Document:

Guarantee Agreement

 Exhibit 4.16 
 GUARANTEE AGREEMENT 
 Between 
 GAINSCO, INC. 
 as Guarantor, 
 and 
 U.S. BANK NATIONAL ASSOCIATION

 as Guarantee Trustee, 
 Dated as of December 21, 2006 

 GAINSCO CAPITAL TRUST I 
 Certain Sections of this Guarantee Agreement relating to 
 Sections 310 through
318 of the 
 Trust Indenture Act of 1939: 
  

					
	 Trust Indenture
 Act Section
	  	 	  	 Guarantee Agreement
 Section

	 Section 310
	  	(a) (1)	  	4.1 (a)
		  	(a) (2)	  	4.1 (a)
		  	(a) (3)	  	Not Applicable
		  	(a) (4)	  	Not Applicable
		  	(b)	  	2.8, 4.1 (c)
	 Section 311
	  	(a)	  	2.2 (c)
		  	(b)	  	2.2 (c)
	 Section 312
	  	(a)	  	2.2 (a)
		  	(b)	  	2.2 (c)
		  	(c)	  	Not Applicable
	 Section 313
	  	(a)	  	2.3
		  	(a) (4)	  	2.3
		  	(b)	  	2.3
		  	(c)	  	2.3
		  	(d)	  	2.3
	 Section 314
	  	(a)	  	2.4
		  	(b)	  	2.4
		  	(c) (1)	  	2.5
		  	(c) (2)	  	2.5
		  	(c) (3)	  	2.5
		  	(e)	  	1.1, 2.5, 3.2
	 Section 315
	  	(a)	  	3.1 (d)
		  	(b)	  	2.7
		  	(c)	  	3.1 (c)
		  	(d)	  	3.1 (d)
		  	(e)	  	Not Applicable
	 Section 316
	  	(a)	  	1.1, 2.6, 5.4
		  	(a) (1) (A)	  	5.4
		  	(a) (1) (B)	  	5.4
		  	(a) (2)	  	Not Applicable
		  	(b)	  	5.3
		  	(c)	  	Not Applicable
	 Section 317
	  	(a) (1)	  	Not Applicable
		  	(a) (2)	  	Not Applicable
		  	(b)	  	Not Applicable
	 Section 318
	  	(a)	  	2.1

 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Guarantee Agreement.

  

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 TABLE OF CONTENTS 
  

					
	ARTICLE I. DEFINITIONS	  	1
	 SECTION 1.1.
	  	Definitions	  	1
	ARTICLE II. TRUST INDENTURE ACT	  	4
	 SECTION 2.1.
	  	Trust Indenture Act; Application	  	4
	 SECTION 2.2.
	  	List of Holders	  	5
	 SECTION 2.3.
	  	Reports by the Guarantee Trustee	  	5
	 SECTION 2.4.
	  	Periodic Reports to the Guarantee Trustee	  	5
	 SECTION 2.5.
	  	Evidence of Compliance with Conditions Precedent	  	5
	 SECTION 2.6.
	  	Events of Default; Waiver	  	6
	 SECTION 2.7.
	  	Event of Default; Notice	  	6
	 SECTION 2.8.
	  	Conflicting Interests	  	6
	ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE	  	6
	 SECTION 3.1.
	  	Powers and Duties of the Guarantee Trustee	  	6
	 SECTION 3.2.
	  	Certain Rights of Guarantee Trustee	  	8
	 SECTION 3.3.
	  	Indemnity	  	9
	 SECTION 3.4.
	  	Expenses	  	9
	ARTICLE IV. GUARANTEE TRUSTEE	  	10
	 SECTION 4.1.
	  	Guarantee Trustee; Eligibility	  	10
	 SECTION 4.2.
	  	Appointment, Removal and Resignation of the Guarantee Trustee	  	10
	ARTICLE V. GUARANTEE	  	11
	 SECTION 5.1.
	  	Guarantee	  	11
	 SECTION 5.2.
	  	Waiver of Notice and Demand	  	11
	 SECTION 5.3.
	  	Obligations Not Affected	  	11
	 SECTION 5.4.
	  	Rights of Holders	  	12
	 SECTION 5.5.
	  	Guarantee of Payment	  	13
	 SECTION 5.6.
	  	Subrogation	  	13
	 SECTION 5.7.
	  	Independent Obligations	  	13
	ARTICLE VI. COVENANTS AND SUBORDINATION	  	13
	 SECTION 6.1.
	  	Subordination	  	13
	 SECTION 6.2.
	  	Pari Passu Guarantees	  	14
	ARTICLE VII. TERMINATION	  	14
	 SECTION 7.1.
	  	Termination	  	14
	ARTICLE VIII. MISCELLANEOUS	  	14
	 SECTION 8.1.
	  	Successors and Assigns	  	14
	 SECTION 8.2.
	  	Amendments	  	14
	 SECTION 8.3.
	  	Notices	  	14
	 SECTION 8.4.
	  	Benefit	  	16
	 SECTION 8.5.
	  	Interpretation	  	16
	 SECTION 8.6.
	  	Governing Law	  	17
	 SECTION 8.7.
	  	Counterparts	  	17

  

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 GUARANTEE AGREEMENT 
 THIS GUARANTEE AGREEMENT, dated as of December 21, 2006, is executed and delivered by GAINSCO, INC., a Texas corporation (the “Guarantor”), having its principal office at 3333 Lee Parkway, Suite
1200, Dallas, Texas 75219, and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (“U.S. Bank National Association”), for the benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of GAINSCO STATUTORY TRUST II, a Connecticut statutory trust (the “Issuer Trust”). 
 Pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”), dated of even date herewith, among Gainsco, Inc., as Depositor, and U.S. Bank National Association, as Property Trustee, the Administrators named
therein and the Holders from time to time of undivided beneficial interests in the assets of the Issuer Trust, the Issuer Trust is issuing up to $18,000,000 aggregate Liquidation Amount (as defined herein) of its Floating Rate Capital Securities,
representing preferred undivided beneficial interests in the assets of the Issuer Trust and having the terms set forth in the Trust Agreement (the “Capital Securities”); 
 The Capital Securities will be issued by the Issuer Trust and the proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust’s Common Securities (the “Common Securities”), representing common undivided beneficial interests in the assets of the Issuer Trust, will be used to purchase the Junior Subordinated Debentures of the Guarantor due
March 15, 2037 (the “Junior Subordinated Debentures”), which will be deposited with U.S. Bank National Association, as Property Trustee under the Trust Agreement, as trust assets; and 
 As an inducement to the Holders to purchase the Capital Securities, the Guarantor is willing to irrevocably and unconditionally agree, to the extent set
forth herein, to pay to the Holders of the Capital Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. 
 NOW, THEREFORE, in consideration of the purchase of the Capital Securities by each Holder, which purchase the Guarantor hereby acknowledges shall benefit
the Guarantor, the Guarantor, intending to be legally bound hereby, executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Capital Securities. 
 ARTICLE I. DEFINITIONS 
 SECTION 1.1. Definitions. 
 As used in this Guarantee Agreement, the terms set forth below shall have the following meanings. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement. 
 “Affiliate” of any specified Person means any
other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means

 
the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
 “Debenture
Redemption Date” means, with respect to any Junior Subordinated Debenture to be redeemed, the date fixed for such redemption by or pursuant to the Indenture. 
 “Event of Default” means (i) a default by the Guarantor in any of its payment obligations under this Guarantee Agreement, or (ii) a default by the Guarantor in any other obligation hereunder
that remains unremedied for 30 days after receipt by Guarantor of written notice of such default. 
 “Guarantee Agreement”
means this Guarantee Agreement, as modified, amended or supplemented from time to time. 
 “Guarantee Payments” means the
following payments or distributions, without duplication, with respect to the Capital Securities, to the extent not paid or made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid Distributions (as defined in the Trust
Agreement) required to be paid on the Capital Securities, to the extent the Issuer Trust shall have funds on hand available therefor at such time, (ii) the Redemption Price, with respect to the Capital Securities called for redemption by the
Issuer Trust, to the extent that the Issuer Trust shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, termination, winding-up or liquidation of the Issuer Trust, unless the Junior
Subordinated Debentures are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of all outstanding Trust Securities and all accumulated and unpaid Distributions to the date of payment, to the extent the Issuer
Trust shall have funds on hand available to make such payment at such time and (b) the amount of assets of the Issuer Trust remaining available for distribution to Holders on liquidation of the Issuer Trust (in either case, the
“Liquidation Distribution”). 
 “Guarantee Trustee” means U.S. Bank National Association, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. 
 “Guarantor” shall have the meaning specified in the first paragraph of this Guarantee Agreement. 
 “Holder” means any holder, as registered on the books and records of the Issuer Trust, of any Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Capital Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee, or any Affiliate
of the Guarantor or the Guarantee Trustee. 
  

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 “Indenture” means the Junior Subordinated Indenture, dated of even date herewith,
between the Guarantor and U.S. Bank National Association, as trustee, as it may be modified, amended or supplemented from time to time. 
 “Issuer Trust” shall have the meaning specified in the first paragraph of this Guarantee Agreement. 
 “Like Amount” means (a) with respect to a redemption of Trust Securities, Trust Securities having a Liquidation Amount equal to that portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the Common Securities and to the Capital Securities based upon the relative Liquidation Amounts of such classes and (b) with respect to a distribution of Junior
Subordinated Debentures to Holders of Trust Securities in connection with a dissolution or liquidation of the Issuer Trust, Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Junior Subordinated Debentures are distributed. 
 “Liquidation Amount” means the stated amount of
$1,000 per Capital Security and $1,000 per Common Security. 
 “Majority in Liquidation Amount of the Capital Securities”
means, except as provided by the Trust Indenture Act, Capital Securities representing more than 50% of the aggregate Liquidation Amount of all then-outstanding Capital Securities. 
 “Officers’ Certificate” means a certificate signed by the Chairman of the Board, Vice Chairman of the Board, Chief Executive
Officer, President, Executive Vice President or a Senior Vice President or Vice President, and by the Treasurer, an Assistant Treasurer, the Chief Financial Officer, the Secretary or an Assistant Secretary of the Guarantor, and delivered to the
Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: 
 (a) a statement by each officer signing the Officers’ Certificate that such officer has read the covenant or condition and the definitions relating
thereto; 
 (b) a brief statement of the nature and scope of the examination or investigation undertaken by such officer in rendering the
Officers’ Certificate; 
 (c) a statement that such officer has made such examination or investigation as, in such officer’s
opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
 (d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with. 
  

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 “Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. 
 “Redemption Date” means, with respect to any Capital Security to be redeemed, the date fixed for such redemption by or pursuant to the
Trust Agreement; provided that each Debenture Redemption Date and the stated maturity date of the Junior Subordinated Debentures shall be a Redemption Date for a Like Amount of Capital Securities, including, but not limited to any date of
redemption pursuant to the occurrence of any Special Event. 
 “Redemption Price” shall have the meaning specified in the
Trust Agreement. 
 “Responsible Officer” means, when used with respect to the Guarantee Trustee, any officer assigned to
the Corporate Trust Office of the Guarantee Trustee, including any managing director, vice president, principal, assistant vice president, assistant treasurer, assistant secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of this Guarantee Agreement, and also, with respect to a particular matter, any other officer of the Guarantee
Trustee to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. 
 “Senior Indebtedness” shall have the meaning specified in the Indenture. 
 “Special Event” shall
have the meaning specified in the Indenture. 
 “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing
the qualifications to act as Guarantee Trustee under Article IV hereof. 
 “Trust Agreement” has the meaning specified in
the recitals hereto. 
 “Trust Indenture Act” means the Trust Indenture Act of 1939 (15 U.S.C.
§§ 77aaa-77bbbb) and any successor statute, in each case as amended. 
 “Trust Securities” means the Common
Securities and the Capital Securities. 
 ARTICLE II. TRUST INDENTURE ACT 
 SECTION 2.1. Trust Indenture Act; Application. 
 If and to the extent any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Guarantee Agreement, the provision
of the Trust Indenture Act shall control. If any provision of this Guarantee Agreement modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Guarantee
Agreement as so modified or excluded, as the case may be. 
  

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 SECTION 2.2. List of Holders. 
 (a) The Guarantor will furnish or cause to be furnished to the Guarantee Trustee a list of Holders at the following times: 
 (i) quarterly, not more than 15 days after the last day of February, May, August and November, in each year, a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders as of the last day of February, May, August and November, as applicable; and 
 (ii) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished. 
 (b) Notwithstanding Section 2.2(a), no such list need be furnished, if and so long as the
Guarantee Trustee is the Securities Registrar (as defined in the Trust Agreement). 
 (c) The Guarantee Trustee shall comply with the
requirements of Section 311(a), 311(b) and 312(b) of the Trust Indenture Act. 
 SECTION 2.3. Reports by the Guarantee
Trustee. 
 Not later than January 31 of each year, commencing January 31, 2007, the Guarantee Trustee shall provide to the
Holders such reports, if any, as are required by Section 313 of the Trust Indenture Act in the form and in the manner provided by Section 313 of the Trust Indenture Act. If this Guarantee Agreement shall have been qualified under the Trust
Indenture Act, the Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 
 SECTION 2.4. Periodic Reports to the Guarantee Trustee. 
 The Guarantor shall provide to the Guarantee Trustee and the
Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act, in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act, provided that such documents, reports and information shall be required to be provided to the Securities and Exchange Commission only if this Guarantee Agreement shall have been qualified
under the Trust Indenture Act. 
 SECTION 2.5. Evidence of Compliance with Conditions Precedent. 
 The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee
Agreement that relate to any of the 

  

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matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers’ Certificate. 
 SECTION 2.6. Events of Default; Waiver.

 The Holders of a Majority in Liquidation Amount of the Capital Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. 
 SECTION 2.7. Event of
Default; Notice. 
 (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, notice of all Events of Default known to the Guarantee Trustee, unless such Events of Default have been cured or waived before the giving of such notice; provided that, except in the case of a default in
the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee
Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. 
 (b) The Guarantee Trustee shall
not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee or a Responsible Officer charged with the administration of this Guarantee Agreement shall have received written notice of such Event of Default. 
 SECTION 2.8. Conflicting Interests. 
 The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 
 ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 
 SECTION 3.1. Powers and Duties of the Guarantee Trustee. 
 (a) This Guarantee Agreement shall be
held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee hereunder. The right, title and interest of the Guarantee Trustee, as such, hereunder shall automatically vest in any
Successor Guarantee Trustee upon acceptance by such 

  

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Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. 
 (b) If an Event of Default has occurred
and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. 
 (c) The Guarantee Trustee,
before the occurrence of any Event of Default and after the cure or waiver of all Events of Default that may have occurred, shall be obligated to perform only such duties as are specifically set forth in this Guarantee Agreement (including pursuant
to Section 2.1), and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. If an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her
own affairs. 
 (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful misconduct, except that: 
 (i) Prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may have occurred: 
 (A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement (including pursuant to Section 2.1), and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Guarantee Agreement (including pursuant to Section 2.1); and 
 (B) in the absence of bad faith on
the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; 
 (ii) The Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made; 
 (iii) The Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Capital Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and 
  

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 (iv) No provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds
or liability is not assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. 
 SECTION 3.2. Certain Rights of Guarantee Trustee. 
 (a) Subject to the provisions of
Section 3.1: 
 (i) The Guarantee Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties. 
 (ii) Any direction or act of the Guarantor contemplated by this Guarantee
Agreement shall be sufficiently evidenced by an Officers’ Certificate unless otherwise prescribed herein. 
 (iii) Whenever, in the
administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers’ Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor. 
 (iv) The Guarantee Trustee may consult with legal counsel, and the written advice or written opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be
legal counsel to the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of
competent jurisdiction. 
 (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by
this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against
the costs, expenses (including attorneys’ fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee 

  

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Trustee; provided that nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. 
 (vi) The Guarantee Trustee shall
not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. 
 (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or willful misconduct on the part of any such agent or attorney appointed with due care by it hereunder. 
 (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee
Trustee (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be fully protected in acting in accordance with
such instructions. 
 (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee
to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and
authority. 
 SECTION 3.3. Indemnity. 
 The Guarantor agrees to indemnify the Guarantee Trustee (which for purposes of this Section 3.3 shall include its officers, directors, employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any Guarantee Payments as a
result of any amount due to it under this Guarantee Agreement. The provisions of this Section 3.3 shall survive the termination of this Guarantee Agreement or the resignation or removal of the Guarantee Trustee. 
  

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 SECTION 3.4. Expenses. 
 The Guarantor shall from time to time reimburse the Guarantee Trustee for its expenses and costs (including reasonable attorneys’ or agents’
fees) incurred in connection with the performance of its duties hereunder, except for such expenses and costs as may be attributable to its negligence, willful misconduct or bad faith. 
 ARTICLE IV. GUARANTEE TRUSTEE 
 SECTION 4.1. Guarantee Trustee;
Eligibility. 
  

	 	(a)	There shall at all times be a Guarantee Trustee, which shall: 

  

	 	(i)	not be an Affiliate of the Guarantor; and 

 (ii) be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $100,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If
such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act,
the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 
 (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2. 
 (c) If the Guarantee Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 
 SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee. 
 (a) No resignation or removal of the Guarantee Trustee and no appointment of a Successor Guarantee Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Guarantee Trustee by written instrument executed by the Successor Guarantee Trustee and delivered to the Holders and the Guarantee Trustee. 
 (b) Subject to the immediately preceding paragraph, a Guarantee Trustee may resign at any time by giving written notice thereof to the Holders and the
Guarantor. The Guarantee Trustee shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements of Section 4.1(a) such Persons’ expenses and charges to serve as the Guarantee Trustee, and selecting
the Person who agrees to the lowest expenses and charges. If the instrument of acceptance by the Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 30 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
  

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 (c) The Guarantee Trustee may be removed without cause by the Guarantor at any time except during an
Event of Default, and at any time by Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at least a Majority in Liquidation Amount of the Capital Securities, delivered to the Guarantee Trustee and the Guarantor
(i) for cause or (ii) if a Debenture Event of Default shall have occurred and be continuing at any time. 
 (d) If a resigning
Guarantee Trustee shall fail to appoint a successor, or if a Guarantee Trustee shall be removed or become incapable of acting as Guarantee Trustee, or if any vacancy shall occur in the office of any Guarantee Trustee for any cause, the Holders of
the Capital Securities, by Act of the Holders of record of not less than 25% in aggregate Liquidation Amount of the Capital Securities then outstanding delivered to such Guarantee Trustee, shall promptly appoint a Successor Guarantee Trustee. If no
Successor Guarantee Trustee shall have been so appointed by the Holders of the Capital Securities and such appointment accepted by the Successor Guarantee Trustee, any Holder, on behalf of himself and all others similarly situated, may petition any
court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
 ARTICLE V. GUARANTEE 
 SECTION 5.1. Guarantee. 
 The
Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer Trust), as and when due, regardless of any defense, right of set-off
or counterclaim which the Issuer Trust may have or assert, except the defense of payment. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer Trust to pay such amounts to the Holders. The Guarantor shall give prompt written notice to the Guarantee Trustee in the event it makes any direct payment hereunder. 
 SECTION 5.2. Waiver of Notice and Demand. 
 The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 
  

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 SECTION 5.3. Obligations Not Affected. 
 The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following: 
 (a) the release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer Trust of any express or implied agreement, covenant, term or condition relating to the Capital Securities to be performed or observed by the Issuer Trust; 
 (b) the extension of time for the payment by the Issuer Trust of all or any portion of the Distributions (other than an extension of time for payment of
Distributions that results from an election to defer any interest payment on the Junior Subordinated Debentures as so provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Capital Securities; 
 (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer Trust granting indulgence or extension of any kind; 
 (d) the voluntary or involuntary
liquidation, dissolution, sale of any collateral, receivership, conservatorship, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer Trust or any of the assets of the Issuer Trust; 
 (e) any invalidity of, or defect or deficiency in, the Capital
Securities; 
 (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or 
 (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment of the
underlying obligation), it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. 
 There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing. 
 SECTION 5.4. Rights of Holders. 
 The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to
enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in Liquidation Amount of the Capital Securities have the right to direct the time, 

  

 - 12 - 

 
method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust or any other Person. 
 SECTION 5.5. Guarantee of
Payment. 
 This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged
except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures to Holders as provided in the Trust Agreement. 
 SECTION 5.6. Subrogation. 
 The
Guarantor shall be subrogated to all rights (if any) of the Holders against the Issuer Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under
this Guarantee Agreement, if at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders. 
 SECTION 5.7. Independent Obligations. 

The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer Trust with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g),
inclusive, of Section 5.3 hereof. 
 ARTICLE VI. COVENANTS AND SUBORDINATION 
 SECTION 6.1. Subordination. 
 This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all Senior Indebtedness of the Guarantor to the same extent and in the same manner set forth in
the Indenture with respect to the Junior Subordinated Debentures, and the provisions of Article XIII of the Indenture will apply, mutatis mutandis, to the obligations of the Guarantor hereunder. The obligations of the Guarantor hereunder do
not constitute Senior Indebtedness of the Guarantor. 
  

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 SECTION 6.2. Pari Passu Guarantees. 
 The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with any similar guarantee agreements issued by the Guarantor
on behalf of the holders of Trust Securities and any other security, guarantee or other obligation that is expressly stated to rank pari passu with the obligations of the Guarantor under this Guarantee Agreement. 
 ARTICLE VII. TERMINATION 
 SECTION 7.1. Termination. 
 This Guarantee Agreement shall terminate and be of no further force and effect upon
(i) full payment of the Redemption Price of all outstanding Capital Securities, (ii) the distribution of Junior Subordinated Debentures to the Holders in exchange for all of the outstanding Capital Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any
time any Holder is required to restore payment of any sums paid under the Capital Securities or this Guarantee Agreement. 
 ARTICLE VIII.
MISCELLANEOUS 
 SECTION 8.1. Successors and Assigns. 
 All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, conservators, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor’s obligations hereunder, the Guarantor shall not assign its obligations hereunder without the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities, and any purported assignment that is not in accordance with these provisions shall be void. 
 SECTION 8.2. Amendments. 
 Except with respect to any changes that do not materially adversely affect the rights of the
Holders (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of the Capital Securities. The provisions of
Article VI of the Trust Agreement concerning meetings of the Holders shall apply to the giving of such approval. 
  

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 SECTION 8.3. Notices. 
 Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice,
and delivered, telecopied (confirmed by delivery of the original) or mailed by first class mail as follows: 
 (a) if given to the Guarantor,
to the address or telecopy number set forth below or such other address or telecopy number or to the attention of such other Person as the Guarantor may give notice to the Holders: 
 GAINSCO, INC. 
 3333 Lee Parkway, Suite
1200 
 Dallas, Texas 75219 
 Facsimile No.: (972) 629-4401 
 Attention: Chief Financial Officer 
 (b) if given to the Issuer Trust, in care of the Guarantee Trustee, at the Issuer Trust’s (and the Guarantee Trustee’s) address set forth below
or such other address or telecopy number or to the attention of such other Person as the Guarantee Trustee on behalf of the Issuer Trust may give notice to the Holders: 
 GAINSCO Capital Trust I 
 c/o GAINSCO, INC. 
 3333 Lee Parkway, Suite 1200 
 Dallas, Texas
75219 
 Facsimile No.: (972) 629-4401 
 Attention: Chief Financial Officer 
 with a copy to: 
 U.S. Bank National Association 
 225 Asylum
Street, 23rd Floor 
 Hartford, Connecticut 06103 
 Attention: Corporate Trust Services – GAINSCO Statutory Trust II 
 (c) if given to the Guarantee
Trustee: 
 U.S. Bank National Association 
 225 Asylum Street, 23rd Floor 
 Hartford, Connecticut 06103 
 Attention: Corporate Trust Services – GAINSCO Statutory Trust II 
  

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 with a copy to: 
 U.S. Bank National Association One Federal Street, 3rd Floor 
 Boston, Massachusetts 02110 
 Attention: Corporate Trust Services – GAINSCO Statutory Trust II 
 Facsimile No.: (617) 603-6683 Telephone: (617) 603-6549 
 (d) if given to any Holder of record, at
the address set forth on the books and records of the Issuer Trust. 
 All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 
 SECTION 8.4.
Benefit. 
 This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Capital
Securities. 
 SECTION 8.5. Interpretation. 
 In this Guarantee Agreement, unless the context otherwise requires: 
 (a) capitalized terms used in this
Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1; 
 (b) a term
defined anywhere in this Guarantee Agreement has the same meaning throughout; 
 (c) all references to “the Guarantee Agreement” or
“this Guarantee Agreement” are to this Guarantee Agreement as modified, supplemented or amended from time to time; 
 (d) all
references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; 
 (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; 
 (f) a reference to the singular includes the plural and vice versa; and 
  

 - 16 - 

 (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and
neuter genders. 
 SECTION 8.6. Governing Law. 
 THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. 
 SECTION 8.7. Counterparts. 
 This
instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Guarantee and
of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Guarantee as to the parties hereto, and may be used in lieu of the original signature pages to this Guarantee for all purposes.

 [Signatures on Next Page] 
  

 - 17 - 

 THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. 
  

			
	GAINSCO, INC.
	as Guarantor
		
	 By:
	 	 /s/ Glenn W. Anderson

	Name:	 	Glenn W. Anderson
	Title:	 	President and Chief Executive Officer
	
	U.S. BANK NATIONAL ASSOCIATION,
	as Guarantee Trustee
		
	By:	 	 /s/ Paul D. Allen

	Name:	 	Paul D. Allen
	Title:	 	Vice President

  

 - 18 -Stipulation of Settlement

 Exhibit 10.26 
 UNITED STATES DISTRICT COURT 
 NORTHERN DISTRICT OF TEXAS 
 FORT WORTH DIVISION 
  

													
		 	EARL CULP, On Behalf of Himself and All	 		 	§	 		 	Civil Action No. 4:04-cv-00723-Y
		 	Others Similarly Situated,	 		 	§	 		 		 	
		 		 		 	§	 		 	(ECF)	 	
		 	Plaintiff,            	 		 	§	 		 		 	
		 	 vs.
	 		 	§	 		 		 	
		 		 		 	§	 		 		 	
		 	GAINSCO, INC., et al.,	 		 	§	 		 		 	
		 		 		 	§	 		 		 	
		 	Defendants.            	 		 	§	 		 		 	
		 		 		 	§	 		 		 	
		 	  
	 		 	§	 		 		 	

 STIPULATION OF SETTLEMENT 

 This Stipulation of Settlement dated as of October 31, 2006 (the “Stipulation”), is made
and entered into by and among the following Settling Parties (as defined further in §IV hereof) to the above-entitled Litigation: (i) the Lead Plaintiff (on behalf of himself and each of the Settlement Class Members), by and through their
counsel of record in the Litigation; and (ii) the Defendants, by and through their counsel of record in the Litigation. The Stipulation is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released
Claims (as defined in ¶1.15), upon and subject to the terms and conditions hereof. 
 I. THE LITIGATION 
 On or after April 8, 2003, the following class actions were filed in the United States District Court for the Southern District of Florida:

 1. Culp v. Gainsco, Inc., et al., Case No. 03-20854 
 2. Swoops v. Gainsco, Inc., et al., Case No. 03-21069 
 These cases (the “Litigation”) were consolidated for all purposes by Order dated October 7, 2003. On October 16, 2003, David Varney was appointed as Lead Plaintiff under §21D(a)(3)(B) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Lead Plaintiff’s selection of Lead Counsel, pursuant to §21D(a)(3)(B)(v) of the Exchange Act was approved. 
 On March 29, 2004, Lead Plaintiff filed a Second Consolidated Amended Class Action Complaint asserting claims under §§10(b) and 20(a) of
the Exchange Act and Rule 10b-5 thereunder (“Complaint”) naming as defendants Gainsco, Inc. (“Gainsco” or the “Company”), Glenn W. Anderson and Daniel J. Coots. Thereafter, Defendants filed a motion to transfer venue
and a motion to dismiss. On September 22, 2004, the United States District Court for the Southern District of Florida issued an order declining to rule on the motion to dismiss and transferring the Litigation to the Northern District of Texas
Fort Worth Division (the “Court”). The Litigation was transferred to the Court on October 1, 2004. On January 31, 2005 Defendants filed a motion to dismiss the 

  

 - 1 - 

 
Complaint. On September 19, 2005, the Court issued an Order Denying Defendants’ Motion to Dismiss. Thereafter, the parties engaged in formal
discovery. On April 12, 2006, Lead Plaintiff filed a Motion for Class Certification which Defendants opposed. The Motion for Class Certification was pending at the time the parties reached an agreement-in-principle to settle this Litigation.

 On May 12, 2006, the Court issued an Order of Referral for Mediation in October 2006. The parties agreed to participate in mediation
with Christopher Nolland. The mediation was scheduled for July 13, 2006; however, prior to the Mediation, the parties reached an agreement-in-principle to settle the Litigation. 
 II. DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY 
 The Defendants have denied and continue to
deny each and all of the claims and contentions alleged by the Lead Plaintiff in the Litigation. The Defendants have denied expressly and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct,
statements, acts or omissions alleged, or that could have been alleged, in the Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that the Lead Plaintiff or the Settlement Class have suffered damage,
that the price of Gainsco common stock was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, or that the Lead Plaintiff or the Settlement Class were harmed by the conduct alleged in the Litigation.

 Nonetheless, the Defendants have concluded that further litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like
this Litigation. The Defendants have, therefore, determined that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in the Stipulation. 

 - 2 - 

 III. CLAIMS OF THE LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT 
 The Lead Plaintiff believes that the claims asserted in the Litigation have merit and that the evidence developed to date supports the claims. However,
counsel for the Lead Plaintiff recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and possible appeals. Counsel for the Lead Plaintiff also have taken
into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this Litigation, as well as the difficulties and delays inherent in such litigation. Counsel for the Lead Plaintiff also are mindful of the
inherent problems of proof under and possible defenses to the federal securities law violations asserted in the Litigation. Counsel for the Lead Plaintiff believe that the settlement set forth in the Stipulation confers substantial benefits upon the
Settlement Class. Based on their evaluation, counsel for the Lead Plaintiff have determined that the settlement set forth in the Stipulation is in the best interests of the Lead Plaintiff and the Settlement Class. 
 IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT 
 NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Lead Plaintiff (for himself and the Settlement Class Members) and the Defendants, by and through their respective counsel or attorneys of record, that, subject to the
approval of the Court, the Litigation and the Released Claims shall be finally and fully compromised, settled and released, and the Litigation shall be dismissed with prejudice, as to all Settling Parties, upon and subject to the terms and
conditions of the Stipulation. 
 1. Definitions 
 As used in the Stipulation the following terms have the meanings specified below. 
  

 - 3 - 

 1.1 “Authorized Claimant” means any Settlement Class Member whose claim for recovery has been
allowed pursuant to the terms of the Stipulation. 
 1.2 “Claimant” means any Settlement Class Member who files a Proof of Claim in
such form and manner, and within such time, as the Court shall prescribe. 
 1.3 “Claims Administrator” means the firm of
Gilardi & Co. LLC, which shall administer the settlement. 
 1.4 “Defendants” means Gainsco, Glenn W. Anderson and Daniel
J. Coots. 
 1.5 “Effective Date” means the first date by which all of the events and conditions specified in ¶7.1 of the
Stipulation have been met and have occurred. 
 1.6 “Escrow Agent” means the law firm of Lerach Coughlin Stoia Geller
Rudman & Robbins LLP or its successor(s). 
 1.7 “Final” means: (i) the date of final affirmance on an appeal of the
Judgment, the expiration of the time for a petition for or a denial of a writ of certiorari to review the Judgment and, if certiorari is granted, the date of final affirmance of the Judgment following review pursuant to that grant; or (ii) the
date of final dismissal of any appeal from the Judgment or the final dismissal of any proceeding on certiorari to review the Judgment; or (iii) if no appeal is filed, the expiration date of the time for the filing or noticing of any appeal from
the Court’s Judgment approving the Stipulation substantially in the form of Exhibit B attached hereto; i.e., thirty (30) days after entry of the Judgment. Any proceeding or order, or any appeal or petition for a writ of certiorari
pertaining solely to any plan of allocation and/or application for attorneys’ fees, costs or expenses, shall not in any way delay or preclude the Judgment from becoming Final. 
 1.8 “Judgment” means the final judgment and order of dismissal with prejudice to be rendered by the Court, substantially in the form attached
hereto as Exhibit B. 
 1.9 “Lead Plaintiff” means David Varney. 
  

 - 4 - 

 1.10 “Person” means an individual, corporation, partnership, limited partnership, association,
joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or
assignees. 
 1.11 Plaintiffs’ Counsel” means counsel who have appeared for any of the plaintiffs in the Litigation. 
 1.12 “Plaintiffs’ Settlement Counsel” or “Lead Counsel” mean Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Jeffrey
D. Light, 655 West Broadway, Suite 1900, San Diego, California, 92101; Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Jack Reise, 120 East Palmetto Park Road, Suite 500, Boca Raton, Florida 33432; and Vianale & Vianale LLP,
Kenneth J. Vianale, 2499 Glades Road, Suite 112, Boca Raton, Florida 33431. 
 1.13 “Plan of Allocation” means a plan or formula of
allocation of the Settlement Fund whereby the Settlement Fund shall be distributed to Authorized Claimants after payment of expenses of notice and administration of the settlement, taxes and tax expenses and such attorneys’ fees, costs,
expenses and interest as may be awarded by the Court. Any Plan of Allocation is not part of the Stipulation and Defendants shall have no responsibility or liability with respect thereto. 
 1.14 “Related Parties” means each of the Defendants and each of their past or present directors, officers, employees, partners, members,
principals, agents, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, banks or investment banks, underwriters, associates, personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated entities, any entity in which a Defendant has a controlling interest, any members of their immediate families, or any trust of which any Defendant is the settlor
or which is for the benefit of any Defendant and/or member(s) of his family. 
  

 - 5 - 

 1.15 “Released Claims” shall collectively mean all claims (including “Unknown Claims”
as defined in ¶1.21 hereof), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, whether or not concealed or hidden, asserted or that might have been asserted in any forum, including,
without limitation, claims for negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state or federal statutes, rules or regulations, by the Lead Plaintiff or
Settlement Class Member against the Released Persons arising out of, based upon or related to both the purchase of Gainsco common stock by any Settlement Class Member during the class period and the facts, transactions, events, occurrences, acts,
disclosures, statements, omissions or failures to act which were or could have been alleged in the Litigation. 
 1.16 “Released
Persons” means each and all of the Defendants and their Related Parties. 
 1.17 “Settlement Class” means for purposes of this
Stipulation only, all Persons who purchased the common stock of Gainsco between November 17, 1999 through and including February 7, 2002, excluding the Defendants and members of their immediate families, any entity in which a Defendant has
a controlling interest, and the legal representatives, heirs, successors, or assigns of any such excluded party. Also excluded from the Settlement Class are those Persons who submit a valid request to be excluded from the Settlement Class pursuant
to the Notice of Pendency and Proposed Settlement of Class Action attached as Exhibit A-1 hereto. 
 1.18 “Settlement Class Member”
or “Member of the Settlement Class” mean, for purposes of this Stipulation only, a Person who falls within the definition of the Settlement Class as set forth in ¶1.17 of the Stipulation. 
 1.19 “Settlement Fund” means the principal amount of Four Million Dollars ($4,000,000) paid pursuant to ¶2.1 of the Stipulation and
delivered to the Escrow Agent, plus any accrued interest. 
  

 - 6 - 

 1.20 “Settling Parties” means, collectively, each of the Defendants and the Lead Plaintiff on
behalf of himself and the Members of the Settlement Class. 
 1.21 “Unknown Claims” means any Released Claims which the Lead
Plaintiff or Settlement Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Persons which, if known by him, her or it, might have affected his, her or its settlement with and release of
the Released Persons, or might have affected his, her or its decision not to object to this settlement. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, the Lead Plaintiff shall
expressly and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits of California Civil Code §1542, which provides: 
 A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. 
 The Lead Plaintiff shall
expressly and each of the Settlement Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and all provisions, rights and benefits conferred by any law of any state or territory of the United
States, or principle of common law, which is similar, comparable and/or equivalent to California Civil Code §1542. The Lead Plaintiff or Settlement Class Members may hereafter discover facts in addition to or different from those which he, she
or it now knows or believes to be true with respect to the subject matter of the Released Claims, but the Lead Plaintiff shall expressly and each Settlement Class Member, upon the Effective Date, shall be deemed to have, and by operation of the
Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have
existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without 

  

 - 7 - 

 
malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Lead
Plaintiff acknowledges, and the Settlement Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part.

 2. The Settlement 
 a. The Settlement Fund 
 2.1 The principal amount of $4,000,000 in cash, plus any accrued interest, shall constitute the
Settlement Fund, and shall be transferred to the Escrow Agent on or before November 20, 2006. If the Settlement Fund is not transferred to the Escrow Agent as set forth above, interest will accrue at 8% per annum from the date such payment
should have been deposited on such portion of the Settlement Fund not transferred, until the date such sums are transferred to the Escrow Agent. 
 b. The Escrow Agent 
 2.2 The Escrow Agent shall invest the Settlement Fund deposited pursuant to ¶2.1 above in
instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof and shall reinvest the proceeds of these instruments as they mature in similar instruments at their
then current market rates. The Escrow Agent shall bear all risks related to investment of the Settlement Fund. 
 2.3 The Escrow Agent shall
not disburse the Settlement Fund except as provided in the Stipulation, by an order of the Court, or with the written agreement of counsel for Defendants and Plaintiffs’ Settlement Counsel. 
 2.4 Subject to further orders and/or directions as may be made by the Court, the Escrow Agent is authorized to execute such transactions on behalf of the
Settlement Class Members as are consistent with the terms of the Stipulation. 
  

 - 8 - 

 2.5 All funds held by the Escrow Agent shall be deemed and considered to be in custodia legis of
the Court, and shall remain subject to the jurisdiction of the Court, until such time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court. 
 2.6 After transfer of the Settlement Fund to the Escrow Agent pursuant to ¶2.1 hereof, the Escrow Agent may establish a “Notice and
Administration Fund,” and may deposit up to $100,000 from the Settlement Fund in it. The Notice and Administration Fund may be used by Plaintiffs’ Settlement Counsel to pay costs and expenses reasonably and actually incurred in connection
with providing notice to the Settlement Class, locating Settlement Class Members, soliciting Settlement Class claims, assisting with the filing of claims, administering and distributing the Settlement Fund to Authorized Claimants, processing Proof
of Claim and Release forms and paying escrow fees and costs, if any. The Notice and Administration Fund may also be invested and earn interest as provided for in ¶2.2 of this Stipulation. 
 c. Taxes 
 2.7 The Settling Parties
and the Escrow Agent agree to treat the Settlement Fund as being at all times a “qualified settlement fund” within the meaning of Treas. Reg. §1.468B-1. In addition, the Escrow Agent shall timely make such elections as necessary or
advisable to carry out the provisions of this ¶2.7, including the “relation-back election” (as defined in Treas. Reg. §1.468B-1) back to the earliest permitted date. Such elections shall be made in compliance with the procedures
and requirements contained in such regulations. It shall be the responsibility of the Escrow Agent to timely and properly prepare and deliver the necessary documentation for signature by all necessary parties, and thereafter to cause the appropriate
filing to occur. 
 (a) For the purpose of §468B of the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder, the “administrator” shall be the Escrow Agent. The Escrow Agent shall timely and properly file all informational and other tax returns necessary or 

  

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advisable with respect to the Settlement Fund (including, without limitation, the returns described in Treas. Reg. §1.468B-2(k)). Such returns (as well
as the election described in this paragraph) shall be consistent with this ¶2.7 and in all events shall reflect that all Taxes (including any estimated Taxes, interest or penalties) on the income earned by the Settlement Fund shall be paid out
of the Settlement Fund as provided in ¶2.7(b) hereof. 
 (b) Defendants, their attorneys and insurers shall have no liability or
responsibility for any taxes (including any estimated Taxes, interest or penalties) arising with respect to the income earned by the Settlement Fund, including any Taxes or tax detriments that may be imposed upon the Defendants or their counsel with
respect to any income earned by the Settlement Fund for any period during which the Settlement Fund does not qualify as a “qualified settlement fund” for federal or state income tax purposes (“Taxes”). All (a) Taxes and
(b) expenses and costs incurred in connection with the operation and implementation of this ¶2.7 (including, without limitation, expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses relating to
filing (or failing to file) the returns described in this ¶2.7) (“Tax Expenses”), shall be paid out of the Settlement Fund; in all events the Defendants and their counsel shall have no liability or responsibility for the Taxes or the
Tax Expenses. The Escrow Agent shall indemnify and hold each of the Defendants and their counsel and person(s) and/or entities paying the Settlement Fund harmless for Taxes and Tax Expenses (including, without limitation, Taxes payable by reason of
any such indemnification). Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement Fund and shall be timely paid by the Escrow Agent out of the Settlement Fund without prior order from
the Court and the Escrow Agent shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Authorized Claimants any funds necessary to pay such amounts including the establishment of adequate reserves for
any Taxes and Tax Expenses (as well as any amounts that may be required to 

  

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be withheld under Treas. Reg. §1.468B-2(l)(2)); neither the Defendants nor their counsel are responsible nor shall they have any liability therefor. The
parties hereto agree to cooperate with the Escrow Agent, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the provisions of this ¶2.7. 
 (c) For the purpose of this ¶2.7, references to the Settlement Fund shall include both the Settlement Fund and the Notice and Administration Fund
and shall also include any earnings thereon. 
 d. Termination of Settlement 
 2.8 In the event that the Stipulation is not approved, or is terminated, canceled, or fails to become effective for any reason, the Settlement Fund
(including accrued interest) less costs of notice and administration actually incurred or due and owing in connection with the settlement provided for herein, shall be refunded to Defendants and the insurance carrier in proportion to their
respective contributions to the Settlement Fund, as described in ¶7.5 hereof. 
 3. Notice Order and Settlement Hearing

 3.1 Promptly after execution of the Stipulation, Plaintiffs’ Settlement Counsel shall submit the Stipulation together with its
Exhibits to the Court and shall apply for entry of an order (the “Notice Order”), substantially in the form of Exhibit A attached hereto, requesting, inter alia, certification of the Settlement Class for settlement purposes only and
approval for the mailing of a settlement notice (the “Notice”) and publication of a summary notice, substantially in the forms of Exhibits A-1 and A-3 attached hereto. The Notice shall include the general terms of the settlement set forth
in the Stipulation, the proposed Plan of Allocation, the general terms of the Fee and Expense Application as defined in ¶6.1 hereof and the date of the Settlement Hearing as defined below. 
  

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 3.2 Plaintiffs’ Settlement Counsel shall request that after notice is given, the Court hold a
hearing (the “Settlement Hearing”) and approve the settlement of the Litigation as set forth herein. At or after the Settlement Hearing, Plaintiffs’ Settlement Counsel also will request that the Court approve the proposed Plan of
Allocation and the Fee and Expense Application. 
 4. Releases 
 4.1 Upon the Effective Date, as defined in ¶1.5 hereof, the Lead Plaintiff and each of the Settlement Class Members shall be deemed to have, and by
operation of the Judgment shall have, fully, finally, and forever released, relinquished and discharged all Released Claims against the Released Persons, whether or not such Settlement Class Member executes and delivers a Proof of Claim and Release.

 4.2 The Proof of Claim and Release to be executed by Settlement Class Members shall release all Released Claims against the Released
Persons and shall be substantially in the form contained in Exhibit A-2 attached hereto. 
 4.3 Upon the Effective Date, as defined in
¶1.5 hereof, each of the Released Persons shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished and discharged each and all of the Settlement Class Members and Plaintiffs’
Counsel from all claims (including Unknown Claims), arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of the Litigation or the Released Claims. 
 5. Administration and Calculation of Claims, Final Awards and Supervision and Distribution of Settlement Fund 
 5.1 The Claims Administrator, subject to such supervision and direction of the Court or Plaintiffs’ Settlement Counsel as may be necessary or as
circumstances may require, shall administer and calculate the claims submitted by Settlement Class Members and shall oversee distribution of the Net Settlement Fund (defined below) to Authorized Claimants. 
 5.2 The Settlement Fund shall be applied as follows: 
 (a) to pay Plaintiffs’ Counsel’s attorneys’ fees, expenses and costs with interest thereon (the “Fee and Expense Award”), if and to the extent allowed by the Court; 
  

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 (b) to pay all the costs and expenses reasonably and actually incurred in connection with providing
notice, locating Settlement Class Members, soliciting Settlement Class claims, assisting with the filing of claims, administering and distributing the Settlement Fund to Authorized Claimants, processing Proof of Claim and Release forms and paying
escrow fees and costs, if any; 
 (c) to pay the Taxes and Tax Expenses described in ¶2.7 hereof; and 
 (d) to distribute the balance of the Settlement Fund (the “Net Settlement Fund”) to Authorized Claimants as allowed by the Stipulation, the
Plan of Allocation, or the Court. 
 5.3 Upon the Effective Date and thereafter, and in accordance with the terms of the Stipulation, the
Plan of Allocation, or such further approval and further order(s) of the Court as may be necessary or as circumstances may require, the Net Settlement Fund shall be distributed to Authorized Claimants, subject to and in accordance with the
following. 
 5.4 Within ninety (90) days after the mailing of the Notice or such other time as may be set by the Court, each Person
claiming to be an Authorized Claimant shall be required to submit to the Claims Administrator a completed Proof of Claim and Release, substantially in the form of Exhibit A-2 attached hereto, signed under penalty of perjury and supported by such
documents as specified in the Proof of Claim and Release and as are reasonably available to the Settlement Class Member. 
 5.5 Except as
otherwise ordered by the Court, all Settlement Class Members who fail to timely submit a Proof of Claim and Release within such period, or such other period as may be ordered by the Court, or otherwise allowed, shall be forever barred from receiving
any payments pursuant to the Stipulation and the settlement set forth therein, but will in all other respects be subject to and bound by the provisions of the Stipulation, the releases contained therein, and the Judgment. 
  

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 5.6 The Net Settlement Fund shall be distributed to the Authorized Claimants substantially in accordance
with a Plan of Allocation to be described in the Notice and approved by the Court. However, if there is any balance remaining in the Net Settlement Fund after six (6) months from the date of distribution of the Net Settlement Fund (whether by
reason of tax refunds, uncashed checks or otherwise), Plaintiffs’ Settlement Counsel shall reallocate such balance among Authorized Claimants in an equitable and economic fashion. Thereafter, any balance which still remains in the Net
Settlement Fund shall be donated to an appropriate non-profit organization. 
 5.7 The Defendants and their counsel (except as provided in
¶2.7) shall have no responsibility for, interest in, or liability whatsoever with respect to the investment or distribution of the Settlement Fund, the Plan of Allocation, the determination, administration, or calculation of claims, the payment
or withholding of Taxes, or any losses incurred in connection therewith. 
 5.8 No Person shall have any claim against Plaintiffs’
Counsel or any claims administrator, or Defendants or their respective counsel based on distributions made substantially in accordance with the Stipulation and the settlement contained therein, the Plan of Allocation, or further order(s) of the
Court. 
 5.9 It is understood and agreed by the Settling Parties that any proposed plan of allocation of the Net Settlement Fund including,
but not limited to, any adjustments to an Authorized Claimant’s claim set forth therein, is not a part of the Stipulation and is to be considered by the Court separately from the Court’s consideration of the fairness, reasonableness and
adequacy of the settlement set forth in the Stipulation, and any orders or proceedings relating to the Plan of Allocation shall not operate to terminate or cancel the Stipulation or affect the finality of the Court’s Judgment approving the
Stipulation and the settlement set forth therein, or any other orders entered pursuant to the Stipulation. 
  

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 6. Lead Counsel’s Attorneys’ Fees and Reimbursement of Expenses 
 6.1 The Lead Plaintiff or his counsel may submit an application or applications (the “Fee and Expense Application”) for distributions to them
from the Settlement Fund for: (a) an award of attorneys’ fees; plus (b) reimbursement of actual expenses, including the fees and expenses of any experts or consultants, incurred in connection with prosecuting the Litigation, plus any
interest on such attorneys’ fees, costs and expenses at the same rate and for the same periods as earned by the Settlement Fund (until paid) as may be awarded by the Court; and (c) reimbursement for the expenses (including lost wages) of
the Lead Plaintiff. Lead Counsel reserve the right to make additional applications for fees and expenses incurred. In no event shall any such application seek or act to increase the amount of the Settlement Fund. Defendants and their Related Parties
will take no position with respect to Lead Counsel’s Fee and Expense Application so long as it does not increase the amount of the Settlement Fund. 
 6.2 The attorneys’ fees, expenses and costs, including the fees and expenses of experts and consultants, as awarded by the Court, shall be paid to Lead Counsel from the Settlement Fund, as ordered, immediately
after the Court executes an order awarding such fees and expenses. Lead Counsel shall thereafter allocate the attorneys’ fees amongst Plaintiffs’ Counsel in a manner in which they in good faith believe reflects the contributions of such
counsel to the institution, prosecution and settlement of the Litigation. In the event attorneys’ fees or expenses are awarded by the Court pursuant to ¶6.1 hereof and paid to Plaintiffs’ Counsel from the Settlement Fund, all
Plaintiffs’ Counsel who receive any payment of attorneys’ fees or expenses agree that they accept payment subject to the obligation of each Plaintiffs’ Counsel (including their respective partners, shareholders and/or firms),
receiving payments to make repayment to the Settlement Fund within 

  

 - 15 - 

 
five (5) business days from receiving notice from Defendants’ counsel or from a court of appropriate jurisdiction, of the amount required to be
refunded by any court or appellate court, with accrued interest, in the event, for any reason, including, without limitation, appeal, further proceeding on remand or successful collateral attack, the attorneys’ fee or expense award is reduced
or reversed. Furthermore, all Plaintiffs’ Counsel (including their respective partners, shareholders and/or firms) agree that they remain subject to the continuing jurisdiction of the Court for the purpose of enforcing their obligation to repay
required attorneys’ fees and expenses to the Settlement Fund as provided in this paragraph. 
 6.3 The procedure for and the allowance
or disallowance by the Court of any applications by Lead Plaintiff or Lead Counsel for attorneys’ fees and expenses, including the fees and expenses of experts and consultants, to be paid out of the Settlement Fund, are not part of the
settlement set forth in the Stipulation, and are to be considered by the Court separately from the Court’s consideration of the fairness, reasonableness and adequacy of the settlement set forth in the Stipulation, and any order or proceeding
relating to the Fee and Expense Application, or any appeal from any order relating thereto or reversal or modification thereof, shall not operate to terminate or cancel the Stipulation, or affect or delay the finality of the Judgment approving the
Stipulation and the settlement of the Litigation set forth therein. 
 6.4 Defendants and their Related Parties shall have no responsibility
for, and no liability whatsoever with respect to, any payment to Plaintiffs’ Counsel or any other counsel or Person who receives payment from the Settlement Fund. 
 6.5 Defendants and their Related Parties shall have no responsibility for, and no liability whatsoever with respect to the allocation among Plaintiffs’ Counsel and/or any other Person who may assert some claim
thereto, of any Fee and Expense Award that the Court may make in the Litigation, and Defendants and their respective Related Parties take no position with respect to such matters. 
  

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 7. Conditions of Settlement, Effect of Disapproval, Cancellation or Termination 
 7.1 The Effective Date of the Stipulation shall be conditioned on the occurrence of all of the following events: 
 (a) Defendants have timely made their contributions to the Settlement Fund as required by ¶2.1 hereof; 
 (b) the Court has entered the Notice Order, as required by ¶3.1 hereof; 
 (c) the Court has entered the Judgment, or a judgment substantially in the form of Exhibit B attached hereto; 
 (d) Defendants have not exercised their option to terminate the settlement pursuant to ¶7.4; and 
 (e) the Judgment has become Final, as defined in ¶1.7 hereof. 
 7.2 Upon the occurrence of all of the events referenced in ¶7.1 hereof, any and all remaining interest or right of Defendants in or to the Settlement Fund, if any, shall be absolutely and forever extinguished.

 7.3 If all of the conditions specified in ¶7.1 hereof are not met, then the Stipulation shall be canceled and terminated subject to
¶7.6 hereof unless Plaintiffs’ Settlement Counsel and counsel for Defendants mutually agree in writing to proceed with the Stipulation. 
 7.4 If prior to the Settlement Hearing, Persons who otherwise would be Members of the Settlement Class have filed with the Court timely requests for exclusion (“Requests for Exclusion”) from the Settlement Class in accordance with
the provisions of the Notice Order and the notice given pursuant thereto and such Persons’ shares purchased during the class period in the aggregate are in an amount greater than the amount specified in a separate Supplemental Agreement between
the 

  

 - 17 - 

 
Settling Parties, the Defendants shall have, in their sole and absolute discretion, the option to terminate this Stipulation in accordance with the
procedures set forth in the Supplemental Agreement. The Supplemental Agreement will not be filed with the Court unless and until a dispute among the Settling Parties concerning its interpretation or application arises. Copies of all Requests for
Exclusion received, together with copies of all written revocations of Requests for Exclusion, shall promptly be delivered to counsel for Defendants but in no event later than seven (7) days before the Settlement Hearing. 
 7.5 Unless otherwise ordered by the Court, in the event the Stipulation shall terminate, or be canceled, or shall not become effective for any reason,
the Settlement Fund (including accrued interest), plus any amount then remaining in the Notice and Administration Fund (including accrued interest), less expenses and any costs which have either been properly disbursed pursuant to ¶¶2.6 or
2.7 hereof, or are chargeable to the Notice and Administration Fund, shall be refunded by the Escrow Agent in accordance with instructions given by counsel for the Defendants within five (5) business days after written notification of such
event is sent by counsel for Defendants. At the request of Defendants’ counsel, the Escrow Agent or its designee shall apply for any tax refund owed to the Settlement Fund and pay the proceeds, after deduction of any fees or expenses incurred
in connection with such application(s) for refund, to the Defendants or their insurance carrier in proportion to their respective contributions to the Settlement Fund. 
 7.6 In the event that the Stipulation is not approved by the Court or the settlement set forth in the Stipulation is terminated or fails to become effective in accordance with its terms, the Settling Parties shall be
restored to their respective positions in the Litigation as of July 12, 2006. In such event, the terms and provisions of the Stipulation, with the exception of ¶¶1.1-1.21, 2.2-2.8, 6.2, 7.3-7.7, 8.2-8.4, 8.9-8.13 herein, shall have no
further force and effect with respect to the Settling Parties and shall not be used in this Litigation or in any other proceeding for any purpose, 

  

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and any judgment or order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc. No order of
the Court or modification or reversal on appeal of any order of the Court concerning the Plan of Allocation or the amount of any attorneys’ fees, expenses and interest awarded by the Court to the Lead Plaintiff or to any Plaintiffs’
Counsel shall constitute grounds for cancellation or termination of the Stipulation. 
 7.7 If the Effective Date does not occur, or if the
Stipulation is terminated pursuant to its terms, neither the Lead Plaintiff nor any Plaintiffs’ Counsel shall have any obligation to repay any amounts actually and properly disbursed from the Notice and Administration Fund or pursuant to
¶2.7 hereof. In addition, any expenses already incurred and chargeable to the Notice and Administration Fund pursuant to ¶2.6 hereof at the time of such termination or cancellation but which have not been paid, shall be paid by the Escrow
Agent in accordance with the terms of the Stipulation prior to the balance being refunded in accordance with ¶7.5 hereof. 
 7.8 If a
case is commenced in respect to any Defendant under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or conservator is appointed under any similar law, and in the event of the entry of a final order of a court of competent
jurisdiction determining the transfer of the Settlement Fund, or any portion thereof, by or on behalf of such Defendant to be a preference, voidable transfer, fraudulent transfer or similar transaction that results in the actual return of the
Settlement Fund or any portion thereof, paid by or on behalf of that Person, then, as to such Defendant, the releases given and Judgment entered in favor of such Defendant pursuant to this Stipulation shall be null and void. 
 8. Miscellaneous Provisions 
 8.1 The
Settling Parties (a) acknowledge that it is their intent to consummate this agreement; and (b) agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and conditions of the Stipulation and to exercise
their best efforts to accomplish the foregoing terms and conditions of the Stipulation. 
  

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 8.2 Each Defendant warrants as to himself that, at the time any of the payments provided for herein are
made on behalf of himself, he is not insolvent and such payment will not render him insolvent. This representation is made by each Defendant as to himself, and is not made by counsel for the Defendants. 
 8.3 The parties intend this Stipulation to be a final and complete resolution of all disputes between them with respect to the Litigation. The settlement
compromises claims which are contested and shall not be deemed an admission by any Settling Party as to the merits of any claim or defense. While retaining their right to deny that the claims advanced in the Litigation were meritorious, Defendants,
in any statement made to any media (whether or not for attribution), will not deny that the Litigation was filed in good faith and is being settled voluntarily after consultation with competent legal counsel. The Final Judgment will contain a
statement that during the course of the Litigation, the parties and their respective counsel at all times complied with the requirements of Federal Rule of Civil Procedure 11. The Settling Parties agree that the amount paid to the Settlement Fund
and the other terms of the settlement were negotiated in good faith by the Settling Parties, and reflect a settlement that was reached voluntarily after consultation with competent legal counsel. The Settling Parties reserve their right to rebut, in
a manner that such party determines to be appropriate, any contention made in any public forum that the Litigation was brought or defended in bad faith or without a reasonable basis. 
 8.4 Neither the Stipulation nor the settlement contained therein, nor any act performed or document executed pursuant to or in furtherance of the
Stipulation or the settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity of any Released Claim, or of any wrongdoing or liability of the Defendants; or (b) is or may be deemed to be or
may be used 

  

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as an admission of, or evidence of, any fault or omission of any of the Defendants in any civil, criminal or administrative proceeding in any court,
administrative agency or other tribunal. Defendants may file the Stipulation and/or the Judgment in any action that may be brought against them in order to support a defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim. 
 8.5 All agreements made and orders entered during the course of the Litigation relating to the confidentiality of information shall survive this Stipulation. 
 8.6 All of the Exhibits to the Stipulation are material and integral parts thereof and are fully incorporated therein by this reference. 
 8.7 The Stipulation may be amended or modified only by a written instrument signed by or on behalf of all Settling Parties or their respective
successors-in-interest. 
 8.8 The Stipulation and the Exhibits attached thereto and the Supplemental Agreement constitute the entire
agreement among the parties hereto and no representations, warranties or inducements have been made to any party concerning the Stipulation or its Exhibits other than the representations, warranties and covenants contained and memorialized in such
documents. Except as otherwise provided therein, each party shall bear its own costs. 
 8.9 Plaintiffs’ Settlement Counsel, on behalf
of the Settlement Class, are expressly authorized by the Lead Plaintiff to take all appropriate action required or permitted to be taken by the Settlement Class pursuant to the Stipulation to effectuate its terms and also are expressly authorized to
enter into any modifications or amendments to the Stipulation on behalf of the Settlement Class which they deem appropriate. 
 8.10 Each
counsel or other Person executing the Stipulation or any of its Exhibits on behalf of any party hereto hereby warrants that such Person has the full authority to do so. 
  

 - 21 - 

 8.11 The Stipulation may be executed in one or more counterparts. All executed counterparts and each of
them shall be deemed to be one and the same instrument. A complete set of original executed counterparts shall be filed with the Court. 
 8.12 The Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the parties hereto. 
 8.13
The Court shall retain jurisdiction with respect to implementation and enforcement of the terms of the Stipulation, and all parties hereto submit to the jurisdiction of the Court for purposes of implementing and enforcing the settlement embodied in
the Stipulation. 
 8.14 The Stipulation and the Exhibits thereto shall be considered to have been negotiated, executed and delivered, and to
be wholly performed, in the State of Texas, and the rights and obligations of the parties to the Stipulation shall be construed and enforced in accordance with, and governed by, the internal, substantive laws of the State of Texas without giving
effect to that State’s choice of law principles. 
 IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed,
by their duly authorized attorneys, dated as of October 31, 2006. 
  

	
	 CLAXTON & HILL, PLLC
 ROGER F. CLAXTON
 State Bar No. 04329000
 ROBERT J. HILL
 State Bar No. 09652100

	
	 /s/ Roger F. Claxton

	ROGER F. CLAXTON
	
	 700 McKinney Place
 3131 McKinney Avenue,
LB-103
 Dallas, TX 75204-2471
 Telephone: 214/969-9029

214/953-0583 (fax)

	
	Local Counsel for Plaintiffs

  

 - 22 - 

	
	 LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP
 JEFFREY D. LIGHT

	
	 /s/ Jeffrey D. Light

	JEFFREY D. LIGHT
	
	 655 West Broadway, Suite 1900
 San Diego, CA 92101-3301
 Telephone: 619/231-1058
 619/231-7423 (fax)

	
	 LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP
 JACK REISE
 ROBERT J. ROBBINS
 120 East Palmetto Park Road, Suite 500
 Boca Raton, FL 33432
 Telephone: 561/750-3000
 561/750-3364 (fax)

	
	 VIANALE & VIANALE LLP
 KENNETH J. VIANALE
 JULIE PRAG VIANALE

	
	 /s/ Kenneth J. Vianale

	KENNETH J. VIANALE
	
	 2499 Glades Road, Suite 112
 Boca Raton, FL 33431
 Telephone: 561/392-4750
 561/392-4775 (fax)

	
	 Co-Lead Counsel for Plaintiffs

  

 - 23 - 

	
	 JACKSON WALKER L.L.P.
 MARK T. JOSEPHS
 SCOTT A. WHEATLEY

	
	 /s/ Mark T. Josephs

	MARK T. JOSEPHS
	 901 Main Street
 Suite 6000
 Dallas, TX 75202
 Telephone: 214/953-6000
 214/953-5822 (fax)

	
	Attorneys for Defendants

  

 - 24 -

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