Document:

Exhibit 10.2

 

Second
Amendment

to

Revolving Facility B Agreement

 

This SECOND AMENDMENT TO
REVOLVING FACILITY B AGREEMENT (this “Second Amendment”), dated as of December 20, 2017 (effective as provided
herein), is between HALLMARK FINANCIAL SERVICES, INC., a Nevada corporation (“Borrower”), and FROST BANK, a
Texas state bank (“Lender”).

 

RECITALS:

 

Borrower and Lender are
parties to the Revolving Facility B Agreement dated as of December 17, 2015 (such agreement, together with all amendments
and restatements thereto, the “Facility B Agreement”). Borrower, American Hallmark Insurance Company of
Texas, a Texas insurance corporation, Hallmark Insurance Company, an Arizona insurance corporation, and Lender are parties to the
Credit Agreement dated as of June 30, 2015 (such agreement, together with all amendments and restatements thereto, the “Credit
Agreement”).

 

Borrower has requested
an amendment to the Facility B Agreement to extend the Facility B Termination Date and the Facility B Maturity Date.

 

Lender has agreed to extend
the Facility B Termination Date and the Facility B Maturity Date, subject to the terms of this Second 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 Facility B Agreement and the Credit Agreement.

 

ARTICLE II

 

Amendments to Facility B
Agreement

 

2.1           Amendments
to Facility B Agreement Section 1.1.

 

(a)          The
definition of “Facility B Maturity Date” is amended by deleting “December 17, 2023” and substituting
“December 17, 2024” in lieu thereof.

 

(b)          The
definition of “Facility B Termination Date” is amended by deleting “December 17, 2018” and substituting
“December 17, 2019” in lieu thereof.

 

2.2           Amendment
to Facility B Agreement Section 2.3. Facility B Agreement Section 2.3 is amended by deleting “April 1,
2019” and substituting “April 1, 2020” in lieu thereof.

 

    
Second Amendment to Revolving Facility B Agreement – Page 1

     

    

 

ARTICLE III

 

Conditions Precedent

 

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

 

(a)          Documents.
Lender shall have received all of the following, each dated (unless otherwise indicated) the date of this Second Amendment and
the following shall have occurred, in form and substance satisfactory to Lender:

 

(i) Second Amendment.
This Second Amendment executed by Borrower and Lender.

 

(ii) Second Restated
Facility B Note. The duly executed Second Restated Facility B Note in the form of Exhibit A, payable
to the order of Lender, and in the amount of the Facility B Commitment.

 

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

 

(b)          Fee. Lender
shall have received an amendment fee in an amount equal to $30,000.00, due and payable as of the date hereof, which fee is
fully earned and non-refundable (subject to Credit Agreement Section 10.11).

 

(c)          Interest.
Lender shall have received all accrued, unpaid interest on the Facility B Loan, accrued through December 20, 2017.

 

(d)          Expenses.
Lender shall have received reimbursement from Borrower for Attorney Costs incurred through the date hereof.

 

(e)          No
Default. No Default or Event of Default shall exist prior to giving effect to this Second Amendment or immediately after giving
effect to this Second Amendment.

 

(f)          Representations
and Warranties.

 

(i) All of the representations
and warranties contained in Article VIII of the Credit Agreement and in Article V of the Facility B Agreement,
as amended hereby, and in the other Loan Documents shall be true and correct on and as of the date of this Second 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 of this Second Amendment shall be true and correct, both before and after giving
effect to this Second Amendment.

 

3.2           Effectiveness.
Upon satisfaction of the conditions precedent in Section 3.1, this Second Amendment shall be effective as of date hereof.

 

    
Second Amendment to Revolving Facility B Agreement – Page 2

     

    

 

ARTICLE IV

 

Ratification and Acknowledgement

 

4.1           Ratification.
The terms and provisions set forth in this Second Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Facility B Agreement and except as expressly modified and superseded by this Second Amendment, the terms and
provisions of the Facility B Agreement, the Credit Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Borrower agrees that the Facility B Agreement, as amended hereby, the Credit Agreement
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.

 

ARTICLE V

 

Representations and Warranties

 

5.1           Loan
Documents. Borrower hereby represents and warrants to Lender that (a) the execution, delivery and performance of this
Second 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 Borrower and will not violate any organization or governance document of Borrower or any agreement
to which Borrower is a party or its property is subject, (b) this Second Amendment constitutes a valid and legally binding
agreement enforceable against Borrower, (c) the representations and warranties contained in the Facility B Agreement,
as amended hereby, and in the Credit Agreement made by or as to Borrower, AHIC and HIC and in each other Loan Document are true
and correct on and as of the date hereof (both before and immediately after giving effect to this Second Amendment), as though
made on and as of the date hereof, except to the extent such representations and warranties speak to a specific date, and (d) no
Default or Event of Default exists prior to giving effect to this Second Amendment or will exist immediately after giving effect
to this Second Amendment.

 

ARTICLE VI

 

Miscellaneous

 

6.1           Reference
to Facility B Agreement. Each of the Loan Documents, including the Facility B 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
Facility B Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Facility B
Agreement shall mean a reference to the Facility B Agreement as amended hereby. This Second Amendment is a Loan Document.

 

6.2           Severability.
The provisions of this Second Amendment are intended to be severable. If for any reason any provision of this Second 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.

 

6.3           Counterparts.
This Second 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 Second Amendment by signing any such counterpart.

 

    
Second Amendment to Revolving Facility B Agreement – Page 3

     

    

 

6.4           GOVERNING
LAW. THIS SECOND 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 BORROWER WAIVES THE RIGHT TO BE SUED
ELSEWHERE. BORROWER 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 SECOND AMENDMENT AND THE OTHER LOAN DOCUMENTS.

 

6.5           WAIVER
OF JURY TRIAL. BORROWER AND LENDER HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS SECOND AMENDMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER ENTERING
INTO THIS SECOND AMENDMENT AND EXTENDING THE REVOLVING LOAN MATURITY DATE.

 

6.6           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.

 

    
Second Amendment to Revolving Facility B Agreement – Page 4

     

    

 

Executed as of the date
first written above.

 

	BORROWER:	HALLMARK FINANCIAL SERVICES, INC.,
	 	a Nevada corporation

 

	 	By:	 
	 	 	Jeffrey R. Passmore
	 	 	Senior Vice President 

 

    
Second Amendment to Revolving Facility B Agreement (Hallmark) – Signature Page

     

    

 

	LENDER:	FROST BANK, a Texas state bank 

 

	 	By:	 
	 	 	Jerry Colwell
	 	 	Senior Vice President

 

    
Second Amendment to Revolving Facility B Agreement (Hallmark) – Signature Page

     

    

 

EXHIBIT A

 

Facility B Note

 

    
Second Amendment to Revolving Facility B Agreement – Exhibit AExhibit

EXHIBIT 10.70
         

Sumit Sadana
Severance Benefits

Section I

Subject to the requirements of this Exhibit A, the following Severance Benefits will be payable to you in connection with your "Qualifying Separation from Service" from Micron Technology, Inc. (the "Company").

As soon as administratively practicable after your Qualifying Separation from Service, you will be paid all wages through the date of termination; any amounts owed to you under any Company expense reimbursement program; if not previously paid, an amount equal to the payout earned under the applicable annual incentive plan for the performance period ending immediately prior to the date of the Qualifying Separation from Service; and such employee benefits (including equity compensation and paid time off), if any, to which you may be entitled under the Company’s employee benefit plans.  

The following salary continuation and supplemental cash-based Severance Benefits shall be paid bi-weekly during the "Severance Period" (as defined in Section II) following your Qualifying Separation from Service in roughly equal installments in accordance with the Company's normal payroll cycle commencing (or in the case of a "Change in Control Separation" (as defined in Section II), in a lump sum) within 60 days of your Qualifying Separation from Service:

		
	•
	An amount equal to one time (one and one-half times, in the case of a Change in Control Separation) the sum of your base salary in effect as of the date of your Qualifying Separation from Service;

		
	•
	An amount equal to 12 months (18 months the case of a Change in Control Separation) of matching contributions under the Company’s qualified retirement plan that you would have otherwise received had you remained employed during the Severance Period based on your contribution rate to the plan at the time of your Qualifying Separation from Service; provided that if such payment would have resulted in you receiving an excess matching contribution under the Company’s qualified retirement plan had such payment been made to that qualified plan during the Severance Period, the payment will be reduced to the extent necessary to prevent such excess deemed contribution. 

		
	•
	An amount equal to 12 months (18 months in the case of a Change in Control Separation) of COBRA premiums at the benefit level in effect at the time of your Qualifying Separation from Service reduced by the employee portion of the premium for that benefit level in effect as of the time of your Qualifying Separation from Service that you would have paid during the Severance Period. 

In addition, upon your Qualifying Separation from Service, you will receive an amount equal to the annual incentive plan bonus that would actually have been earned for the performance period in which your Qualifying Separation from Service occurs, payable at the same time and in the same form as provided under the annual incentive plan; provided in the case of a Change in Control Separation that occurs within the same performance period of a Change in Control, in lieu of an annual bonus payment for the performance period in which your Change in Control Separation occurs, you will receive within 60 days of your Change in Control Separation a payment equal to the target bonus payable for the performance period in which your Change in Control Separation occurs, reduced by any amount previously paid to you under the annual incentive plan for that same performance period as a result of the Change in Control.  

In the event of a Change in Control Separation, all "time-based" or "performance-based" equity awards granted to you under the Company’s equity plans that have not previously become vested and earned shall be treated as vested and earned under this Exhibit A.  Notwithstanding anything contained in those equity plans, the determination as to whether you have become entitled to such accelerated vesting and payouts will be determined under this Exhibit A.

In the event your Qualifying Separation from Service does not constitute a Change in Control Separation, with respect to "time-based" options (including the Offer Options granted to you under the Offer Letter, effective June 23, 2017), and/or "performance-based" options that have not previously become vested, the continued vesting and exercisability of any granted stock options in accordance with the terms of the applicable stock plan as if your employment as an officer had continued during the Severance Period, provided, however, and for purposes of clarification, the parties agree that you will be entitled to 

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vesting for the completion of "performance-based" goals hereunder if and only if the specified performance goal was achieved prior to or during that Severance Period and any required goal achievement certification for such performance goal has been made by the Board, or a committee thereof, thereafter.  With respect to restricted stock awards, or RSAs, (including the Offer RSAs granted to you under the Offer Letter, effective June 23, 2017) the lapse of any "time-based" and/or "performance-based" restrictions at the same time and in the same amounts such restrictions would have lapsed, if at all, in accordance with the terms of the applicable stock plan if your employment as an officer had continued during the Severance Period, provided, however, and for purposes of clarification, the parties agree that you will be entitled to the lapse of "performance-based" restrictions hereunder if and only if the specified performance goal was achieved prior to or during the Severance Period and any required goal achievement certification for such performance goal has been made by the Board, or a committee thereof, thereafter      

No cash or equity based Severance Benefits will be payable to you until you sign, and do not revoke, a release of claims in favor of the Company, its affiliates and their respective officers and directors during the Release Execution Period substantially in the form attached hereto (the "Release"). For this purpose, the "Release Execution Period" shall be the 60-day period commencing on the date of your Qualifying Separation from Service.  In the event that such Release Execution Period begins in one tax year and ends in the next tax year, the Severance Benefits will be paid on the later of (i) the last day of the Release Execution Period, (ii) if applicable, the Section 409A Delayed Payment Date, or (iii) the payment date otherwise set forth in Section I of this Exhibit A. 

If any amount or benefit that would constitute non-exempt "deferred compensation" for purposes Section 409A of the Internal Revenue Code ("Section 409A) would otherwise be payable or distributable under this Exhibit A by reason of your Qualifying Separation from Service during a period in which you are specified employee (as defined by the Company’s specified employee policy), then, subject to any permissible acceleration under Section 409A, such benefit or payment shall be delayed and payable in a lump sum on the first day of the seventh month following your Qualifying Separation from Service (the "Section 409A Delayed Payment Date").  

The amounts payable or provided under this Exhibit A are intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A.  Notwithstanding any other provision of this Exhibit A, payments provided under this Exhibit A may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption.  Any payments under this Exhibit A that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible.  For purposes of Section 409A, each installment payment provided under this Exhibit A shall be treated as a separate payment. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Exhibit A comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the you on account of non-compliance with Section 409A.  

The Company shall reduce the amounts payable or provided under this Exhibit so that no Section 280G excise tax will apply if such reduction will result in a higher net after-tax benefit to you as reasonably determined by the Company’s independent tax accountants and assuming you are in the highest marginal tax brackets for Federal state and local income tax purposes; provided that in no event will the Company provide a tax gross-up to you with respect to the payments and benefits provided to you under this Exhibit A.  

Section II

For the purpose of the Severance Benefits described in Section I, these terms will have the meaning set forth below:

"Good Reason" shall mean any of the following, without your consent: 

(a)    a material diminution in your base salary (other than an across-the-board reduction in base salary that affects all peer employees); 

(b)    a material diminution in your authority, duties, or responsibilities; or 

(c)    the relocation of your principal office to a location that is more than twenty-five (25) miles from the location of your principal office on the Effective Date of the Offer Letter; provided, however, that Good Reason shall not include (A) any relocation of your principal office which is proposed or initiated by you; or (B) any relocation that results in your principal place office being closer to your then-current principal residence.  

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A termination by you shall not constitute termination for Good Reason unless you shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than ninety (90) days after the initial occurrence of such event) (the "Good Reason Notice"), and the Company has not taken action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by you within thirty (30) days following its receipt of such Good Reason Notice.  Your date of termination for Good Reason must occur within a period of three hundred and sixty five (365) days after the initial occurrence of an event of Good Reason.

"Cause" shall mean any of the following acts by you, as determined by the Board of the Company or a designated committee:

(a)    the commission by you of, or your pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude (including pleading guilty or nolo contendere to a felony or lesser charge which results from plea bargaining), whether or not such felony, crime or lesser offense is connected with the business of the Company or any of its affiliates;

(b)    your engaging in any other act of dishonesty, fraud, intentional misrepresentation, moral turpitude, illegality or harassment, whether or not such act was committed in connection with the business of the Company or any of its affiliates;

(c)    the willful and repeated failure by you to follow the lawful directives of the Board or your supervisor; 

(d)    any material violation by you of the Company’s written policies;

(e)    any intentional misconduct by you in connection with the Company and any of its affiliate’s business or relating to your duties, or any willful violation of any laws, rules or regulations; or 

(f)     your material breach of any employment, severance, non-competition, non-solicitation, confidential information, or restrictive covenant agreement, or similar agreement, with the Company or an affiliate. 

The determination of the Board (or a designated committee) as to the existence of "Cause" shall be conclusive on you and the Company.

"Change in Control" means and includes the occurrence of any one of the following events:

(a)    individuals who, as of the effective date of the Offer Letter (the "Effective Date"), constitute the Board of Directors of the Company (the "Incumbent Directors") cease for any reason to constitute at least a majority of such Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors ("Election Contest") or other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board ("Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

(b)    any person is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "1934 Act")), directly or indirectly, of either (A) 35% or more of the then-outstanding shares of common stock of the Company ("Company Common Stock") or (B) securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of directors (the "Company Voting Securities"); provided, however, that for purposes of this subsection (b), the following acquisitions shall not constitute a Change in Control:  (w) an acquisition directly from the Company, (x) an acquisition by the Company or a Subsidiary of the Company, (y) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary of the Company, or (z) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection (c) below); or

(c)    the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a Subsidiary (a "Reorganization"), or the sale or other disposition of all or substantially all of the Company’s assets (a "Sale") or the acquisition of assets or stock of another corporation (an "Acquisition"), unless immediately following such Reorganization, Sale or Acquisition:  (A) all or substantially all 

3

of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company Common Stock and outstanding Company Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Reorganization, Sale or Acquisition (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the "Surviving Corporation") in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other than (x) the Company or any Subsidiary of the Company, (y) the Surviving Corporation or its ultimate parent corporation, or (z) any employee benefit plan or related trust) sponsored or maintained by any of the foregoing is the beneficial owner, directly or indirectly, of 35% or more of the total common stock or 35% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation, and (C) at least a majority of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or

(d)    approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

For purposes of the foregoing Change in Control definition, (i) "Subsidiary" means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company and (ii) "Person" means any individual, entity or group, within the meaning of Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934 Act.  

Notwithstanding the foregoing, for purposes of changing the form of payment from installments to lump sum under this Exhibit A, a Change in Control shall not be deemed to have occurred unless such transaction constitutes a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets, each within the meaning of Section 409A.

"Change in Control Separation" means a Qualifying Separation from Service that occurs on or within 12 months following a Change in Control.  

"Qualifying Separation from Service" means a termination of your employment with Micron in a manner that constitutes a "separation from service" within the meaning of Section 409A and that is a result of your resignation for "Good Reason" or your involuntary termination by the Company for a reason other than for "Cause" (as these terms are defined in Section II of the Exhibit).  

"Severance Period" means with respect to a Change in Control Separation, the 18-month period following such Change in Control Separation and with respect to any other Qualifying Separation from Service under this Exhibit A, the 12-month period following such Qualifying Separation from Service. 

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