<PAGE>

                                                                    Exhibit 10.1


                           STOCK PURCHASE AGREEMENT


     This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into on
and effective as of May 23, 2000, by and among A&B CAPITAL CORPORATION, a Nevada
corporation ("Purchaser") and CHARLES B. BREWER, an individual ("Brewer").

                             W I T N E S S E T H :

     WHEREAS, pursuant to Findings of Fact and Conclusions of Law and Order
Confirming Southmark Corporation's Fourth Amended and Restated Plan of
Reorganization, as modified, entered July 23, 1990 (the "Order") in the case
styled In Re: Southmark Corporation, Debtor, Case No. 389-36324-SAF-11, in the
United States Bankruptcy Court for the Northern District of Texas, Dallas
Division (the "Proceeding"), Southmark Corporation ("Southmark") canceled "all
existing Equity Securities" and issued certain additional securities, including
shares of its Redeemable Series A Preferred Stock, par value $0.01 per share
(the "Preferred Stock") and new Common Stock, par value $0.01 per share (the
"Common Stock");

     WHEREAS, the Preferred Stock is subject to the obligations under and is the
benefit of the rights granted pursuant to that certain Certificate of
Designation, Preferences and Rights of Redeemable Series A Cumulative
Liquidation Preference Preferred Stock dated August 10, 1990, as filed with and
accepted by the Secretary of State of Georgia (the "Certificate");

     WHEREAS, Brewer acquired and presently holds 178,270.25 shares of Preferred
Stock (which constitutes approximately 6.3% of the 2,831,997 shares of Preferred
Stock of Southmark presently outstanding) and 2,358 shares of Common Stock
(which constitutes less than 0.01% of the 36,761,096 shares of Southmark Common
Stock outstanding) and Brewer has no options, warrants, calls or rights to
acquire any shares of Preferred Stock or Common Stock of Southmark;

     WHEREAS, Purchaser desires to acquire from Brewer, and Brewer  desires to
sell all of the shares of Preferred Stock and Common Stock of Southmark
presently held by Brewer, all under and subject to the terms and conditions
hereinafter set forth.

     ACCORDINGLY, in consideration of the foregoing premises, the mutual
promises, covenants, representations and warranties contained herein, and on the
terms and subject to the conditions set forth herein, and for other good and
valuable consideration, the receipt,

                                      -1-
<PAGE>

sufficiency and adequacy of which is hereby acknowledged by all of the parties
hereto, Purchaser and Brewer hereby agree as follows:

     1.   Adoption of Recitals. The parties hereto do hereby adopt and confirm
          --------------------
the foregoing recitals in the same manner as if fully re-copied herein.

     2.   Purchase and Sale of Stock. Subject to the terms and conditions of
          --------------------------
this Agreement, including the approval by the Board of Directors of Southmark
pursuant to Article Tenth of the Articles of Incorporation, Brewer hereby agrees
to sell, convey, transfer and assign to Purchaser, and the Purchaser hereby
agrees to purchase and acquire at the "Closing" (as that term is defined below)
for the "Consideration" set forth or determined as provided in paragraph 3 of
this Agreement, all of the shares of Preferred Stock and Common Stock of
Southmark owned by Brewer, same to be at least 178,270.25 shares of Preferred
Stock, and at least 2,358 shares of Common Stock of Southmark, all free and
clear of any liens or encumbrances of any kind or character. At Closing, Brewer
will deliver or cause to be delivered to Purchaser, free and clear of all liens
and encumbrances(other than any restrictions imposed by applicable federal and
state securities laws) of any kind or character, certificates representing the
number of shares of Preferred Stock and Common Stock to be sold as set forth
below, together with appropriate Stock Powers separate from certificates
executed in blank sufficient for transfer into the name of Purchaser or, in the
alternative, appropriate irrevocable instructions to make book-entry transfers
under the Depository Trust Company ("DTC") system to transfer all of such shares
to Purchaser, same to constitute at Closing, in the aggregate, all of the shares
of Preferred Stock and Common Stock of Southmark held at the Closing by Brewer.
At the time of such transfer at the Closing, Brewer shall have obtained any and
all necessary and appropriate releases of any liens or encumbrances (other than
any restrictions imposed by applicable federal and state securities laws) prior
to (or simultaneously with) the Closing relating to the shares of Preferred
Stock and Common Stock to be sold to Purchaser hereunder which shall be in a
form and substance satisfactory to Purchaser and its counsel.

     3.   Consideration. The Purchase Price to be paid by Purchaser to Brewer
          -------------
for all of the shares of Preferred Stock and Common Stock shall be calculated on
a basis equal to $1.50 per share of Preferred Stock, in cash, up to a maximum of
$267,405.37, it being intended that the total Purchase Price for all shares of
Preferred Stock and Common Stock transferred shall be for such total, but if
less than 178,270.25 shares of Preferred Stock are sold, such amount may be
proportionately reduced on the basis of $1.50 per share. Purchaser intends that
Brewer may allocate at he deems appropriate between the Common Stock and
Preferred Stock, recognizing that Purchaser is not paying a premium to Brewer
for the number of shares of Preferred Stock of Southmark held by Brewer.

     4.   Closing of this Agreement. The closing of the transaction contemplated
          -------------------------
by this Agreement (herein called the "Closing") shall take place at a location
mutually acceptable to Purchaser and Brewer

                                      -2-
<PAGE>

at 2:00 p.m., local Dallas, Texas time on a mutually acceptable date prior to
the earlier of May 31, 2000, or five "Business Days" (as that term is defined
below) following the date that the Board of Directors of Southmark has approved
in writing such transaction pursuant to Article Tenth of the Articles of
Incorporation, as amended, of Southmark, or at such other place, time and date
as shall be fixed by mutual agreement among the parties hereto. The date on
which the Closing shall take place shall be hereinafter referred to as the
"Closing Date." The term "Business Day" shall mean a day on which business is
regularly transacted by national banks in Dallas, Dallas County, Texas, and
shall not be a Saturday, Sunday or national holiday.

     5.   Representations, Warranties and Covenants of Brewer.  Brewer hereby
          ---------------------------------------------------
represents and warrants to Purchaser and covenants and agrees with the
Purchaser, that the following representations and warranties are true, complete
and correct on the date of this Agreement (except for those representations and
warranties which expressly speak to the Closing Date) and shall be true,
complete and correct on the Closing Date (except for those representations and
warranties which expressly speak to the date of this Agreement only) and shall
survive the Closing to the extent provided in paragraph 7 hereof.

          (a)  Capacity and Binding Obligations. Brewer has all
               --------------------------------
     requisite capacity, power and authority to execute, deliver and
     perform his obligations under this Agreement and each of the
     other documents contemplated hereby to be executed by Brewer.
     This Agreement has been duly executed and delivered on behalf of
     Brewer and constitutes a legal, valid and binding obligation,
     enforceable in accordance with its terms. The execution, delivery
     and performance of this Agreement by Brewer in the consummation
     of the transactions contemplated hereby, do not require the
     consent, waiver, approval, license or authorization of any
     "Person" (as defined below) or any regulatory authority and will
     not, with or without the giving of notice, or lapse of time,
     conflict with, violate, result in a breach or acceleration of any
     obligation under or constitute a default under any provision of
     any mortgage, lien, lease, agreement, contract, instrument,
     order, judgment, decree, law, ordinance or regulation or any
     restriction by which Brewer for the shares of Preferred Stock or
     Common Stock of Southmark is bound or affected, except, in each
     instance for any required approval of the Board of Directors of
     Southmark pursuant to Article Tenth of its Articles of
     Incorporation as amended. The term "Person" shall mean an
     individual, corporation, general partnership, limited
     partnership, limited liability company, trust or incorporated
     organization or a government or any agency or political
     subdivision thereof.

                                      -3-
<PAGE>

          (b)  Ownership of and Title to Stock. Brewer has and at
               -------------------------------
     Closing, will have indefeasible title and full beneficial and
     record ownership of at least 178,270.25 shares of Preferred Stock
     of Southmark and 2,358 shares of Common Stock of Southmark, in
     each instance, free and clear of any liens, claims, charges,
     options or encumbrances, with full power and authority to
     transfer (subject only to applicable federal and state securities
     laws and approval by the Board of Directors of Southmark) all of
     such shares of Preferred Stock and Common Stock which will be
     sold and delivered to Purchaser pursuant to this Agreement, and
     Purchaser will receive good and marketable title thereto, free
     and clear of any liens, charges, options or other encumbrances
     created by or attributable to Brewer, except to the extent that
     applicable federal and state securities laws and any required
     approval by the Board of Directors of Southmark constitute an
     encumbrance.

          (c)  Compliance with Applicable Law. Including his reliance
               ------------------------------
     upon the Purchaser's representations in paragraph 6 below, Brewer
     will use his best lawful efforts to comply with all applicable
     legal requirements in connection with this Agreement and the
     Closing hereunder, including all provisions of the Securities and
     Exchange Act of 1934, the Securities Act of 1933, as same has
     been amended, and all rules and regulations promulgated
     thereunder and any and all other federal and state laws and
     regulations that may be applicable to the transactions referred
     to herein.

          (d)  No Brokers or Finders. Brewer represents and warrants
               ---------------------
     that he has not incurred nor is he liable for any finders,
     brokers, or similar fees or commissions to any third Person
     whatsoever as the result of the execution and delivery of this
     Agreement or the consummation of the transaction contemplated
     hereby. Brewer shall indemnify and hold Purchaser harmless from
     and against any and all claims for fees based on any alleged
     retention of any such Person by or on behalf of or with respect
     to Brewer.

          (e)  Covenants of Access. Brewer will permit representatives
               -------------------
     of the Purchaser to have the opportunity to review information
     relating to and involving the litigation, other assets and
     opportunities and obligations of Southmark and will coordinate
     with representatives of the Purchaser the timing of various
     matters, record retention and replacement and all of the matters
     involving Southmark from and after the date of this Agreement.
     Brewer shall not cause Southmark to terminate any employee or
     discard any records without the prior consent of the authorized
     representative of the Purchaser unless this Agreement has been
     terminated pursuant to paragraph 9 below.

                                      -4-
<PAGE>

          (f)  Covenant to Remain in Position and Appoint Other
               ------------------------------------------------
     Designees. Brewer intends to remain in his present capacities as
     ---------
     the Chairman of the Board, President and Chief Executive Officer
     of Southmark until at least the later of May 22, 2000, or five
     days after the distribution to be made to the "Other Preferred
     Shareholders" (as defined below) described in paragraph 6(d)
     below is effective in accordance with this Agreement and
     applicable law, provided, however, that Brewer may resign or
                     --------  -------
     otherwise depart the employ at such time as he deems appropriate
     at any time but not before appointing at least two designees of
     the Purchaser as members of the Board of Directors of Southmark
     following the approval of the transaction represented by this
     Agreement by Board of Directors (or Transfer Review Committee or
     Transfer Review Officer) of Southmark. Brewer further covenants
     that in his capacity as the sole member of the Board of Directors
     he will approve the transaction reflected by this Agreement and
     the "GBL Transaction" (as that phrase is defined in paragraph
     8(b)(iv) below). Brewer will make the appointment to the Board of
     Directors of at least the two individuals designated by the
     Purchaser at the Closing.

     6.   Representations, Warranties and Covenants of Purchaser. Purchaser
          ------------------------------------------------------
hereby represents and warrants to Brewer covenants and agrees with Brewer that
the following representations and warranties are true, correct and complete on
the date of this Agreement (except for those representations and warranties
which expressly speak to the Closing Date) and shall be true, correct and
complete on the Closing Date (except for those representations and warranties
which expressly speak to the date of this Agreement only) and shall survive the
Closing to the extent provided in paragraph 7 hereof.

          (a)  Organization. Purchaser is a corporation duly
               ------------
     organized, validly existing and in good standing under the laws
     of its state of incorporation with the corporate power and
     authority to acquire and own the shares of Preferred Stock and
     Common Stock of Southmark. This Agreement is a valid and binding
     obligation of Purchaser enforceable in accordance with its terms
     and Purchaser has the full power and authority (corporate and
     other) to perform its obligations under this Agreement.

          (b)  Compliance with Applicable Law. Purchaser will use its
               ------------------------------
     best lawful efforts to comply with all applicable legal
     requirements in connection with this Agreement and the ownership
     of shares of Preferred Stock and Common Stock, including all
     provisions of the Securities and Exchange Act of 1934, the
     Securities Act of 1933, as same have been amended, and all rules
     and regulations promulgated thereunder and any and all federal
     and state laws and regulations that may be applicable to the
     transactions referred to herein.

                                      -5-
<PAGE>

          (c)  Exempt Transaction. The shares of Preferred Stock and
               ------------------
     Common Stock of Southmark are being acquired hereunder by
     Purchaser in a transaction exempt from registration under
     applicable federal and state securities laws and in accordance
     therewith, Purchaser advises that its acquisition of the shares
     of Common Stock and Preferred Stock is for investment purposes
     only and not with a view toward the distribution thereof to any
     other Person except in compliance with the provisions of
     applicable federal and state securities laws. Purchaser
     acknowledges that the shares of Preferred and Common Stock of
     Southmark Purchaser acquires under this Agreement may be
     "restricted securities" (as that term is defined in Rule 144
     under the Securities Act of 1933) and may not be sold or
     transferred except in compliance with applicable federal and
     state securities laws.

          (d)  Covenant of Distribution. The Purchaser hereby commits
               ------------------------
     to cause Southmark following the Closing under this Agreement,
     but in no event later than July 31, 2000, to have an amount of
     funds or other value calculated on the basis of $1.50 per share
     of Preferred Stock (other than shares purchased from Brewer and
     Grace Brothers, Ltd.) sufficient to enable Southmark to make a
     cash distribution to all "Other Preferred Shareholders" (defined
     to be all holders of Southmark Preferred Stock except Brewer,
     Grace Brothers, Ltd. and/or the Purchaser) in an amount equal to
     $1.50 per share of Preferred Stock held by the Other Preferred
     Shareholders. Any funds required for such advance may be in the
     form of a loan or other advance from or on behalf of the
     Purchaser to Southmark secured by a pledge of the first recovery,
     if any, from the items of litigation currently in process for
     Southmark, such that if collected dollars result from such
     litigation, such funds would first be utilized to repay any loan
     or advance with any excess remaining as an asset of Southmark.

     7.   Survival of Representations, Warranties and Covenants.  All
          -----------------------------------------------------
representations, warranties and covenants and agreements of Brewer and Purchaser
hereunder shall, except as otherwise expressly stated in such item, survive the
date of this Agreement and the Closing Date until the applicable expiration of
the statute of limitations and all other documents delivered hereunder or to be
delivered by one party to the other party are true or will be true when
delivered and will survive the date of this Agreement and the Closing Date until
the applicable expiration of the statute of limitations except as otherwise
expressly stated in each such item or waived in writing.  Each of Brewer and
Purchaser agree to indemnify, save and hold the

                                      -6-
<PAGE>

other harmless from and against any loss, claim, expense, damage or liability
arising from or related to a breach of any one or more of the representations,
warranties, covenants and agreements set forth in this Agreement.

     8.   Conditions of Closing.
          ---------------------

          (a) Conditions Precedent to the Obligations of All Parties.
              ------------------------------------------------------
     The respective obligations of each and all parties to consummate
     the transactions contemplated by this Agreement at the Closing
     are subject to the fulfillment prior to or at the Closing of each
     of the following conditions, except as such parties may legally
     waive such conditions in writing, and at Closing the duly
     authorized representatives of each of Brewer and Purchaser shall
     each execute and deliver to the other a certificate or
     certificates certifying as to such satisfaction or specific
     waiver of same:

               (i)   On the Closing Date, there shall not be
          pending or threatened any claim, action, suit or
          proceeding against any of the parties hereto
          which, if adversely determined, might prevent or
          materially hinder the consummation of the
          transactions contemplated by this Agreement or any
          of them or result in the payment of substantial
          damages as a result of any of the transactions
          contemplated by this Agreement, or cause any party
          to violate any order or judgment or otherwise
          materially impair the benefits of any party or
          parties contemplated hereby, and no investigation
          by any governmental agency shall be pending or
          threatened which might eventually result in any
          such suit, action or proceeding.

               (ii)  The Board of Directors of Southmark
          shall have approved unconditionally in writing the
          transactions contemplated by this Agreement
          pursuant to Article Tenth of the Articles of
          Incorporation, as amended, of Southmark.

               (iii) The Board of Directors of Southmark
          shall have approved unconditionally in writing the
          "GBL Transaction" (as that phrase is defined
          below) pursuant to Article Tenth of the Articles
          of Incorporation, as amended, of Southmark.

          (b)  Conditions Precedent to the Obligations of the
               ----------------------------------------------
     Purchaser. All obligations of the Purchaser to consummate the
     ---------
     transactions contemplated by this Agreement are subject to the
     fulfillment, prior to or at the Closing of each of the following
     conditions, except as the Purchaser may legally waive such
     conditions in writing:

                                      -7-
<PAGE>

               (i)   Other than any representation or
          warranty made as of the specified date (each of
          which needs to be true and correct only as of such
          specified date) and except as otherwise
          contemplated or permitted by this Agreement, all
          representations and warranties of Brewer contained
          in this Agreement shall be true and correct in all
          respects on and as of the Closing Date as if made
          on and as of the Closing Date and Brewer shall
          deliver to Purchaser a certificate or certificates
          dated at the Closing Date and executed on behalf
          of Brewer to such effect.

               (ii)  The Purchaser shall have received
          appropriate documents evidencing the transfer of
          all shares of Preferred Stock and Common Stock of
          Southmark owned by Brewer which shall consist of
          at least 178,270.25 shares of Preferred Stock and
          2,358 shares of Common Stock of Southmark in
          accordance with the requirements of this
          Agreement.

               (iii) There shall not have occurred a
          material adverse change since the date of this
          Agreement in the condition, financial or
          otherwise, of Southmark at Closing; provided that
          the ultimate conclusion or outcome of any
          litigation pending on the date of this Agreement
          to which Southmark is a party shall not be deemed
                                              ---
          a material adverse change.

               (iv)  Any other consents, waivers,
          acknowledgments, etc., of all third Persons,
          including those set forth on Exhibit "1" attached
          hereto and incorporated herein, shall have been
          received on or prior to the Closing Date and
          copies thereof delivered to the Purchaser.

               (v)   Grace Brothers, Ltd., an Illinois
          Partnership ("GBL") shall have closed (or will
          simultaneously with the Closing hereunder, close)
          the transaction between Purchaser and GBL
          resulting in Purchaser acquiring from GBL at least
          787,271 shares of Preferred Stock and 7,343,156
          shares of Common Stock of Southmark (the "GBL
          Transaction").

          (c)  Conditions Precedent to Obligations of Brewer. All
               ---------------------------------------------
     obligations of Brewer to consummate the transactions contemplated
     by this Agreement are subject to the

                                      -8-
<PAGE>

     fulfillment prior to or at the Closing of each of the following
     conditions, except as Brewer may legally waive such conditions in
     writing:

               (i)   Other than a representation or warranty
          made as of a specified date (each of which need to
          be true and correct only as of such specified
          date) and except as otherwise contemplated or
          permitted by this Agreement, all representations
          and warranties of the Purchaser contained in this
          Agreement shall be true and correct in all
          respects on and as of the Closing Date as if made
          on and as of the Closing Date, and Purchaser shall
          deliver to Brewer a certificate or certificates
          dated as of the Closing Date and executed by an
          authorized representative of the Purchaser to such
          effect.

               (ii)  Purchaser shall have delivered to
          Brewer the cash consideration required pursuant to
          paragraph 3 above in a form satisfactory to the
          Purchaser and Brewer against delivery of
          certificates for the shares of Preferred Stock and
          Common Stock or DTC transfer on a "payment versus
          delivery" basis and all other documents or
          instruments required to be so delivered to Brewer
          pursuant to the terms of this Agreement shall have
          been delivered.

               (iii) Purchaser shall have executed and
          delivered to Brewer the "Springing Proxy"
          substantially in the form attached hereto as
          Exhibit "2."

     9.   Termination. Notwithstanding any other provision of this Agreement,
          -----------
this Agreement may be terminated by written notice of termination at any time
before, but not later than, the Closing hereunder as follows:

          (a)  By mutual consent of the Purchaser and Brewer acting
     through their authorized representatives; or

          (b)  By the Purchaser upon notice in writing to Brewer if
     all other conditions precedent set forth in paragraphs 8(a)
     and/or 8(b) have not been fulfilled or waived; or

          (c)  By Brewer upon notice in writing to the Purchaser if
     all other conditions precedent set forth in paragraphs 8(a)
     and/or 8(c) have not been fulfilled or waived; or

                                      -9-
<PAGE>

          (d)  By either Purchaser or Brewer if the Closing has not
     taken place by the close of business on May 31, 2000.

In the event this Agreement is terminated, this Agreement shall forthwith become
void and of no further force or effect and there shall be no obligation on the
part of Brewer or the Purchaser except as specifically set forth in this
Agreement.  The power of termination provided for in this paragraph when
exercised as herein provided, should only be effective upon delivery to the
other party of a notice in writing of such exercise signed on behalf of the
terminating party by its duly authorized representative.  In the event this
Agreement is terminated in accordance with this paragraph by any of the parties
hereto, any such termination shall be without obligation or liability to any of
the other parties hereto except as expressly set forth in this Agreement.

     10.  Brewer Opportunity to Rescind. Assuming the purchase and sale of stock
          -----------------------------
described in paragraph 2 of this Agreement has been completed at the Closing and
not otherwise terminated pursuant to paragraph 9, in the event that the
Purchaser for any reason does not satisfy the covenants set forth in paragraph
6(d) above, prior to the close of business on July 31, 2000, unless Brewer shall
have agreed to an extension of such time, Brewer shall have the option at his
sole discretion to rescind the transaction ab initio upon written notice to the
Purchaser at any time prior to 4:00 p.m., local Dallas, Texas time on August 10,
2000. Such notice of rescission shall be accompanied by a tender to the
Purchaser of all consideration paid by Purchaser to Brewer pursuant to paragraph
3 of this Agreement, and upon receipt thereof, the Purchaser shall deliver to
Brewer all shares of Preferred Stock and Common Stock Purchaser acquired from
Brewer pursuant to paragraphs 2 and 3 of this Agreement. In the event Brewer
exercises such right of rescission on the basis of the failure of the occurrence
of the event required in paragraph 6(d) above, Brewer shall also again become
the sole Director of Southmark in the event he has resigned, and the Purchaser
will use its best lawful efforts to cause Brewer to be reelected as the Chairman
of the Board, President and Chief Executive Officer of Southmark and any
deputies or designees of the Purchaser serving as directors of Southmark shall
be deemed to have resigned from the Board, and Purchaser shall use its best
lawful efforts to cause such persons to submit any necessary written
resignations confirming same to Southmark. In the event such rescission occurs,
the parties to this Agreement, following completion of such rescission shall
have no further liability to each other with respect to the subject of this
Agreement. In the event Brewer does not elect rescission within the requisite
time period (as same may be extended), such opportunity to rescind shall be null
and void and of no further force or effect.

     11.  Miscellaneous.
          -------------

          (a)  Costs and Expenses. Except as otherwise expressly
               ------------------
     provided for this Agreement, each party hereto shall bear its own
     costs and expenses and fees incurred or

                                      -10-
<PAGE>

     assumed by such party in the preparation or execution of this
     Agreement and in compliance with the covenants and conditions
     herein, whether or not the transactions contemplated hereby shall
     be consummated.

          (b)  Further Cooperation. To the extent that either of the
               -------------------
     Purchaser's or Brewer's further approval or other action is
     deemed necessary or desirable by any of other parties in order to
     effectuate the terms, conditions and purposes of this Agreement
     and the conveyance of the shares of Common Stock and Preferred
     Stock to the Purchaser, each of the parties hereto hereby agree
     to execute all reasonable documents and take all actions
     reasonably requested by the other party.

          (c)  Notices. Any notice or other communication required or
               -------
     permitted to be given by this Agreement or any other document or
     instrument referred to herein which has been executed in
     connection herewith must be given in writing (which may be by
     telecopy, followed by mail or personal delivery) and must be
     personally delivered or mailed by pre-paid certified or
     registered mail, to the party to whom such notice or
     communication is directed, at the address of such party set forth
     opposite his or its name on the signature page to this Agreement.
     Subject to the other provisions of this Agreement, any party may
     change its address (or redesignate the person to whom such notice
     shall be delivered) for purposes of this Agreement by giving
     notice of such change to the other party pursuant to this
     provision. In all instances, any notice or other communication
     required or permitted to be given by this Agreement shall only be
     effective upon actual receipt thereof by the person intended to
     receive same.

          (d)  Amendments. Neither this Agreement nor any term hereof
               ----------
     may be changed, waived, discharged or terminated orally, but only
     by written agreement among the parties hereto.

          (e)  Headings. The headings of sections or paragraphs of
               --------
     this Agreement are inserted for convenience of reference only,
     and shall not be deemed to constitute a part of this Agreement.

          (f)  Binding Effect. All terms and provisions of this
               --------------
     Agreement shall be binding upon and enure to the benefit of and
     be enforceable by the heirs, legal representatives, successors
     and assigns of the parties hereto, wherever applicable to such
     party.

          (g)  Entire Agreement. This Agreement and the Commitment
               ----------------
     Agreement constitute the entire agreement among the parties
     hereto, supercedes any and all prior

                                      -11-
<PAGE>

     understandings and arrangements, and may not be modified or
     amended except on or after the date hereof by a writing executed
     by the party against whom such modification or amendment is
     sought to be enforced. The failure of any of the parties of this
     Agreement to insist upon strict adherence to any term of this
     Agreement on one or more occasions shall not be deemed to be a
     waiver or deprive such person or entity of the right thereafter
     to insist upon strict adherence to that term or any other term of
     this Agreement. No waiver of this Agreement, the obligations or
     conditions herein, shall be valid unless the writing is signed by
     the party against whom said waiver is sought to be enforced.

          (h)  Governing Law and Enforcement. This Agreement shall be
               -----------------------------
     construed and enforced in accordance with the laws of the State
     of Texas, the state in which it was negotiated, executed and
     delivered; provided that matters relating to the obligations
     and/or duties of the Board of Directors of Southmark may be
     governed by Georgia law. Should any clause, sentence or paragraph
     of this Agreement be judicially or administratively declared to
     be invalid, unenforceable or void under the laws of the State of
     Texas or the United States of America or any agency or
     subdivision thereof, such decision shall not have the effect of
     invalidating or voiding the remainder of this Agreement and the
     parties hereto agree that the part or parts of this Agreement so
     held to be invalid, unenforceable or void shall be deemed to have
     been deleted herefrom and the remainder shall have been included
     herein. In the event any party hereto shall fail to perform any
     of its obligations under this Agreement, such party hereby agrees
     to pay all reasonable expenses, including reasonable attorneys'
     fees, which may be incurred by any party hereto which is
     successful in enforcing this Agreement, whether or not any suit
     or legal proceeding shall be brought.

          (i)  No Third-Party Beneficiaries. This Agreement does not
               ----------------------------
     create and shall not be construed as creating any rights
     enforceable by any person other than the undersigned parties and
     their respective lawful successors and assigns and other persons
     named herein and does not comply or release and shall not be
     construed as implying or releasing, that any rights are
     enforceable against any person or entity other than the
     undersigned parties and their respective successors and assigns
     and the persons named herein.

          (j)  Counterparts. This Agreement may be executed in several
               ------------
     counterparts, each of which shall be deemed to be an original for
     all purposes and all of which constitute one and the same
     instrument and it shall not be necessary

                                      -12-
<PAGE>

     for the proof of this Agreement that any party produces or
     accounts for more than one such counterpart.

          (k)  Facsimile. This Agreement or any notices hereunder may
               ---------
     be transmitted by facsimile and it is the intent of the parties
     for the facsimile of any autograph reproduced by a receiving
     facsimile machine to be an original signature, and for the
     facsimile and any complete photocopy of this Agreement or notice
     to be deemed an original counterpart.

     EXECUTED of the date first above written.

Address for Notices:

                                                A&B CAPITAL CORPORATION, a
                                                Nevada corporation
10670 N. Central Expressway
Suite 600
Dallas, Texas 75231
Attn: President                                 By: /s/ RONALD AKIN
214-692-4865                                        ----------------------------
214-750-0779 (facsimile)                        Name: Ronald Akin
                                                      --------------------------
                                                Title: President
                                                       -------------------------


9027 Woodhurst
Dallas, Texas 75234
(972)406-6775 (telephone)
(972) 406-6724 (facsimile)                      /s/ CHARLES B. BREWER
(214) 341-2542 (facsimile)                      --------------------------------
                                                Charles B. Brewer, individually

                                      -13-
<PAGE>

                                  EXHIBIT "1"

                   CONSENTS OF THIRD PERSONS TO BE OBTAINED
<PAGE>

                                  EXHIBIT "2"


                                SPRINGING PROXY


     This is a Springing Proxy made by A&B Capital Corporation, a Nevada
corporation (the "Holder"), which is effective only as provided herein and at
the times specified herein.

     1.   Definitions. As used in this Springing Proxy, the following terms have
          -----------
the following meanings:

          (a)  "Proxy" shall mean the proxy granted by the Holder
     under paragraph 2 hereof.

          (b)  "Stock Purchase Agreement" shall mean the Stock
     Purchase Agreement dated as of May ___, 2000 between Holder and
     Charles B. Brewer ("Brewer") pursuant to which Holder has
     purchased certain shares of Redeemable Series A Preferred Stock
     (the "Preferred Stock") and shares of Common Stock issued by
     Southmark Corporation ("Southmark") from Brewer.

          (c)  "Shares" shall be and mean all of the shares of
     Preferred Stock and Common Stock acquired by Holder from Brewer
     or acquired by Holder from Grace Brothers, Ltd., same
     constituting in the aggregate as of the date of this Springing
     Proxy 965,541.25 shares of Preferred Stock and 7,346,114 shares
     of Common Stock of Southmark or any securities issued in
     replacement thereof or therefor pursuant to any merger or
     consolidation of Southmark into another entity.

          (d)  "Event" shall be and mean (i) the failure by Holder to
     satisfy (to the satisfaction of Brewer) the covenant set forth in
     paragraph 6(d) of the Stock Purchase Agreement on or before July
     31, 2000, or such later date as may be agreed to in writing by
     Brewer, and (ii) the covenant set forth in paragraph 6(d) remains
     unsatisfied for a period of 30 calendar days after the date
     Brewer notifies Holder in writing of Brewer's decision to
     exercise his right of recission under paragraph 10 of the Stock
     Purchase Agreement and (iii) at the end of such 30 calendar day
     period, Brewer does in fact exercise such right of recission.

     2.   Irrevocable Proxy. Immediately upon the occurrence of the Event, but
          -----------------
not otherwise, Holder hereby irrevocably appoints Brewer as its attorney and
proxy on its behalf and in its name to vote the Shares at any meeting of
stockholders of Southmark
<PAGE>

and where any consent or action by stockholders is to be taken by written
consent or other action rather than at a meeting of stockholders, to execute on
Holder's behalf any such written consent or action by stockholders with respect
to any and all matters involving the election of directors or voting upon any
action required to be approved by stockholders of Southmark, except that such
                                                             ------ ----
proxy may not vote the Shares in favor of any action which, (m) if taken by such
stockholders would cause the loss to Southmark of any loss carry-forward or (n)
materially adversely affects the percentage interest of Holder represented by
such Shares or (o) would or could cause approval of a merger involving Southmark
or disposition of substantially all of Southmark's assets or a liquidation of
Southmark or (p) would or could cause an automatic conversion of the Preferred
Stock with or into Common Stock (each an "Excluded Item"); provided, however,
                                                           --------  -------
that if the Event continues for a period of one calendar year after the date
Brewer exercises his right of recission under paragraph 10 of the Stock Purchase
Agreement, the Excluded Items shall no longer be excluded from the Proxy, and
after such time, Brewer shall have the full power and authority to vote all of
the Shares at any meeting of stockholders of Southmark or if any consent or
action by stockholders is to be taken by written consent or action other than at
a meeting of stockholders, to execute on Holder's behalf any written consent or
action by stockholders without restriction.

     3.   Term. The Proxy, once effective, shall nevertheless terminate
          ----
immediately upon the first to occur of (x) the satisfaction of the covenant in
paragraph 6(d) to the satisfaction of Brewer or (y) the date which is one
calendar day following the date a distribution is actually made by Southmark to
the "Other Preferred Shareholders" (as that term is defined in the Stock
Purchase Agreement) of assets of a value of $1.50 per share of Preferred Stock
(such time is to be the "Expiration Time"). On the occurrence of the Expiration
Time, this Proxy shall be deemed to be null, void and of no further force or
effect.

     4.   Miscellaneous. This Proxy, once effective, is irrevocable until the
          -------------
Expiration Time, is coupled with an interest in the Shares and has been granted
in connection with the Stock Purchase Agreement. This Proxy shall be binding
upon the heirs, successors and assigns of Holder (including any transferee of
the Shares). This Proxy shall not otherwise affect or restrict the sale,
transfer or other disposition by Holder of any or all of the Shares. If for any
reason of incapacity or death, Brewer ceases to be able to act as the attorney
and proxy, ________________________ shall replace Brewer as the attorney and
proxy of Holder, but neither Brewer nor his substitute may substitute any other
person to act under
<PAGE>

this Proxy. This Proxy and any other matter relating to this Proxy may be filed
with Southmark with respect to the Shares.

     IN WITNESS WHEREOF, the undersigned has executed this Springing Proxy on
May ______, 2000, effective only as provided herein.

                                                  A&B CAPITAL CORPORATION



                                                  By:___________________________
                                                  Name:_________________________
                                                  Title:________________________



STATE OF TEXAS           (S)
                         (S)
COUNTY OF DALLAS         (S)

     SUBSCRIBED AND SWORN TO BEFORE ME by ____________________, ________________
of A&B Capital Corporation, on this ____ day of May, 2000, as the act and deed
of such entity.



                                                  ______________________________
                                                  Notary Public, State of Texas
                                                  My Commission Expires:________