EXHIBIT 10 (b)

                           AMENDMENT OF ARTICLE VII
                                    OF THE
                         AMENDED AND RESTATED BYLAWS
                                      OF
                      HALLMARK FINANCIAL SERVICES, INC.


      The Amended and  Restated Bylaws  of the  Hallmark Financial  Services,
 Inc. (the "Corporation") are amended by deleting the current Article VII  in
 its entirety and substituting therefor the following new Article VII:

                                 ARTICLE VII.

           INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS

      Section 1.     Scope  of   Indemnification.  To   the  fullest   extent
 authorized, permitted or required by NRS  Section 78.7502 (as now in  effect
 or as subsequently  amended or superseded),  but subject  to the  procedural
 requirements stated in NRS Section  78.751, the Corporation shall  indemnify
 each director, officer, employee and agent of the Corporation and each other
 person identified  in  NRS Section  78.7502  against all  judgments,  fines,
 settlements, costs, expenses and other monetary obligations such person  may
 suffer, sustain or incur as the result  of actions taken or omitted by  such
 person under circumstances  and in situations  described or  defined in,  or
 contemplated by, NRS Section 78.7502.

      Section 2.     Expense  Advances.    The   expenses  of  officers   and
 directors of  the Corporation  incurred in  defending  a civil  or  criminal
 action, suit or  proceeding shall  be paid by  the Corporation  as they  are
 incurred and in  advance of  the final disposition  of the  action, suit  or
 proceeding, upon receipt of an undertaking  by or on behalf of the  director
 or officer to repay the amount if it is ultimately determined by a court  of
 competent jurisdiction that he or she  is not entitled to be indemnified  by
 the Corporation. The provisions of this  Section 2 do not affect any  rights
 to advancement of expenses to which corporate personnel other than directors
 or officers may be entitled under any contract or otherwise by law.

      Section 3.     Insurance, Other Financial Arrangements. The Corporation
 may, but  will have  no  obligation to,  purchase  and maintain  errors  and
 omissions insurance or make other financial arrangements for the benefit  of
 any or all of its directors, officers, employees or agents or other  persons
 identified  in  NRS  Section  78.752.    Under  no  circumstances  will  the
 Corporation have or  incur any  liability to any  person on  account of  its
 decision not to purchase  or maintain any such  insurance or make any  other
 such financial arrangements.

      Section 4.     Enforceability. The provisions of  this Article VII  are
 to  be  deemed  an  element  of  the  contract  or  engagement  between  the
 Corporation  and  each  person   who  holds  a   position  giving  rise   to
 indemnification. Subject to the conditions and limitations expressed  herein
 and in NRS Sections 78.7502, 78.751 and 78.752, the indemnification provided
 in this Article VII may thus be enforced against the Corporation as a matter
 of contractual right.

      The undersigned Secretary of the Corporation hereby certifies that  the
 foregoing amendment  was duly  adopted  by the  Board  of Directors  of  the
 Corporation on July ____, 2002.


                                    Raymond A. Kilgore, Secretary