CONFORMED COPY
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 2
Annual Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
Commission file number 0-16090
HALLMARK FINANCIAL SERVICES, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 87-0447375
(State or Other Jurisdiction (I.R.S. Employer I.D. No.)
of Incorporation or Organization)
14651 Dallas Parkway, Suite 900, 75240
Dallas, Texas
(Address of Principal (Zip Code)
Executive Offices)
Issuer's Telephone Number, Including Area Code: (972) 404-1637
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, 3 cents par value American Stock Exchange Emerging
Company Marketplace
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes XX No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. Yes XX No
State issuer's revenues for its most recent fiscal year - $16,587,550.
State the aggregate market value of the voting stock held by non-affiliates
- - $4,258,823 as of March 19, 1999.
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. Common Stock, 3 cents
par value - 11,048,133 shares outstanding as of March 19, 1999.
This Amendment No. 2 amends and supplements the Form 10-KSB filed by
Hallmark Financial Services, Inc. (the "Company") on March 29, 1999, and
the Form 10-KSB/A filed by the Company on April 30, 1999, by restating the
information under "Executive Compensation Agreements" included in Item 10
of Part III of Form 10-KSB.
Risks Associated with Forward-Looking Statements Included in this Form 10-
KSB/A
This Form 10-KSB/A contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, which are intended to be covered by
the safe harbors created thereby. These statements include the plans and
objectives of management for future operations, including plans and
objectives relating to future growth of the Company's business activities
and availability of funds. The forward-looking statements included herein
are based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and
market conditions, regulatory framework, and future business decisions, all
of which are difficult or impossible to predict accurately and many of
which are beyond the control of the Company. Although the Company believes
that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and, therefore,
there can be no assurance that the forward-looking statements included in
this Form 10-KSB will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein,
the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and
plans of the Company will be achieved.
PART III
Item 10. Executive Compensation.
Executive Compensation Agreements
The Company has entered into an Executive Compensation Agreement with
each of Ramon D. Phillips, Raymond A. Kilgore, Linda H. Sleeper and Johnny
J. DePuma. The term of each agreement is automatically extended by an
additional year on the first day of each calendar year unless notice has
previously been given to the executive that the agreement will not be so
extended. Prior to the conclusion of calendar year 1998, the Board of
Directors notified the executives that the Executive Compensation
Agreements would not be so extended as of January 1, 1999. As a result,
each agreement will expire on December 31, 2000, unless hereafter extended.
The Executive Compensation Agreement with the Chief Executive Officer
specifies minimum levels of base salary and benefits and provides for
various performance bonuses. The Chief Executive Officer has waived a
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portion of the specified compensation in each of the last two fiscal years.
The agreement with each other executive officer provides for compensation
and bonus as determined by the Chief Executive Officer, subject to review
by the Board or the Compensation Committee. Each agreement includes
covenants of the executive to at all times maintain the confidentiality of
the Company's trade secrets and not to compete with the Company during the
term of employment and for two years thereafter.
Pursuant to these agreements, if the Company terminates the executive
without "cause" (as defined therein), or the executive resigns within six
months after a "change of control" (as defined therein), the Company is
obligated to pay the executive a lump sum cash payment equal to two times
(three times in the case of the Chief Executive Officer) the sum of (a) the
executive's then current annual salary (but not less than the executive's
highest annual salary during the preceding three fiscal years), plus (b)
the highest amount of bonus and other cash compensation received by the
executive during any one of the three preceding fiscal years. In addition,
all incentive stock options granted under the Company's 1991 Key Employee
Stock Option Plan and 1994 Key Employee Long Term Incentive Plan provide
for accelerated vesting in the event of a change of control of the Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HALLMARK FINANCIAL SERVICES, INC.
(Registrant)
Date: May 25, 1999 /s/ Ramon D. Phillips
Ramon D. Phillips, President
(Chief Executive Officer)
Date: May 25, 1999 /s/ Johnny J. DePuma
Johnny J. DePuma, Vice President
(Chief Financial Officer/Principal Accounting
Officer)
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Date: May 25, 1999 /s/ Ramon D. Phillips
Ramon D. Phillips, Director
Date: May 25, 1999 /s/ Linda H. Sleeper
Linda H. Sleeper, Director
Date: May 25, 1999 /s/ Raymond A. Kilgore
Raymond A. Kilgore, Director
Date: May 25, 1999 /s/ Jack R. Daugherty
Jack R. Daugherty, Director
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Date: May 25, 1999 ______________________________
Kenneth H. Jones, Jr., Director
Date: May 25, 1999 /s/ Samuel W. Rizzo
Samuel W. Rizzo, Director
Date: May 25, 1999 /s/ A. R. Dike
A. R. Dike, Director
Date: May 25, 1999 /s/ James H. Graves
James H. Graves, Director
Date: May 25, 1999 /s/ C. Jeffrey Rogers
C. Jeffrey Rogers, Director
Date: May 25, 1999 /s/ George R. Manser
George R. Manser, Director
