-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S5ZmaOIh2HNoR0nmou/sXQoTc/844gekdMTHj5fmaaEdGBWk1VGYUDoWb8PRdPHC Nq9atcSz4RDNJkkEYMnSgw== 0000950134-99-004506.txt : 19990519 0000950134-99-004506.hdr.sgml : 19990519 ACCESSION NUMBER: 0000950134-99-004506 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GAINSCO INC CENTRAL INDEX KEY: 0000786344 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 751617013 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-09828 FILM NUMBER: 99629858 BUSINESS ADDRESS: STREET 1: 500 COMMERCE ST CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173362500 MAIL ADDRESS: STREET 2: P O BOX 2933 CITY: FORTH WORTH STATE: TX ZIP: 76113-2933 10-K/A 1 AMENDMENT NO. 2 TO FORM 10-K - FISCAL END 12/31/98 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 2 to Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the fiscal year ended Commission file number 1-9828 December 31, 1998 GAINSCO, INC. (Exact name of registrant as specified in its charter) TEXAS 75-1617013 (State of Incorporation) (I.R.S. Employer Identification No.) 500 Commerce Street Fort Worth, Texas 76102 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (817) 336-2500 Securities registered pursuant to Section 12(b) of the Act: Title of each Class Name of each exchange on which registered Common Stock ($.10 par value) The New York Stock Exchange 2 PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information contained in Form 10-K/A Amendment No. 1 filed on May 14, 1999 is amended to read as follows: The following are the names and ages of all directors of the Company, the period during which they have served as such and their business experience during at least the last five years, including all Company positions held. The term of each director expires at the next annual shareholders meeting. Management has not as yet nominated any person for the position of director during the coming year. Mr. Joel C. Puckett, age 55, has served as a director of the Company since 1979 and Chairman of the Board of Directors since April, 1998. Mr. Puckett is a certified public accountant with offices located in Minneapolis, Minnesota. Mr. Puckett has been engaged in the private practice of accounting since 1973. Mr. Glenn Anderson, age 47, has served as President, Chief Executive Officer and Director of the Company since April 1998. Prior to assuming these positions, Mr. Anderson served as Executive Vice President of USF&G Corporation and as President of the Commercial Insurance Group of United States Fidelity & Guaranty Company, positions which he held since 1996. From 1995 to 1996 he served as Executive Vice President, Commercial Lines of that company. Mr. Anderson served from 1993 to 1995 as Senior Vice President, Commercial Lines Middle Market, for USF&G Corporation. Mr. Anderson has been engaged in the property and casualty business since 1975. Mr. Dan Coots, age 47, has served as Vice President, Treasurer and Chief Financial Officer of the Company since 1987. In 1991 Mr. Coots was promoted to Senior Vice President. Mr. Coots has been engaged in the property and casualty insurance business since 1983. He has served as director of the Company since 1997. Mr. John C. Goff, age 43, has served as a director of the Company since 1997. From 1987 to April 1994, Mr. Goff served as a senior investment advisor to and investor with Mr. Richard Rainwater. From inception through late 1996 he served as Chief Executive Officer of Crescent Real Estate Equities, Inc. ("Crescent") and since late 1996 he has served as Vice Chairman of the Board of Crescent, which is a real estate investment company (CEI on the NYSE). Mr. Goff is also Vice Chairman of the Board of Crescent Operating, Inc. an investment company (COPI on the NASDAQ) and sits on the Boards of Texas Capital Bank and The Staubach Company. Mr. Goff currently is managing principal of Goff Moore Strategic Partners, a private investment firm. Mr. Robert J. McGee, Jr., age 44, has served as a director of the Company since 1997. Since 1992, Mr. McGee has served as Chairman and Chief Executive Officer of KBK Capital Corporation, a 36-year old commercial finance company. From 1989 to 1992 Mr. McGee served as Chairman of the Board and Chief Executive Officer of Texas Commerce Bank-Tarrant County and Vice Chairman, Texas Commerce Bank, N.A. 2 3 Mr. Sam Rosen, age 63, has served as the Secretary and a director of the Company since 1983. Mr. Rosen is a partner with the law firm of Shannon, Gracey, Ratliff & Miller, LLP. He has been a partner in that firm or its predecessor since 1966. Mr. Rosen is a director of Aztec Manufacturing Co. Mr. Harden Wiedemann, age 45, has served as a director of the Company since 1989. Mr. Wiedemann has been Chairman and Chief Executive Officer of Assurance Medical, Incorporated, a company providing independent oversight of drug testing, since 1991. Mr. John H. Williams, age 65, has served as a director of the Company since 1990. Mr. Williams is a Senior Vice President, Investments, with Everen Securities, Inc. and has been a principal of that firm or its predecessors since May 1987. Prior to that time, Mr. Williams was associated with Thomson McKinnon Securities, Inc. and its predecessors from 1967. Mr. Williams is a director of Clear Channel Communications, Inc. The information required by this Item 10 with regard to Executive Officers is included in Part 1 of the Form 10-K Report. EMPLOYMENT CONTRACTS By Employment Agreement effective as of April 17, 1998 (the "Agreement"), the Company employed Glenn W. Anderson as President and Chief Executive Officer for a four year period. That term was extended for a one-year period on April 17, 1999 and will be extended for additional one year periods on each anniversary of April 17, 1998, unless either party delivers written notice to the other at least thirty (30) days prior to the applicable anniversary date. Under the Agreement, Mr. Anderson will receive an annual base salary of $340,000 and will be eligible to receive annual management incentive bonuses as may be provided in management bonus plans. He received a bonus of $260,000 at the end of his first full year of employment. Under the Agreement, Mr. Anderson was granted non-qualified stock options to purchase 579,710 shares of Common Stock at an exercise price of $5.25 per share which was the lowest closing price during the first five trading days after the pubic announcement of the Company's results of operations for the quarter ended June 30, 1998. The options were fully vested and exercisable upon grant and have a term of five years. The Agreement provides unaccountable relocation expenses of $50,000 and an allowance not to exceed $110,000 for relocation, home sale, temporary housing and moving expenses actually incurred. The Agreement additionally provides fifteen days of paid vacation annually, a $2,000,000 term life insurance policy, the right to participate in any Company group health and disability program, a monthly automobile allowance of $700, a club membership in accordance with Company policy and reimbursement of all appropriate and reasonable expenses incurred by Mr. Anderson in the performance of his duties. The Agreement permits termination of Mr. Anderson for cause with payment of salary accrued to the date of termination. If Mr. Anderson's employment is terminated without cause, he will be entitled to an amount equal to thirty-six times 150% of his then current monthly rate of base salary. The Company has entered into a Change in Control Agreement with Mr. Anderson in substantially the same form entered into with other executive officers of the Company (see Change in Control Agreements below) and if he is terminated without cause within twenty-four months of a change in control of the Company, he shall be entitled to the greater of (i) the amount he would be entitled to upon such termination in the absence of a change in control or (ii) the amount called for by the Change in Control Agreement. Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1,000,000 limit on the amount of compensation that will be deductible by the Company with respect to each of the chief executive officer and the four 3 4 other most highly compensated executive officers. Performance based compensation that meets certain requirements will not be subject to the deduction limit. Because they were not approved by the shareholders before vesting, the nonqualified stock options granted to Mr. Anderson pursuant to the Agreement are not excluded from the deduction limits of Section 162(m). Therefore, if the exercise of these options by Mr. Anderson results in income to him in excess of $1,000,000 in any one year, that portion over $1,000,000 will not be tax deductible by the Company. Under an arrangement between the Company and Mr. Joel C. Puckett, he is compensated for his services as non-executive Chairman of the Board based upon the time that he is required to devote to those duties. Mr. Puckett's compensation is determined by applying the portion of his total time which is devoted to the Company's business to an amount equal to the base salary of the Company's chief executive officer. During the period that Mr. Puckett is compensated under this arrangement he will not receive fees paid to other independent directors. Under this arrangement Mr. Puckett received $109,083 for services rendered from April 1998 through the end of 1998. CHANGE IN CONTROL AGREEMENTS The Named Executives each have Severance Agreements which are automatically extended for one additional year from each December 31st unless sooner terminated by the Company. The Severance Agreements provide for the payment of benefits if the Named Executive is actually or "constructively" terminated following a change in control of the Company. A "change in control of the Company" is generally deemed to occur if: (A) any person becomes the beneficial owner of 25% or more of the Company's voting securities; (B) during a two-year period the majority of the Board of Directors of the Company changes without approval by two-thirds of the directors who either were directors at the beginning of the period, or whose election was previously approved; (C) the shareholders of the Company approve a merger or consolidation with another company in which the Company's voting securities do not continue to represent at least 75% of the surviving entity; or (D) the shareholders approve a liquidation, sale or disposition of all or substantially all of the Company's assets. No benefits are payable if a Named Executive quits or is terminated for cause and no benefits beyond those otherwise provided by the Company are provided if a Named Executive is terminated by reason of death, disability or retirement. If, within two years following a change in control, a Named Executive is terminated by the Company for reasons other than cause, or if the Named Executive terminates employment for "good reason," the Named Executive will be paid a lump sum cash payment in an amount equal to two times the Named Executive's base salary; provided, however, such payment shall not be less than 1.25 times the amount reported on the Named Executive's Form W-2 issued by the Company with respect to the year preceding the date of actual or constructive termination. In the event such payment would not be deductible, in whole or in part, by the Company as a result of Section 280G of the Internal Revenue Code, such payment shall be reduced to the extent necessary to make the entire payment deductible. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Company's Compensation Committee until February of 1998 were Messrs. Joel C. Puckett, John C. Goff, and Joseph D. Macchia. Members of that committee since February, 1998 have been Messrs. John H. Williams, Chairman, Robert J. McGee, Jr., Harden Wiedemann and John C. Goff. Mr. Puckett continued to serve on the committee until July 1998. No executive officer of the Company served as a member of the compensation committee of or as a director of another entity, one of whose executive officers served on the Compensation Committee or the Board of Directors of the Company. 4 5 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Mr. Glenn W. Anderson failed to file a Form 3 on a timely basis when he became an executive officer of the company but such filing has since been made. Mr. Harden H. Wiedemann, a director of the Company failed to file a Form 4 on a timely basis in connection with sales made by him during the months of September, October, and December, 1998. This information was, however, corrected by the timely filing of a Form 5. ITEM 11. EXECUTIVE COMPENSATION The information contained in Form 10-K/A Amendment No. 1 filed on May 14, 1999 is amended to read as follows: SUMMARY COMPENSATION TABLE The individuals named below (the "Named Executives") include the Company's chief executive officer and the other four most highly compensated executive officers of the Company for the fiscal year ending December 31, 1998. Information is provided for the fiscal years ending on December 31 of the three years shown in the table below.
SUMMARY COMPENSATION TABLE LONG TERM COMPENSATION ------------------------------------ ANNUAL COMPENSATION AWARDS PAYOUTS ---------------------------------------------------------------------------------- Other Restricted Annual Stock LTIP All Other Name and Salary Bonus Compen- Award(s) Options/ Payouts Compensation Principal Position Year ($) ($) sation ($) ($) SARs (#) ($) ($)(2) ------------------ ---- ------- ------- ---------- ---------- -------- ------- ----------- GLENN W. ANDERSON 1998 238,436 245,000 105,397(1) 579,710 - - President and Chief 1997 - - - - - - Executive Officer 1996 - - - - - - RICHARD M. BUXTON 1998 156,000 54,700 - - 34,164 - - Vice President 1997 149,519 47,366 - - 54,521(4) - - 1996 - - - - - - - DANIEL J. COOTS 1998 140,173 36,500 - - 35,135 - - Senior Vice 1997 122,400 25,551 - - - - 13,893 President, Treasurer 1996 110,475 152,696 - - - - 20,668 and Chief Financial Officer CAROLYN E. RAY 1998 123,361 31,900 - - 34,192 - - Senior Vice President 1997 98,699 19,848 - - - - 13,843 1996 87,975 77,328 - - - - 20,668 J. LANDIS GRAHAM 1998 121,594 31,900 - - 19,567 - - Senior Vice President 1997 97,910 14,064 - - - - 11,975 1996 94,599 63,650 - - - - 20,668 JOSEPH D. MACCHIA(3) 1998 95,109 -0- - - - - - 1997 220,550 131,514 - - - - 13,893 1996 210,000 756,891 - - - - 20,668
5 6 (1) Amounts reimbursed for relocation and car allowance. (2) Amounts contributed to or accrued for the Named Executive under the Profit Sharing Plan of the Company. (3) Mr. Macchia retired as Chairman of the Board, President and Chief Executive Officer of the Company on April 18, 1998. (4) These options were canceled in connection with the grant of options in 1998. STOCK OPTION GRANTS IN LAST FISCAL YEAR The following table shows information on stock options awarded to Named Executives during the fiscal year ended December 31, 1998. OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants (1) ------------------------------------------------------------------------------------------ Number of % of Total Securities Options Underlying Granted to Exercise or Grant Date Options Granted Employees in Base Price Present Value (2) Name (#) Fiscal Year ($/Sh) Expiration Date ($/Sh) - -------------------------------------------------------------------------------------------------------------- Glenn W. Anderson 579,710 71.6 5.75 04/25/03 3.50 Richard M. Buxton 34,164 4.2 6.03125 05/10/06 4.38 Daniel J. Coots 35,135 4.3 6.03125 05/10/06 4.38 Carolyn E. Ray 34,192 4.2 6.03125 05/10/06 4.38 J. Landis Graham 19,567 2.4 6.03125 05/10/06 4.38
(1) Stock options are awarded at the fair market value of shares of Common Stock at the date of grant. 6 7 (2) Options are valued using a Black-Scholes pricing model. The model assumes historic one-year stock price volatility and dividend yield, a risk-free 5.53% interest rate and a ten year option term. No adjustments are made for risk of forfeiture or nontransferability. These values have been calculated in a manner permitted by Securities and Exchange Commission regulations but the Company disavows the ability of this or any other valuation model to predict or estimate the Company's future stock price or to place a reasonably accurate present value on the options because all models depend on assumptions about the future, which is simply unknown. (3) Joseph D. Macchia was not granted stock options during 1998 and held no stock options at the end of that year. AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table summarizes for each of the Named Executives the number of stock options, if any, exercised during the fiscal year ended December 31, 1998, the aggregate dollar value, if any, realized upon exercise, if any, the total number of unexercised stock options held at December 31, 1998 and the aggregate dollar value of the unexercised options held at December 31, 1998. Value realized upon exercise is the difference between the fair market value of the underlying stock on the exercise date and the exercise price of the option. Value of unexercised options at fiscal year-end is the difference between the exercise price of the stock options and the fair market value of the underlying stock at December 31, 1998, the latter of which was $6.125 per share. These values, unlike the amounts, if any, set forth in the column headed "Value Realized," have not been, and may never be, realized. The options have not been, and may not be, exercised. Actual gains, if any, on exercise will depend on the value of the Company's stock on the date of exercise. There can be no assurance that the values shown will be realized. AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FY-END OPTION VALUES
SHARES VALUE OF UNEXERCISED ACQUIRED ON VALUE NUMBER OF UNEXERCISED IN-THE-MONEY NAME EXERCISE (#) REALIZED ($) OPTIONS AT FY-END OPTIONS AT FY-END ($) ---- ------------ ------------ ----------------- --------------------- Exercisable Unexercisable Exercisable Unexercisable ----------- ------------- ----------- ------------- GLENN W. ANDERSON - - 579,710 - $217,391 - President and Chief Executive Officer RICHARD M. BUXTON - - 20,499 13,665 $1,922 $1,281 Vice President DANIEL J. COOTS - - 62,216(1) 14,054 $157,169 $1,318 Senior Vice President, Treasurer and Chief Financial Officer CAROLYN E. RAY - - 59,574(2) 13,676 $157,436 $1,282 Senior Vice President J. LANDIS GRAHAM - - 11,741 7,826 $1,101 $734 Senior Vice President
(1) Options to purchase 37,398 shares are exercisable at approximately $2.14 per share, options to purchase 3,737 shares are exercisable at approximately $4.44 per share and options to purchase 21,081 shares are exercisable at approximately $6.03 per share. 7 8 (2) Options to purchase 39,058 shares are exercisable at approximately $2.14 per share and options to purchase 20,516 are exercisable at approximately $6.03 per share. (3) Joseph D. Macchia exercised no stock options during 1998 and held no stock options at the end of 1998. COMPENSATION OF DIRECTORS Beginning with the meeting of the Board of Directors following the 1998 annual shareholders meeting each independent director receives a retainer of $2,000 per quarter and a fee of $2,000 for each in person meeting of the Board. No additional fee is paid for participation in committee meetings. 8 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. GAINSCO, INC. (Registrant) /s/ Glenn W. Anderson - ---------------------------------- By: Glenn W. Anderson, President Date: 05/17/99 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Title Date ---- ----- ---- Joel C. Puckett * Chairman of the Board 05/17/99 - ------------------------------ ------------------- Joel C. Puckett /s/ Glenn W. Anderson President and Chief 05/17/99 - ------------------------------ Executive Officer ------------------- Glenn W. Anderson /s/ Daniel J. Coots Senior Vice President and 05/17/99 - ------------------------------ Chief Financial Officer ------------------- Daniel J. Coots /s/ Sam Rosen Secretary and Director 05/17/99 - ------------------------------ ------------------- Sam Rosen John C. Goff* Director 05/17/99 - ------------------------------ ------------------- John C. Goff Robert J. McGee, Jr.* Director 05/17/99 - ------------------------------ ------------------- Robert J. McGee Harden W. Wiedemann* Director 05/17/99 - ------------------------------ ------------------- Harden H. Wiedemann John H. Williams* Director 05/17/99 - ------------------------------ ------------------- John H. Williams
*By: /s/ Glenn W. Anderson ------------------------------- Glenn W. Anderson, Attorney-in-fact Under Power of Attorney 9 -----END PRIVACY-ENHANCED MESSAGE-----