Unassociated Document


     

    
      SECOND
AMENDMENT TO PURCHASE AGREEMENT

      


      


      THIS SECOND AMENDMENT TO PURCHASE
AGREEMENT (“Second
Amendment”) is executed to be effective as of December 18, 2008, by and
among Hallmark Financial Services, Inc., a Nevada corporation (“Purchaser”),
Samuel M. Cangelosi, Donate A. Cangelosi and Donald E. Meyer (individually, a
“Seller”
and, collectively, the “Sellers”).

      


      RECITALS:

      


      A.           Purchaser
and Sellers entered into a Purchase Agreement (the “Original
Agreement”) dated as of November 9, 2005, with respect to the sale by
Sellers to Purchaser of the TGA Stock (as defined in the Original Agreement) and
the TGASRI Stock (as defined in the Original Agreement).

      


      B.           The
Original Agreement was previously amended by a First Amendment to Purchase
Agreement executed by Purchaser and Sellers effective as of August 30,
2007.

      


      B.           Purchaser
and Sellers mutually desire to further amend the Original Agreement as provided
herein.

      


      AGREEMENT:

      


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

      


      1.           Amendment of Section
1.2.  Section 1.2 of the Original Agreement is hereby amended
and completely restated to read as follows:

      


      Section
1.2    Purchase
Price.

       

        The
total consideration for the Shares (the “Total Purchase
Price”) shall be an amount equal to $40,900,000.00, consisting of the sum
of:

       

      (a)           For
the purchase of the TGA Stock, an aggregate amount equal to up to
$40,700,000.00, consisting of an unconditional consideration of $36,700,000.00
(the “TGA
Base Purchase Price”) plus additional contingent consideration of
$4,000,000.00 (the “TGA Contingent
Purchase Price”), as provided in Section 1.4 hereof
(the TGA Base Purchase Price and TGA Contingent Purchase Price are collectively
referred to herein as the “TGA Purchase
Price”); plus,

       

      (b)           For
the purchase of the TGASRI Stock, an aggregate amount equal to
$200,000.00  (the “TGASRI Purchase
Price”).

      


      2.           Amendment of Subsection
1.3(c).  Subsection 1.3(c) of the Original Agreement is hereby
amended and completely restated to read as follows:

      


      (c)           The
TGA Contingent Purchase Price, if any, shall be payable by the Purchaser to the
Sellers on or before January
31, 2009.  Such payment, if any, shall be by Purchaser’s checks
or by wire transfers of immediately available funds to the bank account(s) set
forth on a notice given to the Purchaser by the Sellers at least three (3)
business days prior to the due date of the TGA Contingent Purchase
Price.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.           Amendment of Section
1.4.  Section 1.4 of the Original Agreement is hereby amended
and completely restated to read as follows:

      


      Section 1.4    TGA Contingent Purchase
Price.  Payment of the TGA Contingent Purchase Price is
conditioned on the Sellers’ compliance with the covenants contained in Section 5.9
hereof.

      


      (a)           [Intentionally
Deleted]

      


      (b)           [Intentionally
Deleted]

      


      (c)           [Intentionally
Deleted]

      


      (d)           Notwithstanding
the foregoing provisions of this Section 1.4, the TGA Contingent Purchase Price
otherwise payable to the Sellers shall be reduced by such amount (not in excess
of the TGA Contingent Purchase Price otherwise payable) as TGA shall have paid
at the written instructions of the Sellers to employees of TGA as one-time
incentive bonuses for the fiscal year ended December 31, 2008.

      


      4.           Ratification.  The
terms and provisions set forth in this Second Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Original
Agreement.  Except as expressly modified and superseded by this Second
Amendment, the terms and provisions of the Original Agreement are ratified and
confirmed and shall continue in full force and effect.  Purchaser and
Sellers agree that the Original Agreement, as amended hereby, shall continue to
be legal, valid, binding and enforceable in accordance with its
terms.

      


      5.           Purchaser
Acknowledgment.  Purchaser acknowledges and agrees that Sellers
have fully complied with the covenants contained in Section 5.9 of the Original
Agreement and the TGA Contingent Purchase Price of $4,000,000 is fully earned
and final as of the date hereof.

      


      6.           Sellers’
Release.  Each Seller hereby releases, acquits and forever
discharges Purchaser, its affiliates, subsidiaries and parents, and their
respective shareholders, directors, officers, employees, attorneys, agents,
successors, and assigns from any and all claims, obligations, liabilities,
demands, actions, and causes of action of any kind or character whatsoever,
known or unknown, foreseen or unforeseen, arising as a result of or in
connection with the Original Agreement or the respective Seller’s employment by
TGA (as defined in the Original Agreement) through the date hereof, other than
the obligation of Purchaser to pay the TGA Contingent Purchaser
Price.

      


      7.           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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, each party has executed, or caused a duly authorized officer to
execute, this Second Amendment to be effective as of the date first set forth
above.

       

      
        


        
          
            
              	
                      PURCHASER:

                    	
                      HALLMARK
      FINANCIAL SERVICES, INC.

                    
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      /s/ Mark E. Schwarz

                    
	 
      	
                      Name:

                    	
                      Mark E.Schwarz

                    
	 
      	
                      Title:

                    	
                      ExecutiveChairman

                    
	 
      	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                      SELLERS:

                    	
                      /s/ Samuel M.Cangelosi

                    
	 
      	
                      Samuel
      M. Cangelosi

                    
	 
      	 
      
	 
      	 
      
	 
      	
                      /s/ Donate A.
      Cangelosi  

                    
	 
      	
                      Donate
      A. Cangelosi

                    
	 
      	 
      	 
      
	 
      	 
      
	 
      	
                      /s/ Donald E.
    Meyer  

                    
	 
      	
                      Donald
      E. Meyer