Document:

exv10w7

 

Exhibit 10.7

WAIVER AND FIRST AMENDMENT

TO

EMPLOYMENT AGREEMENT

     This WAIVER AND FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “First
Amendment”) is entered into as of August 27, 2004 between GAINSCO, INC., a
Texas corporation (the “Company”), and Glenn W. Anderson (“Employee”):

     WHEREAS, the Company and Employee have entered into an Employment
Agreement effective as of April 17, 1998 (the “1998 Anderson Employment
Agreement”), the current expiration of which is April 16, 2008;

     WHEREAS, GAINSCO Service Corp. and Employee entered into a Change in
Control Agreement dated April 17, 1998 (the “1998 Change in Control
Agreement”);

     WHEREAS, concurrently herewith and in reliance hereon, the Company is
entering into (i) the Securities Exchange Agreement dated as of August 27, 2004
with Goff Moore Strategic Partners, L.P., a Texas limited partnership (“GMSP”,
and such agreement, the “GMSP Exchange Agreement”); (ii) the Stock Investment
Agreement dated as of August 27, 2004 with Robert W. Stallings (“Stallings”,
and such agreement, the “Stallings Investment Agreement”); (iii) the Securities
Purchase Agreement dated as of August 27, 2004 with James Reis (“Reis”, and
such agreement, the “Reis Investment Agreement”); (iv) the Employment Agreement
dated as of August 27, 2004 with Stallings (the “Stallings Employment
Agreement”); and (v) the Employment Agreement dated as of August 27, 2004 with
Reis (the “Reis Employment Agreement”) (the GMSP Exchange Agreement, the
Stallings Investment Agreement and the Reis Investment Agreement collectively,
the “Stock Agreements”; and the Stallings Employment Agreement and the Reis
Employment Agreement together, the “Employment Agreements”);

     WHEREAS, the Company and Employee desire to amend the 1998 Anderson
Employment Agreement as more particularly set forth below; and

     WHEREAS, the Company desires to issue shares of its common stock, par
value $0.10 per share (“Common Stock”), to Employee on the terms set forth
below;

     NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Employee agree as follows:

     1.      Waiver. Employee hereby consents to the execution, delivery and
performance of the Stock Agreements and the Employment Agreements, and confirms
and agrees that the execution, delivery and performance of the Stock Agreements
and Employment Agreements in accordance with their respective terms, and the
consummation of the transactions and the performance of the duties and
obligations contemplated thereby, do not and will not violate or trigger, and
no prior transaction has violated or triggered, any payment or other rights
under the

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1998 Anderson Employment Agreement or the 1998 Change in Control
Agreement, and Employee hereby waives any such violation or trigger.

     2.     Amendments to Section 4 of 1998 Anderson Employment Agreement.

          (a)     Subject to both (i) receipt of the GNAC Shareholder Approval (as such
term is defined in the Stock Agreements) hereof and (ii) the consummation of
the transactions contemplated in the Stock Agreements (the later of the date of
the occurrence of the events in clause (i) or (ii) preceding is hereinafter
referred to as the “Effective Date”), Section 4(b) of the 1998 Anderson
Employment Agreement is hereby amended and restated to read in its entirety as
follows:

     (b) Bonus. Employee shall receive a bonus (in respect
of each completed calendar year during the term specified in
Section 3, commencing with the calendar year in which the
Effective Date occurs) in an amount equal to two percent
(2%) of EBIT of the Company for the applicable calendar year
and payable no later than March 31 of the following calendar
year. In respect of the calendar year in which the
Effective Date occurs, Employee shall receive a bonus equal
to 2% of the Company’s EBIT for such calendar year Prorated
for the partial year that commenced on the Effective Date.
As used in this Agreement, (i) “EBIT” means consolidated
Income before Federal income taxes plus (A) Interest expense
and (B) any bonuses accrued in respect of Employee (but not
any other officer or employee of the Company or any of its
subsidiaries), in each case as determined on a consolidated
basis and in accordance with generally accepted accounting
principles for financial reporting in the United States,
consistently applied (for purposes of the definition of
EBIT, (x) dividends are not a deduction from Income before
Federal income taxes in the computation of EBIT and (y)
bonuses accrued for directors, officers and employees are
expenses deducted in the computation of Income before
Federal income taxes); and (ii) “Prorated” means, with
respect to any number, the product of the number multiplied
by a fraction, the numerator of which is the number of days
worked by such Employee during the applicable calendar year
and the denominator of which is 365.

          (b)     Section 4(c) of the 1998 Anderson Employment Agreement is hereby
deleted in its entirety, and the parties agree that the Option provided for
therein has been granted and has expired unexercised in accordance with its
terms.

     3.     Stock Grants.

          (a)      Subject to and forthwith after both the (i) receipt of the GNAC
Shareholder Approval hereof and (ii) the consummation of the transactions
contemplated in the Stock Agreements, the Company shall issue to Employee
200,000 shares of Common Stock (the “Granted Shares”). There will be no
vesting or forfeiture conditions applicable to the Granted Shares. There will
be no transfer restrictions applicable to the Granted Shares beyond those set
forth in Sections 4(d) and (f) below and under the Securities Act of 1933, as
amended (the

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“Securities Act”), and applicable state securities laws (the Securities
Act and applicable state securities laws collectively, the “Applicable
Securities Laws”) .

          (b)      Subject to and forthwith after both the (i) receipt of the GNAC
Shareholder Approval hereof and (ii) the consummation of the transactions
contemplated in the Stock Agreements, the Company and Employee shall enter into
a Restricted Stock Agreement substantially in the form attached hereto as
Exhibit “A” (the “Restricted Stock Agreement”), pursuant to which the Company
shall issue to Employee 400,000 shares of restricted Common Stock (the
“Restricted Shares”).

          (c)      The Granted Shares and the Restricted Shares will be issued to
Employee without registration under the Securities Act or any other Applicable
Securities Laws. The Company will have no obligation to register the Granted
Shares or the Restricted Shares for resale under any Applicable Securities
Laws.

          (d)     Employee will be acquiring the Granted Shares and the Restricted
Shares for investment and with no intent to sell or otherwise dispose of them.
In no event shall Employee sell, assign, pledge, exchange, transfer, encumber,
charge or otherwise dispose of any of the Granted Shares or the Restricted
Shares, if such sale, assignment, pledge, exchange, transfer, encumbrance,
charge or disposition might reasonably be expected to result in a violation of
any of the Applicable Securities Laws. Unless the Company agrees otherwise,
Employee shall be required to provide a legal opinion in form and substance and
from counsel satisfactory to the Company that any such intended sale,
assignment, pledge, exchange, transfer, encumbrance, charge or disposition is
exempt from the registration requirements of the Applicable Securities Laws.

          (e)     Employee is an “accredited investor” (as defined in Rule 501(a) of the
Regulation D under the Securities Act) resident and domiciled in the State of
Texas.

          (f)     The reverse side of each certificate reflecting ownership of the
Restricted Shares shall bear the legends set forth in the Restricted Stock
Agreement. The reverse side of each certificate reflecting ownership of the
Granted Shares shall bear the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THUS MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF, UNLESS THEY ARE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE AND AN OPINION IN FORM AND SUBSTANCE AND
FROM COUNSEL SATISFACTORY TO THE COMPANY HAS BEEN
RECEIVED BY THE COMPANY.

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     4.      Replacement Change in Control Agreement.

          (a)     Contemporaneously with the execution of this Agreement, the Company
and Employee are entering into a replacement Change in Control Agreement (the
“2004 Change in Control Agreement”) and upon execution of the 2004 Change in
Control Agreement, the 1998 Change in Control Agreement shall terminate and be
of no force and effect.

          (b)     The Company and Employee each hereby release the other from any and
all present and future payment obligations, adjustments, executions, offsets,
actions, causes of action, suits, debts, sums of money, accounts, covenants,
controversies, promises, damages, judgments, claims, demands, liabilities or
losses whatsoever, all whether known or unknown, which either of them, and
their respective successors and assigns ever had, now have, or hereafter may
have, whether grounded in law or in equity, in contract or in tort, against the
other, by reason of any matter whatsoever arising out of the 1998 Change in
Control Agreement on or prior to the date of this Agreement.

          (c)     Section 6(c) of the 1998 Anderson Employment Agreement is hereby
amended to read as follows:

     (c) Change in Control. If Employee’s employment is
terminated pursuant to Section 6(a)(iii) above prior to the
end of a period of twenty-four (24) months beyond the month
in which a “change in control of the Company” (as defined in
the 2004 Change in Control Agreement) occurs, Employee shall
receive the greater of (i) the amount determined pursuant to
Section 6(b)(ii) above or (ii) the amounts payable pursuant
to the 2004 Change in Control Agreement.

     5.      Definitions. Terms defined in this First Amendment are incorporated by
this reference into Section 11 of the 1998 Anderson Employment Agreement.
References in the 1998 Anderson Employment Agreement to “Change in Control
Agreement” are hereby amended to be references to “2004 Change in Control
Agreement.”

     6.      Ratification. Except as amended or waived hereby, the 1998 Anderson
Employment Agreement shall remain in full force and effect and is hereby
ratified, approved and confirmed.

     7.     Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

     8.      Counterparts. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.

[Remainder of page intentionally left blank.]

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

	 	 	 	 	 
	 	GAINSCO, INC.

 	 
	 	By:  	/s/ John H. Williams
 	 
	 	 	John H. Williams 	 
	 	 	Chairman of the Compensation Committee of
the Board of Directors of GAINSCO, INC. 	 
	 

	 	 	 	 	 
	 	EMPLOYEE

 	 
	 	/s/  Glenn W. Anderson
 	 
	 	Glenn W. Anderson, individually 	 
	 	 	 

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EXHIBIT A

FORM OF RESTRICTED STOCK AGREEMENT

GAINSCO, INC.

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) dated as of
                                      , 2004, is entered into between GAINSCO, INC., a Texas
corporation (the “Company”), and Glenn W. Anderson (the “Employee”) pursuant to
a Waiver and First Amendment dated August 27, 2004 (the “First Amendment”) to
the Employment Agreement dated effective April 17, 1998 (the “1998 Anderson
Employment Agreement”) (terms defined in the First Amendment are used herein
with the same meaning). The Company and the Employee agree as follows:

     1.     Definitions.

          1.1     “Change in Control” shall have the meaning set forth in the Change in
Control Agreement dated as of August 27, 2004 between the Company and Employee.

          1.2     “Person” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

     2.     Acquisition of Restricted Stock. Concurrently with the execution and
delivery hereof, the Company has issued to the Employee 400,000 shares of the
Company’s common stock, par value $.10 per share (“Common Stock”). The Company
and the Employee have determined that it would be in their best interests to
impose certain rights and obligations upon the Company, the Employee and his
legal representatives, as the case may be, with respect to such 400,000 shares
of Common Stock (as adjusted for stock splits, dividends and the like, the
"Shares”).

     3.      Restriction Period. During the period (the “Restriction Period”)
commencing as of the date of this Agreement and ending on the fifth anniversary
of the date of this Agreement, the Shares shall be subject to the restrictions
described in Section 4 of this Agreement (the “Restrictions”). The Shares
subject to the Restrictions at any given time are called the “Restricted
Shares.”

     4.      Restrictions. The Restricted Shares shall be represented by one or
more stock certificates registered in the name of the Employee. The Employee
shall have the right to receive dividends on the Restricted Shares, to vote the
Restricted Shares and to enjoy all other shareholder rights with respect
thereto, except that (i) the Employee shall not be entitled to possession of
the stock certificate representing the Restricted Shares, (ii) the Company
shall retain custody of the stock certificate(s) representing the Restricted
Shares, (iii) the Employee

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may not, other than as permitted under Section 9.2, sell, assign, pledge,
exchange, transfer, encumber, charge, otherwise dispose of the Restricted
Shares, or any of them, or any interest therein or thereto, and (iv) the
Restricted Shares are subject to potential forfeiture as provided in Section 5
of this Agreement.

     5.     Forfeiture. Any Restricted Shares (and all voting and other rights
associated with such Restricted Shares) shall be forever forfeited (to the
extent that the Restrictions with respect to such Restricted Shares have not
previously lapsed) in the event (i) such Restricted Shares are transferred by
operation of law to any Person other than the Company or in accordance with
Section 9.2 for any reason (including without limitation the bankruptcy of the
Employee or seizure and sale by legal process), or (ii) the Employee’s
employment with the Company is terminated prior to the end of the Restriction
Period for any reason; provided, however, that if Employee is terminated
Without Cause pursuant to Section 6(a)(iii) of the 1998 Anderson Employment
Agreement or in the event of the death or employment ending disability of
Employee, a Prorated number of Restricted Shares for the year in which such
event occurred shall become fully vested as of the date of such termination or
death or employment ending disability from the last anniversary of the date of
this Agreement to the date of such event. The Company shall not be obligated
to pay the Employee any amount for the forfeiture of any Restricted Shares.
The Employee shall be entitled to retain all Shares to which the Restrictions
have ceased to apply.

     6.      Lapse of Restrictions. Subject to Section 5 of this Agreement,
Restricted Shares shall become “vested”, and the Restriction Period with regard
thereto shall lapse, as follows:

     (i)     80,000 Restricted Shares shall become fully vested on the first
anniversary of the date of this Agreement;

     (ii)     an additional 80,000 Restricted Shares shall become fully vested on
the second anniversary of the date of this Agreement;

     (iii)     an additional 80,000 Restricted Shares shall become fully vested on
the third anniversary of the date of this Agreement;

     (iv)     an additional 80,000 Restricted Shares shall become fully vested on
the fourth anniversary of the date of this Agreement; and

     (v)     the remaining 80,000 Restricted Shares shall become fully vested on
the fifth anniversary of the date of this Agreement.

Notwithstanding the foregoing, however, the Restrictions shall lapse
automatically with respect to all previously unvested Shares (unless earlier
forfeited in accordance with Section 5 of this Agreement) upon the occurrence
of a Change in Control.

     7.     Restrictions on Corresponding Securities and Assets. Any other
securities or assets (other than ordinary cash dividends) that are received by
the Employee in respect of any of the Restricted Shares shall be subject to the
Restrictions to the same extent and for so long as such Restricted Shares to
which such securities or other assets are attributable remain subject to the

Restrictions.

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     8.     Delivery of Certificates Upon Lapse of Restrictions. Promptly
following the lapse of the Restrictions as to any of the Shares, the Company
will deliver the stock certificate or certificate representing such Shares with
respect to which the Restrictions have lapsed to the Employee or his legal
representative.

     9.     Certain Restrictions on Transferability of Shares by the Employee. The
following restrictions shall apply to all Restricted Shares:

          9.1     Restriction on Transfers in Violation of the Securities Act. Employee
will be acquiring the Restricted Shares for investment and with no intent to
sell or otherwise dispose of them. In no event shall Employee sell, assign,
pledge, exchange, transfer, encumber, charge or otherwise dispose of any of the
Restricted Shares or any right or benefit under this Agreement, if such sale,
assignment, pledge, exchange, transfer, encumbrance, charge or disposition
might reasonably be expected to result in a violation of the Securities Act of
1933, as amended (the “Securities Act”), or applicable state securities laws
(the Securities Act and applicable state securities laws collectively, the
“Applicable Securities Laws”). Unless the Company agrees otherwise, Employee
shall be required to provide a legal opinion in form and substance and from
counsel satisfactory to the Company that such intended sale, assignment,
pledge, exchange, transfer, encumbrance, charge or disposition is exempt from
the registration requirements of the Applicable Securities Laws.

          9.2     Permitted Transfers. The Employee may transfer all or any part of the
Shares, to (i) the members of the immediate family of the Employee (including
lineal descendants) or one or more trusts or partnerships for the benefit of
the Employee or members of the immediate family of the Employee (including
lineal descendants); or (ii) the estate of the Employee or to any heir,
executor, administrator or lineal descendant of the Employee; provided that
prior to any such transfer either the Employee or the transferee delivers to
the Company a written instrument in accordance with Section 10 and an opinion
of counsel reasonably satisfactory to the Company in accordance with Section
9.1 to the effect that the transfer is exempt from registration under
Applicable Securities Laws. In the event of a transfer under this Section 9.2,
such transferee(s) shall be deemed a Shareholder for purposes of this
Agreement.

     10.     Conditions to Transfers. It shall be a condition to the transfer of
any Restricted Shares by the Employee to any Person that the recipient of such
Restricted Shares shall become a signatory to this Agreement by executing an
Addendum Agreement in the form and substance satisfactory to the Company.

     11.     Legends of Certificates. The reverse side of each certificate
reflecting ownership of the Restricted Shares subject to the Restrictions under
Section 4 shall bear the following legends:

THE SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION
(EACH A “TRANSFER”) AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF
A RESTRICTED STOCK AGREEMENT DATED AS OF                , 2004, WITH
THE COMPANY (THE “RESTRICTED STOCK

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AGREEMENT”), COPIES OF WHICH ARE AVAILABLE AT THE COMPANY’S
PRINCIPAL OFFICE FOR INSPECTION. THE COMPANY WILL NOT
REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN
COMPLIANCE WITH THE TERMS OF THE RESTRICTED STOCK AGREEMENT.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THUS MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF, UNLESS THEY ARE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE AND AN OPINION IN FORM AND
SUBSTANCE AND FROM COUNSEL SATISFACTORY TO THE COMPANY HAS
BEEN RECEIVED BY THE COMPANY.

     12.     Notices. Any notice required or permitted under this Agreement shall
be in writing and shall be deemed to be delivered (i) upon physical delivery
(if hand delivered); (ii) three business days after deposit in the United
States mail (if mailed), postage prepaid, certified or registered mail, return
receipt requested, addressed as set forth below or (iii) the day such notice is
sent via facsimile as set forth below:

	 	 	 
	The Company:
	 	GAINSCO, INC.
	 	 	1445 Ross Avenue, Suite 5300
	 	 	Dallas, Texas 75202
	 	 	Attention: Chairman of the Board
	 	 	Fax: (214) 647-0415
	 	 	 
	Employee:
	 	Notices to Employee shall be given at
the most recent address of Employee on the
Company’s records.

Notice given in any other manner shall be effective when received. The address
for notice may be changed by notice given in accordance with this provision.
If notice is required to be delivered to any party to this Agreement, a copy of
such notice shall be delivered to all other parties to this Agreement.

     13.     Power of Attorney. The Chairman of the Board of the Company, from
time to time, is hereby appointed the attorney-in-fact, with full power of
substitution of the Employee for the sole purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which such attorney-in fact may deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in fact is irrevocable and
coupled with an interest. The Chairman of the Board of the Company, as
attorney-in-fact for the Employer may, in the name of the Employee, make and
execute all conveyances, assignments and transfers of the Restricted Shares,
and the Employee hereby ratifies and confirms all that the

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Chairman of the Board of the Company, as said attorney-in-fact, shall do
so by virtue hereof, provided that the foregoing shall be solely for the
purpose of carrying out the provisions of this Agreement. Nevertheless, the
Employee shall, if so requested by the Company, execute and deliver to the
Company all such instruments as may, in the reasonable judgment of the Company,
be advisable for the purposes hereof.

     14.     Waiver. No waiver of any provision of this Agreement shall constitute
a waiver of any other provision of this Agreement, nor shall such waiver
constitute a waiver of any subsequent breach of such provision.

     15.     Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the Employee and his heirs, executors, administrators and
legal representatives and upon the Company and its successors and assigns.

     16.      Governing Law; Venue. The validity, construction, and enforcement of
this Agreement shall be governed by the laws of the State of Texas, without
regard for any principles of conflict of laws. Any dispute arising out of or
relating to this Agreement may be brought in a court of competent jurisdiction
located in Dallas, Texas, and both of the parties to this Agreement irrevocably
submit to the exclusive jurisdiction of such courts in any such dispute, waives
any objection it may now or hereafter have to venue or to convenience of forum,
agrees that all claims in respect of the dispute shall be heard and determined
only in any such court, and agrees not to bring any dispute arising out of or
relating to this Agreement in any other court. The parties agree that either
or both of them may file a copy of this paragraph with any court as written
evidence of the knowing, voluntary and bargained agreement among the parties
irrevocably to waive any objections to venue or to convenience of forum.
Process in any dispute may be served on any party anywhere in the world.

     17.     Severability. If any provision of this Agreement is declared
unenforceable by a court of last resort, such declaration shall not affect the
validity of any other provision of this Agreement.

     18.     Construction. The headings contained in this Agreement are for
reference purposes only and shall not affect this Agreement in any manner
whatsoever. Wherever required by the context, any gender shall include any
other gender, the singular shall include the plural, and the plural shall
include the singular.

     19.      Amendments. This Agreement may only be amended or modified by written
agreement of the Company and the Employee.

     20.      Tax Consequences. Employee understands that he shall be responsible
for his own tax liability that may arise as a result of the transaction
contemplated by this Agreement. Employee understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary
income the difference between the amount paid for the Shares and the fair
market value of the Shares as of the date any of the restrictions on the Shares
lapse. Employee understands that he may elect to be taxed at the time the
Shares are granted rather than when the restrictions lapse by filing an
election under Section 83(b) of the Code with the Internal Revenue Service
within 30 days from the date of grant. If Employee does not choose to elect

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Section 83(b) status, Employee may ask the Company to reduce the number of
Restricted Shares issued pursuant to this Agreement to equal the estimated
after-tax value of Restricted Shares when reduced.

[Remainder of page intentionally left blank.]

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The parties have executed this Agreement effective as of the date first set
forth above.

	 	 	 	 	 
	 	GAINSCO, INC.

 	 
	 	By:  	
 	 
	 	 	John H. Williams 	 
	 	 	Chairman of the Compensation Committee of the
Board of Directors of GAINSCO, INC. 	 
	 

	 	 	 	 	 
	 	EMPLOYEE

	 	
 	 
	 	Glenn W. Anderson, individually	 
	 	 	 
	 	 	 
	 

     The undersigned, the spouse of the Employee, hereby joins in the execution
and delivery of this Agreement to evidence her consent and approval to, and
agreement to be bound by, all the terms and provisions hereof.

	 	 

12exv10w8

 

Exhibit 10.8

GAINSCO, INC.

1445 Ross Avenue, Suite 5300

Dallas, Texas 75202

August 27, 2004

Glenn W. Anderson

5792 Forest Highlands Drive

Fort Worth, Texas 76132

Dear Glenn:

     GAINSCO, INC. (the “Company” or “Employer”) considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the
Company (the “Board”) recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.

     The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the management of the Company and its direct and indirect subsidiaries
(collectively, the “GAINSCO Companies”), including yourself, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a future change in control of the Company,
although no such change is now contemplated.

     In order to induce you to remain in the employ of one or more of the
GAINSCO Companies, and in consideration of your agreement set forth in
Subsection 2(ii) hereof, the Company agrees that you shall receive the
severance benefits set forth in this letter agreement (this “Agreement”) in the
event your employment with all of the GAINSCO Companies is terminated
subsequent to a “Change in Control of the Company” (as defined in Section 2
hereof) under the circumstances described below.

     1. Term of Agreement. This Agreement shall commence on the date first set
forth above and shall continue in effect through December 31, 2005; provided,
however, that commencing on January 1, 2006 and each January thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than the September 30 preceding each such January 1, the
Company shall have given notice that it does not wish to extend this Agreement;
provided, further, if a Change in Control of the Company shall have
occurred during the original or extended

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term of this Agreement, this
Agreement shall continue in effect for the later of (i) the original or
extended term or (ii) the end of the Post Transaction Period. The “Post
Transaction Period” means a period of twenty-four (24) months beyond the date
on which such Change in Control of the Company occurred. Notwithstanding the
foregoing, in no event shall the term of this Agreement extend beyond the date
that you attain sixty-five years of age.

     2. Change in Control.

          (i) No benefits shall be payable hereunder unless there shall have been a
Change in Control of the Company, as defined below. For purposes of this
Agreement, a “Change in Control of the Company” shall be deemed to have
occurred if, after the date of this Agreement,

               (A) any “Person” (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
(other than an Approved Person (as defined below)) becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of a majority or more of the then outstanding
Common Stock, par value $.10 per share, of the Company (“Common Stock”)
(such Person, an “Acquiring Person”); or

               (B) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board and any new director (other
than a director designated by or affiliated with any Acquiring Person or
a Person who has entered into an agreement with the Company to effect a
transaction described in clauses (A), (C) or (D) of this Subsection)
whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved (“Continuing Directors”) cease for any reason to constitute a
majority thereof; or

               (C) the Company merges or consolidates with any other corporation or
other entity, or another corporation or other entity acquires Common
Stock pursuant to a plan of exchange (within the meaning of Article 5.02
of the Texas Business Corporation Act, as amended (the “TBCA”)) (a “Share
Exchange"), in each case other than a merger, consolidation or Share
Exchange which results in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least a majority of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger, consolidation or Share Exchange; or

               (D) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company’s assets other than
in the usual and regular course of business (as defined in Article 5.09B
of the TBCA);

2

 

provided, however, that in no event shall any increase in a Person’s Beneficial
Ownership of Common Stock as a result of the acquisition of securities of the
Company by the Company or any of its subsidiaries be deemed a Change in Control
of the Company.

          As used in this Agreement, (w) “Approved Person” means (1) an employee
benefit plan of the Company (or a trustee or other fiduciary holding securities
for such a plan) (collectively, an “Employee Plan”), or (2) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
or (3) a Person not less than a majority of whose voting securities are
Beneficially Owned by the Company after giving effect to the transaction, or
(4) any of Goff Moore Strategic Partners, L.P., a Texas limited partnership,
Robert W. Stallings, James R. Reis, First Western Capital, LLC, an Arizona
limited liability company, or any employee, partner, Affiliate or Associate of
any of the foregoing Persons, or (5) any Person who was, directly or
indirectly, the Beneficial Owner of 5% or more of the outstanding Common Stock
on the date of this Agreement; (x) “Affiliate” means, with respect to any
Person, any other Person that directly, or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with such
specified Person (for this purpose the term “control” (including the terms
“controlling”, “controlled by” and “under common control with”) shall mean the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person whether through the ownership of
voting securities, by contract, or otherwise); (y) “Associate” means, with
respect to any Person, (i) any corporation or entity (other than the Company or
a Subsidiary of the Company) of which such Person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10 percent or more of any
class of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such
Person or who is a director or officer of the Company or any of its
Subsidiaries; and (z) “Subsidiary” means, with respect to any Person, any
corporation or other entity (including partnerships and other business
associations) in which the Person directly or indirectly owns at least a
majority of the outstanding voting securities or other equity interests having
the power, under ordinary circumstances, to elect a majority of the directors,
or otherwise to direct the management and policies, of such corporation or
other entity.

          (ii) For purposes of this Agreement, a “Potential Change in Control of the
Company” shall be deemed to have occurred if (A) the Company enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control of the Company, (B) any Person (including the Company) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company, (C) any
Person, other than an Approved Person, who becomes the Beneficial Owner,
directly or indirectly, of 10% or more of the outstanding Common Stock,
increases his Beneficial Ownership of such securities by 5% or more of the
Common Stock then outstanding, or (D) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in Control of
the Company has occurred. You agree that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control of the
Company, you will remain in the employ of the GAINSCO Companies until the
earliest of (1) a date which is one year after the occurrence of such Potential
Change in Control of the Company, (2) the termination by you
of your employment with the GAINSCO Companies by reason of death,
Disability or Retirement as defined in Subsection 3(i), or (3) the occurrence
of a Change in Control of the Company.

3

 

     3. Termination Following Change in Control. If a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iii) hereof upon the subsequent termination of your employment
during the Post Transaction Period unless such termination is (A) because of
your death, Disability or Retirement, (B) by any GAINSCO Company for Cause, or
(C) by you other than for Good Reason. You shall not be entitled to any
benefits under this Agreement if your employment terminates prior to the
occurrence of the Change in Control of the Company.

          (i) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the GAINSCO Companies for a period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time performance
of your duties, your employment may be terminated for “Disability.”
Termination by the GAINSCO Companies or you of your employment based on
"Retirement” shall mean termination with your consent in accordance with The
GAINSCO, INC. 401(k) Plan (the “Retirement Plan”), including any early
retirement, generally applicable to its salaried employees; provided, however,
that termination based on “Retirement” shall not include retirement in
conjunction with termination by you for Good Reason.

          (ii) Cause. Termination by the Company of your employment for “Cause”
shall mean termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination, by
you for Good Reason as defined in Subsections 3(iv) and 3(iii), respectively)
after a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed “willful”
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the Board at a meeting of the Board called
and held for such purpose (after reasonable notice to you and an opportunity
for you, together with your counsel, to be heard before the Board), finding
that in the good faith opinion of the Board you were guilty of conduct set
forth above in clauses (A) or (B) of the first sentence of this Subsection and
specifying the particulars thereof in detail.

          (iii) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without
your express written consent, the occurrence after a Change in Control of the
Company of any of the following circumstances unless, in the case of paragraph
(A), such circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination, as defined in Subsections 3(v) and
3(iv), respectively, given in respect thereof:

      (A) the assignment to you of duties inconsistent with your
employment status as President and Chief Executive Officer immediately
prior to the Change in Control of the

4

 

Company or a substantial adverse
alteration in the nature or status of your responsibilities from those in
effect immediately prior to the Change in Control of the Company;

      (B) the failure (i) to pay to you the base salary to which you are
entitled pursuant to Section 4(a) of your Employment Agreement entered
into with the Company effective as of April 17, 1998 (your “1998
Employment Agreement”), (ii) to pay to you the bonus to which you are
entitled under Section 2(a) of your Waiver and First Amendment to
Employment Agreement dated as of August 27, 2004 (the “First Amendment”)
with the Company or (iii) to deliver the Common Stock to which you are
entitled under the Restricted Stock Agreement provided in Section 3(b) of
the First Amendment; or

      (C) the relocation of the Company’s principal executive offices to a
location outside of the Dallas/Fort Worth, Texas metroplex (or, if
different, the metropolitan area in which such offices are located
immediately prior to the Change in Control of the Company) or the
Company’s requiring you to be based anywhere other than the Company’s
principal executive offices except for required travel on the Company’s
business to an extent substantially consistent with your present business
travel obligations.

Your right to terminate your employment pursuant to this Subsection shall not
be affected by your incapacity due to physical or mental illness.

          (iv) Notice of Termination. Any purported termination of your employment
by Employer or by you shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 6 hereof. For purposes of
the Agreement, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.

          (v) Date of Termination, Etc. “Date of Termination” shall mean (A) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to full-time
performance of your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii) above or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of termination pursuant to Subsection (ii)
above shall not be less than thirty (30) days, and in the case of a termination
pursuant to Subsection (iii) above shall not be less than fifteen (15) nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court
of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given (including, but not

5

 

limited to, base salary) and continue you as a participant in all compensation,
benefit and insurance plans in which you were participating whether or not
specifically referenced in this Agreement when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement, except as provided in
Subsection 4(iii)(B) below.

     4. Compensation upon Termination or During Disability. Following a Change
in Control of the Company and upon termination of your employment or during a
period of Disability, you shall be entitled to the following benefits:

          (i) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your salary at the rate in effect at the commencement
of such period, together with all other compensation and benefits payable to
you during such period, until this Agreement is terminated pursuant to Section
3(i) hereof. Thereafter, or in the event your employment shall be terminated
by the Company or by you for Retirement, or by reason of your death, your
benefits shall be determined under the Company’s retirement, insurance and
other compensation plans and programs then in effect in accordance with the
terms of such programs.

          (ii) If your employment shall be terminated by Employer for Cause or by
you other than for Good Reason, Disability, death or Retirement, Employer shall
pay you your full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation or benefit plan of any of the
GAINSCO Companies at the time such payments are due, and no GAINSCO Company
shall have any further obligations to you under or in respect of this
Agreement.

          (iii) If your employment by Employer shall be terminated (a) by Employer
other than for Cause, Retirement or Disability or (b) by you for Good Reason,
then you shall be entitled to the benefits provided below:

               (A) Employer shall pay you your full base salary through the Date of
Termination at the higher of (i) the rate in effect at the time Notice of
Termination is given or (ii) the rate in effect at the time of the
occurrence of the Change in Control of the Company, plus all other
amounts that have accrued, and to which you are entitled, under any
compensation plan of the Company, at the time such payments are due,
except as otherwise provided below; and

               (B) in lieu of any further salary payments to you for the period
subsequent to the Date of Termination, Employer shall pay as severance
pay to you a
lump sum cash severance payment in an amount equal to 200% of your
annual base salary in effect at the time the Change in Control of the
Company occurred; provided, however, that (x) you shall not be entitled
to receive such severance payment in the event that you are entitled to
receive the amount determined pursuant to Section 6(b)(ii) of your 1998
Employment Agreement and (y) any such payment shall be conditioned upon
your execution and delivery to Employer of a Separation Agreement and
General Release substantially in the form attached hereto as Exhibit “A”
(the “Separation Agreement”). Employer shall have no obligation

6

 

whatsoever to pay any severance pay or other amount to you pursuant to
this Subsection 4(iii)(B) unless and until you have executed and
delivered the Separation Agreement. Notwithstanding any other provisions
of this Agreement, in the event that any payment or benefit received or
to be received by you in connection with a Change in Control of the
Company or the termination of your employment (whether payable pursuant
to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, its successors, any Person whose actions
result in a Change in Control of the Company or any Person affiliated
with (or which, as a result of the completion of the transactions causing
a Change in Control of the Company, will become affiliated with) the
Company or such Person within the meaning of section 1504 of the Internal
Revenue Code of 1986, as amended (the “Code”) (all such payments and
benefits being hereinafter called the “Severance Payments”) would not be
deductible (in whole or in part), by the Company, Employer, an affiliate
or any Person making such payment or providing such benefit as a result
of section 280G of the Code, then, to the extent necessary to make such
portion of the Severance Payments deductible (and after taking into
account any reduction in the Severance Payments provided by reason of
section 280G of the Code in such other plan, arrangement or agreement),
(A) the cash Severance Payments shall first be reduced (if necessary, to
zero), and (B) all other non-cash Severance Payments shall next be
reduced. For purposes of this limitation, (i) no portion of the
Severance Payments, the receipt or enjoyment of which you shall have
effectively waived in writing prior to the Date of Termination, shall be
taken into account, (ii) no portion of the Severance Payments shall be
taken into account which, in the opinion of tax counsel selected by the
Company’s independent auditors does not constitute a “parachute payment”
within the meaning of section 280G(b)(2) of the Code, including by reason
of section 280G(b)(4)(A) of the Code, (iii) the Severance Payments shall
be reduced only to the extent necessary so that the Severance Payments
(other than those referred to in clauses (i) or (ii)) in their entirety
constitute reasonable compensation for services actually rendered within
the meaning of section 280G(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions, in the opinion of tax counsel
referred to in clause (ii); and (iv) the value of any non-cash benefit or
any deferred payment or benefit included in the Severance Payments shall
be determined by the Company’s independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code.

               (C) the payments provided for in paragraphs (A) and (B) above shall
be made not later than the 30th day following the Date of Termination;
provided, however, that if the amount of such payment cannot be finally
determined on or before such day, Employer shall pay to you on such day
an estimate, as determined in good faith by Employer, of the minimum
amount of such payment and shall pay the remainder of such payment
(together with interest at the rate provided in section 1274(b)(2)(B) of
the
Code) as soon as the amount thereof can be determined but in no
event later than the 60th day after the Date of Termination; and
provided, further, that notwithstanding anything to the contrary
contained in this Agreement, the payments provided for in paragraph (B)
above shall not be made any earlier than the eleventh (11th) day
following your execution (without revocation) of the Separation
Agreement. In the event that the amount of any estimated payment exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by Employer to you, payable on the fifth business day
after demand by Employer (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).

7

 

          (iv) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to Employer, or otherwise.

          (v) In addition to all other amounts payable to you under this Section 4,
you shall be entitled to receive all benefits payable to you, at the respective
time or times such payments are due, under the Retirement Plan(s), and any
other plan or agreement relating to retirement benefits.

     5. Successors: Binding Agreement. (i) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place, unless the successor’s obligations to so perform
are clearly established under applicable law. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation from
Employer in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason following a Change
in Control of the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

          (ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.

     6. Guarantee. The Company hereby unconditionally guarantees payment and
performance in full of all obligations of Employer under this Agreement and any
renewals or extensions hereof. This guarantee is a continuing guarantee and
may not be revoked by the
Company without your written consent and shall expire only when this
Agreement and all renewals or extensions of it have terminated.

     7. Notice. For the purpose of this Agreement, notices and other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:

8

 

If to the Company:

1445 Ross Avenue, Suite 5300

Dallas, TX 75202

Attn: President

If to you:

5792 Forest Highlands Drive

Fort Worth, Texas 76132

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.

     8. Entire Agreement; Modification. THIS AGREEMENT SUPERSEDES ALL PRIOR
AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN YOU, ON THE ONE HAND, AND ANY OF
THE PARTIES TO THIS AGREEMENT OR ANY OTHER GAINSCO COMPANY, ON THE OTHER HAND,
ONLY WITH RESPECT TO ITS SPECIFIC SUBJECT MATTER (INCLUDING WITHOUT LIMITATION
ANY PRIOR AGREEMENT OR UNDERSTANDING WITH RESPECT TO A CHANGE IN CONTROL
(HOWEVER THEREIN DEFINED OR UNDERSTOOD) OF THE COMPANY) AND CONSTITUTES A
COMPLETE AND EXCLUSIVE STATEMENT OF THE TERMS OF THE AGREEMENT AMONG THE
PARTIES WITH RESPECT TO ITS SPECIFIC SUBJECT MATTER; PROVIDED, HOWEVER, THAT
THIS AGREEMENT DOES NOT SUPERCEDE SECTION 6(C) OF YOUR 1998 EMPLOYMENT
AGREEMENT. IN THE EVENT THAT YOU ARE PARTY TO AN EMPLOYMENT AGREEMENT WITH ANY
GAINSCO COMPANY THAT PROVIDES FOR ANY PAYMENT TO YOU UPON A CHANGE IN CONTROL
(HOWEVER THEREIN DEFINED OR UNDERSTOOD), YOU SHALL BE ENTITLED TO THE GREATER
OF THE PAYMENT DUE TO YOU THEREUNDER OR UNDER THIS AGREEMENT, BUT NOT TO
PAYMENTS BOTH THEREUNDER AND UNDER THIS AGREEMENT. THIS AGREEMENT MAY NOT BE
AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED EXCEPT BY AN AGREEMENT IN WRITING
AND SIGNED BY YOU AND SUCH OFFICER AS MAY BE DULY AUTHORIZED TO ACT ON THE
COMPANY’S BEHALF.

     9. Applicable Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections.

     10. Tax Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.

     11. Validity; Survival. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. The obligations of the Company and Employer under Subsections 4(i),
4(ii) and 4(v) shall survive the expiration of the term of the Agreement.

9

 

     12. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     13. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Tarrant County, Texas in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance or your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.

     If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.

10

 

	 	 	 	 	 
	 	Sincerely,

GAINSCO, INC.

 	 
	 	By:  	/s/ John H. Williams
 	 
	 	 	John H. Williams 	 
	 	 	Chairman of the Compensation Committee of
the Board of Directors of GAINSCO, INC. 	 
	 

Agreed to effective the

27th day of August, 2004

/s/ Glenn W. Anderson

                  Glenn W. Anderson

11

 

EXHIBIT “A”

SEPARATION AGREEMENT AND GENERAL RELEASE

     THIS SEPARATION AGREEMENT AND GENERAL RELEASE (this “Agreement”) dated as
of the                    day of                   , 20                    (the “Effective Date”), is by and between                   
(“Employee”), and GAINSCO, INC., a Texas corporation (the “Company” or
"Employer”).

     WHEREAS, Employee and Employer desire to terminate their relationship on
an amicable basis;

     NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1. Definitions. All capitalized terms used but not otherwise defined in
this Agreement are used with the same meaning as in the letter agreement dated
August 27, 2004 among Employee and the Company (the “Change in Control
Agreement”).

     2. Termination of Employment. Employee and Employer hereby terminate by
mutual consent the employment of Employee by Employer and any other GAINSCO
Companies effective as of the Effective Date. Employee hereby resigns any and
all positions and directorships he holds with Employer and any other GAINSCO
Companies effective as of the Effective Date.

     3. Release. Employee hereby irrevocably and unconditionally releases and
forever discharges the Company, each of the GAINSCO Companies, and each of
their respective subsidiaries and other affiliated companies and their
respective agents, employees, representatives, officers, directors,
shareholders, trustees and attorneys, past and present, and the heirs,
successors and assigns of all of the foregoing (collectively, the “Released
Parties”) from any and all debts, liabilities, claims, demands, actions or
causes of action, suits, judgments or controversies of any kind whatsoever
(except as set forth below and except for workers’ compensation claims and
claims for vested benefits payable under employee benefit plans covering
Employee) (collectively, the “Claims”) against the Released Parties, that now
exist or that may arise in the future out of any matter, transaction or event
occurring prior to or on the Effective Date, including without limitation, any
claims of breach of contract or for retirement or severance or other
termination pay (except as set forth in Section 4 below), or claims of
harassment or discrimination (for example, on the basis of age, sex, race,
handicap, disability, religion, color or national origin) under any federal,
state or local law, rule or regulation, including, but not limited to the Age
Discrimination in Employment Act of 1967, 29 U.S.C. §621, et seq. Employee
further agrees not to file or bring any claim, suit, civil action, complaint,
arbitration or administrative action in any city, state or federal court or
agency or arbitration tribunal with respect to any Claim.

     4. Consideration. In consideration of Employee’s execution of this
Agreement, Employee shall be entitled to receive from Employer as a one-time
severance payment (the “Severance Payment") the amount specified in Section
4(iii)(B) of the Change in Control
Agreement. Employee acknowledges that no other promise or agreement of
any kind has been made to Employee or with Employee by any Person whatsoever to
cause Employee to sign this

1

 

Agreement. Employee further acknowledges and agrees
that the Severance Payment, together with the other consideration provided for
in the Change in Control Agreement, shall constitute full accord and
satisfaction of all severance obligations in connection with Employee’s
employment, except that the parties agree that Employee’s execution of this
Agreement shall not affect any rights which Employee may have pursuant to
Employee’s 1998 Employment Agreement, the First Amendment thereto or any other
written agreement, policy, plan or program of any GAINSCO Company providing
employee benefits (including under any stock option agreements), which rights
shall be governed by the terms thereof.

     5. No Disparagement. Employee agrees that he or she will refrain from
speaking ill of or making any disparaging comment about any GAINSCO Company or
any employee or member of management of any GAINSCO Company, following the
termination of Employee’s employment.

     6. No Solicitation. For a period of eighteen (18) months following the
Effective Date of this Agreement, Employee agrees not to (i) divert or solicit
the business or patronage of any customer, insured, or general agent of any
GAINSCO Company for any purpose competitive with any ongoing business line or
venture in which any GAINSCO Company is engaged as of the Effective Date of
this Agreement, or (ii) solicit or encourage any officer or employee of any
GAINSCO Company to leave its employ.

     7. Confidential Information and Trade Secrets. As used herein,
“Confidential Information” means any data or information that is competitively
sensitive and not generally known by the public including, but not limited to,
the business plans, lists of customers, insureds, prospective customers and
prospective insureds, training manuals, product development plans, unit-based
provider reimbursement systems, bidding and pricing procedures, market plans
and strategies, projections, internal performance statistics, financial data,
confidential personnel information concerning employees of any of the GAINSCO
Companies, operational or administrative plans, policy manuals, and terms and
conditions of contracts and agreements of the Company, Employer or any GAINSCO
Company. The term “Confidential Information” shall not apply to information
which is (i) already in Employee’s possession (unless such information was
obtained by Employee in the course of Employee’s employment) or (ii) required
to be disclosed by any applicable law or by an order of a court of competent
jurisdiction. Employee recognizes and acknowledges that the Confidential
Information constitutes valuable, special and unique assets of Employer and its
affiliates. Until such time as it may cease to be Confidential Information
through no act of Employee in violation of this Agreement, Employee will not
use or disclose any Confidential Information.

     8. Disclaimer of Liability. Employee acknowledges that this Agreement
shall not in any way be construed as an admission by any of the Released
Parties of any wrongful or illegal act against Employee or any other person,
and that the Released Parties expressly disclaim any liability of any nature
whatsoever arising from or related to the subject of this Agreement.

     9. COMPETENCY. EMPLOYEE ACKNOWLEDGES THE FOLLOWING:

	a.	 	THAT HE OR SHE FULLY COMPREHENDS AND UNDERSTANDS
ALL OF THE TERMS OF THIS AGREEMENT AND THEIR LEGAL EFFECTS;

2

 

	b.	 	THAT HE OR SHE IS COMPETENT TO EXECUTE THIS
AGREEMENT;
	 
	c.	 	THAT IT IS EXECUTED KNOWINGLY AND VOLUNTARILY AND
WITHOUT RELIANCE UPON ANY STATEMENT OR REPRESENTATION OF ANY
RELEASED PARTY OR ITS REPRESENTATIVES;
	 
	d.	 	THAT THIS AGREEMENT IS WRITTEN IN A MANNER
CALCULATED TO BE UNDERSTOOD BY HIM OR HER OR BY THE AVERAGE
INDIVIDUAL ELIGIBLE TO PARTICIPATE IN THIS PROGRAM;
	 
	e.	 	THAT HE OR SHE HAS BEEN ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY BEFORE EXECUTING THIS AGREEMENT AND
THAT HE OR SHE HAS HAD THE OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OF HIS CHOICE REGARDING THIS AGREEMENT;
	 
	f.	 	THAT EMPLOYEE DOES NOT WAIVE RIGHTS OR CLAIMS
THAT MAY ARISE AFTER THE DATE THIS AGREEMENT IS EXECUTED;
	 
	g.	 	THAT EMPLOYEE WAIVES RIGHTS OR CLAIMS UNDER THIS
AGREEMENT ONLY IN EXCHANGE FOR CONSIDERATION IN ADDITION TO
ANYTHING OF VALUE TO WHICH THE EMPLOYEE WAS ALREADY ENTITLED;
	 
	h.	 	[THAT HE OR SHE HAS BEEN PROVIDED THE MATERIALS
REGARDING THE CLASS, UNIT, OR GROUP OF INDIVIDUALS ELIGIBLE
FOR THIS COMPENSATION AND THE TIME LIMITS APPLICABLE TO SUCH
PROGRAM;] [This clause to be included if required by or
advisable under applicable law.]
	 
	i.	 	[THAT HE OR SHE HAS BEEN PROVIDED THE JOB TITLES
AND AGES OF ALL INDIVIDUALS ELIGIBLE OR SELECTED FOR THE
PROGRAM AND THE AGES OF ALL INDIVIDUALS IN THE SAME JOB
CLASSIFICATION OR ORGANIZATIONAL UNIT WHO ARE NOT ELIGIBLE OR
SELECTED FOR THE PROGRAM;] [This clause to be included if
required by or advisable under applicable law.]
	 
	j.	 	THAT HE OR SHE HAS HAD A PERIOD OF AT LEAST 21
DAYS [or 45 days, if required by or advisable under applicable
law] WITHIN WHICH TO CONSIDER THIS AGREEMENT;
	 
	k.	 	THAT FOR A PERIOD OF SEVEN DAYS FOLLOWING THE
EXECUTION OF THIS AGREEMENT, EMPLOYEE MAY REVOKE THIS
AGREEMENT AND IT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE SEVEN-DAY PERIOD HAS EXPIRED OR SUCH LATER DATE AS
PROVIDED FOR HEREIN.

3

 

     10. Parties in Interest. This Agreement is for the benefit of the
Released Parties and shall be binding upon Employee and his representatives and
heirs.

     11. Governing Law. This Agreement and the rights and obligations of
Employee hereunder shall be governed by and construed and enforced in
accordance with the substantive laws of the State of Texas.

     12. Amendment. This Agreement may not be clarified, modified, changed or
amended except in writing and signed by Employee and Employer or a
successor-in-interest of Employer.

     13. Enforcement of Laws. Nothing in this Agreement affects the rights and
responsibilities of the Equal Employment Opportunity Commission (the
“Commission”) to enforce the anti-discrimination laws, and this waiver does not
affect Employee’s right to file a charge or participate in an investigation or
proceeding with the Commission. However, Employee waives any rights or claims,
known or unknown, to participate in any recovery under any proceeding or
investigation by the Equal Employment Opportunity Commission or any state or
local commission concerned with the enforcement of anti-discrimination laws

     14. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision, and there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

[Intentionally left blank.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.

	 	 	 	 	 
	 

	 	EMPLOYEE:	 
	 
	 	 
	

	 	

Glenn W. Anderson	 
	 
	 	 
	 	 	THE COMPANY
	 
	 	 	 	 
	 	 	GAINSCO, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	

	 	 	______________________, its ________

5

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