Letter of Intent for Acquisition of National Specialty Lines, DLT Insurance Adjusters, and Lalande Financial Group by [Acquirer] from GAINSCO, INC.

Summary

This letter of intent outlines a proposed transaction where [Acquirer] would acquire National Specialty Lines, Inc., DLT Insurance Adjusters, Inc., and Lalande Financial Group, Inc. from GAINSCO, INC. The agreement sets out the framework for due diligence, exclusivity, and confidentiality, with the goal of signing a definitive agreement by August 30, 2002. Key terms include a purchase price based on future premiums, assumption of certain insurance reserves, and post-closing service arrangements. The letter is non-binding except for exclusivity and confidentiality provisions until a final agreement is signed.

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EX-10.29 7 d98792exv10w29.txt LETTER OF INTENT EXHIBIT 10.29 "*" denotes confidential information omitted from this Exhibit and filed separately with the Securities and Exchange Commission. June 28, 2002 GAINSCO, INC. 500 Commerce Street Fort Worth, TX 76102 Attention: Mr. Glenn Anderson Dear Mr. Anderson, We are pleased to provide you with a proposal regarding a transaction pursuant to which * (together with its subsidiaries, "*") would acquire National Specialty Lines, Inc., DLT Insurance Adjusters, Inc. and Lalande Financial Group, Inc. (collectively, the "Companies") from GAINSCO, INC. (the "Seller"). This letter and the term sheet attached hereto as Annex I (the "Term Sheet") are intended to set forth the basis under which * is prepared to conduct due diligence and further pursue a possible Transaction. The terms contained in the Term Sheet are intended only to describe the proposed Transaction and are not intended to create any obligation on the part of *, the Seller or the Companies. Accordingly, this letter, if agreed to by the Seller and the Companies, does not constitute a binding commitment, nor an offer by any of the parties to enter into a binding commitment, with respect to the Transaction. A binding commitment with respect to the Transaction will result only from the execution and delivery of definitive agreements and related documents, setting forth such terms and such additional understandings as the parties may develop in the course of further negotiations, and in each case subject to the conditions expressed therein. Prior to the execution of definitive agreements, * and its affiliates will complete its due diligence examination of the Companies and related matters. In connection with such due diligence review, the Seller and the Companies will ensure that *, its affiliates and each of their representatives are provided with such access to the Companies' management, facilities, books, records, workpapers and other information as *, its affiliates and their representatives may reasonably request, and the Seller and the Companies will ensure that *, its affiliates and their representatives will be entitled, upon reasonable notice, to contact and communicate with the customers and other persons that have business relationships with the Companies, subject to this letter and to the existing Confidentiality Acknowledgement dated March 4, 2002 between * and Seller (the "Confidentiality Agreement"). The goal of * and Seller is to sign a definitive agreement by August 30, 2002. In consideration for *'s continued pursuit of the Transaction and its commitment of significant resources and incurrence of substantial expense in connection therewith, until August 30, 2002, neither the Seller nor the Companies, nor their officers, directors, employees, advisors, agents, representatives, affiliates, security holders, or anyone acting on behalf of the Seller, the Companies or such persons (collectively, the "Representatives"), shall, directly or indirectly, solicit, initiate or engage in discussions or negotiations with, or provide any nonpublic information to, any third person (other than *, its affiliates and their representatives) concerning any merger, consolidation, liquidation, dissolution, sale of substantially all assets, purchase or sale of shares of capital stock, issuance of long-term debt securities or other business combination transaction involving the Companies; provided that the foregoing shall not restrict the placement of insurance risks or other operational matters in the ordinary course of the Companies business. The Seller, the Companies and the Representatives shall immediately terminate all discussions and negotiations with any person (other than *, its affiliates or their representatives) concerning any such transaction. The Seller and the Companies shall notify all of their Representatives of the requirements of this paragraph and ensure the compliance thereof by the Representatives. The term "person" as used herein shall be interpreted broadly and shall include, without limitation, any individual, corporation, partnership, limited liability company, trust, estate, business trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. Except as required by law, without the prior written consent of *, neither the Seller nor the Companies, nor any of their Representatives, shall disclose to any person or entity (other than regulatory agencies) the nature of the Transaction or any of the terms, conditions or other facts regarding the Transaction, including the status thereof. The Seller and the Companies shall notify all of their Representatives of the requirements of this paragraph and ensure the compliance thereof by the Representatives. This letter, together with the Confidentiality Agreement constitutes the entire agreement among the parties regarding the subject matter hereof. * * * * If you are interested in proceeding with the above described Transaction on the terms set forth herein and in the Term Sheet, please sign in the space provided below and return to us an executed copy of this letter, whereupon the applicable undertakings set forth in the third through sixth paragraphs of this letter shall become our binding agreement. Sincerely, * By: ------------------------------ Name: * Title: CEO/President ACCEPTED AND APPROVED, on behalf of itself and, as applicable, its security holders and subsidiaries, as of the date hereof: GAINSCO, INC. By: -------------------------------------- Name: Title: National Specialty Lines, Inc. By: -------------------------------------- Name: Title: DLT Insurance Adjusters, Inc. By: -------------------------------------- Name: Title: Lalande Financial Group, Inc. By: -------------------------------------- Name: Title: ANNEX I *'S ACQUISITION OF NATIONAL SPECIALTY LINES, INC., DLT INSURANCE ADJUSTERS, INC. AND LALANDE FINANCIAL GROUP, INC. Summary of Terms June 28, 2002 TRANSACTION............................. (A) * (together with its subsidiaries, "*") would acquire all of the - outstanding capital stock of National Specialty Lines, Inc. ("NSL"), DLT Insurance Adjusters, Inc. ("DLT"), and Lalande Financial Group, Inc. ("LFG") (collectively, the "Companies") from GAINSCO, INC. (the "Seller") for a purchase price equal to *% of direct premiums earned (not including any premiums earned as identified in B below) by * (or its affiliates) on automobile business produced by NSL during a period of * years from the closing date, payable quarterly and subject to an aggregate maximum of $*. (B) * would provide an underwriting market that upon closing would assume on fair market terms the unearned premium reserves of the Seller's subsidiary (MGA Insurance Company, Inc. "MGA Insurance Company") relating to the non-standard automobile business produced and serviced by the Company. (C) The value of net assets less liabilities of NSL and DLT, including fixed assets, would be reviewed by * and Seller during due diligence to mutually agree on a closing transfer value in addition to the above. (D) * would provide agreed upon services after closing to MGA Insurance Company through NSL and DLT for the runoffs of MGA Insurance Company policies and of MGA Insurance Company claims. Terms mutually acceptable to each party for providing run-off service will be determined during due diligence review. (E) Following additional review, the parties may use an alternative structure for the Transaction if it is determined that such structure is more efficient for accounting, tax or other purposes, provided that the substance of the terms and conditions set forth herein would not be altered. (F) * and Seller would mutually agree to an insurance transition strategy, to be effective with the closing date, to transition new and renewal business produced by the Companies to *. NON-COMPETE REQUIREMENTS................. In consideration of the transactions contemplated hereby, the Seller would be subject to non-compete arrangements (the "Non-Compete Requirements"), which would survive the Closing for five years. The Non-Compete Requirements would provide, among other things, that (1) the Seller would not at any time interfere with or otherwise disrupt the relationship between the Companies and any current employee, agent, client or customer of the Companies, and (2) the Seller would not, for itself, or on behalf of any entity, compete in any manner with the business of the Companies as conducted by the Companies prior to the Closing. CONDITIONS TO CLOSING.................... The obligations of * to complete the Transaction would be subject to the satisfaction of those conditions customarily contained in transactions of this type, including, among others, (1) obtaining all requisite regulatory approvals and required consents and approvals from third parties, (2) the cancellation and retirement of all securities of the Companies which may be exercisable or exchangeable for or convertible into shares of the capital stock of the Companies, including all warrants and stock options, and the termination of any existing stock incentive arrangements and stockholders agreements, (3) the repayment in full of all long-term indebtedness of the Companies (if any), (4) entering into the arrangements described above under the caption "Non-Compete Requirements," (5) obtaining satisfactory assurance that the status of the Companies' licenses, as appropriate will be sufficient to conduct their business after the Closing, (6) entering into arrangements satisfactory to * and Seller with the employees of the Companies (it is understood by the parties that, following additional due diligence, * and the Seller would agree upon a minimum number of employees of the Companies who would be retained for an agreed upon time period), (7) if requested by *, the termination of existing reinsurance arrangements of MGA Insurance Company as such arrangements relate to the business produced by the Companies on terms satisfactory to *, (8) obtaining the approval of the Board of Directors of * (or a committee thereof), (9) the non-occurrence 9 of any material adverse change in the business or financial condition of the Companies, (10) the accuracy of the representations and warranties made by the Sellers in connection with the Transaction as of the Closing (11) the completion, to its full satisfaction, of *'s due diligence examination of the Companies and related matters, (12) execution of mutually agreed upon service contracts with *, NSL and DLT for the runoffs of MGA Insurance Company policies and claims, and (13) obtaining the approval of the Board of Directors of Seller. Due diligence requests, Board approvals and similar matters would be accomplished in the period prior to the execution of a definitive agreement and would not remain therein as closing conditions. REPRESENTATIONS, COVENANTS AND INDEMNIFICATION...................... (A) The Seller would make representations, warranties and covenants to * as are required by *. The Seller would also provide * with an appropriate indemnity for damages, if any, * incurs as a result of a breach of a representation, warranty, covenant or agreement of the Seller. (B) * would make representations, warranties and covenants to Seller as are required by Seller. * would also provide Seller with an appropriate indemnity for damages, if any, Seller incurs as a result of a breach of a representation, warranty, covenant or agreement of *. TRANSACTION COSTS........................ Each party would bear its own costs, fees and expenses incurred in connection with the Transaction. * * * *