SHAREHOLDERS AGREEMENT
This agreement (the "Agreement") is made between AMERICAN
HALLMARK GENERAL AGENCY, INC., a Texas corporation,
("Corporation"), XXXXXX X. XXXXXXXX and XXXXXXX XXXXX, SR.,
("Shareholder" or "Shareholders", as appropriate) and HALLMARK
UNDERWRITERS, INC., a Texas corporation, ("Underwriters").
WHEREAS, the Shareholders jointly (with right of
survivorship) own all of the issued and outstanding common shares
of Underwriters (the "Stock"); and
WHEREAS, the Corporation has paid Shareholders One Hundred
and No/100 Dollars ($100.00), receipt of which is acknowledged;
and
WHEREAS, the Corporation performs certain services and
provides certain facilities to Underwriters from time to time
which facilities and services are valuable to the Underwriters;
and
WHEREAS, the parties believe it to be in the best interest
of all to restrict the transfer of the Stock in such a manner so
that the Stock will not find its way into the hands of persons
who are unlicensed pursuant to the laws of this State, or persons
who may be inimical to the best interests of Underwriters or the
Corporation and to provide a fair market value for the Stock in
the event a triggering event occurs;
NOW, THEREFORE, for and in consideration of the mutual
promises and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties have agreed and do agree as
follows:
Present Ownership. Underwriters was formed pursuant to the
Texas Business Corporation Act with its principal place of
business in Dallas, Dallas County, Texas, and is or intends
to be duly licensed in Texas as a managing general insurance
agency. The Shareholders are currently the owners, jointly,
of all of the Stock. The parties agree that any shares of
stock, of any nature or class, which Underwriters may
authorize or issue after the date of this Agreement, and any
shareholder of such shares, shall be subject to all of the
restrictions and obligations contained in this Agreement as
if such shares were presently issued and outstanding (and
shall thereafter be part of the "Stock") and such
shareholder were a signatory to this Agreement (who shall
thereafter be referred to as a "Shareholder" hereunder).
Survivorship. The Shareholders of Underwriters shall all
hold joint interest in all Stock with a right of
survivorship. In the event of the death of any Shareholder,
the interest of such deceased Shareholder shall
automatically be transferred to the other Shareholder, or
Shareholders, to be then held jointly by the Shareholders,
and the estate or personal representative of the deceased
Shareholder shall have no interest in the Stock whatsoever.
1. Term. This Agreement shall be effective as of the effective
date specified herein and shall continue in effect until
terminated as provided in Paragraph 12.
Legend on Certificates. Each certificate for Stock of the
Agency now issued and presently owned by the Shareholders
(as well as any certificate for Stock in the future with the
appropriate Shareholder) shall be conspicuously endorsed, in
accordance with Article 2.22 of the Texas Business
Corporation Act, as follows:
"THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE
WITH THE PROVISIONS OF THE SHAREHOLDERS AGREEMENT DATED
____________________ BY AND AMONG AMERICAN HALLMARK
GENERAL AGENCY, INC., HALLMARK UNDERWRITERS, INC. AND
SHAREHOLDERS, XXXXXX X. XXXXXXXX AND XXXXXXX XXXXX,
SR., A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE
SECRETARY OF THE COMPANY, AND MAY BE OBTAINED WITHOUT
CHARGE BY REQUESTING SAME AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS. IN ADDITION, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE RESTRICTIONS IMPOSED BY
ARTICLE 21.07-3 OF THE INSURANCE CODE OF TEXAS OF 1951,
AS AMENDED."
Stock Restrictions and Obligations. The Corporation, or its
designee, shall have the first right to purchase all of the
Stock owned by Shareholders upon the occurrence of any of
the following "triggering" events:
(a) Death of the Surviving Shareholder. Within ninety (90)
days after the death of the sole surviving Shareholder,
the Corporation, or its designee, shall have the first
right to buy all of the Stock of such Shareholder by
giving written notice thereof to the legal
representative of the deceased Shareholder's estate, or
if none to any heir of Shareholder, within such ninety
(90) day period.
Upon giving such notice, the Corporation, or its
designee, shall pay to the deceased Shareholder's legal
representative, or his or her heirs, as the case may
be, in consideration for such Stock, the sum of money
determined under Paragraph 6 hereof and pursuant to the
terms for sale prescribed in Paragraph 7 hereof, in
exchange for all of the Stock which the Shareholder
owned at the time of his death, and the estate of the
deceased Shareholder or the Shareholder's heirs, as the
case may be, shall be obligated to sell such Stock to
the Corporation, or its designee, upon such terms.
(b) Notice By Corporation. At any time whatsoever,
Corporation, or its designee, may notify Shareholders
that it wishes to purchase all of the Shareholders'
interest in the Stock and, upon receipt of such notice,
Shareholders shall sell such Stock to Corporation, or
to its designee. Upon giving such notice, the
Corporation, or its designee, shall pay to each such
Shareholder, in consideration for such Stock, the sum
of money determined under Paragraph 6 hereof and
pursuant to the terms of sales prescribed in Paragraph
7 hereof, and each Shareholder shall be required to
sell such Stock upon such terms.
(c) Voluntary Transfer. If at any time any Shareholder
wishes to sell, transfer, mortgage, pledge, give or in
any other manner devise, distribute or dispose of all
or any of his or her interest in the Stock, Shareholder
shall first give the Corporation written notice of such
intention, which notice shall constitute an offer to
sell and the Corporation, or its designee, shall have
the right to accept such offer and purchase all of such
Shareholder's Stock at any time within ninety (90) days
from the date of such notice at a price per share of
Stock determined in accordance with Paragraph 6 hereof.
Upon making such election, the Corporation, or its
designee, shall pay to the selling Shareholder, in
consideration for such Stock, the sum of money
determined pursuant to Paragraph 6 hereof and upon the
terms of sale set forth in Paragraph 7 hereof, and
Shareholder shall be required to sell such interest in
Stock upon such terms.
(d) Involuntary Transfer. If for any reason any person or
entity obtains or claims an interest in the Stock as a
result of any involuntary transfer by a Shareholder,
such Stock owned or claimed by any such person or
entity shall be subject to all limitations and
obligations contained herein and Corporation may
enforce all terms of this Agreement against any such
person or entity owning or claiming an interest in the
Stock.
(e) Other Transfers. The Shareholder shall not transfer,
assign or in any way alienate any interest in the
Stock, except as provided for in this Agreement, or as
may be agreed to in writing by Corporation. If, and
only if, the Corporation, or its designee, elects not
to purchase the shares of Shareholder when such option
is provided above, then any Shareholder may sell or
assign all or any part of Shareholder's interest in the
Stock upon such terms as the Shareholder may desire,
provided that such Stock shall continue to be subject
hereto, as provided in paragraph 1.
Valuation of Stock. The Stock of the Agency shall be valued
and the sales price determined for purposes of this
Agreement at $1.00 per share for the joint interests of
Shareholders in each such share. The interest of a single
Shareholder shall be equal to his or her fractional amount
(with the numerator of one and the denominator being the
total number of such Shareholders) of the sales price.
Terms of Sale. The Corporation shall pay the consideration
for the purchased Stock in cash, or by reducing
Shareholder's debt, if any, owed to Corporation by the
amount of the sales price.
Right To Assign or Transfer. It is understood by all
parties that Corporation has no intent to own Underwriters
(while Underwriters holds a Texas managing general agent's
license) but it is recognized that Corporation does have a
pecuniary interest in Underwriters and has an interest in
placing certain restrictions on the Stock. Corporation
acknowledges that, because of licensing restrictions, it is
not entitled to own shares of a Texas corporate managing
general agency and therefore agrees that prior to purchasing
any Stock of Underwriters hereunder, if Underwriters then
holds such a license, it will assign its rights to purchase
hereunder to a designed individual or individuals permitted
to own such Stock, in which event such Stock shall be sold
to such designee upon the same terms and conditions and for
the same consideration as if Corporation had purchased them.
Any such Stock purchased by an designee and any designee so
purchasing shall be subject to all of the terms and
conditions hereof as if the Stock were owned by the original
Shareholder and the designee were the original Shareholder.
Stock Power. To protect Corporation's rights hereunder,
Shareholders have this day delivered to Corporation all of
the certificates of Stock of Agency owned by Shareholder,
together with blank stock powers, undated but executed,
which irrevocably authorizes and appoints Corporation, as
its attorney in fact, to complete such stock powers and to
transfer the Stock if and when an event occurs hereunder
which authorizes such transfer.
Assignment of Agency's Rights. The parties acknowledge that
it is in the best interest of Underwriters to restrict the
transfer of Stock as provided herein and that to accomplish
same it may be necessary for Underwriters to contract with
Shareholder and to assign its contractual rights to
Corporation. Accordingly, to the extent necessary, this
Agreement shall be construed as an agreement between
Underwriters and the Shareholders for the repurchase of
Shareholders' shares of Stock. Any repurchase rights of the
Agency are hereby assigned to the Corporation or its
designee.
Spouses. The spouse ("Spouse") of any Shareholder of
Agency, if the Shareholder is married, agrees, as evidenced
by Spouse's signature hereto, that to the extent Spouse
could claim an ownership interest in the Stock, which is
subject this Agreement, Spouse will be bound by this
Agreement and will transfer any such interest in conformity
with this Agreement.
Termination. This Agreement may be terminated (i) upon the
voluntary agreement of all the parties, or (ii) by any of
the parties following six (6) months prior written notice
from the terminating party to the remaining parties, subject
however to the prior rights of first refusal in Corporation
and its designee to purchase Shareholders' Stock hereunder,
the election of which shall terminate the running of the
notice of termination.
Construction of Agreement; Severability. The captions used
in this Agreement are for convenience only and shall not be
construed in interpreting this Agreement. Whenever the
context requires, the masculine shall include the feminine
and neuter and the singular shall include the plural, and
conversely. If any portion of this Agreement shall be held
invalid or inoperative, then insofar as is reasonable or
possible (a) the remainder of this Agreement shall be
considered valid and operative, and (b) effect shall be
given to the intent manifested by the part held invalid or
inoperative.
Notice. Any notice to any party to this Agreement required
or permitted by this Agreement shall be in writing and shall
be effective upon receipt if hand delivered or upon the
placing of such notice in the United States mails, Postage
Prepaid, Certified Mail, Return Receipt Requested, addressed
to the receiving party at its last known address.
Place of Performance. All obligations pursuant to the terms
of this Agreement shall be payable and shall be made and
completed in Dallas, Dallas County, Texas.
Binding. This Agreement shall be binding upon and shall
inure to the benefit of the parties, their legal
representatives, successors, and assigns; this Agreement may
not be assigned, however, by any Shareholder.
Applicable Law. This Agreement shall be construed under and
in accordance with the laws of the State of Texas.
Specific Performance. The parties declare that it is
impossible to measure in money the damages that would accrue
to a party to this Agreement in the event of a breach.
Therefore, if any party institutes an action or proceeding
to enforce the provisions of this Agreement, the Agreement
may be specifically enforced.
New Shareholders. Any person or entity who becomes a
Shareholder of Underwriters after the effective date of this
Agreement shall be required to execute an addendum to this
Agreement binding said Shareholder to the same extent as if
an original Shareholder. Any new Shareholder must also have
his or her spouse sign the addendum binding his or her
interest. The addendum shall also be signed by the
Corporation and the Agency. Notwithstanding the foregoing,
the new Shareholder and his or her spouse, if any, will be
bound by the terms of this Agreement whether or not an
addendum is signed.
Supersedes Prior Agreements. This Agreement supersedes any
prior agreements between the parties relating to the Stock.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the _________ day of________________, 199_, to be effective
______________________, 199_.
CORPORATION:
AMERICAN HALLMARK GENERAL AGENCY, INC.
By:
President
JOINT SHAREHOLDERS:
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxx, Sr.
UNDERWRITERS:
HALLMARK UNDERWRITERS, INC.
By:
President
_________________________ and __________________________, the
spouses of Xxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxx, Sr.,
Shareholders, agree that to the extent each may claim an interest
in the Stock, which is subject to this Agreement, each will be
bound by this Agreement and will transfer any such interest in
conformity with this Agreement.
Executed as of the ________ day of ___________________,
1995.
SPOUSES:
DATED:
DATED:
