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EXHIBIT 99.25
AGREEMENT
THIS AGREEMENT, dated as of March 23, 2001, is among Xxxx
Xxxxx Strategic Partners, L.P. ("GMSP") and Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx"
and, together with GMSP, the "Purchasers"), Bank One, NA, with its principal
office in Chicago, Illinois (the "Lender"), GAINSCO, Inc. (the "Company"), and
GAINSCO Service Corp. ("Service" and, together with the Company, "Borrowers").
WITNESSETH
WHEREAS, GMSP currently holds 31,620 shares of the Company's
Series A Convertible Preferred Stock (the "Series A Preferred");
WHEREAS, GMSP is purchasing 3,000 shares of the Company's
Series C Redeemable Preferred Stock (the "Series C Preferred" and together with
the Series A Preferred and any other shares of preferred stock of the Company
purchased by or otherwise issued to GMSP from time to time, the "GMSP Preferred
Stock") pursuant to that certain Securities Purchase Agreement dated as February
26, 2001 and amended as of March 23, 2001 between GMSP and the Company (as
further amended, supplemented or modified, the "GMSP Purchase Agreement");
WHEREAS, Xxxxxxxxx is purchasing a common stock purchase
warrant and 3,000 shares of the Company's Series B Convertible Redeemable
Preferred Stock (the "Series B Preferred" and, together with any other shares of
preferred stock of the Company purchased by or otherwise issued to Xxxxxxxxx
from time to time, the "Xxxxxxxxx Preferred Stock") pursuant to that certain
Securities Purchase Agreement dated as of February 26, 2001 and amended as of
March 23, 2001 between Xxxxxxxxx and the Company (as further amended,
supplemented or modified, the "Xxxxxxxxx Purchase Agreement" and, together with
the GMSP Purchase Agreement, the "Purchase Agreements");
WHEREAS, Borrowers have obtained loans from the Lender
pursuant to that certain Credit Agreement dated as of November 13, 1998 between
Borrowers and the Lender (as amended through the date hereof and as from time to
time further amended, modified or restated the "Senior Credit Agreement"); and
WHEREAS, the Purchasers, the Lender and Borrowers have agreed
that the obligations of Borrowers to the Purchasers arising under the Purchase
Agreements or otherwise in respect of the Series A Preferred, the Series B
Preferred and the Series C Preferred will be subordinated on the terms and
conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Subordination. Each Borrower, for itself and its successors, covenants and
agrees, and each holder of the Subordinated Obligations (as hereinafter
defined), by such holder's acceptance thereof, likewise covenants and agrees,
that the payment of the Subordinated Obligations is hereby expressly
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subordinated, to the extent and in the manner immediately hereinafter set forth,
in right of payment to the prior payment in full in cash of all Senior
Indebtedness (as hereinafter defined). The subordination provisions herein set
forth are made for the benefit of the holders of the Senior Indebtedness, and
such holders may proceed to enforce such provisions.
As used herein, the following terms have the following meanings:
"Subordinated Payment" means any payment of the Subordinated
Obligations, regardless of its form, whether consisting of cash, property or
securities, by set-off or otherwise, and including without limitation any
redemption, retirement, purchase, repayment or other acquisition of the GMSP
Preferred Stock or the Xxxxxxxxx Preferred Stock, or any sinking fund payment,
that is required under the terms of the Subordinated Documents, provided that
"Subordinated Payments" shall not include: (a) any payment made through the
issuance or receipt of Exchange Securities (as hereinafter defined), or (b) any
payment made through the issuance of additional shares of preferred stock
containing the same terms as the preferred stock in respect of which the
additional shares are being issued ("PIK Preferred Shares").
"Subordinated Obligations" means all redemption or repurchase
payments, dividends, fees, indemnities and other amounts owing by the Company
under the terms of the Subordinated Agreements; provided, that "Subordinated
Obligations" shall not include: (a) indemnification payments regarding claims
made by third parties against GMSP, Xxxxxxxxx or other persons or entities
entitled to indemnification under the respective Purchase Agreements so long as
no Event of Default or Potential Default (as these and other capitalized terms
not otherwise defined herein are defined in the Senior Credit Agreement) has
occurred and is then continuing which arises from the failure of either Borrower
to pay any Senior Indebtedness when due and payable, (b) payments of investment
management fees and reimbursements of expenses to GMSP pursuant to Section 4 or
Section 10 of each of the respective Investment Management Agreements heretofore
entered into between GMSP, on the one hand, and the Company or certain
Subsidiaries of the Company, on the other hand, as in effect on the date hereof,
(c) payments made by the Company pursuant to Section 6.2 of the GMSP Purchase
Agreement and Section 6.5 of the Xxxxxxxxx Purchase Agreement, or (d) payments
made by the Company or certain Subsidiaries of the Company to Xxxxxxxxx pursuant
to his Consulting Agreement entered into prior to the date hereof, as in effect
on the date hereof.
"Subordinated Agreements" means each Purchase Agreement, the
Statements of Resolution with respect to the Series A Preferred, the Series B
Preferred and the Series C Preferred (collectively, as amended, supplemented or
modified from time to time, the "Statement"), and all other documents and
instruments entered into in connection with the GMSP Preferred Stock, the
Xxxxxxxxx Preferred Stock or any Exchange Securities or PIK Preferred Shares.
"Exchange Securities" means (a) any common stock or preferred
stock issued by the Company or any successor thereto, provided that the holders
thereof have no right to require the Company to redeem or repurchase such
securities or to pay dividends or distributions thereon or any other amount in
respect thereof, and (b) any common or preferred stock issued by the Company or
any successor thereto, with respect to which the holders have any such right,
provided that such right and such securities are subordinated, to at least the
same extent as the Subordinated Obligations, to the payment of all Senior
Indebtedness or securities issued in exchange for Senior Indebtedness then
outstanding.
"Senior Indebtedness" shall mean all obligations and
liabilities of any and every kind and nature now existing or hereafter arising,
contingent or otherwise, of the Company under, in
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connection with, or evidenced by, the Senior Credit Agreement, including,
without limitation, all principal, premium (if any), interest (including
Post-Petition Interest, as hereafter defined), fees, costs, expenses and
liabilities provided for therein, and including any obligations arising under
interest rate protection agreements entered into with the Lender in connection
therewith, and any renewals, extensions, modifications and refundings of such
obligations; provided, that (a) the principal balance of the Senior Indebtedness
shall not be increased to more than $15,500,000 without the prior written
consent of each Purchaser and any such excess not so consented to shall not
constitute "Senior Indebtedness" hereunder, and (b) the maturity date of the
Senior Indebtedness shall not be extended beyond September 30, 2003 without the
prior written consent of each Purchaser or such obligations shall no longer
constitute "Senior Indebtedness" hereunder, unless a payment default exists at
such date, in which case such obligations shall continue to constitute Senior
Indebtedness until such payment default is cured.
"Post-Petition Interest" shall mean interest accruing in
respect of Senior Indebtedness after the commencement of any bankruptcy,
insolvency, receivership or similar proceedings by or against the Company, at
the rate applicable to such Senior Indebtedness pursuant to the Credit
Agreement, whether or not such interest is allowed as a claim enforceable
against the Company in a bankruptcy case under Title 11 of the United States
Code, and any other interest that would have accrued but for the commencement of
such proceedings.
2. Distribution on Dissolution, Liquidation and Reorganization. Upon any
distribution of assets of the Company or any Subsidiary (as this and other
capitalized terms not otherwise defined herein are defined in the Senior Credit
Agreement), upon any foreclosure, dissolution, winding up or liquidation of the
Company or any Subsidiary, whether voluntary or involuntary, or upon any
reorganization, readjustment, arrangement or similar proceeding relating to the
Company or any Subsidiary, or any of its property, and whether in bankruptcy,
insolvency or receivership proceedings or otherwise, or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or any Subsidiary or otherwise or upon any exercise by the
holders of the Senior Indebtedness (the "Senior Creditors") of any of their
rights and remedies under any document evidencing Senior Indebtedness,
(a) the holders of all Senior Indebtedness shall be
entitled to receive payment in full in cash of the
Senior Indebtedness before the holders of the
Subordinated Obligations are entitled to receive any
Subordinated Payment; and
(b) any Subordinated Payment to which the holders of the
Subordinated Obligations would be entitled except for
the provisions hereof shall be paid by the
liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the Lender to the extent
necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders
of such Senior Indebtedness, and, if any holder of
Subordinated Obligations does not file a proper claim
or proof of debt therefor prior to thirty (30) days
before the expiration of the time to file such claim,
then the Senior Creditors are hereby authorized and
empowered to file such claim.
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3. Payment of the Subordinated Obligations. Until the indefeasible payment in
full in cash of the Senior Indebtedness (at which time this Agreement will
automatically terminate, subject to Section 9 below),
(a) no Subordinated Payment shall be made or accepted on
account of any Subordinated Obligations, and
(b) no holder of Subordinated Obligations will take
action to commence or cause the commencement of any
action or proceeding (whether at law or in equity)
against the Company or any Subsidiary to recover any
Subordinated Payment (unless the Lender shall have
agreed in writing in advance to, and shall have
joined, in such proceeding).
4. Payment Remittance. In the event that, notwithstanding the foregoing, any
Subordinated Payment prohibited by any of the foregoing paragraphs (2) or (3)
shall be paid to or received by any holder of Subordinated Obligations, then and
in such event such Subordinated Payment shall be held in trust for the benefit
of the Senior Creditors and paid over and delivered forthwith to the Lender, for
application to the payment of all Senior Indebtedness remaining unpaid until all
such Senior Indebtedness shall have been paid in full in cash.
5. Notice of Certain Events. The Company shall give prompt written notice to the
holders of the Subordinated Obligations and the Senior Creditors of any
dissolution, winding up, liquidation, reorganization, readjustment, arrangement
or similar proceeding, assignment for the benefit of creditors, or any
marshalling of assets and liabilities, in respect of the Company or any
Subsidiary, and shall also give prompt written notice to each such person of any
event or condition which, pursuant to the subordination provisions set forth
herein, prevents payment by the Company on account of the Subordinated
Obligations.
6. Reliance on Subordination. Each holder of the Subordinated Obligations by its
acceptance hereof acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each Senior Creditor to acquire and continue to hold the Senior Indebtedness and
such holder of the Senior Indebtedness shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold such
Senior Indebtedness and shall be deemed a third party beneficiary of such
provisions.
7. Waiver and Consent. Each holder of the Subordinated Obligations waives any
and all notice of the acceptance of these provisions or of the creation,
renewal, extension or accrual, now or at any time in the future, of any Senior
Indebtedness or of the reliance of the holders of the Senior Indebtedness on
these provisions. Each holder of the Subordinated Obligations acknowledges and
agrees that (a) the subordination provisions set forth herein shall be
specifically enforceable against such Persons by the holders of the Senior
Indebtedness, and (b) without notice to or further assent by it, the Senior
Indebtedness may from time to time, in whole or in part, be renewed, extended,
increased, refunded or released by the holders thereof, as they may deem
advisable, that the loan agreements and any other instruments or documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, that any collateral security for any such Senior
Indebtedness may from time to time, in whole or in part, be exchanged, sold, or
surrendered by the holders thereof, as they may deem advisable, and that such
holders may take any other action they may deem necessary or appropriate in
connection with the Senior Indebtedness, all without in any manner or to any
extent impairing or affecting the obligations of the Company to the holders of
the Subordinated Obligations.
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8. Subordination Unaffected by Certain Events. The rights set forth herein of
the holders of the Senior Indebtedness as against each holder of the
Subordinated Obligations shall remain in full force and effect without regard
to, and shall not be impaired or affected by:
(a) any act or failure to act on the part of the Company
or any Subsidiary;
(b) any extension or indulgence in respect of any payment
or prepayment of the Senior Indebtedness or any part
thereof or in respect of any other amount payable to
any holder of the Senior Indebtedness; or
(c) any amendment, modification or waiver of, or addition
or supplement to, or deletion for, or compromise,
release, consent or other action in respect of, any
of the terms of any Senior Indebtedness or any other
agreement which may be made relating to any Senior
Indebtedness; or
(d) any exercise or nonexercise by any holder of Senior
Indebtedness of any right, power, privilege or remedy
under or in respect of such Senior Indebtedness or
the Subordinated Obligations or any waiver of any
such right, power, privilege or remedy or any default
in respect of such Senior Indebtedness or the
Subordinated Obligations, or any receipt by any
holder of Senior Indebtedness of any security, or any
failure by such holder to perfect a security interest
in, or any release by such holder of, any security
for the payment of such Senior Indebtedness; or
(e) any merger or consolidation of the Company or any of
its Subsidiaries into or with any of its Subsidiaries
or into or with any other Person, or any sale, lease
or transfer of any or all of the assets of the
Company or any of its Subsidiaries to any other
Person; or
(f) the absence of any notice to, or knowledge by, any
holder of the Subordinated Obligations of the
existence or occurrence of any of the matters or
events set forth in the foregoing clauses (a) through
(e).
9. Reinstatement of Subordination. The obligations of each holder of the
Subordinated Obligations under the subordination provisions set forth herein
shall continue to be effective, or be reinstated, as the case may be, as to any
payment in respect of any Senior Indebtedness that is rescinded or must
otherwise be returned by the holder of such Senior Indebtedness upon the
occurrence or as a result of any proceeding, all as though such payment had not
been made.
10. Effect of Agreement. It is understood that the provisions set forth herein
are and are intended solely for the purpose of defining the relative rights of
the holder or holders of the Subordinated Obligations, on the one hand, and the
holders of Senior Indebtedness, on the other hand. Nothing contained herein is
intended to or shall impair, as between the Company, its creditors other than
the holders of Senior Indebtedness, and the holder or holders of the
Subordinated Obligations, the obligation of the Company, which is unconditional
and absolute, to pay to the holder or holders of the Subordinated Obligations
the principal of and interest, dividends and other amounts on the Subordinated
Obligations as and when the same shall become due and payable in accordance with
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its terms, or to affect the relative rights of the holder or holders of the
Subordinated Obligations and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein prevent the holder or holders of
the Subordinated Obligations from exercising all remedies otherwise permitted by
applicable law, subject to the rights, if any, herein of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
11. Headings. Section headings in this Agreement are for convenience of
reference only but shall not govern the interpretation of any of the provisions
of this Agreement.
12. Counterparts. This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
13. Successors and Assigns. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of each party hereto and its successors
and assigns. Each Purchaser agrees that it will not transfer all or any interest
in the Preferred Stock or the Purchase Agreement to which it is a party without
an acknowledgment by the transferee that it is acquiring such interest subject
to the terms of this Agreement.
14. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15. Future Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof;
provided, that the parties acknowledge that certain payments to be made pursuant
to the Purchase Agreements and the Statement may, by the terms of such
documents, only be made subject to the terms of the Senior Credit Agreement.
16. Severability of Provisions. Any provision in this Agreement that is held to
be inoperative, unenforceable or invalid in any jurisdiction shall, to that
jurisdiction, be inoperative, unenforceable or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability or
validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.
17. ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[signature page to follow]
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
XXXX XXXXX STRATEGIC PARTNERS, L.P., a
Texas limited partnership
By: GMSP Operating Partners, L.P.,
its general partner
By: GMSP, L.L.C.,
its general partner
By: /s/ J. Xxxxxxx Xxxxxxx
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Title: Principal
---------------------------------
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
BANK ONE, NA
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Senior Vice President
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GAINSCO, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: President and CEO
---------------------------------
GAINSCO SERVICE CORP.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: President and CEO
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