FIFTH AMENDMENT TO LOAN AGREEMENT
AND GUARANTOR CONSENT
THIS FIFTH AMENDMENT TO LOAN AGREEMENT AND GUARANTOR CONSENT (the
"Fifth Amendment") is made as of December 15, 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, by that certain Third Amendment to Loan Agreement and
Guarantor Consent ("Third Amendment") dated as of September 17, 1998, and
dby that certain Fourth Amendment to Loan Agreement and Guarantor Consent
dated November 1, 1998 ("Fourth Amendment") 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, and the
Fourth 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 December 15,
1998 be extended to 2:00 p.m. (Dallas, Texas time) on February 15, 1999.
The Lender is willing to amend the Loan Agreement to so extend such
maturity date on the condition 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 the Fourth Amendment, and this Fifth 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
February 15, 1999 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 Fifrth Amendment, and this Fifth 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 Fifth
Amendment.
(d) Each Guarantor represents and warrants that, as of
the date hereof: (i) such Guarantor has full power and authority to
execute this Fifth Amendment, and this Fifth 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 Fifth
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 Fifth 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 Fifth Amendment shall
be effective as of the date and year first above written, subject to the
following:
(a) The Lender shall have received this Fifth Amendment
executed by Borrower and each Guarantor;
(b) 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 fo the
Guarantors to the contrary and providing a substitute certificate
conforming to the requirements hereof;
(c) All of the conditions precedent set forth in
Section 4.0, Conditions Precedent to Subsequent Loans, of the Loan
Agreement shall be satisfied; and
(d) 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 Fifth Amendment constitutes a Loan
Document for all purposes. The Loan Agreement, as amended by this Fifth
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 Fifth
Amendment to Loan Agreement to be effective as of the date and year first
above written.
BORROWER:
Address: HALLMARK FINANCE CORPORATION
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
GUARANTORS:
Address: HALLMARK FINANCIAL SERVICES,
INC.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
Address: HALLMARK CLAIMS SERVICE, INC.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
Address: AMERICAN HALLMARK GENERAL
AGENCY, INC.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
Address: ACO HOLDINGS, INC.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
Address: AMERICAN HALLMARK AGENCIES,
INC.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By:____________________________
Name:__________________________
Title:_________________________
LENDER:
Address: NATIONSBANK OF TEXAS, N.A.
NationsBank Plaza
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000 By:____________________________
Xxxxx X. Xxxxx, Senior Vice
President
