EXHIBIT 10(a)
ENDORSEMENT NO. 2
to the
GUARANTY AGREEMENT
Effective: July 1, 1996
provided by
DORINCO REINSURANCE COMPANY
in favor of
STATE AND COUNTY MUTUAL FIRE INSURANCE COMPANY
as respects business produced and managed by
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS
or its subsidiary
AMERICAN HALLMARK GENERAL AGENCY, INC.
IT IS HEREBY AGREED, effective July 1, 2000, that the fifth, seventh,
eleventh and nineteenth paragraphs under PREAMBLE (as amended by Endorsement
No. 1) shall be deleted and the following substituted therefor:
"DORINCO has entered into a Quota Share Retrocession Agreement,
effective July 1, 1996, with AMERICAN HALLMARK ('Retrocession
Agreement'), pursuant to which AMERICAN HALLMARK has retroceded to
DORINCO a 25% share of the Interest and Liabilities under the
Reinsurance Agreement. As respects subject business of the REINSURANCE
AGREEMENT written or renewed on or after July 1, 1997, and before July
1, 2000, AMERICAN HALLMARK will retrocede to DORINCO a 50% share of the
Interest and Liabilities under the Reinsurance Agreement. As respects
subject business of the REINSURANCE AGREEMENT written or renewed on or
after July 1, 2000, AMERICAN HALLMARK will retrocede to DORINCO a 100%
share of the Interest and Liabilities under the Reinsurance Agreement.
NOW, THEREFORE, DORINCO hereby agrees, as respects subject business of
the REINSURANCE AGREEMENT written or renewed on or after July 1, 2000,
to guarantee a 100% share of the full and complete performance of all
terms, conditions and covenants by: (a) AMERICAN HALLMARK under the
REINSURANCE AGREEMENT (Exhibit 'A'); (b) GENERAL AGENCY under the
GENERAL AGENCY AGREEMENT (Exhibit 'B'); and (c) AMERICAN HALLMARK under
the ADMINISTRATIVE SERVICES AGREEMENT (Exhibit 'C'). This GUARANTY
constitutes consideration by DORINCO to STATE AND COUNTY MUTUAL for
entering into the subject agreements with AMERICAN HALLMARK and GENERAL
AGENCY.
If, by action of a state insurance regulatory agency or court of
competent jurisdiction, AMERICAN HALLMARK is found to be insolvent or
is placed in supervision, conservation, receivership, rehabilitation or
liquidation, or has a receiver, supervisor or conservator appointed,
then DORINCO shall fully assume 100% of AMERICAN HALLMARK's obligations
owed to STATE AND COUNTY MUTUAL under the subject agreements, including
but not limited to making all payments that were required of AMERICAN
HALLMARK under the subject agreements. STATE AND COUNTY MUTUAL shall
assign to DORINCO its right to recover from AMERICAN HALLMARK any
claims payments or other payments made by DORINCO to STATE AND COUNTY
MUTUAL by reason of AMERICAN HALLMARK being found to be insolvent or
placed in supervision, conservation receivership, rehabilitation or
liquidation. Notwithstanding DORINCO's agreement to fully assume
AMERICAN HALLMARK's obligations, if AMERICAN HALLMARK is found to be
insolvent or is placed in supervision, conservation, receivership,
rehabilitation or liquidation, STATE AND COUNTY MUTUAL shall not be
required to pay to DORINCO any amounts paid by STATE AND COUNTY MUTUAL
to AMERICAN HALLMARK as of that date and/or which STATE AND COUNTY
MUTUAL is required to pay in the future to AMERICAN HALLMARK and/or its
supervisor, conservator, rehabilitator or liquidator.
In the event that either (i) the Texas Department of Insurance requires
cancellation or disallows credit for reinsurance under the REINSURANCE
AGREEMENT or (ii) DORINCO's A.M. Best rating at any time is lower than
A-, DORINCO will immediately secure 100% of AMERICAN HALLMARK's
obligations under the REINSURANCE AGREEMENT via a security fund
agreement to be executed by DORINCO and STATE AND COUNTY MUTUAL, which
security fund agreement shall be in form and content acceptable to
STATE AND COUNTY MUTUAL."
The provisions of this Agreement shall remain otherwise unchanged.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Endorsement as of the dates first above
mentioned.
DORINCO REINSURANCE COMPANY
Attest: By: __________________________________
Title: ________________________________
Date: ________________________________
AMERICAN HALLMARK INSURANCE
COMPANY OF TEXAS
Attest: By: __________________________________
Title: ________________________________
Date: ________________________________
AMERICAN HALLMARK GENERAL
AGENCY, INC.
Attest: By: __________________________________
Title: ________________________________
Date: ________________________________
