THIRD AMENDMENT TO LOAN AGREEMENT AND GUARANTOR CONSENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT AND GUARANTOR CONSENT (the
"Third Amendment") is made as of September 17, 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, 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 Expiration Date as defined in the Loan Agreement means 2
p.m. (Dallas, Texas time) on September 17, 1998 and the Borrower has
requested that Lender amend the Loan Agreement to extend such maturity date
to 2 p.m. (Dallas, Texas time) on November 1, 1998 but that all other terms,
conditions and covenants of the Loan Agreement continue unaffected. Lender
is willing to amend the Loan Agreement to so extend such maturity date but
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 and by this Third Amendment, 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 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
November 1, 1998 or any other date on which the Loans become due and payable
pursuant to the terms of this Agreement.
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 Third
Amendment, and this Third Amendment constitutes the legal, valid and binding
obligation of the Borrower 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 the
Borrower of this Third Amendment.
(d) Each Guarantor represents and warrants that, as of the
date hereof: (i) such Guarantor has full power and authority to execute
this Third Amendment, and this Third 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 Third Amendment.
4. Guarantors' Acknowledgment. By signing below, each of the
Guarantors: (i) acknowledges and consents to the execution, delivery and
performance of this Third Amendment; (ii) agrees that its obligations in
respect of its Guaranty are not released, modified, impaired or affected in
any manner by this Third Amendment or any of the provisions contemplated
herein; and (iii) acknowledges that it has no claims or offsets against, or
defenses or counterclaims to, its Guaranty.
5. Conditions of Effectiveness. This Third Amendment shall be
effective as of the date and year first above written, subject to the
following:
(a) The Lender shall have received this Third Amendment
executed by Borrower and each Guarantor;
(b) The Lender shall have received the 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 Promissory Note dated March 17, 1997;
(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 Third Amendment constitutes a Loan Document for all
purposes. The Loan Agreement, as amended by this Third 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
P R OCEDURE 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 Third
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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Name:
Title:
Address: AMERICAN HALLMARK GENERAL
AGENCY, INC.
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Name:
Title:
Address: ACO HOLDINGS, INC.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
Name:
Title:
Address: AMERICAN HALLMARK AGENCIES,
INC.
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Name:
Title:
LENDER:
Address: NATIONSBANK OF TEXAS, N.A.
NationsBank Plaza
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ By:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President