sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
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. 2)1
HALLMARK FINANCIAL SERVICES, INC.
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(Name of issuer)
SHARES OF COMMON STOCK, PAR VALUE $0.03 PER SHARE
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(Title of class of securities)
40624Q104
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(CUSIP number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
January 22, 2003
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(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 which 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 9 Pages)
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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 No. 40624Q104 13D Page 2 of 9 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 5,334,001
OWNED BY
EACH
REPORTING
PERSON WITH ------------------------------------------------------------------
8 SHARED VOTING POWER
0
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,334,001
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,334,001
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.1%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 40624Q104 13D Page 3 of 9 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.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 5,334,001
OWNED BY
EACH
REPORTING
PERSON WITH ------------------------------------------------------------------
8 SHARED VOTING POWER
0
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,334,001
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,334,001
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.1%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 40624Q104 13D Page 4 of 9 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.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 5,334,001
OWNED BY
EACH
REPORTING
PERSON WITH ------------------------------------------------------------------
8 SHARED VOTING POWER
0
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,334,001
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,334,001
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.1%
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14 TYPE OF REPORTING PERSON*
OO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 40624Q104 13D Page 5 of 9 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
MARK E. SCHWARZ
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 5,409,001
OWNED BY
EACH
REPORTING
PERSON WITH ------------------------------------------------------------------
8 SHARED VOTING POWER
0
------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,409,001
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
5,409,001
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.4%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 40624Q104 13D Page 6 of 9 Pages
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The following constitutes Amendment No. 2 ("Amendment No. 2") to the
Schedule 13D filed by the undersigned. This Amendment No. 2 amends the Schedule
13D as specifically set forth.
Item 2 is hereby amended and restated as follows:
Item 2. Identity and Background.
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(a)-(c) This statement is jointly filed by Newcastle Partners, L.P.,
a Texas limited partnership ("NP"), Newcastle Capital Management, L.P., a Texas
limited partnership ("NCM"), Newcastle Capital Group, L.L.C, a Texas limited
liability company ("NCG"), and Mark E. Schwarz (together with NP, NCM and NCG,
the "Reporting Persons"). Because Mark Schwarz is the managing member of NCG,
which is the general partner of NCM (with Mark Schwarz, NCG and NCM, hereinafter
referred to as the "Controlling Persons"), which in turn is the general partner
of NP, the Controlling Persons may be deemed, pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the "Act"), to be the beneficial
owners of all shares of Common Stock held by NP. The Reporting Persons are
filing this joint statement, as they may be considered a "group" under Section
13(d)(3) of the Act. However, neither the fact of this filing nor anything
contained herein shall be deemed to be an admission by the Reporting Persons
that such a group exists.
As stated above, Mark Schwarz is the managing member of NCG. The
principal business of NCG is acting as the general partner of NCM. The principal
business of NCM is acting as the general partner of NP. The principal business
of NP is investing in securities. The principal place of business for each of
the Reporting Persons is 300 Crescent Court, Suite 1110, Dallas, Texas 75201.
(d) During the last five years, none of the Reporting Persons have
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of the Reporting Persons have
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction, and as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3 is hereby amended and restated as follows:
Item 3. Source and Amount of Funds or Other Consideration.
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The net investment cost (including commissions, if any) of the
shares of Common Stock held directly by NP was approximately $2,063,134.48, all
of which was obtained from NP's working capital. NP also directly owns a
currently exercisable option to purchase 50,000 shares of Common Stock which was
purchased for nominal value, as further described in Item 6 hereof. Mark Schwarz
directly owns options exercisable within 60 days of the date hereof to purchase
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CUSIP No. 40624Q104 13D Page 7 of 9 Pages
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75,000 shares of Common Stock, which options were provided to him as
consideration for his service as a director of the Issuer.
Item 5(a)-(b) is hereby amended and restated as follows:
(a) The aggregate percentage of shares of Common Stock reported to
be owned by the Reporting Persons is based upon 11,049,133 shares outstanding,
which is the total number of shares of Common Stock outstanding as reported in
the Issuer's Form 10-Q for the quarter ended September 30, 2002.
As of the filing date of this statement, NP beneficially owned
5,334,001 shares of Common Stock, including 50,000 shares currently issuable
upon the exercise of an option at an exercise price of $.375 per share,
representing approximately 48.1% of the issued and outstanding Common Stock of
the Issuer.
NCM, as the general partner of NP, may be deemed to beneficially own
the 5,334,001 shares of Common Stock beneficially owned by NP, representing
approximately 48.1% 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 5,334,001 shares of
Common Stock beneficially owned by NP, representing approximately 48.1% 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 5,334,001 shares of Common Stock beneficially owned by NP,
representing approximately 48.1% of the issued and outstanding Common Stock of
the Issuer. In addition, Mr. Schwarz directly owns options exercisable within 60
days of the date hereof to purchase 75,000 shares at an exercise price of $.6875
per share, which, together with the Common Stock beneficially owned by NP,
represents 48.4% of the issued and outstanding Common Stock.
(b) By virtue of his position with NP, NCM and NCG, Mark Schwarz has
the sole power to vote and dispose of the shares of Common Stock reported in
this statement.
Item 5(c) is hereby amended to add the following:
(c) During the past 60 days, NP entered into the transaction
described in Item 6 hereof.
Item 5(d) is hereby amended and restated as follows:
(d) No person other than the Reporting Persons is known to have the
right to receive, or the power to direct the receipt of dividends from, or
proceeds from the sale of, such shares of the Common Stock.
Item 6 is hereby amended and restated as follows:
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CUSIP No. 40624Q104 13D Page 8 of 9 Pages
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Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
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On December 6, 2002, NP purchased for nominal value, subject to
obtaining the consent of the Issuer, an option to purchase 50,000 shares of
Common Stock of the Issuer from a former director of the Issuer. On January 22,
2003, such existing option was cancelled and the Issuer simultaneously granted
directly to NP a new option which may be exercised upon issuance and up to March
10, 2010 at a price of $.375 per share.
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CUSIP No. 40624Q104 13D Page 9 of 9 Pages
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SIGNATURES
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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: January 27, 2003 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 Schwarz
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Mark Schwarz, Managing Member
NEWCASTLE CAPITAL MANAGEMENT, L.P.
By: Newcastle Capital Group, L.L.C.,
its general partner
By: /s/ Mark Schwarz
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Mark Schwarz, Managing Member
NEWCASTLE CAPITAL GROUP, L.L.C.
By:/s/ Mark Schwarz
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Mark Schwarz, Managing Member
/s/ Mark Schwarz
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MARK SCHWARZ