      Non-solicitation.  Executive agrees that from and after the Termination Date, and for a period of twelve (12) months thereafter (the “Restricted Period”), neither he nor any individual, partner(s), limited partnership, corporation or other entity or business with which he is in any way affiliated, including, without limitation, any partner, limited partner, member, director, officer, shareholder, employee, or agent of any such entity or business, will (a) request, induce or attempt to influence, directly or indirectly, any employee of Company or any of its affiliates to terminate their employment with Company or any of its affiliates or (b) employ any person who, during his period of employment with Company was, or after the Termination Date is, an employee of Company or any of its affiliates; provided, however, that the foregoing restrictions shall not apply to general employment solicitations and not directed to an employee of Company or any of its affiliates or the hiring of any former employee of Company or any of its affiliates who was not solicited to leave or induced to leave the employment of Company or any of its affiliates by Executive.  Executive further agrees that, during the Restricted Period, he shall not, directly or indirectly, as an individual, employee, agent, consultant, stockholder, director, partner or in any other individual or representative capacity of Company or of any other person, entity or business, solicit or encourage any present supplier, contractor, partner or investor of Company or any of its affiliates to terminate, limit or otherwise alter his, her or its relationship with Company; provided, however, that the foregoing restrictions shall not apply to general solicitations or communications by Executive or any such entity that are not directed at any suppliers, contractors, partners or investors of Company or its affiliates for the purpose of soliciting or encouraging them to terminate, limit or otherwise alter his, her or its relationship with Company or any of its affiliates.  Notwithstanding any contrary provisions of the immediately preceding sentence, this Section 6 is not intended and shall not be construed as a covenant of noncompetition on the part of Executive, and Executive shall be entitled following his employment with Company to become an employee, partner, investor, member, consultant or participant with any third party that itself may be engaged in a business similar to that of Company.

 

7.                                      Amendment.  This Agreement may be amended or canceled only by mutual agreement of the parties in writing without the consent of any other person.  So

 

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long as Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.

 

8.                                      Successors and Affiliates.  This Agreement shall be binding on, and inure to the benefit of, Company and its successors and assigns and any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of Company’s assets and business.

 

9.                                      Remedies.  Executive acknowledges that Company and its affiliates would be irreparably injured by his violation of Sections 5 or 6, and he agrees that Company, in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining Executive from any actual or threatened breach of Sections 5 or 6.

 

10.                               Withholding.  To the extent required by applicable law, all amounts otherwise payable under the Agreement shall be subject to withholding and other employment taxes.

 

11.                               Waiver of Breach.  The waiver by Executive or Company of a breach of any provision of this Agreement shall not operate as or be deemed a waiver by the non-breaching party of any subsequent breach.  Continuation of payments or benefits hereunder by Company following a breach by Executive of any provision of this Agreement shall not preclude Company from thereafter exercising any right that it may otherwise independently have to terminate said payments or benefits based upon the same violation.

 

12.                               Severability.  The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

 

13.                               Notices.  All notices hereunder shall be in writing and shall be deemed sufficiently given if personally delivered, sent by registered or certified mail, postage prepaid, sent by overnight courier or facsimile, at such addresses as the parties may from time to time provide to each other.

 

14.                               Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Texas, without regard to the conflict of law provisions of any state.

 

15.                               Counterparts.  This Agreement may be executed in more than one counterpart, but all of which together will constitute one and the same agreement.

 

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16.                               Other Agreements.  Except as otherwise specifically provided in this Agreement, this instrument constitutes the entire agreement between Executive and Company relating to the subject matter hereof and supersedes all prior agreements and understandings between the parties relating to the subject matter hereof, whether written or oral.

 

17.                               Special Section 409A Provisions.  This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder.  Notwithstanding any other provision of this Agreement to the contrary, if any payment or benefit hereunder is subject to section 409A of the Code, and if such payment or benefit is to be paid or provided on account of Termination Date (or other separation from service or termination of employment):

 

(a)                                 and if Executive is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code) and if any such payment or benefit is required to be made or provided prior to the first day of the seventh month following Executive’s separation from service or termination of employment, such payment or benefit shall be delayed until the first day of the seventh month following Executive’s separation from service; and

 

(b)                                 the determination as to whether Executive has had a termination of employment (or separation from service) shall be made in accordance with the provisions of section 409A of the Code and the guidance issued thereunder without application of any alternative levels of reductions of bona fide services permitted thereunder.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first set forth above.

 

 

	
 
    	
FIRSTCITY   FINANCIAL CORPORATION
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   James T. Sartain
    
	
 
    	
Its
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Jim W. Moore
    
	
 
    	
 
    	
Jim   W. Moore
    

 

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Exhibit A

 

EXECUTIVE RELEASE

 

MUTUAL RELEASE AND WAIVER

 

This document is attached to, is incorporated into, and forms a part of, a Separation Agreement dated as of December 20, 2012 (the “Agreement”) between FirstCity Financial Corporation (“Company”) and Jim W. Moore (“Executive”). Except for a claim based upon a breach of the Agreement, Executive, on behalf of himself and his heirs, representatives, agents, and insurers (hereinafter the “Employee Releasors”) releases and forever discharges Company and its current and former officers, directors, trustees, members, representatives, agents, employees, and insurers, and its affiliates, predecessors and successors and their respective officers, directors, representatives, agents, employees, and insurers (hereinafter collectively and individually the “Releasees”) from any and all rights, claims, demands, debts, dues, sums of money, accounts, attorneys’ fees, complaints, judgments, executions, actions and causes of action of any nature whatsoever, cognizable at law or equity, known or unknown (sometimes referred to in this Release as “Claims”) which Executive (or the other Employee Releasors may have) now has or claims, or might hereafter have or claim, against the Releasees based upon or arising out of any matter or thing whatsoever, through the date of this Mutual Release and Waiver, including but not limited to any alleged violation of the Age Discrimination in Employment Act of 1967, as amended (including amendments made by the Older Workers Benefit Protection Act), Title VII of the Civil Rights Act of 1964, as amended, The Civil Rights Act of 1991, Section 1981 through 1988 of Title 42 of the United States Code, as amended, the Employee Retirement Income Security Act of 1974, as amended, The National Labor Relations Act, as amended, The Fair Labor Standards Act, as amended, The Occupational Safety and Health Act, as amended, The Family and Medical Leave Act of 1993, any state antidiscrimination law, any state wage and hour law, any other local state or federal law, regulations or ordinance, any public policy, contract, tort or common law or any allegation for costs, fees or other expenses ,including attorneys’ fees, incurred in these matters. Claims for breach of the Agreement by Company are not waived or released by Employee Releasors.

 

Company, in exchange for good and valuable consideration, releases and forever discharge Employee Releasors from any and all Claims which Company now has or claims, or might hereafter have or claim, against the Employee Releasors based upon or arising out of any matter or thing whatsoever, through the date of this Mutual Release and Waiver with the exception of willful misconduct, fraud or criminal conduct in the discharge of Executive’s employment duties or acts knowingly outside the scope of his employment with Company, provided further that as of the date of signing this Mutual Release and Waiver, Company is not aware of any circumstances falling within this exception. In addition, claims for breach of the Agreement by Executive are not waived or released by Company.

 

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The following provisions are applicable to and made a part of the Agreement and this Mutual Release and Waiver:

 

(a)           In exchange for this Mutual Release and Waiver, Executive hereby acknowledges that he has received separate consideration beyond that to which he is otherwise entitled under Company’s policies or applicable law.

 

(b)           Company hereby expressly advises Executive to consult with an attorney of his choosing prior to executing the Agreement or this Mutual Release and Waiver.

 

(c)           Executive has forty-five (45) days from the Effective Date (as defined in the Agreement) to consider whether or not to execute this Mutual Release and Waiver. In the event of such execution, Executive has a further period of seven (7) days from the date of said execution in which to revoke said execution. The Mutual Release and Waiver will not become effective until expiration of such revocation period.

 

(d)           This Mutual Release and Waiver and the commitments and obligations of the parties under the Agreement:

 

(i)            shall become final and binding immediately following the expiration of Executive’s right to revoke the execution of the Agreement in accordance with paragraph (c) of this Exhibit A;

 

(ii)           shall not become final and binding until the expiration of such right to revoke; and

 

(iii)          shall not become final and binding if Executive revokes such execution by writing delivered to Company’s Board of Directors on or prior to the date on which his right to revoke the execution of this Agreement expires.

 

(e)           Executive hereby acknowledges that he has carefully read and understands the terms of the Agreement and this Mutual Release and Waiver and his rights as set forth therein and that, by executing this Mutual Release and Waiver and to receive thereby the payments and benefits agreed to in the Agreement, he freely and knowingly, and after due consideration, voluntarily enters into this Mutual Release and Waiver. Executive further agrees that if he signs this Mutual Release and Waiver in less than 45 days, he confirms by such signature that he does so freely and knowingly, after due consideration, voluntarily and without any pressure or coercion of any nature from anyone at Company. [TO BE  PROVIDED  AT TERMINATION DATE. A list of the job titles and ages of all individuals eligible to and not eligible to receive severance is attached hereto as Appendix 1.]

 

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MY SIGNATURE BELOW ACKNOWLEDGES THAT I HAVE READ THIS ENTIRE DOCUMENT, UNDERSTAND WHAT I AM SIGNING, AND AM ACTING VOLUNTARILY OF MY OWN FREE WILL, HAVING RECEIVED VALUABLE CONSIDERATION FOR THIS AGREEMENT. COMPANY HAS HEREBY ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY AND ANY OTHER ADVISORS OF MY CHOICE PRIOR TO SIGNING THIS MUTUAL RELEASE AND HAS ADVISED ME THAT I AM RELEASING CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AMONG OTHER CLAIMS, AND FURTHER THAT I WILL NOT RECEIVE ANY PAYMENTS OR BENEFITS EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT.

 

 

	
SIGNATURE
    	
 
    	
 
    	
DATE
    	
 
    

 

 

FIRSTCITY FINANCIAL CORPORATION

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

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Schedule 4

 

All pictures, paintings, paraphernalia, and/or personal mementos located in Jim Moore’s office including but not limited to:

 

1 Large Western oil painting by Thomas Turner

 

1 Texas Ducks Unlimited Print by Ken Carlson 71/200 

 

1 Framed Republic of Texas Flag Replica

 

1 Framed Collection of Old West Badges

 

1 8 – Foot Leather Bull Whip

 

1 Collector’s set of 1976 Ben Hogan Golf Clubs and 1 putter

 

Various framed photos of family members and friends; several personal mementos on shelves; and approximately 35 books covering various subjects.

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