SECOND AMENDMENT TO PROCESSING AGREEMENT
THIS AMENDMENT TO PROCESSING AGREEMENT (this "Amendment") is
made and entered into effective as of the 30th day of November,
1995, by and between PEREGRINE PREMIUM FINANCE L.C., a Texas
limited liability company (hereinafter referred to as
"Peregrine"), and HALLMARK FINANCE CORPORATION, a Texas
corporation (hereinafter referred to as "Hallmark"), and joined
herein by AMERICAN HALLMARK GENERAL AGENCY, INC.
WHEREAS, the parties hereto have entered into that certain
Processing Agreement dated as of January 1, 1995, as amended by
that certain Amendment to Processing Agreement dated as of
January 1, 1995 (the "Processing Agreement"); and
WHEREAS, as a result of financing obtained by Peregrine from
Bank One, Texas, N.A., the parties desire to increase Peregrine's
capital commitment under the Processing Agreement from
$10,500,000 to $13,500,000; and
WHEREAS, the parties hereto desire to enter into this
Amendment to reflect the aforesaid increased capital commitment
on the part of Peregrine;
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Paragraph 4(b) of the Processing Agreement is hereby
amended to read in its entirety as follows:
"Peregrine will have available for use in funding Notes its
own money, whether such money represents member's equity or
debt of Peregrine to its Lender or one or more of its
members or otherwise (herein called 'Capital'), in an amount
not less than $13,500,000. If, at any time and from time to
time during the existence of this Agreement, Hallmark
desires to obtain funding for Notes in a total amount that
would require Peregrine's Capital commitment to exceed
$13,500,000, then Hallmark will give to Peregrine written
notice (the "Notice") of such fact, of the amount of Notes
Hallmark desires to have funded hereunder and of the extra
Capital required of Peregrine to fund such Notes, at least
30 days prior to the date (the 'Funding Date') Hallmark
desires to obtain such excess funding. Peregrine will,
within 15 days of receipt of the Notice, give to Hallmark
written notice of whether it will provide all or any part,
or none, of the additional Capital funding over and above
$13,500,000 requested by Hallmark. If Peregrine elects to
provide all or any part of the additional Capital, it shall
provide such Capital on or before the Funding Date. If
Peregrine gives notice that it does not elect to provide all
of such additional Capital or if Peregrine gives Hallmark no
notice whatsoever, then Hallmark shall be entitled to sell,
itself finance, obtain third-party financing for, or
otherwise deal with such premium finance notes for policies
of insurance produced by Brokers through State and County;
provided that any such third-party financing or financing
provided by Hallmark itself shall not be in an amount
greater than the amount of premium finance notes with
respect to which funding was requested in the Notice. If in
such event Hallmark does sell, itself finance, obtain third-
party financing for, or otherwise deal with such premium
finance notes, Peregrine agrees to transfer Unfunded Notes
(as hereinafter defined) as provided in paragraph 4(e) below
and to use its best efforts to obtain a release by
Peregrine's Lender of any lien or security interest claimed
by it in premium finance notes not funded in whole or in
part by Peregrine's Lender. The parties acknowledge that
Peregrine may obtain financing from a Lender in order to
fulfill Peregrine's Capital commitment hereunder. In the
event that Peregrine obtains such financing, Hallmark will
abide by any requirements imposed upon Peregrine by its
Lender in connection with such financing, including, without
limitation, any requirements regarding the delivery of
possession to Lender of Notes in which it has a security
interest."
2. Except as amended hereby, the Processing Agreement is
ratified, approved and confirmed in all respects.
3. Capitalized terms used herein and not otherwise defined
shall have the respective meanings ascribed to such terms in the
Processing Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
PEREGRINE PREMIUM FINANCE L.C.
Date:________________ By:___________________________
Its:__________________________
HALLMARK FINANCE CORPORATION
Date:________________ By:___________________________
Its:__________________________
AMERICAN HALLMARK GENERAL AGENCY, INC.
Date:________________ By:___________________________
Its:__________________________