EXHIBIT 2(b)
ASSUMPTION AGREEMENT
This Assumption Agreement, dated as of December 1, 2002 (this
"Agreement"), is by and among The Millers Insurance Company, a Texas
property and casualty insurance company ("Millers"), Millers General Agency,
Inc., a Texas corporation ("MGA"), and Phoenix Indemnity Insurance Company,
an Arizona property and casualty insurance company ("Phoenix").
PRELIMINARY STATEMENTS
A. Hallmark Financial Services, Inc., a Nevada corporation, Millers
American Group, Inc., a Texas corporation, and Millers have entered into
that certain Purchase Agreement, dated as of November 26, 2002 (the
"Purchase Agreement").
B. Millers owes Phoenix an intercompany payable in connection with
reinsurance obligations and overpayment of tax liabilities (the
"Intercompany Payable") which, as of September 30, 2002, was in the amount
of $478,054.00.
C. The assumption of the Intercompany Payable by MGA is a condition
precedent to the consummation of the transactions contemplated by the
Purchase Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants set forth herein and in the Purchase Agreement, and
for other good and valid consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assumption of Liabilities. MGA hereby assumes and agrees to
perform, pay or cause to be paid, and fully discharge when due the
Intercompany Payable in an aggregate amount not to exceed $480,000.00
effective as of December 1, 2002 (the "Assumed Liability").
2. Liabilities Not Assumed. Except for the Assumed Liability, MGA
has not agreed to pay or assume, shall not be required to pay or assume and
shall not have any liability or obligation with respect to, and shall not
assume, and Millers shall remain liable for, any and all liabilities of
Millers other than the Assumed Liability. Phoenix represents and warrants
that the Assumed Liability is the full amount of all liabilities owed by
Millers to Phoenix.
3. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
4. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party, which consent will not
be unreasonably withheld.
5. Purchase Agreement. The Purchase Agreement shall survive the
execution and delivery of this Agreement.
6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas without regard
to its conflict of law principles.
7. Counterparts. This Agreement may be executed and delivered in
any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which shall constitute one and
the same instrument.
8. Amendment. This Agreement may not be amended or modified
except by an instrument in writing executed by each of the parties hereto.
9. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon the determination that any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the fullest extent
possible.
10. Waiver and Consent. Phoenix hereby waives any notice
requirements and any other rights that it may have and hereby consents to
the assumption of the Assumed Liability by MGA pursuant to the terms of this
Agreement. Phoenix hereby acknowledges that the assumption of the Assumed
Liability by MGA will be effective as of the date hereof.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
THE MILLERS INSURANCE COMPANY
By: ____________________________________________
Name: ____________________________________________
Title: ____________________________________________
MILLERS GENERAL AGENCY, INC.
By: ____________________________________________
Name: ____________________________________________
Title: ____________________________________________
PHOENIX INDEMNITY INSURANCE COMPANY
By: ____________________________________________
Name: ____________________________________________
Title: ____________________________________________
