sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 4)1
Hallmark Financial Services, Inc.
---------------------------------
(Name of Issuer)
Shares of Common Stock, Par Value $0.03 Per Share
-------------------------------------------------
(Title of Class of Securities)
40624Q104
---------
(CUSIP Number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 6, 2005
------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 13 Pages)
----------------------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP 40624Q104 13D Page 2 of 13 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE PARTNERS, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 67,520,362
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
67,520,362
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
67,520,362
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
77.8%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 3 of 13 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE CAPITAL MANAGEMENT, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 67,520,362
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
67,520,362
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
67,520,362
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
77.8%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 4 of 13 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE CAPITAL GROUP, L.L.C.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 67,520,362
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
67,520,362
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
67,520,362
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
77.8%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 5 of 13 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
MARK E. SCHWARZ
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO, PF
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 67,813,287
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
67,813,287
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
67,813,287
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.1%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP 40624Q104 13D Page 6 of 13 Pages
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The following constitutes Amendment No. 4 ("Amendment No. 4") to the
Schedule 13D filed by the undersigned. This Amendment No. 4 amends the Schedule
13D as specifically set forth herein.
Item 3 is hereby amended and restated to read as follows:
As of June 21, 2005, NP had invested $49,120,351 (inclusive of
brokerage commissions) in shares of Common Stock of the Issuer. The source of
these funds was the working capital of NP.
As of June 21, 2005, Mark Schwarz had invested $242,382 (inclusive
of brokerage commissions) in shares of Common Stock of the Issuer. The source of
these funds was the personal funds of Mr. Schwarz.
Item 4 is hereby amended to add the following:
On April 29, 2005, the Issuer distributed to holders of its
outstanding Common Stock nontransferable rights to purchase additional shares of
Common Stock (the "Rights Offering"). Stockholders received one right for each
share of Common Stock held of record by them as of the close of business on
April 20, 2005. Each right entitled its holder to purchase 1.37 shares of Common
Stock. NP purchased 44,462,093 shares of Common Stock pursuant to its basic
subscription privilege and oversubscription privilege under the Rights Offering
which was concluded on June 6, 2005. After giving effect to the shares of Common
Stock issued to it in the Rights Offering, NP beneficially owned an aggregate of
67,590,362 shares. Mr. Schwarz purchased 192,925 shares of Common Stock pursuant
to his basic subscription privilege and oversubscription privilege under the
Rights Offering. After giving effect to the shares of Common Stock issued to him
in the Rights Offering, Mr. Schwarz beneficially owned, together with the shares
held directly by NP which he was also deemed to beneficially own, an aggregate
of 67,813,287 shares.
On June 21, 2005, NP sold 70,000 shares of Common Stock to a
director of the Issuer as described in Item 6.
Item 5(a) is hereby amended and restated to read as follows:
The aggregate percentage of shares of Common Stock reported to be
owned by the Reporting Persons is based upon 86,841,791 shares outstanding,
which is the total number of shares of Common Stock outstanding as of June 21,
2005, after giving effect to the shares issued as a result of the Rights
Offering.
As of the filing date of this statement, NP beneficially owned
67,520,362 shares of Common Stock, representing approximately 77.8% of the
issued and outstanding Common Stock of the Issuer.
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 7 of 13 Pages
------------------------------ -----------------------
NCM, as the general partner of NP, may be deemed to beneficially own
the 67,520,362 shares of Common Stock beneficially owned by NP, representing
approximately 77.8% of the issued and outstanding Common Stock of the Issuer.
NCG, as the general partner of NCM, which in turn is the general
partner of NP, may also be deemed to beneficially own the 67,520,362 shares of
Common Stock beneficially owned by NP, representing approximately 77.8% of the
issued and outstanding Common Stock of the Issuer.
Mark Schwarz, as the managing member of NCG, the general partner of
NCM, which in turn is the general partner of NP, may also be deemed to
beneficially own the 67,520,362 shares of Common Stock beneficially owned by NP,
which, together with the 292,925 shares of Common Stock Mr. Schwarz owns
directly, represents approximately 78.1% of the issued and outstanding Common
Stock of the Issuer.
NCM, NCG and Mr. Schwarz disclaim beneficial ownership of the shares
of Common Stock held by NP, except to the extent of their pecuniary interest
therein.
Item 5(c) is hereby amended to add the following:
There were no transactions by the Reporting Persons in the shares of
Common Stock during the past 60 days other than (a) NP's exercise of an option
(an exempt transaction under Section 16(b) of the Act) to purchase 50,000 shares
on April 18, 2005 at an exercise price of $.375 per share, (b) Mr. Schwarz's
exercise of options (an exempt transaction under Section 16(b) of the Act) to
purchase 100,000 shares on April 18, 2005 at an exercise price of $.6875 per
share, (c) NP's acquisition of 44,462,093 shares in connection with the Rights
Offering as described in Item 4, (d) Mr. Schwarz's acquisition of 192,925 shares
in connection with the Rights Offering as described in Item 4, and (e) NP's
disposition of 70,000 shares in connection with the Stock Purchase Agreement as
described in Item 6.
Item 6 is hereby amended and restated to read as follows:
As further discussed in Item 5(c) above, NP exercised the option
previously granted by the Issuer to NP on January 22, 2003.
On June 20, 2005, NP and Mark J. Morrison, a director of the Issuer,
entered into a Stock Purchase Agreement pursuant to which NP sold to Mr.
Morrison 70,000 shares of Common Stock at a price of $.90 per share (the "Stock
Purchase Agreement"). The Stock Purchase Agreement is attached as an exhibit
hereto and is incorporated herein by reference.
Other than as described herein, there are no contracts,
arrangements, understandings or relationships among the Reporting Persons, or
between the Reporting Persons and any other person, with respect to the
securities of the Issuer.
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CUSIP 40624Q104 13D Page 8 of 13 Pages
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Item 7 is hereby amended to add the following exhibit:
Exhibit 99.1 Stock Purchase Agreement by and between Newcastle Partners, L.P.
and Mark J. Morrison dated June 20, 2005.
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CUSIP 40624Q104 13D Page 9 of 13 Pages
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: June 22, 2005 NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.,
its general partner
By: Newcastle Capital Group, L.L.C.,
its general partner
By: /s/ Mark E. Schwarz
---------------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL MANAGEMENT, L.P.
By: Newcastle Capital Group, L.L.C.,
its general partner
By: /s/ Mark E. Schwarz
---------------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL GROUP, L.L.C.
By: /s/ Mark E. Schwarz
---------------------------------------
Mark E. Schwarz, Managing Member
/s/ Mark E. Schwarz
-----------------------------------------
MARK E. SCHWARZ
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CUSIP 40624Q104 13D Page 10 of 13 Pages
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EXHIBIT INDEX
Exhibit Page
------- ----
99.1 Stock Purchase Agreement by and between 11 to 13
Newcastle Partners, L.P. and Mark J. Morrison
dated June 20, 2005.
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CUSIP 40624Q104 13D Page 11 of 13 Pages
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated effective as of June 20, 2005 (the
"AGREEMENT"), by and between Newcastle Partners, L.P. ("SELLER") and the
undersigned individual ("PURCHASER").
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires
to purchase from Seller 70,000 shares of common stock, $.03 par value
(individually, a "SHARE", collectively, the "SHARES"), of Hallmark Financial
Services, Inc., a Nevada corporation (the "COMPANY"), for a purchase price of
$.90 per Share, or $63,000 in total, on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Sale of Shares.
--------------
1.1. SALE AND PURCHASE OF SHARES. Upon the terms and subject to the
conditions contained in this Agreement, Seller shall sell to Purchaser and
Purchaser shall purchase from Seller, all right, title and interest in and to
the Shares (the "STOCK SALE"), at a purchase price of $.40 per Share, the number
of Shares and at an aggregate purchase price set forth next to Purchaser's name
on the signature line of this Agreement. Upon full payment for the Shares, the
Seller shall instruct the transfer agent of the Company to transfer the Shares
to the Purchaser.
Section 2. Representations and Warranties of Purchaser.
-------------------------------------------
2.1. INVESTMENT REPRESENTATIONS. Purchaser hereby represents and
warrants to Seller, in connection with the transactions contemplated by this
Agreement, as follows:
(a) INVESTMENT. The Shares to be acquired by Purchaser will be
acquired for investment for Purchaser's own account, not as a nominee or agent,
and not with a view to the resale or distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "SECURITIES ACT").
(b) ACCREDITED INVESTOR. Purchaser is an "Accredited Investor"
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. Purchaser is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Agreement, including a complete loss of
Purchaser's investment in the Shares.
(c) RESTRICTED SHARES. Purchaser understands and agrees that,
when acquired by Purchaser pursuant to this Agreement, the Shares will be
"restricted securities" within the meaning of the Securities Act, and may not be
sold, transferred or otherwise disposed of, directly or indirectly, without
registration under the Securities Act or an exemption therefrom.
(d) NO REPRESENTATION. Purchaser confirms that neither Seller
nor any agent or affiliate of Seller or any other person or entity has made any
representation or warranty to Purchaser about the Company or the Shares and that
Purchaser has not relied upon any other representation or warranty, express or
implied in purchasing the Shares.
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 12 of 13 Pages
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(e) FINANCIAL CIRCUMSTANCES. Purchaser has no reason to
anticipate any change in Purchaser's personal circumstances, financial or
otherwise, which may cause or require any sale or distribution by Purchaser of
all or any part of the Shares.
(f) FINANCIAL EXPERIENCE. The Purchaser represents that by
reason of Purchaser's business or financial experience, Purchaser has the
capacity to evaluate the merits and risks of the purchase of the Shares and to
protect Purchaser's own interests in connection with the transactions
contemplated by this Agreement.
(g) LEGEND. Purchaser understands and agrees that the
certificate or any other document evidencing any of the Shares shall be endorsed
with a legend in substantially the same form as set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND
CONTENT TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
Purchaser understands that the foregoing representations and
warranties are to be relied upon by Seller as a basis for exemption of the sale
of the Shares under the Securities Act and under the securities laws of all
applicable states and for other purposes.
Section 3. Further Assurances.
------------------
From and after the date of this Agreement, Purchaser and Seller
agree to execute and deliver any additional documents, instrument and other
writings as may be reasonably necessary or desirable to effect the transfer of
the Shares to the Purchaser in accordance with the terms hereof, including any
documents reasonably required by the transfer agent or the Company's counsel.
------------------------------ -----------------------
CUSIP 40624Q104 13D Page 13 of 13 Pages
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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement as of the date first written above.
NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.
Its General Partner
By: /s/ Mark Schwarz
-------------------------------------
Name: Mark Schwarz
Title: Chief Executive Officer
PURCHASER
/s/ Mark J. Morrison
-----------------------------------------
Mark J. Morrison