FOURTH AMENDMENT TO LOAN AGREEMENT
AND GUARANTOR CONSENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT AND GUARANTOR CONSENT (the
"Fourth Amendment") is made as of November 1, 1998, among HALLMARK FINANCE
CORPORATION, referred to herein as the "Borrower," HALLMARK FINANCIAL
SERVICES, INC., HALLMARK CLAIMS SERVICE, INC., AMERICAN HALLMARK GENERAL
AGENCY, INC., ACO HOLDINGS, INC., and AMERICAN HALLMARK AGENCIES, INC.
(collectively, the "Guarantors"), and NATIONSBANK, N.A., a national banking
association previously known as NationsBank of Texas, N.A., referred to
herein as the Lender.
R E C I T A L S:
A. The Borrower and the Lender are parties to a Loan Agreement
dated as of March 17, 1997 (the "Original Loan Agreement").
B. The Guarantors executed Guaranty Agreements in favor of the
Lender pursuant to the Original Loan Agreement.
C. The Original Loan Agreement has been amended pursuant to that
certain First Amendment to Loan Agreement and Guarantor Consent (the "First
Amendment") dated as of July 31, 1997, by that certain Second Amendment to
Loan Agreement and Guarantor Consent (the "Second Amendment") dated as of
October 1, 1997, and by that certain Third Amendment to Loan Agreement and
Guarantor Consent ("Third Amendment") dated as of September 17, 1998, among
the Borrower, the Guarantors, and the Lender (the Original Loan Agreement,
as amended by the First Amendment, the Second Amendment, and the Third
Amendment is hereinafter called the "Loan Agreement").
D. The Borrower has requested that the Expiration Date (as defined
in the Loan Agreement) of 2:00 p.m. (Dallas, Texas time) on November 1, 1998
be extended to 2:00 p.m. (Dallas, Texas time) on December 15, 1998. The
Lender is willing to amend the Loan Agreement to so extend such maturity
date on the condition that the Loan Agreement also be amended to reduce the
Maximum Amount to the lesser of $1,000,000 or the Borrowing Base and that
all other terms, conditions and covenants of the Loan Agreement, as amended
hereby, continue unaffected, but such amendment shall be subject to the
terms and conditions set forth below.
E. Each of the Guarantors desires to consent to such amendment.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Same Terms. All terms used herein which are defined in
the Loan Agreement have the same meanings when used herein unless the
context hereof otherwise requires or provides. In addition, all references
in the Loan Documents to the "Agreement" mean the Original Loan Agreement,
as amended by the First Amendment, the Second Amendment, the Third
Amendment, and this Fourth Amendment, and as the same are hereafter amended
from time to time.
2. Amendment to Loan Agreement. Effective as of the date
above, the Loan Agreement is hereby amended as follows:
(a) Section 1.0, Certain Definitions, is amended to
delete the definition of "Expiration Date" contained therein and
substituting in lieu thereof the following:
"Expiration Date" means 2 p.m. (Dallas, Texas time) on
December 15, 1998 or any other date on which the Loans become due and
payable pursuant to the terms of this Agreement.
(b) Section 1.0, Certain Definitions, is amended to
delete the definition of Maximum Amount contained therein and substituting
in lieu thereof the following:
"Maximum Amount" means the lesser of $1,000,000 or the
Borrowing Base.
(c) Section 2.10, Usage Fee, is deleted and therefore a
usage fee will not be charged.
(d) Exhibit "B", Borrowing Base Certificate, is deleted
and Exhibit B-1, Borrowing Base Certificate, is wholly substituted therefor
and in such Exhibit B-1, the Calculation of Borrowing Base shall now be:
[(Total Adjusted Eligible Premium Finance
Agreements-Bank Reserve) x 60%] =
Maximum Amount of borrowings (not
to exceed $1,000,000) $
LESS: Outstandings $
Available Amount/Overadvance Due Bank
(Amount of Borrowing Base - Outstandings) $
3. Certain Representations. The Borrower and each of the
Guarantors, jointly and severally, represents and warrants that, as of the
date hereof:
(a) the representations and warranties contained in the
Loan Agreement as amended hereby are true and correct on and as of the date
hereof as made on and as of such date;
(b) no event has occurred and is continuing which
constitutes a Default or an Event of Default;
(c) The Borrower represents and warrants that, as of the
date hereof: (I) the Borrower has full power and authority to execute this
Fourth Amendment, and this Fourth Amendment constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms,
e x c ept as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally; and (ii) no authorization,
approval, consent or other action by, notice to, or filing with, any
governmental authority or other person is required for the execution,
delivery and performance by the Borrower of this Fourth Amendment.
(d) Each Guarantor represents and warrants that, as of
the date hereof: (i) such Guarantor has full power and authority to execute
this Fourth Amendment, and this Fourth Amendment constitutes the legal,
valid and binding obligation of such Guarantor enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and (ii) no
authorization, approval, consent or other action by, notice to, or filing
with, any governmental authority or other person is required for the
execution, delivery and performance by such Guarantor of this Fourth
Amendment.
4. Guarantors' Acknowledgment. By signing below, each of the
Guarantors: (i) acknowledges and consents to the execution, delivery and
performance of this Fourth Amendment; (ii) agrees that its obligations in
respect of its Guaranty are not released, modified, impaired or affected in
any manner by this Fourth Amendment or any of the provisions contemplated
herein; (iii) acknowledges that it has no claims or offsets against, or
defenses or counterclaims to, its Guaranty; and (iv) agrees, ratifies, and
affirms that the Renewal Promissory Note in the original principal amount of
$1,000,000 and payable by the Borrower to the Lender, upon being executed by
Borrower and delivered to Lender as required below shall be an Obligation
of each Guarantor under each of the respective Guarantees.
5. Conditions of Effectiveness. This Fourth Amendment shall
be effective as of the date and year first above written, subject to the
following:
(a) The Lender shall have received this Fourth Amendment
executed by Borrower and each Guarantor;
(b) The Lender shall have received the $1,000,000
Renewal Promissory Note executed by Borrower and satisfactory in form and
content to Lender, such Renewal Promissory Note being in renewal and
extension of the unpaid principal balance of the $8,000,000 Promissory Note
dated March 17, 1997 as previously renewed by that $8,000,000 Renewal
Promissory Note dated as of September 17, 1998;
(c) The Lender shall have received certificates of
incumbency and containing specimen signatures of all officers of the
Borrower and each of the Guarantors who will be authorized to execute or
attest to any of the documents contemplated hereby on behalf of the Borrower
and each of the Guarantors executed by the President and by the Secretary of
the Borrower and each of the Guarantors on the date hereof, and such
certification may be conclusively relied upon by the Lender until the Lender
receives notice in writing from the Borrower and each of the Guarantors to
the contrary and providing a substitute certificate conforming to the
requirements hereof;
(d) All of the conditions precedent set forth in Section
4.0, Conditions Precedent to Subsequent Loans, of the Loan Agreement shall
be satisfied; and
(e) The Lender shall have received such other documents,
opinions, certifications, consents, waivers, agreements, and evidence as the
Lender may reasonably request.
6. Limitation on Agreements. The modifications set forth
herein are limited precisely as written and shall not be deemed: (a) to be a
consent under or a waiver of or an amendment to any other term or condition
in the Loan Agreement or any of the other Loan Documents; or (b) to
prejudice any right or rights which the Lender now has or may have in the
future under or in connection with the Loan Agreement and the other Loan
Documents, each as amended hereby, or any of the other documents referred to
herein or therein. This Fourth Amendment constitutes a Loan Document for all
purposes. The Loan Agreement, as amended by this Fourth Amendment, and all
of the other Loan Documents executed in connection therewith, shall remain
in full force and effect and are each hereby ratified and confirmed.
7. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW). THE RULES OF PRACTICE
AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL
ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE SPECIAL RULES
SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL
CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
CITY OF THE BORROWER'S DOMICILE AT TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES
OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II)
BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC.
91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF
THE BANK HERETO: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SET OFF; OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL; OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY
REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING
BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THIS EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF
ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE
MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
8. Entirety, Etc. This instrument together with all of the
other Loan Documents embodies the entire agreement between the parties.
THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to Loan Agreement to be effective as of the date and year first
above written.
BORROWER:
Address: HALLMARK FINANCE CORPORATION
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Name:
Title:
GUARANTORS:
Address: HALLMARK FINANCIAL SERVICES,
INC.
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Name:
Title:
Address: HALLMARK CLAIMS SERVICE, INC.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
Name:
Title:
Address: AMERICAN HALLMARK GENERAL
AGENCY, INC.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
Name:
Title:
Address: ACO HOLDINGS, INC.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
Name:
Title:
Address: AMERICAN HALLMARK AGENCIES,
INC.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
Name:
Title:
LENDER:
Address: NATIONSBANK OF TEXAS, N.A.
NationsBank Plaza
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President