1
EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made to be
effective as of August 8, 2001, by and between GAINSCO, INC., a Texas
corporation ("Seller"), and Xxxxxxx X. Xxxx ("Buyer").
RECITALS:
WHEREAS, Seller purchased all of the outstanding shares (the "Shares")
of the capital stock of Tri-State, Ltd., a North Dakota corporation ("TSL"),
from Buyer and Xxxx X. Xxxxx ("Xxxxx") on January 7, 2000 (the "Original
Transaction"), and Seller is now the record and beneficial owner of all the
Shares;
WHEREAS, TSL is the record and beneficial owner of all of the
outstanding shares of the capital stock of each of Xxxx Xxxx Insurance, Inc. and
MDR/Motor Vehicle Driving Records (TSL, Xxxx Xxxx Insurance, Inc. and MDR/Motor
Vehicle Driving Records are referred to herein as the "Acquired Companies");
WHEREAS, prior to the making of this Agreement, TSL distributed all of
the outstanding shares of the capital stock of Midwest Casualty Insurance
Company ("MCIC") to Seller, and Seller is now the record and beneficial owner of
all of the outstanding shares of the capital stock of MCIC;
WHEREAS, both before and since the Original Transaction, Buyer has been
the President of TSL and in such capacity has a thorough familiarity with the
condition, operations and history of TSL and the other Acquired Companies; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of
the Shares for the consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements set forth and for other good and valuable consideration, the
adequacy, sufficiency and receipt of which are hereby acknowledged, the parties
agree as follows:
ARTICLE I.
SALE AND TRANSFER OF SHARES; CLOSING
1.1 SHARES. Subject to the terms and conditions of this Agreement, at
the Closing (defined below), Seller will sell and transfer the Shares to Buyer,
and Buyer will purchase the Shares from Seller.
1
2
1.2 PURCHASE PRICE. The purchase price to be paid by Buyer for the
Shares shall be equal to the sum of $931,968, payable through the execution and
delivery by Buyer of a Promissory Note substantially in the form attached hereto
as Exhibit 1.2 (the "Note").
1.3 CLOSING. The consummation of the purchase and sale (the "Closing")
provided for in this Agreement will take place at the offices of Xxxxxxx Xxxxxx
L.L.P., at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, at 10:00 a.m. (local
time) on a date (the "Closing Date") that is no later than five (5) days after
all conditions to Closing have been satisfied, or at such other time and place
as the parties may agree. Subject to the provisions of Article IV, failure to
consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 1.3 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
1.4 CLOSING OBLIGATIONS. At the Closing:
(a) Seller will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer (it
being understood that such Shares nonetheless shall be retained by
Buyer pursuant to the Stock Pledge Agreement substantially in the form
of Exhibit 1.4(a)(i) attached hereto (the "Stock Pledge Agreement") and
will be pledged at or following the Closing to Bank One, NA);
(ii) a Mutual Release substantially in the form of Exhibit
1.4(a)(ii) attached hereto (the "Mutual Release") executed by Seller
and TSL;
(iii) an Assignment and Assumption Agreement substantially in
the form of Exhibit 1.4(a)(iii) attached hereto (the "Assignment")
executed by Seller and TSL; and
(iv) evidence that the Consent (defined in Section 2.1 below)
has been obtained.
(b) Buyer will deliver to Seller:
(i) the Note, executed by Buyer;
(ii) the Stock Pledge Agreement, executed by Buyer;
(iii) two effective Letters of Credit, each in an amount equal
to $931,968 and otherwise substantially in the respective forms of
Exhibit 1.4(b)(iii)(A) and Exhibit 1.4(b)(iii)(B) attached hereto;
(iv) the Mutual Release, executed by Buyer and Xxxxx; and
(v) the Assignment, executed by Buyer and Xxxxx.
2
3
1.5 ADJUSTMENTS TO NOTE.
(a) Within 90 days following the Closing, Seller will provide to Buyer
a calculation of the "July 31 Book Value Amount". As used in this Agreement, the
"July 31 Book Value Amount" means, with respect to TSL on a consolidated basis
(but exclusive of the assets and liabilities of MCIC), total assets less total
liabilities as of the close of business on July 31, 2001 computed in accordance
with generally accepted accounting principles for financial reporting in the
United States, applied on a consistent basis. If, within 15 days after delivery
of the calculation of the July 31 Book Value Amount to Buyer, Buyer has not
given written notice to Seller disputing such calculation and indicating the
basis of such dispute, such calculation shall be conclusive and binding on
Buyer. In the event Buyer gives Seller such notice of dispute within such 15-day
period, Seller and Buyer will use their best efforts to settle the dispute
within 30 days after the giving of such notice. Any dispute unresolved after
such 30-day period shall be submitted to a national public accounting firm
selected by Seller and reasonably satisfactory to Buyer. The costs and fees of
such national public accounting firm shall be borne equally by Buyer and Seller.
The decision of such accounting firm with respect to such dispute shall be final
and binding on the parties hereto.
(b) Following the final determination of the July 31 Book Value Amount:
(i) to the extent the July 31 Book Value Amount exceeds $681,968, the original
principal amount of the Note shall be increased by an amount equal to such
incremental excess; (ii) to the extent the July 31 Book Value Amount is less
than $681,968, the original principal amount of the Note shall be reduced by an
amount equal to such incremental shortfall, and (iii) if the July 31 Book Value
Amount is equal to $681,968, the original principal amount of the Note shall not
be adjusted. In the event the original principal amount of the Note is to be
adjusted, Buyer shall execute, within 30 days after the final determination of
the July 31 Book Value Amount, an amended and restated Note reflecting the
adjusted original principal amount of the Note and the original Note shall be
marked "canceled" upon receipt by Seller of the amended and restated Note. The
amended and restated Note shall be identical in all respects to the original
Note except that (i) the original principal amount shall be adjusted as set
forth in this Section and (ii) the final payment of principal due at maturity of
the Note on June 30, 2004 shall be adjusted to reflect the increase or decrease
in the original principal amount of the Note (it being understood that the first
two payments of principal, each in the amount of $350,000 and due on June 30,
2002 and June 30, 2003, respectively, shall not be changed).
1.6 TELECOMMUNICATIONS EQUIPMENT. Seller shall allow TSL continued use
of the telecommunications equipment described on Schedule 1.6 attached hereto
(the "Telecom Equipment") for a period not to exceed 90 days following the date
of the Closing. Upon the earlier to occur of (i) receipt by Seller of written
notice from TSL that TSL no longer requires the Telecom Equipment or (ii) the
90th day following the date of the Closing, Buyer and TSL shall provide Seller
with reasonable cooperation and reasonable access to the premises on which the
Telecom Equipment is located sufficient to allow Seller to remove the Telecom
Equipment in such a manner as to facilitate the preservation of the value of the
Telecom Equipment.
1.7 FURTHER ASSURANCES. At all times following the Closing, the parties
agree (i) to furnish upon request to each other such further information, (ii)
to execute and deliver to each other such other documents, and (iii) to do such
other acts and things, all as the other party may
3
4
reasonably request for the purpose of confirming the ownership of the Telecom
Equipment and all the outstanding capital stock of MCIC by Seller and the
ownership of all the outstanding capital stock of TSL by Buyer.
ARTICLE II.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
2.1 BANK CONSENT. The consent, waiver and release of Bank One, NA (the
"Consent") under its Revolving Credit Agreement with Seller and GAINSCO Service
Corp. dated November 13, 1998, as amended, and related collateral documents,
with respect to the transactions contemplated by this Agreement (the
"Transactions") must have been obtained and must be in full force and effect.
2.2 NO PROHIBITION. Neither the consummation nor the performance of any
of the Transactions will, directly or indirectly (with or without notice or
lapse of time) cause Buyer or any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, or other entity (any "Person") affiliated with Buyer
to suffer any material adverse consequence under, (a) any applicable federal,
state, local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty (any "Legal Requirement") or any award, decision,
injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made,
or rendered by any court, administrative agency, or other Governmental Body
(defined below) or by any arbitrator (any "Order") or (b) any Legal Requirement
or Order that has been published, introduced, or otherwise proposed by or before
any Governmental Body. As used in this Agreement, "Governmental Body" means any
(i) nation, state, county, city, town, village, district, or other jurisdiction
of any nature; (ii) federal, state, local, municipal, foreign, or other
government; (iii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); (iv) multi-national organization or body; or (v)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
2.3 REGULATORY APPROVAL. Buyer shall have obtained the necessary
regulatory approvals in the states in which any of the Acquired Companies
operate to consummate the Transactions.
2.4 CLOSING DELIVERIES. All items contemplated in Section 1.4(a) shall
have been delivered to Buyer.
4
5
ARTICLE III.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
3.1 CONSENTS. The Consent must have been obtained and must be in full
force and effect.
3.2 NO PROHIBITION. Neither the consummation nor the performance of any
of the Transactions will, directly or indirectly (with or without notice or
lapse of time) cause Seller or any Person affiliated with Seller to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order or (b) any Legal Requirement or Order that has been published, introduced,
or otherwise proposed by or before any Governmental Body.
3.3 REGULATORY APPROVAL. Seller shall have obtained the necessary
regulatory approvals in the states in which any of the Acquired Companies
operate to consummate the Transactions.
3.4 PAYMENT OF RESERVE ADJUSTMENT. Seller shall have received via wire
transfer from Buyer the sum of $50,000 in immediately available funds pursuant
to the terms of the Agreement Regarding Reserve Adjustment of even date herewith
between Buyer and Seller.
3.5 INSURANCE AGREEMENTS. The General Agency Agreement among MA
Insurance Company, Inc., MCIC and TSL and the Quota Share Reinsurance Agreement
among MGA Insurance Company, Inc., MCIC, and Motors Insurance Corporation by
GMAC Re Corporation, each in form and substance acceptable to Seller in its sole
discretion, shall have been fully executed and delivered and shall remain in
full force and effect through the Closing.
3.6 CLOSING DELIVERIES. All items contemplated in Section 1.4(b) shall
have been delivered to Seller.
ARTICLE IV.
TERMINATION
4.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) (i) by Buyer if any of the conditions in Article II has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Seller, if any of the conditions in Article
III has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller have not waived
such condition on or before the Closing Date;
5
6
(b) by mutual consent of Buyer and Seller; or
(c) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before December
31, 2001, or such later date as the parties may agree upon.
4.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 4.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 4.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 5.1 will survive; provided, however, that if
this Agreement is terminated by a party because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE V.
GENERAL PROVISIONS
5.1 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such costs
and expenses.
5.2 ACKNOWLEDGEMENTS OF BUYER. Buyer has such knowledge and experience
in financial and business matters generally and the business and operations of
the Acquired Companies in particular as to be capable of evaluating the merits
and risks of purchasing the Shares. To the full satisfaction of Buyer, Buyer has
been furnished any materials Buyer has requested relating to the Acquired
Companies. Buyer is not relying upon any other information, representation or
warranty by Seller or any of its affiliates or their respective agents in
determining to purchase the Shares. Buyer has consulted to the extent deemed
appropriate by Buyer with Buyer's own advisers as to the financial, tax, legal
and related matters concerning the purchase of the Shares.
5.3 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the Transactions will be issued, if at all, at
such time and in such manner as Seller determines. Unless consented to by Seller
in advance or required by Legal Requirements, prior to the Closing Buyer shall
keep this Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person other than any professional advisors of Buyer.
Seller and Buyer will consult with each other concerning the means by which the
employees, customers, and suppliers of the Acquired Companies and MCIC and
others having dealings with the Acquired Companies and MCIC will be informed of
the Transactions, and Seller will have the right to be present for any such
communication.
5.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when
6
7
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
If to Seller:
GAINSCO, INC.
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy of all notices to Seller and TSL to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
If to Buyer:
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx P.L.L.P.
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
5.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement shall be brought against any of the parties in the courts of the State
of Texas, County of Dallas, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Texas, Dallas
Division, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
5.6 BEST EFFORTS; FURTHER ASSURANCES. Between the date of this
Agreement and the Closing Date, Buyer and Seller each shall use its best efforts
to cause the conditions to Closing
7
8
for which it is responsible to be satisfied. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
5.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. The rights of Buyer and Seller hereunder are
in addition to all other rights provided by law. Neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
5.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the parties hereto.
5.9 REDUCTION OF LETTERS OF CREDIT. In the event that the amount of
principal and interest outstanding under the Note is reduced (whether by payment
of principal by Buyer or through the issuance of a replacement Note as set forth
in Section 1.5 of this Agreement), within 30 days after receipt by Seller of the
written request of Buyer, Seller shall request the issuers of the respective
Letters of Credit to reduce the face amount of each Letter of Credit to an
amount equal to the sum of the amount of principal and interest then outstanding
pursuant to the Note.
5.10 REPRESENTATION OF SELLER. Seller hereby represents to Buyer that,
subject to receipt of the Consent and the following sentence, Seller has all
right, power, authority, and capacity to execute and deliver this Agreement and
sell the Shares free and clear of encumbrances to Buyer on the terms set forth
herein. Buyer acknowledges that the certificate(s) evidencing the Shares will be
pledged by Seller to Bank One, NA at or shortly after the Closing.
5.11 DELIVERY OF SHARES. Seller shall deliver the certificate(s)
evidencing the Shares to Buyer within thirty (30) days following the date that
all obligations of Buyer under the Note have been fully satisfied (whether
through payment by Buyer or draw on one or both Letters of Credit).
5.12 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties.
8
9
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
5.13 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
5.14 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Texas without regard to conflicts of laws principles.
5.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Intentionally left blank.]
9
10
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
---------------------------------------------
Xxxxxxx X. Xxxx
SELLER:
GAINSCO, INC.
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
10
11
EXHIBIT 1.2
PROMISSORY NOTE
Dated as of
$931,968 August __, 2001
For value received, Xxxxxxx X. Xxxx ("Maker"), promises to pay to the
order of GAINSCO, INC., a Texas corporation (the "Company"), at its principal
office in Fort Worth, Texas, or at such other place or to such other payee as
the holder of this promissory note (this "Note") may from time to time specify,
the principal sum of Nine Hundred and Thirty-One Thousand Nine Hundred
Sixty-Eight Dollars ($931,968) together with interest on the unpaid principal
balance from day to day outstanding as follows:
Principal
$350,000 on June 30, 2002; $350,000 on June 30, 2003; and $231,968 on
June 30, 2004; and
Interest
All accrued interest to be payable on each March 31, June 30, September
30 and December 31 during the term of this Note, with any accrued but
unpaid interest as of June 30, 2004 to be paid in full at that time.
The rate of interest on this Note shall be fixed on each March 31, June
30, September 30 and December 31 during the term of this Note to a rate per
annum equal to the "prime rate" in effect at the close of business on the
immediately preceding "Business Day" as published by the Wall Street Journal
(Southwest Edition), and shall remain the same for the ensuing quarterly period
(unless increased for late payments or following an event of default as provided
in this Note). For purposes of this Note, a "Business Day" is a day on which the
Wall Street Journal (Southwest Edition) is published. Interest on this Note
shall be calculated at a daily rate equal to 1/365 of the interest rate which
this Note bears from time to time, subject to the provisions hereof limiting
interest to the maximum permitted by applicable law.
Any installment payment not paid within 10 days after the date such
installment is due will bear interest at the rate of 12% per annum from the due
date of the installment until such installment has been paid in full.
Demand for payment will be presumed to have been issued, and the entire
unpaid principal balance and accrued interest hereunder will become immediately
due, upon delivery to Maker of written notice of the occurrence of any one or
more of the following events of default:
12
ARTICLE VI. MAKER FAILS TO MAKE ANY PAYMENT DUE HEREUNDER WITHIN 5 DAYS
OF THE DATE OF WRITTEN NOTICE THAT SUCH PAYMENT IS OVERDUE;
ARTICLE VII. EITHER LETTER OF CREDIT (AS SUCH TERM IS DEFINED IN THE
STOCK PLEDGE AGREEMENT (HEREIN SO CALLED) BETWEEN MAKER AND THE COMPANY OF EVEN
DATE WITH THIS NOTE) CEASES TO BE IN FULL FORCE AND EFFECT OR THE ISSUER OF
EITHER LETTER OF CREDIT GIVES ANY NOTICE OF ITS INTENT TO TERMINATE OR NOT TO
RENEW THE LETTER OF CREDIT OR TO DISHONOR A DRAW ON THE LETTER OF CREDIT
(PROVIDED, HOWEVER, THAT IN THE EVENT THAT THE APPLICABLE ISSUER OF A LETTER OF
CREDIT GIVES NOTICE OF ITS INTENT NOT TO RENEW THE LETTER OF CREDIT AND MAKER,
PRIOR TO THE DATE THAT IS 20 CALENDAR DAYS PRIOR TO THE EXPIRATION OF THE LETTER
OF CREDIT, SUBSTITUTES A LIKE LETTER OF CREDIT BY A UNITED STATES BANK HAVING A
NET WORTH (AS ESTABLISHED BY THE MOST RECENT PUBLIC FINANCIAL INFORMATION OF
SUCH BANK, COPIES OF WHICH SHALL BE PROVIDED BY MAKER TO COMPANY) OF NOT LESS
THAN $500 MILLION, NO EVENT OF DEFAULT SHALL BE DEEMED TO HAVE OCCURRED);
ARTICLE VIII. ANY DEFAULT UNDER THE TERMS OF THE STOCK PLEDGE
AGREEMENT; OR
ARTICLE IX. MAKER: (A) BECOMES INSOLVENT, OR MAKES A TRANSFER IN FRAUD
OF CREDITORS, OR MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS, OR ADMITS IN
WRITING HIS INABILITY TO PAY HIS DEBTS AS THEY BECOME DUE; (B) GENERALLY IS NOT
PAYING HIS DEBTS AS SUCH DEBTS BECOME DUE; (C) HAS A RECEIVER, TRUSTEE,
LIQUIDATOR, ADMINISTRATOR OR CUSTODIAN APPOINTED FOR, OR TAKE POSSESSION OF, ALL
OR ANY SUBSTANTIAL PART OF HIS ASSETS, EITHER IN A PROCEEDING BROUGHT BY MAKER
OR IN A PROCEEDING BROUGHT AGAINST MAKER AND SUCH APPOINTMENT IS NOT DISCHARGED
OR SUCH POSSESSION IS NOT TERMINATED WITHIN SIXTY (60) DAYS AFTER THE EFFECTIVE
DATE THEREOF OR MAKER CONSENTS TO OR ACQUIESCES IN SUCH APPOINTMENT OR
POSSESSION; (D) FILES A PETITION FOR RELIEF UNDER THE UNITED STATES BANKRUPTCY
CODE OR ANY OTHER PRESENT OR FUTURE FEDERAL OR STATE INSOLVENCY, BANKRUPTCY OR
SIMILAR LAWS (ALL OF THE FOREGOING HEREINAFTER COLLECTIVELY CALLED "APPLICABLE
BANKRUPTCY LAW") OR AN INVOLUNTARY PETITION FOR RELIEF IS FILED AGAINST MAKER
UNDER ANY APPLICABLE BANKRUPTCY LAW AND SUCH INVOLUNTARY PETITION IS NOT
DISMISSED WITHIN SIXTY (60) DAYS AFTER THE FILING THEREOF, OR AN ORDER FOR
RELIEF NAMING MAKER IS ENTERED UNDER ANY APPLICABLE BANKRUPTCY LAW, OR ANY
COMPOSITION, REARRANGEMENT, READJUSTMENT, EXTENSION, REORGANIZATION OR OTHER
RELIEF OF DEBTORS NOW OR HEREAFTER EXISTING IS REQUESTED OR CONSENTED TO BY
MAKER; (E) FAILS TO HAVE DISCHARGED WITHIN A PERIOD OF SIXTY (60) DAYS ANY
ATTACHMENT, SEQUESTRATION OR SIMILAR WRIT LEVIED UPON ANY PROPERTY OF MAKER; OR
(F) FAILS TO PAY WITHIN THIRTY (30) DAYS ANY FINAL MONEY JUDGMENT AGAINST MAKER.
provided, however, that in the case of the event of default described
in clause (ii) or (iv), the entire unpaid principal balance and accrued interest
hereunder shall automatically become due; and provided, further, that Maker
waives presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or any other notice of any kind. If the principal balance is
accelerated as provided above, Maker agrees to pay interest on the unpaid
principal balance from the date of the event of default until paid at the rate
of 12% per annum.
13
No delay or omission of the holder of this Note to exercise any right
hereunder will impair any such right or shall be construed to be a waiver of any
such default or an acquiescence in such default. No waiver of any default will
be construed, taken, or held to be a waiver of any other default, or waiver,
acquiescence in, or consent to any further or succeeding default of the same
nature. Maker waives demand, notice, and protest in any defense by reason of
extension of time for payment or other indulgence granted by the holder of this
Note.
Maker may, at any time and without penalty, prepay all or any portion
of the amounts due under this Note.
It is the intent of Maker and the Company to conform to and contract in
strict compliance with applicable usury law from time to time in effect. In no
way, nor in any event or contingency (including but not limited to prepayment,
default, demand for payment or acceleration of the maturity of any obligation),
shall the rate of interest taken, reserved, contracted for, charged or received
under this Note exceed the highest lawful interest rate permitted under
applicable law. If the Company shall ever receive anything of value which is
characterized as interest under applicable law and which would apart from this
provision be in excess of the highest lawful interest rate permitted under
applicable law, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the principal
amount owing on this Note in the inverse order of its maturity and not to the
payment of interest, or refunded to Maker or the other payor thereof if and to
the extent such amount which would have been excessive exceeds such unpaid
principal. All interest paid or agreed to be paid to the Company shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full stated term (including any renewal or extension) of this
Note so that the amount of interest on account of such obligation does not
exceed the maximum amount permitted by applicable law. As used in this
paragraph, the term "applicable law" shall mean the laws of the State of Texas
or the Federal laws of the United States, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or come into
effect in the future.
Maker agrees to pay to the holder of this Note all costs and expenses
incurred by such holder in connection with the enforcement of the provisions of
this Note, including, without limitation, the costs of transfer and filings and
reasonable attorneys' fees incurred in attempting to effect collection at trial
and on any appeal thereof.
The provisions of this Note will inure to the benefit of and be binding
upon any successors to Maker, or any assignees of Maker, and shall extend to any
holder of this Note.
The obligations to the holder of this Note are absolute and
unconditional and the rights of said holder will not be subject to any defenses,
set-offs, counterclaims, or recoupment by reason of any indebtedness or
liability at any time owing by the Company or the holder to Maker.
14
THIS NOTE IS GOVERNED BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
TRANSACTIONS TO BE WHOLLY PERFORMED WITHIN SUCH STATE.
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Note shall be brought against Maker in the
courts of the State of Texas, County of Dallas, or, if it has or can acquire
jurisdiction, in the United States District Court for the Northern District of
Texas, Dallas Division, and Maker consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
Whenever any notice is required or permitted to be given to Maker, such
notice must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the address or telecopier number set forth
below.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN MAKER AND COMPANY AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF MAKER AND COMPANY. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN MAKER AND COMPANY.
Maker has caused this Note to be executed effective as of the date
first set forth above.
-----------------------------------
Xxxxxxx X. Xxxx
Address for Notices to Maker:
-----------------------------------
-----------------------------------
Facsimile Number:
------------------
15
EXHIBIT 1.4(a)(i)
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement"), dated as of __________,
2001, is between GAINSCO, INC., a Texas corporation (the "Company"), and Xxxxxxx
X. Xxxx ("Pledgor").
RECITALS
ARTICLE X. UNDER THE TERMS OF A STOCK PURCHASE AGREEMENT DATED AUGUST
8, 2001 (THE "STOCK PURCHASE AGREEMENT"), PLEDGOR PURCHASED FROM THE COMPANY
____ SHARES OF THE COMMON STOCK OF TRI-STATE, LTD., A NORTH DAKOTA CORPORATION
("TSL") (THE "SHARES").
ARTICLE XI. AS PROVIDED IN THE STOCK PURCHASE AGREEMENT, PLEDGOR HAS
ELECTED TO PAY FOR THE SHARES IN PART IN INSTALLMENTS AND HAS EXECUTED THAT
CERTAIN PROMISSORY NOTE DATED AS OF __________, 2001 IN THE STATED PRINCIPAL
AMOUNT OF $931,968 (THE "NOTE"), TO EVIDENCE THIS INDEBTEDNESS.
ARTICLE XII. PLEDGOR HAS AGREED, ON THE TERMS SET OUT HEREIN, TO SECURE
THE PAYMENT AND PERFORMANCE OF THE NOTE BY GRANTING A SECURITY INTEREST IN THE
SHARES TO THE COMPANY.
AGREEMENT
NOW THEREFORE, Pledgor hereby agrees with Company as follows:
12.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below.
(a) The term "Code" shall mean the Uniform Commercial Code as in effect
in the State of Texas on the date of this Agreement or as it may hereafter be
amended from time to time.
(b) The term "Collateral" shall mean all property specifically
described on Schedule "A" attached hereto and made a part hereof. The term
Collateral, as used herein, shall also include (i) all certificates, instruments
and/or other documents evidencing the foregoing, (ii) all renewals, replacements
and substitutions of all of the foregoing, (iii) all Additional Property (as
hereinafter defined), and (iv) all PRODUCTS and PROCEEDS of all of the
foregoing. The designation of proceeds does not authorize Pledgor to sell,
transfer or otherwise convey any of the foregoing property.
(c) The term "Indebtedness" shall mean the obligations of Pledgor
pursuant to the Note.
16
(d) The term "Loan Documents" shall mean the this Agreement, the Note,
the Letters of Credit (defined below in Section 7(e)) and all other instruments
and documents evidencing, securing, governing, guaranteeing and/or pertaining to
the Indebtedness.
(e) The term "Obligated Party" shall mean any party other than Pledgor
who secures, guarantees and/or is otherwise obligated to pay all or any portion
of the Indebtedness.
All words and phrases used herein which are expressly defined in
Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the meaning
provided for therein. Other words and phrases defined elsewhere in the Code
shall have the meaning specified therein except to the extent such meaning is
inconsistent with a definition in Section 1.201, Chapter 8 or Chapter 9 of the
Code.
12.2 SECURITY INTEREST. As security for the Indebtedness, Pledgor, for
value received, hereby grants to Company a continuing security interest in the
Collateral.
12.3 ADDITIONAL PROPERTY. Collateral shall also include the following
property (collectively, the "Additional Property") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion, sale of
assets, combination of shares, stock split or spin-off; (b) any option, warrant,
subscription or right, whether as an addition to or in substitution of any other
Collateral; (c) any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock or other property; (d) any interest, premium or
principal payments; and (e) any conversion or redemption proceeds; provided,
however, that until the occurrence of an Event of Default (as hereinafter
defined), Pledgor shall be entitled to all cash dividends and all interest paid
on the Collateral free of the security interest created under this Agreement.
All Additional Property received by Pledgor shall be received in trust for the
benefit of Company. All Additional Property and all certificates or other
written instruments or documents evidencing and/or representing the Additional
Property that is received by Pledgor, together with such instruments of transfer
as Company may request, shall immediately be delivered to or deposited with
Company and held by Company as Collateral under the terms of this Agreement. If
the Additional Property received by Pledgor shall be shares of stock or other
securities, such shares of stock or other securities shall be duly endorsed in
blank or accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Company, signatures guaranteed by a
member or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance satisfactory to
Company. Company shall be deemed to have possession of any Collateral in transit
to Company or its agent.
12.4 VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities pledged
as Collateral may be exercised by Pledgor; provided, however, that Pledgor will
not exercise, or cause to be exercised, any such voting rights, without the
prior written consent of Company, if the direct or indirect effect of such vote
will result in an Event of Default hereunder.
17
12.5 MAINTENANCE OF COLLATERAL. Other than the exercise of reasonable
care to assure the safe custody of any Collateral in Company's possession from
time to time, Company does not have any obligation, duty or responsibility with
respect to the Collateral. Without limiting the generality of the foregoing,
Company shall not have any obligation, duty or responsibility to do any of the
following: (a) ascertain any maturities, calls, conversions, exchanges, offers,
tenders or similar matters relating to the Collateral or informing Pledgor with
respect to any such matters; (b) fix, preserve or exercise any right, privilege
or option (whether conversion, redemption or otherwise) with respect to the
Collateral unless (i) Pledgor makes written demand to Company to do so, (ii)
such written demand is received by Company in sufficient time to permit Company
to take the action demanded in the ordinary course of its business, and (iii)
Pledgor provides additional collateral, acceptable to Company in its sole
discretion; (c) collect any amounts payable in respect of the Collateral
(Company being liable to account to Pledgor only for what Company may actually
receive or collect thereon); (d) sell all or any portion of the Collateral to
avoid market loss; (e) sell all or any portion of the Collateral unless and
until (i) Pledgor makes written demand upon Company to sell the Collateral, and
(ii) Pledgor provides additional collateral, acceptable to Company in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Pledgor.
12.6 REPRESENTATIONS. Pledgor hereby represents and warrants the
following to Company:
(a) Enforceability. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Pledgor, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may generally be
limited by equitable principles.
(b) Ownership and Liens. Pledgor has good title to the Collateral free
and clear of all liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement and the security
interest of Bank One, N.A. pursuant to the Revolving Credit Agreement with the
Company and GAINSCO Service Corp. dated November 13, 1998, as amended, and
related collateral documents. No dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Collateral. Pledgor has
not executed any other security agreement currently affecting the Collateral and
no financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office except as may have
been executed or filed in favor of Company.
(c) No Conflicts or Consents. Neither the ownership, the intended use
of the Collateral by Pledgor, the grant of the security interest by Pledgor to
Company herein nor the exercise by Company of its rights or remedies hereunder,
will (i) conflict with any provision of (A) any domestic or foreign law,
statute, rule or regulation, or (B) any agreement, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting the
Collateral, or (ii) result in or require the creation of any lien, charge or
encumbrance upon any assets or properties of Pledgor or of any person. No
consent, approval, authorization or order of, and no notice to or filing with,
any court, governmental authority or third party is required in connection with
the grant by Pledgor of the security interest herein or the exercise by Company
of its rights and remedies hereunder.
18
(d) Security Interest. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Company in the manner provided herein, free and clear of any lien, security
interest or other charge or encumbrance.
(e) Location. Pledgor's residence or chief executive office, as the
case may be, and the office where the records concerning the Collateral are kept
is located at its address set forth on the signature page hereof.
(f) Solvency of Pledgor. As of the date hereof, and after giving effect
to this Agreement and the completion of all other transactions contemplated by
Pledgor at the time of the execution of this Agreement, (i) Pledgor is and will
be solvent, (ii) the fair saleable value of Pledgor's assets exceeds and will
continue to exceed Pledgor's liabilities (both fixed and contingent), and (iii)
Pledgor is paying and will continue to be able to pay its debts as they mature.
(g) Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights of any party or of any agreement by which Pledgor or the issuer thereof
is bound. No restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral, except as has been disclosed to
Company in writing. To the best of Pledgor's knowledge, no issuer of such
securities (other than securities of a class which are publicly traded) has any
outstanding stock rights, rights to subscribe, options, warrants or convertible
securities outstanding or any other rights outstanding entitling any party to
have issued to such party capital stock of such issuer, except as has been
disclosed to Company in writing.
12.7 AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective unless Company shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and marketable
title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created by this
Agreement. Pledgor will not permit any dispute, right of setoff, counterclaim or
defense to exist with respect to all or any part of the Collateral. Pledgor will
cause any financing statement or other security instrument with respect to the
Collateral to be terminated, except as may exist or as may have been filed in
favor of Company. Pledgor will defend at its expense Company's right, title and
security interest in and to the Collateral against the claims of any third
party.
(b) Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Company any certificates,
documents or instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper instruments of
transfer and assignment duly executed in blank with, if requested by Company.
19
(c) Adverse Claim. Pledgor covenants and agrees to promptly notify
Company of any claim, action or proceeding affecting title to the Collateral, or
any part thereof, or the security interest created hereunder and, at Pledgor's
expense, defend Company's security interest in the Collateral against the claims
of any third party. Pledgor also covenants and agrees to promptly deliver to
Company a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the issuer of
any securities pledged hereunder as Collateral.
(d) Further Assurances. Pledgor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Company may request in order (i) to
perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Company
to exercise and enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Company; (C)
cooperating with Company in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice of
Company's security interest in any securities pledged as Collateral to any
securities or financial intermediary, clearing corporation or other party
required by Company, in form and substance satisfactory to Company; and (E)
obtaining written confirmation of the pledge of any securities constituting
Collateral from any securities or financial intermediary, clearing corporation
or other party required by Company, in form and substance satisfactory to
Company. When applicable law provides more than one method of perfection of
Company's security interest in the Collateral, Company may choose the method(s)
to be used.
(e) Letters of Credit. Pledgor will cause (i) the Letter of Credit
dated _____, 2001 issued by ______ and (ii) the Letter of Credit dated _____,
2001 issued by Xxxxx Fargo Bank, N.A., each for the benefit of the Company in
connection with the consummation of the transactions contemplated in the Stock
Purchase Agreement (taken together, or with replacement letters of credit in
form and substance satisfactory to the Company in its sole and absolute
discretion, the "Letters of Credit") to remain in full force and effect at all
times during the period of time this Agreement is effective and shall not be
dishonored or revoked.
(f) Fiduciary Obligations. Pledgor will cause TSL to conduct its
affairs in all respects as if the Company were a substantial shareholder in TSL
and shall take all action necessary to preserve the value of TSL for the
Company.
12.8 NEGATIVE COVENANTS. Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective, unless Company shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of the
Collateral, (ii) xxxxx x xxxx or security interest in or execute, file or record
any financing statement or other security instrument with respect to the
Collateral to any party other than Company, or (iii) deliver actual or
constructive possession
20
of any certificate, instrument or document evidencing and/or representing any of
the Collateral to any party other than Company.
(b) Impairment of Security Interest. Pledgor will not take or fail to
take any action which would in any manner impair the enforceability of Company's
security interest in any Collateral.
(c) Dilution of Ownership. As to any securities pledged as Collateral
(other than securities of a class which are publicly traded), Pledgor will not
consent to or approve of the issuance of (i) any additional shares of any class
of securities of such issuer (unless immediately upon issuance additional
securities are pledged and delivered to Company pursuant to the terms hereof to
the extent necessary to give Company a security interest after such issuance in
at least the same percentage of such issuer's outstanding securities as Company
had before such issuance), (ii) any instrument convertible voluntarily by the
holder thereof or automatically upon the occurrence or non-occurrence of any
event or condition into, or exchangeable for, any such securities, or (iii) any
warrants, options, contracts or other commitments entitling any third party to
purchase or otherwise acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Company.
(e) Restrictions on Liens. Pledgor shall not suffer TSL, nor shall
Pledgor suffer any of TSL's subsidiaries to, directly or indirectly, incur,
assume or suffer to exist, any liens, security interests, encumbrances or
adverse claims upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
12.9 RIGHTS OF COMPANY. Company shall have the rights contained in this
Section at all times during the period of time this Agreement is effective.
(a) Power of Attorney. Pledgor hereby irrevocably appoints Company as
Pledgor's attorney-in-fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action and to execute any instrument which
Company may from time to time in Company's discretion deem necessary or
appropriate to accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any securities, instruments,
documents or certificates pledged as Collateral in the name of Company or its
nominee; (ii) use any interest, premium or principal payments, conversion or
redemption proceeds or other cash proceeds received in connection with any
Collateral to reduce any of the Indebtedness; (iii) exchange any of the
securities pledged as Collateral for any other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, and, in connection therewith, to deposit and deliver any and all
of such securities with any committee, depository, transfer agent, registrar or
other designated agent upon such terms and conditions as Company may deem
necessary or appropriate; (iv) exercise or comply with any conversion, exchange,
redemption, subscription or any other right, privilege or option pertaining to
any securities pledged as Collateral; provided, however, except as provided
herein, Company shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion,
21
redemption or otherwise) and shall not be responsible for any delay or failure
to do so; and (v) file any claims or take any action or institute any
proceedings which Company may deem necessary or appropriate for the collection
and/or preservation of the Collateral or otherwise to enforce the rights of
Company with respect to the Collateral.
(b) Performance by Company. If Pledgor fails to perform any agreement
or obligation provided herein, Company may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Company incurred in
connection therewith shall be a part of the Indebtedness, secured by the
Collateral and payable by Pledgor on demand.
(c) Filing of Financing Statements. Pledgor hereby authorizes Company
to file any and all financing statements describing the Collateral as deemed
appropriate by the Company.
Notwithstanding any other provision herein to the contrary, Company
does not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay in
doing so.
12.10 EVENTS OF DEFAULT. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal or neglect of
Pledgor to make any payment of principal or interest on the Indebtedness, or any
portion thereof, as the same shall become due and payable; or
(b) Non-Performance of Covenants. The failure of Pledgor or any
Obligated Party to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other Loan
Documents; or
(c) Default Under other Loan Documents. The occurrence of a default
under any of the other Loan Documents.
(d) Bankruptcy or Insolvency. If Pledgor or any Obligated Party: (i)
becomes insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its or his
inability to pay its or his debts as they become due; (ii) generally is not
paying its or his debts as such debts become due; (iii) has a receiver, trustee,
liquidator, administrator or custodian appointed for, or take possession of, all
or any substantial part of the assets of such party or any of the Collateral,
either in a proceeding brought by such party or in a proceeding brought against
such party and such appointment is not discharged or such possession is not
terminated within sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code or any other present
or future federal or state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within sixty (60)
days after the filing thereof, or an order for relief naming such party is
entered under any Applicable Bankruptcy Law, or any composition, rearrangement,
readjustment, extension, reorganization or other relief of debtors now or
hereafter existing is requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any attachment,
22
sequestration or similar writ levied upon any property of such party; or (vi)
fails to pay within thirty (30) days any final money judgment against such
party; or
(e) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law in any action against Pledgor; or
(f) Abandonment. Pledgor abandons the Collateral or any portion
thereof; or
(g) Action by Other Lienholder. The holder of any lien or security
interest on any of the assets of Pledgor, including without limitation, the
Collateral (without hereby implying the consent of Company to the existence or
creation of any such lien or security interest on the Collateral), declares a
default thereunder or institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder; or
(h) Liquidation and Related Events. If Pledgor or any Obligated Party
is an entity, any action is taken by or on behalf of such entity for the
liquidation, dissolution, winding up, merger or consolidation of such entity; or
(i) Dilution of Ownership. The issuer of any securities (other than
securities of a class which are publicly traded) constituting Collateral
hereafter issues any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and delivered to Company
pursuant to the terms hereof to the extent necessary to give Company a security
interest after such issuance in at least the same percentage of such issuer's
outstanding securities as Company had before such issuance) or any options,
warrants or other rights to purchase any such capital stock; or
Bankruptcy of Issuer. (i) The issuer of any securities
constituting Collateral files a petition for relief under any
Applicable Bankruptcy Law, (ii) an involuntary petition for
relief is filed against any such issuer under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed
within thirty (30) days after the filing thereof, or (iii) an
order for relief naming any such issuer is entered under any
Applicable Bankruptcy Law; or
Letters of Credit. Either Letter of Credit ceases to be in full
force and effect or either issuer of the respective Letters of
Credit gives any notice to Pledgor or the Company of its intent
to terminate or not to renew the applicable Letter of Credit or
to honor a draw on the applicable Letter of Credit (provided,
however, that in the event that the applicable issuer of a Letter
of Credit gives notice of its intent not to renew the Letter of
Credit and Pledgor, prior to the date that is 20 calendar days
prior to the expiration of the Letter of Credit, substitutes a
like letter of credit by a United States bank having a net worth
(as established by the most recent public financial information
of such bank, copies of which shall be provided by Pledgor to
Company) of not less than $500 million, no Event of Default shall
be deemed to have occurred); or
Change in Control of TSL. Any Change of Control shall occur with
respect to TSL, unless such Change of Control has been previously
approved in writing by the Company. The term "Change in Control"
means the time at which (i) there
23
shall be consummated any consolidation or merger of TSL pursuant
to which TSL's common stock (or other capital stock) would be
converted into cash, securities or other property, other than a
merger or consolidation of TSL in which the holders of such
common stock immediately prior to the merger have the same
proportionate ownership, directly or indirectly, of common stock
of the surviving corporation immediately after the merger as they
had of TSL's common stock immediately prior to such merger, (ii)
all or substantially all of TSL's assets shall be sold, leased,
conveyed or otherwise disposed of as an entirety or substantially
as an entirety to any individual, company, corporation,
association, partnership, joint venture, unincorporated trade or
business enterprise, trust or an estate (collectively hereinafter
referred to as "Person"), including an Affiliate or associate of
TSL, in one or a series of transactions. The term "Affiliate"
means, in relation to any Person, any Person which, directly or
indirectly, controls or is controlled by or is under common
control with such Person.
12.11 REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein or
available under applicable law or in equity, under any of the other Loan
Documents or otherwise available to Company, Company may exercise one or more of
the rights and remedies provided in this Section.
(a) Remedies. Company may from time to time upon the occurrence of an
Event of Default, at its discretion, without limitation and without notice
except as expressly provided in any of the Loan Documents:
(i) exercise in respect of the Collateral all the rights and
remedies of a secured party under the Code (whether or not the Code
applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest granted hereunder
by any available judicial procedure;
(iii) sell or otherwise dispose of, at its office, on the
premises of Pledgor or elsewhere, the Collateral, as a unit or in
parcels, by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of any
part of the Collateral shall not exhaust Company's power of sale, but
sales or other dispositions may be made from time to time until all of
the Collateral has been sold or disposed of or until the Indebtedness
has been paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public
sale;
(v) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations;
(vi) apply for the appointment of a receiver for the
Collateral, and Pledgor hereby consents to any such appointment; and
24
(vii) at its option, retain the Collateral in satisfaction of
the Indebtedness whenever the circumstances are such that Company is
entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any
notice under the Uniform Commercial Code, as it exists in the state governing
any such notice, of the sale or other disposition of any Collateral, reasonable
notice shall be deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States Postal Service,
postage prepaid, at Pledgor's address set forth on the signature page hereof,
ten (10) days prior to the date of any public sale, or after which a private
sale, of any of such Collateral is to be held. Company shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Company may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Pledgor further
acknowledges and agrees that the redemption by Company of any certificate of
deposit pledged as Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes that Company may be
unable to effect a public sale of all or any part of the securities pledged as
Collateral because of restrictions in applicable federal and state securities
laws and that Company may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that each any such private sale may be at prices
and other terms less favorable then what might have been obtained at a public
sale and, notwithstanding the foregoing, agrees that each such private sale
shall be deemed to have been made in a commercially reasonable manner and that
Company shall have no obligation to delay the sale of any such securities for
the period of time necessary to permit the issuer to register such securities
for public sale under any federal or state securities laws. Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
made privately in the manner described above to not less than five (5) bona fide
offerees shall be deemed to involve a "public sale" for the purposes of Section
9.504(c) of the Code, notwithstanding that such sale may not constitute a
"public offering" under any federal or state securities laws and that Company
may, in such event, bid for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default shall have
occurred, Company may at its discretion apply or use any cash held by Company as
Collateral, and any cash proceeds received by Company in respect of any sale or
other disposition of, collection from, or other realization upon, all or any
part of the Collateral as follows:
(i) to the repayment or reimbursement of the reasonable costs
and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred by Company in connection with (A) the
administration of the Loan Documents, (B) the custody, preservation,
use or operation of, or the sale of, collection from, or other
realization upon, the Collateral, and (C) the exercise or enforcement
of any of the rights and remedies of Company hereunder;
25
(ii) to the payment or other satisfaction of any liens and
other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable
law (including without limitation, Section 9.504(a)(3) of the Code or
any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully
entitled to receive such cash or proceeds whether by direction of a
court of competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the Collateral by
Company are insufficient to pay all amounts to which Company is legally
entitled, Pledgor and any party who guaranteed or is otherwise obligated to pay
all or any portion of the Indebtedness shall be liable for the deficiency,
together with interest thereon as provided in the Loan Documents.
(e) Non-Judicial Remedies. In granting to Company the power to enforce
its rights hereunder without prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Company to enforce its rights by judicial process.
Pledgor recognizes and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent Company or
Pledgor from resorting to judicial process at either party's option.
(f) Other Recourse. Pledgor waives any right to require Company to
proceed against any third party, exhaust any Collateral or other security for
the Indebtedness, or to have any third party joined with Pledgor in any suit
arising out of the Indebtedness or any of the Loan Documents, or pursue any
other remedy available to Company. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension of the Indebtedness. Pledgor further waives any defense
arising by reason of any disability or other defense of any third party or by
reason of the cessation from any cause whatsoever of the liability of any third
party. Until all of the Indebtedness shall have been paid in full, Pledgor shall
have no right of subrogation and Pledgor waives the right to enforce any remedy
which Company has or may hereafter have against any third party, and waives any
benefit of and any right to participate in any other security whatsoever now or
hereafter held by Company. Pledgor authorizes Company, and without notice or
demand and without any reservation of rights against Pledgor and without
affecting Pledgor's liability hereunder or on the Indebtedness, to (i) take or
hold any other property of any type from any third party as security for the
Indebtedness, and exchange, enforce, waive and release any or all of such other
property, (ii) apply such other property and direct the order or manner of sale
thereof as Company may in its discretion determine, (iii) renew, extend,
accelerate, modify, compromise, settle or release any of the Indebtedness or
other security for the Indebtedness, (iv) waive, enforce or modify any of
26
the provisions of any of the Loan Documents executed by any third party, and (v)
release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of Default, Pledgor
will not exercise any voting rights with respect to securities pledged as
Collateral. Pledgor hereby irrevocably appoints Company as Pledgor's
attorney-in-fact (such power of attorney being coupled with an interest) and
proxy to exercise any voting rights with respect to Pledgor's securities pledged
as Collateral upon the occurrence of an Event of Default.
(h) Dividend Rights and Interest Payments. Upon the occurrence of an
Event of Default:
(i) all rights of Pledgor to receive and retain the dividends
and interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 3 shall automatically cease, and all
such rights shall thereupon become vested with Company which shall
thereafter have the sole right to receive, hold and apply as Collateral
such dividends and interest payments; and
(ii) all dividend and interest payments which are received by
Pledgor contrary to the provisions of clause (i) of this Subsection
shall be received in trust for the benefit of Company, shall be
segregated from other funds of Pledgor, and shall be forthwith paid
over to Company in the exact form received (properly endorsed or
assigned if requested by Company), to be held by Company as Collateral.
(i) Relationship to Letters of Credit. Notwithstanding
anything to the contrary contained in this Section 11, the Company shall not be
entitled to exercise any of its remedies provided for in this Section 11: (i)
unless the Company has first attempted to draw on at least one of the Letters of
Credit or (ii) if the Indebtedness has been satisfied through a draw on one or
both Letters of Credit.
12.12 MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the entire agreement of
Company and Pledgor with respect to the Collateral. If the parties hereto are
parties to any prior agreement, either written or oral, relating to the
Collateral, the terms of this Agreement shall amend and supersede the terms of
such prior agreements as to transactions on or after the effective date of this
Agreement, but all security agreements, financing statements, guaranties, other
contracts and notices for the benefit of Company shall continue in full force
and effect to secure the Indebtedness unless Company specifically releases its
rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any provision
of this Agreement or any of the other Loan Documents shall be valid or effective
unless the same is in writing and signed by the party against whom it is sought
to be enforced.
(c) Actions by Company. The lien, security interest and other security
rights of Company hereunder shall not be impaired by (i) any renewal, extension,
increase or modification with respect to the Indebtedness, (ii) any surrender,
compromise, release, renewal, extension,
27
exchange or substitution which Company may grant with respect to the Collateral,
or (iii) any release or indulgence granted to any endorser, guarantor or surety
of the Indebtedness. The taking of additional security by Company shall not
release or impair the lien, security interest or other security rights of
Company hereunder or affect the obligations of Pledgor hereunder.
(d) Waiver by Company. Company may waive any Event of Default without
waiving any other prior or subsequent Event of Default. Company may remedy any
default without waiving the Event of Default remedied. Neither the failure by
Company to exercise, nor the delay by Company in exercising, any right or remedy
upon any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or remedy at a
later date. No single or partial exercise by Company of any right or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise
thereof, and every such right or remedy hereunder may be exercised at any time.
No waiver of any provision hereof or consent to any departure by Pledgor
therefrom shall be effective unless the same shall be in writing and signed by
Company and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to or demand on Pledgor in any case shall of itself entitle Pledgor to
any other or further notice or demand in similar or other circumstances.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
(f) Venue. Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement shall be brought
against any of the parties in the courts of the State of Texas, County of
Dallas, or, if it has or can acquire jurisdiction, in the United States District
Court for the Northern District of Texas, Dallas Division, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
(g) Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be illegal, invalid or unenforceable under present
or future laws, such provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be illegal, invalid or unenforceable.
(h) No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Company to extend or continue to extend credit to
Pledgor.
(i) Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or
28
to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
If to the Company:
GAINSCO, INC.
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy of all notices to the Company to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
If to Pledgor:
Xxxxxxx X. Xxxx
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx P.L.L.P.
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(j) Binding Effect and Assignment. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be binding on Pledgor
and the heirs, executors, administrators, personal representatives, successors
and assigns of Pledgor, and (iii) shall inure to the benefit of Company and its
successors and assigns. Without limiting the generality of the foregoing,
Company may pledge, assign or otherwise transfer the Indebtedness and its rights
under this Agreement and any of the other Loan Documents to any other party.
Pledgor's rights and obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Company.
(k) Gender and Number. Within this Agreement, words of any gender shall
be held and construed to include the other gender, and words in the singular
number shall be held and
29
construed to include the plural and words in the plural number shall be held and
construed to include the singular, unless in each instance the context requires
otherwise.
(l) Cumulative Rights. All rights and remedies of Company hereunder are
cumulative of each other and of every other right or remedy which Company may
otherwise have at law or in equity or under any of the other Loan Documents, and
the exercise of one or more of such rights or remedies shall not prejudice or
impair the concurrent or subsequent exercise of any other rights or remedies.
(m) Descriptive Headings. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the scope or
meaning of the various and several provisions hereof.
30
EXECUTED as of the date first written above.
PLEDGOR:
-------
------------------------------------------
Xxxxxxx X. Xxxx
COMPANY:
-------
GAINSCO, INC., a Texas corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
31
SCHEDULE "A"
The following property is a part of the Collateral as defined in Subsection
1(b):
All of Pledgor's ownership interest in Tri-State, Ltd., a North Dakota
corporation ("TSL"), including without limitation _______ shares of
common stock in TSL as evidenced by Certificate Number ________ issued
in the name of Pledgor and representing 100% of the outstanding capital
stock of TSL.
32
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, Xxxxxxx X. Xxxx, does hereby sell, assign and
transfer unto ___________________________________, ___________________(___)
Shares of the Capital Stock of Tri-State, Ltd., standing in Xxxxxxx X. Xxxx'x
name on the books of said corporation represented by Certificate No. _____
herewith, and does hereby irrevocably constitute and appoint
_____________________________ attorney to transfer the said stock on the books
of the within named Tri-State, Ltd. with full power of substitution in the
premises.
Dated , .
----------- --- ---------
------------------------------------------
Xxxxxxx X. Xxxx
33
EXHIBIT 1.4(a)(ii)
MUTUAL RELEASE
This Mutual Release (this "Release"), by and among GAINSCO, INC., a
Texas corporation ("Seller"), Midwest Casualty Insurance Company ("MCIC"),
Tri-State, Ltd., a North Dakota corporation ("TSL"), Xxxx Xxxx Insurance, Inc.
("Hill Insurance"), MDR/Motor Vehicle Driving Records ("MDR"), Xxxxxxx X. Xxxx
("Buyer") and Xxxx X. Xxxxx ("Xxxxx") is made and entered into as of the ______
day of August, 2001.
WHEREAS, Seller and Buyer entered into the Stock Purchase Agreement
dated as of August 8, 2001 (the "2001 Purchase Agreement") pursuant to which,
among other things, Seller agreed to sell all of the outstanding capital stock
of TSL to Buyer;
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase Agreement, the parties are executing this Release.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and agreed, the parties agree as
follows:
1. RELEASE BY BUYER, XXXXX, TSL, HILL INSURANCE AND MDR. Each of Buyer,
Xxxxx, TSL, Xxxx Insurance and MDR does for itself, its subsidiaries, officers,
directors, shareholders, members, managers, employees, agents, xxxxxxxxxxxxxxx,
xxxxx, xxxxxxx, successors and assigns (all of the foregoing, other than the
named parties herein, are collectively referred to as "Buyer Related Parties")
hereby release, remise, acquit, satisfy, and forever discharge Seller, MCIC, and
the Seller Related Parties (defined in Section 2 below) of and from all, and all
manner of action and actions, cause and causes of action, suits, debts,
accounts, bills, interests, costs, agreements, damages, judgments, executions,
claims and demands whatsoever, in law or in equity, whether now existing or
hereafter arising, known or unknown (collectively, "Claims") including without
limitation Claims relating to, arising from, or in connection with the Stock
Purchase Agreement dated as of November 17, 1999 among Seller, Buyer, Xxxxx and
TSL (as amended, the "Original Purchase Agreement"), the Employment Agreement
dated as of January 7, 2000 among TSL, Buyer and Seller (the "Hill Agreement"),
the Employment Agreement dated as of January 7, 2000 among TSL, Xxxxx and Seller
(the "Xxxxx Agreement," and together with the Hill Agreement, the Original
Purchase Agreement and the other ancillary documents executed in connection
therewith, the "Original Transaction Documents") or the transactions
contemplated in any of the Original Transaction Documents (the "Original
Transactions"); provided, however, that nothing in this Section shall be
interpreted as releasing Seller, MCIC or any of the Seller Related Parties from
any Claim arising under or in connection with (i) the 2001 Purchase Agreement;
(ii) the Promissory Note dated August __, 2001 in the original principal amount
of $____ and executed by Buyer in favor of Seller; (iii) the Stock Pledge
Agreement dated August __, 2001 between Buyer and Seller; (iv) the Letter of
Credit dated August __, 2001 issued by ______ to Seller); (v) the Letter of
Credit dated August __, 2001 issued by Xxxxx
34
Fargo Bank, N.A. to Seller; (vi) the General Agency Agreement dated August __,
2001 between MGA Insurance Company and TSL; (vii) the Assignment and Assumption
Agreement dated August __, 2001 among Buyer, Seller, TSL and Xxxxx or (viii)
this Release (the foregoing documents collectively, the "2001 Transaction
Documents").
2. RELEASE BY SELLER AND MCIC. Each of Seller and MCIC does for itself,
its subsidiaries, officers, directors, shareholders, members, managers,
employees, agents, xxxxxxxxxxxxxxx, xxxxx, xxxxxxx, successors and assigns (all
of the foregoing, other than the named parties herein, are collectively referred
to as "Seller Related Parties") hereby release, remise, acquit, satisfy, and
forever discharge Buyer, Xxxxx, TSL, Xxxx Insurance, MDR and the Buyer Related
Parties of and from all, and all manner of Claims, including without limitation
Claims relating to, arising from, or in connection with the Original Transaction
Documents and the Original Transactions; provided, however, that nothing in this
Section shall be interpreted as releasing Buyer, Xxxxx, TSL, Hill Insurance and
MDR or any of the Buyer Related Parties from any Claim arising under or in
connection with any of the 2001 Transaction Documents; and provided, further,
that nothing in this Section shall be interpreted as releasing Xxxxx from any
Claim arising under or in connection with the Xxxxx Employment Agreement or
Section 5.13 of the Original Purchase Agreement.
3. DISMISSAL OF CLAIM. Seller shall, as promptly as practicable
following the full execution of this Release, file the appropriate papers with
the Court to cause all claims and causes of action pending in Cause No.
01-4660-E, GAINSCO, INC. v. Xxxxxxx X. Xxxx, in the 000xx Xxxxxxxx Xxxxx xx
Xxxxxx Xxxxxx, Xxxxx to be dismissed with prejudice.
4. TERMINATION OF EMPLOYMENT AGREEMENT. The Hill Agreement is hereby
terminated.
5. MISCELLANEOUS.
(a) This Release will be governed by the laws of the State of Texas
without regard to conflicts of laws principles. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this Release
shall be brought against any of the parties in the courts of the State of Texas,
County of Dallas, or, if it has or can acquire jurisdiction, in the United
States District Court for the Northern District of Texas, Dallas Division, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
(b) This Release and the other 2001 Transaction Documents embody the
entire agreement and understanding between the parties hereto relating to the
subject matter hereof and supersede any prior agreements and understandings
relating to the subject matter hereof. The parties hereto have not relied upon
any promise, warranty or representation, either oral or written, other than as
stated in this Release or the other 2001 Transaction Documents.
35
(c) This Release may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which collectively shall
constitute one and the same instrument representing this Release between the
parties hereto and it shall not be necessary for the proof of this Release that
any party produce or account for more than one such counterpart.
(d) This Release may be amended, modified or superseded, and any of
the terms, covenants, representations, warranties or conditions hereof may be
waived, but only by a written instrument executed by each party hereto. No
waiver of any nature, in any one or more instances, shall be deemed to be or
construed as a further or continued waiver of any condition or any breach of any
other term, covenant, representation or warranty in this Release.
(e) If any provision of this Release is held to be illegal, invalid
or unenforceable under present or future laws effective during the effective
period of this Release, such provision shall be fully severable; this Release
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Release; and the remaining
provisions of this Release shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Release. Furthermore, in lieu of each illegal, invalid or
unenforceable provision there shall be added automatically as part of this
Release a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
(f) This Release shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Release nor any right created hereby or in any agreement entered into in
connection with the transactions contemplated hereby shall be assignable by any
party hereto.
(g) The section headings contained in this Release are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Release.
[Intentionally left blank.]
36
IN WITNESS WHEREOF, the undersigned parties have executed this Mutual
Release in one or more counterparts as of the day and year first above written.
GAINSCO, INC.
By:
--------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
MIDWEST CASUALTY INSURANCE COMPANY
By:
--------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
TRI-STATE, LTD.
By:
--------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
XXXX XXXX INSURANCE, INC.
By:
--------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
MDR/MOTOR VEHICLE DRIVING RECORDS
By:
--------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
---------------------------------
XXXXXXX X. XXXX
-----------------------------------------------------
XXXX X. XXXXX
37
EXHIBIT 1.4(a)(iii)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Assignment and
Assumption Agreement"), is made and entered into on the ____ day of August, 2001
by and among GAINSCO, INC., a Texas corporation ("Seller"), Tri-State, Ltd., a
North Dakota corporation ("TSL"), Xxxxxxx X. Xxxx ("Buyer") and Xxxx X. Xxxxx
("Xxxxx").
WHEREAS, Seller desires to assign to Buyer Seller's rights under (i)
Section 5.13 of the Stock Purchase Agreement dated as of November 17, 1999 among
Seller, Buyer, Xxxxx and TSL, as amended, and (ii) the Employment Agreement
dated as of January 7, 2000 among TSL, Xxxxx and Seller (collectively, the
"Rights");
WHEREAS, Xxxxx and TSL desire to consent to the assignment of the
Rights by Seller.
NOW, THEREFORE, the parties, for good and valuable consideration,
hereby agree as follows:
1. ASSIGNMENT. Seller hereby assigns unto Buyer the Rights and Buyer
hereby accepts the assignment of and assumes the Rights.
2. NO WARRANTIES. Buyer acknowledges that Seller is making no
representation or warranty, express or implied, with respect to the
enforceability of the Rights or the validity of the assignment of the Rights as
contemplated in this Assignment and Assumption Agreement.
3. CONSENT TO ASSIGNMENT. Xxxxx and TSL hereby consent to assignment
of the Rights by Seller to Buyer.
4. COUNTERPARTS. This Assignment and Assumption Agreement may be
executed in any number of counterparts, and each counterpart hereof shall be
deemed to be an original instrument, but all such counterparts shall constitute
but one instrument.
38
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the date first above written.
GAINSCO, INC.
By:
-----------------------------------------
Name:
---------------------------------------
TRI-STATE, LTD.
By:
-----------------------------------------
Name:
---------------------------------------
--------------------------------------------
XXXXXXX X. XXXX
--------------------------------------------
XXXX X. XXXXX
39
EXHIBIT 1.4(b)(iii)(A)
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [ ]
----------
PLACE AND DATE OF ISSUE: DATE AND PLACE OF EXPIRY:
DALLAS, TEXAS [ ] [ ] IN DALLAS, TEXAS
--------- ---------
APPLICANT: ADVISING BANK:
XXXXXXX X. XXXX NOT APPLICABLE
-----------------------
-----------------------
-----------------------
BENEFICIARY: AMOUNT: USD____________
GAINSCO, INC. ___________ AND NO/100 U.S. DOLLARS
000 XXXXXXXX XXXXXX
XXXX XXXXX, XXXXX 00000
Gentlemen,
We hereby establish our Irrevocable Standby Letter of Credit in your
favor available by Beneficiary's sight draft(s) drawn on FIRST WESTERN BANK OF
SPEARFISH, N.A. when accompanied by the original of this credit and the
following document(s):
o Original of a statement purportedly signed by an officer of Beneficiary
stating that: Quote-GAINSCO, Inc. is entitled to draw under this Letter
of CREDIT in accordance with its agreements with XXXXXXX X.
XXXX-Unquote
SPECIAL CONDITIONS:
Multiple drawings are permitted.
Draft(s) must be marked: "Drawn under FIRST WESTERN BANK OF SPEARFISH,
N.A. Credit No. [________]."
UPON THE OCCURRENCE OF EACH EXPIRY DATE, THIS LETTER OF CREDIT SHALL BE
AUTOMATICALLY RENEWED FOR AN ADDITIONAL [______] PERIOD FOR $_________ UNLESS WE
HAVE ADVISED BENEFICIARY IN WRITING AT LEAST
40
30 DAYS PRIOR TO SUCH EXPIRY DATE THAT THIS LETTER OF CREDIT WILL NOT BE
RENEWED.
THE FACE AMOUNT OF THIS LETTER OF CREDIT SHALL BE REDUCED TO AN AMOUNT
SPECIFIED BY BENEFICIARY AND A REPLACEMENT LETTER OF CREDIT WITH SUCH REDUCED
FACE AMOUNT SHALL BE ISSUED BY US when accompanied by the original of this
credit and AN ORIGINAL OF A STATEMENT PURPORTEDLY SIGNED BY AN OFFICER OF
BENEFICIARY STATING THAT: QUOTE-GAINSCO, INC. HEREBY DIRECTS THAT THE FACE
AMOUNT OF THIS LETTER OF CREDIT BE REDUCED TO $___________ -UNQUOTE
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFT(S) DRAWN UNDER AND IN
COMPLIANCE WITH ALL THE TERMS AND CONDITIONS OF THIS CREDIT WILL BE DULY HONORED
IF DRAWN AND PRESENTED FOR PAYMENT TO [_____________________] ON OR BEFORE THE
EXPIRATION OF THIS LETTER OF CREDIT.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE
FOR DOCUMENTARY CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500.
-------------------------------
AUTHORIZED SIGNATURE
FIRST WESTERN BANK OF SPEARFISH, N.A.
41
EXHIBIT 1.4(b)(iii)(B)
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [__________]
PLACE AND DATE OF ISSUE: DATE AND PLACE OF EXPIRY:
DALLAS, TEXAS [_________] [_________] IN DALLAS, TEXAS
APPLICANT: ADVISING BANK:
XXXXXXX X. XXXX NOT APPLICABLE
----------------------
----------------------
----------------------
BENEFICIARY: AMOUNT: USD____________
GAINSCO, INC. ___________ AND NO/100 U.S. DOLLARS
000 XXXXXXXX XXXXXX
XXXX XXXXX, XXXXX 00000
Gentlemen,
We hereby establish our Irrevocable Standby Letter of Credit in your
favor available by Beneficiary's sight draft(s) drawn on FIRST WESTERN BANK OF
SPEARFISH, N.A. when accompanied by the original of this credit and the
following document(s):
o Original of a statement purportedly signed by an officer of Beneficiary
stating that: Quote-GAINSCO, Inc. is entitled to draw under this Letter
of CREDIT in accordance with its agreements with XXXXXXX X.
XXXX-Unquote
SPECIAL CONDITIONS:
Multiple drawings are permitted.
Draft(s) must be marked: "Drawn under FIRST WESTERN BANK OF SPEARFISH,
N.A. Credit No. [________]."
UPON THE OCCURRENCE OF EACH EXPIRY DATE, THIS LETTER OF CREDIT SHALL BE
AUTOMATICALLY RENEWED FOR AN ADDITIONAL [______] PERIOD FOR $_________ UNLESS WE
HAVE ADVISED BENEFICIARY IN WRITING AT LEAST
42
30 DAYS PRIOR TO SUCH EXPIRY DATE THAT THIS LETTER OF CREDIT WILL NOT BE
RENEWED.
THE FACE AMOUNT OF THIS LETTER OF CREDIT SHALL BE REDUCED TO AN AMOUNT
SPECIFIED BY BENEFICIARY AND A REPLACEMENT LETTER OF CREDIT WITH SUCH REDUCED
FACE AMOUNT SHALL BE ISSUED BY US when accompanied by the original of this
credit and AN ORIGINAL OF A STATEMENT PURPORTEDLY SIGNED BY AN OFFICER OF
BENEFICIARY STATING THAT: QUOTE-GAINSCO, INC. HEREBY DIRECTS THAT THE FACE
AMOUNT OF THIS LETTER OF CREDIT BE REDUCED TO $___________ -UNQUOTE
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFT(S) DRAWN UNDER AND IN
COMPLIANCE WITH ALL THE TERMS AND CONDITIONS OF THIS CREDIT WILL BE DULY HONORED
IF DRAWN AND PRESENTED FOR PAYMENT TO [_____________________] ON OR BEFORE THE
EXPIRATION OF THIS LETTER OF CREDIT.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE
FOR DOCUMENTARY CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500.
-------------------------------
AUTHORIZED SIGNATURE
FIRST WESTERN BANK OF SPEARFISH, N.A.
