Exhibit 10.1


 





Fourth
Amendment

to

Second Restated Credit Agreement


 


This FOURTH AMENDMENT
TO SECOND RESTATED CREDIT AGREEMENT (this “Fourth Amendment”), dated as of June 19, 2018, is among HALLMARK
FINANCIAL SERVICES, INC., a Nevada corporation (“Borrower”), American
Hallmark Insurance Company of Texas, a Texas insurance corporation (“AHIC”), HALLMARK INSURANCE COMPANY,
an Arizona insurance corporation (“HIC”) (hereinafter, HIC and AHIC collectively referred to as “L/C
RIC”), and FROST BANK, a Texas state bank (“Lender”).


 


RECITALS:


 


Borrower, AHIC, HIC,
and Lender have previously entered into (i) the Second Restated Credit Agreement dated as of June 30, 2015 (such agreement,
together with all amendments and restatements thereto, the “Credit Agreement”) and (ii) the Revolving Facility B
Agreement dated as of December 17, 2015, as amended.


 


Borrower has requested
an amendment to the Credit Agreement.


 


Lender has agreed to
amend the Credit Agreement, subject to the terms of this Fourth Amendment.


 


AGREEMENT:


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:


 


ARTICLE I



Definitions


 


1.1       Definitions.
All capitalized terms not otherwise defined herein have the same meanings as in the Credit Agreement.


 


ARTICLE II



Amendments to Credit Agreement


 


2.1       Amendments
to Credit Agreement Section 1.1.


 


(a)       The
definition of “Revolving Loan Maturity Date” is amended by deleting “2018” and substituting “2020”
in lieu thereof.


 


(b)       The
definition of “Revolving Facility L/C Commitment Expiration Date” is amended by deleting “2018” and substituting
“2020” in lieu thereof.


 


2.2       Amendment
to Credit Agreement Section 3.1(b)(ii). Credit Agreement Section 3.1(b)(ii) is amended by deleting “2018”
and substituting “2020” in lieu thereof.


 






     


     


    

 


ARTICLE III



Conditions Precedent


 


3.1       Conditions.
The effectiveness of this Fourth Amendment is subject to the satisfaction of the following conditions precedent:


 


(a)       Documents.
Lender shall have received the following in number of counterparts and copies as Lender may request:


 


(i)       Fourth
Amendment. This Fourth Amendment executed by Borrower, each L/C RIC and Lender.


 


(ii)       Tenth
Restated Note. The Tenth Restated Revolving Promissory Note, in the form of Exhibit A hereto, executed by Borrower.


 


(iii)       Good
Standing. (A) An original certificate or certificates of good standing, existence and qualification as to Borrower issued
by the appropriate authority or authorities of the States of Nevada and Texas, (B) a copy of the Certificate of Authority
of AHIC issued by the Commissioner of Insurance, Texas Department of Insurance, and (C) a copy of the Authorization and Deposit
Certificate of HIC, issued by the Arizona Department of Insurance, each such certificate to be certified as of a date acceptable
to Lender.


 


(iv)       Obligor
Proceedings. Evidence that all corporate, limited liability company and partnership proceedings of each Obligor and each other
Person (other than Lender) taken in connection with the transactions contemplated by this Fourth Amendment and the other Loan Documents
shall be reasonably satisfactory in form and substance to Lender; and Lender shall have received copies of all documents or other
evidence which Lender may reasonably request in connection with such transactions.


 


(v)       Form
U-1. Federal Reserve System Form U-1, appropriately completed and executed by Borrower.


 


(vi)       Other
Documents. In form and substance satisfactory to Lender, such other documents, instruments and certificates as Lender may reasonably
require in connection with the transactions contemplated hereby.


 


(b)       No
Default. No Default or Event of Default shall exist either before giving effect to this Fourth Amendment or after giving effect
to this Fourth Amendment.


 


(c)       Expenses.
Reimbursement for reasonable Attorney Costs incurred through the date hereof.


 


(d)       Representations
and Warranties.


 


(i)       All
of the representations and warranties contained in Article VIII of the Credit Agreement, as amended hereby, and in
the other Loan Documents shall be true and correct on and as of the date of this Fourth Amendment with the same force and effect
as if such representations and warranties had been made on and as of such date, except to the extent such representations and warranties
speak to a specific date.


 


(ii)       All
of the representations and warranties contained in Article V hereof shall be true and correct on and as of the date
hereof.


 






    	 	2	 



     


    

 


(e)       Effectiveness.
Upon satisfaction of all conditions precedent in Section 3.1 hereof, this Fourth Amendment shall be effective as of
June 19, 2018.


 


3.2       Post-Closing
Conditions. If any document described in Section 3.1(a)(iii) cannot be delivered to Lender on or before June 19,
2018, as a result of delays of the applicable Governmental Authority (and not as a result of an Obligor’s failure to be in
good standing), Borrower shall cause such document to be delivered to Lender not later than August 15, 2018.


 


ARTICLE IV



Ratification


 


4.1       Ratification.
The terms and provisions set forth in this Fourth Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Credit Agreement and except as expressly modified and superseded by this Fourth Amendment, the terms and provisions
of the Credit Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Each
Obligor (a) agrees that the Credit Agreement, as amended hereby, and the other Loan Documents to which it is a party or subject
shall continue to be legal, valid, binding and enforceable in accordance with their respective terms and (b) ratifies and
affirms its obligations under each Loan Document to which it is a party.


 


ARTICLE V



Representations and Warranties


 


5.1       Representations
and Warranties of All Obligors. Each Obligor hereby represents and warrants to Lender that (a) the execution, delivery
and performance of this Fourth Amendment and any and all other Loan Documents executed and/or delivered in connection herewith
have been authorized by all requisite action on the part of such Obligor and will not violate any organizational document of such
Obligor, (b) the representations and warranties contained in the Credit Agreement, as amended hereby, and each other Loan
Document are true and correct on and as of the date hereof as though made on and as of the date hereof (after giving effect to
this Fourth Amendment), except to the extent such representations and warranties speak to a specific date, (c) no Default
or Event of Default exists either before giving effect to this Fourth Amendment or shall exist after giving effect to this Fourth
Amendment, and (d) such Obligor is in full compliance with all covenants and agreements contained in the Credit Agreement,
as amended hereby, and the other Loan Documents to which it is a party or it or its property is subject.


 


5.2       Representations
and Warranties of Borrower. Reference is made to the Certificate of Corporate Resolutions and Organizational Documents of Borrower
dated June 30, 2015 (the “Borrower Certificate”). Borrower hereby represents and warrants to Lender
that (a) the resolutions that are attached as Exhibit A to the Borrower Certificate are in full force and effect
and have not been amended or modified in any way, (b) the Articles of Incorporation of Borrower that are attached as Exhibit C
to the Borrower Certificate have not been amended, modified or restated in any way and are the Articles of Incorporation of Borrower
on the date hereof, (c) the officers listed in the Borrower Certificate (other than Cecil Wise and Kevin Kasitz) remain duly
elected, qualified and serving officers of Borrower and hold the same offices listed in the Borrower Certificate, (d) all
franchise and other taxes required to maintain Borrower’s corporate existence have been paid when due and no such taxes are
delinquent; (e) no proceedings are pending for the forfeiture of Borrower’s Articles of Incorporation or Borrower’s
dissolution, voluntary or involuntary; (f) Borrower is duly qualified to do business in the States of Nevada and Texas and
is in good standing in such states; (f) Borrower is not required to qualify to do business in any other state; and (h) no
consents, licenses or approvals are required in connection with the execution, delivery and performance by Borrower or the validity
against Borrower of this Fourth Amendment. Borrower hereby represents and warrants to Lender that attached as Exhibit B
is a true and correct copy of the Bylaws of Corporation, to which no amendment or modification has been made.


 






    	 	3	 



     


    

 


5.3       Representations
and Warranties of AHIC. Reference is made to the Certificate of Corporate Resolutions and Organizational Documents of AHIC
dated June 30, 2015 (the “AHIC Certificate”). AHIC hereby represents and warrants to Lender that (a) the
resolutions that are attached as Exhibit A to the AHIC Certificate are in full force and effect and have not been amended
or modified in any way, (b) the Bylaws of AHIC that are attached as Exhibit B to the AHIC Certificate have not
been amended, modified or restated in any way and are the Bylaws of AHIC on the date hereof, (c) the Articles of Incorporation
of AHIC that are attached as Exhibit C to the AHIC Certificate have not been amended, modified or restated in any way
and are the Articles of Incorporation of AHIC on the date hereof, (d) the officers listed in the AHIC Certificate (other than
Cecil Wise and Kevin Kasitz) remain duly elected, qualified and serving officers of AHIC and hold the same offices listed in the
AHIC Certificate, (e) all franchise and other taxes required to maintain AHIC’s corporate existence have been paid when
due and no such taxes are delinquent; (f) no proceedings are pending for the forfeiture of AHIC’s Articles of Incorporation
or AHIC’s dissolution, voluntary or involuntary; (g) AHIC is duly qualified to do business in the State of Texas and
in each other state in which it does business; (h) AHIC is not required to qualify to do business in any other state; and
(i) no consents, licenses or approvals are required in connection with the execution, delivery and performance by AHIC or
the validity against AHIC of this Fourth Amendment.


 


5.4       Representations
and Warranties of HIC. Reference is made to the Certificate of Corporate Resolutions and Organizational Documents of HIC dated
June 30, 2015 (the “HIC Certificate”). HIC hereby represents and warrants to Lender that (a) the
resolutions that are attached as Exhibit A to the HIC Certificate are in full force and effect and have not been amended
or modified in any way, (b) the Bylaws of HIC that are attached as Exhibit B to the HIC Certificate have not been
amended, modified or restated in any way and are the Bylaws of HIC on the date hereof, (c) the Articles of Incorporation of
HIC that are attached as Exhibit C to the HIC Certificate have not been amended, modified or restated in any way and
are the Articles of Incorporation of HIC on the date hereof, (d) the officers listed in the HIC Certificate (other than Cecil
Wise, Kevin Kasitz and James Damonte) remain duly elected, qualified and serving officers of HIC and hold the same offices listed
in the HIC Certificate, (e) all franchise and other taxes required to maintain HIC’s corporate existence have been paid
when due and no such taxes are delinquent; (f) no proceedings are pending for the forfeiture of HIC’s Articles of Incorporation
or HIC’s dissolution, voluntary or involuntary; (g) HIC is duly qualified to do business in the State of Arizona and
in each other state in which it does business; (h) HIC is not required to qualify to do business in any other state; and (i) no
consents, licenses or approvals are required in connection with the execution, delivery and performance by HIC or the validity
against HIC of this Fourth Amendment.


 


ARTICLE VI



Miscellaneous


 


6.1       Reference
to Credit Agreement. Each of the Loan Documents, including the Credit Agreement and any and all other agreements, documents,
or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement,
as amended hereby, are hereby amended so that any reference in such Loan Documents to the Credit Agreement shall mean a reference
to the Credit Agreement as amended hereby.


 


6.2       Severability.
The provisions of this Fourth Amendment are intended to be severable. If for any reason any provision of this Fourth Amendment
shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.


 






    	 	4	 



     


    

 


6.3       Counterparts.
This Fourth Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Fourth Amendment by signing any such counterpart. Delivery of an executed counterpart
of a signature page of this Fourth Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format
shall be effective as delivery of a manually executed counterpart of this Fourth Amendment.


 


6.4       GOVERNING
LAW. THIS FOURTH AMENDMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS. THE LOAN DOCUMENTS ARE PERFORMABLE IN SAN ANTONIO, BEXAR COUNTY, TEXAS, AND AHIC, EACH L/C RIC AND LENDER WAIVE
THE RIGHT TO BE SUED ELSEWHERE. AHIC, EACH L/C RIC AND LENDER AGREE THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN SAN ANTONIO,
TEXAS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS FOURTH AMENDMENT AND THE OTHER LOAN DOCUMENTS.


 


6.5       ENTIRE
AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


	The Remainder of This Page Is Intentionally Left Blank.




    	 	5	 



     


    

 


Executed as of the
date first written above.


 


	BORROWER:	HALLMARK FINANCIAL SERVICES, INC.,
	 	a Nevada corporation
	 	 
	 	 
	 	By:	 
	 	 	Jeffrey R. Passmore
	 	 	Senior Vice President
	 	 	 
	 	 	 
	L/C RICs:	AMERICAN HALLMARK INSURANCE COMPANY
	 	OF TEXAS, a Texas insurance corporation
	 	 
	 	 
	 	By:	 
	 	 	Jeffrey R. Passmore
	 	 	Chief Financial Officer
	 	 	 
	 	 	 
	 	HALLMARK INSURANCE COMPANY (formerly
	 	known as Phoenix Indemnity Insurance Company), an
	 	Arizona insurance corporation
	 	 
	 	 
	 	By:	 
	 	 	Jeffrey R. Passmore
	 	 	Chief Financial Officer


 


 


 


 





Fourth Amendment to Second Restated Credit Agreement –
Signature Page









     


     


    

 


 


	LENDER:	FROST BANK, a Texas state bank
	 	 
	 	 
	 	By:	 
	 	 	Jerry Colwell
	 	 	Senior Vice President


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Fourth Amendment to Second Restated Credit Agreement –
Signature Page




     


     


    

Exhibit A



Tenth Restated Revolving Promissory Note


 


 


 


 


 


 


 





Exhibit A









     


     


    

Exhibit B



Bylaws of Hallmark Financial Services, Inc.


 


 


 


 


 




 


 


 


Exhibit B