EXHIBIT 4.1


 ============================================================================

                              PURCHASE AGREEMENT

                                 by and among

                      HALLMARK FINANCIAL SERVICES, INC.,

                                     and

                  SAMUEL M. CANGELOSI, DONATE A. CANGELOSI,

                             and DONALD E. MEYER


                         DATED AS OF NOVEMBER 9, 2005

 ============================================================================

                This Agreement is subject to arbitration under
                  the rules and regulations of the American
                     Arbitration Association as provided
                             in Article X hereof.
<PAGE>

                              TABLE OF CONTENTS

                                                                         Page


 ARTICLE I TERMS OF THE PURCHASE AND SALE................................  2
      Section 1.1    Sale of Shares......................................  2
      Section 1.2    Purchase Price......................................  2
      Section 1.3    Payment of the Purchase Price.......................  2
      Section 1.4    TGA Contingent Purchase Price.......................  3
      Section 1.5    Non-Compete Payments................................  4
      Section 1.6    Letter of Credit....................................  4
      Section 1.7    Effective Date of Purchase and Sale.................  4

 ARTICLE II CLOSING......................................................  4
      Section 2.1    Closing.............................................  4
      Section 2.2    Deliveries by the Sellers...........................  4
      Section 2.3    Deliveries by Purchaser.............................  5
      Section 2.4    Simultaneous Deliveries.............................  6

 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS...................  6
      Section 3.1    Title to Shares.....................................  6
      Section 3.2    Power and Authority.................................  6
      Section 3.3    Execution and Validity..............................  6
      Section 3.4    No Conflict; Consents...............................  6
      Section 3.5    Company Organization; Good Standing; Delivery of
                     Charter Documents...................................  7
      Section 3.6    Corporate Power and Authority.......................  7
      Section 3.7    Capitalization......................................  7
      Section 3.8    No Undisclosed Liabilities..........................  7
      Section 3.9    Sufficiency and Condition of and Title to the
                     Company Assets......................................  7
      Section 3.10   Real and Personal Property..........................  8
      Section 3.11   Compliance with Laws................................  8
      Section 3.12   Insurance...........................................  8
      Section 3.13   Contracts...........................................  9
      Section 3.14   Litigation; Orders..................................  9
      Section 3.15   Permits.............................................  9
      Section 3.16   Intangible Assets...................................  9
      Section 3.17   Employees........................................... 10
      Section 3.18   Employee Benefits................................... 10
      Section 3.19   Taxes............................................... 12
      Section 3.20   Bank Accounts; Powers of Attorney................... 12
      Section 3.21   Affiliated Transactions............................. 12
      Section 3.22   Books and Records................................... 12
      Section 3.23   Full Disclosure.,,,................................. 13
      Section 3.24   Brokers............................................. 13
      Section 3.25   Absence of Sensitive Payment........................ 13
      Section 3.26   Financial Statements................................ 13

 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.................. 13
      Section 4.1    Organization; Good Standing; Delivery of Charter
                     Documents........................................... 13
      Section 4.2    Power and Authority................................. 14
      Section 4.3    Authorization; Execution and Validity............... 14
      Section 4.4    No Conflict; Purchaser Consents..................... 14
      Section 4.5    Full Disclosure..................................... 14
      Section 4.6    Brokers............................................. 14

 ARTICLE V COVENANTS OF SELLERS.......................................... 14
      Section 5.1    Cooperation of the Sellers.......................... 14
      Section 5.2    Pre-Closing Access to Information................... 14
      Section 5.3    Conduct of Business................................. 14
      Section 5.4    No Business Changes................................. 15
      Section 5.5    Permitted Actions................................... 15
      Section 5.6    Supplements to Schedules............................ 16
      Section 5.7    Standstill.......................................... 17
      Section 5.8    Discharge of Encumbrances........................... 17
      Section 5.9    Non-Disclosure; Non-Competition; Non-Solicitation... 17

 ARTICLE VI COVENANTS OF PURCHASER....................................... 19
      Section 6.1    Cooperation by Purchaser............................ 19
      Section 6.2    Confidentiality Agreement........................... 19

 ARTICLE VII MUTUAL COVENANTS............................................ 19
      Section 7.1    Fees and Expenses................................... 19
      Section 7.2    Governmental Consents............................... 20
      Section 7.3    Consents to Assign Leases and Contracts............. 20
      Section 7.4    Permits............................................. 20
      Section 7.5    Further Assurances.................................. 20
      Section 7.6    Supplemental Agreements and Consents................ 21
      Section 7.7    Tax Matters......................................... 21
      Section 7.8    Employee Benefit Plans; Employment.................. 21

 ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING............................ 22
      Section 8.1    Conditions Precedent to Purchaser's Obligations..... 22
      Section 8.2    Conditions Precedent to the Sellers' Obligations.... 23

 ARTICLE IX TERMINATION PRIOR TO CLOSING................................. 24
      Section 9.1    Termination of Agreement............................ 24
      Section 9.2    Procedure Upon Termination.......................... 24

 ARTICLE X INDEMNIFICATION AND OFFSET.................................... 24
      Section 10.1   Indemnification by Sellers.......................... 24
      Section 10.2   Indemnification by Buyer............................ 24
      Section 10.3   Claims for Indemnification.......................... 25
      Section 10.4   Defense by Indemnifying Party....................... 25
      Section 10.5   Offset.............................................. 25

 ARTICLE XI ARBITRATION AND EQUITABLE REMEDIES........................... 26
      Section 11.1   Settlement Meeting.................................. 26
      Section 11.2   Arbitration Proceedings............................. 26
      Section 11.3   Place of Arbitration................................ 26
      Section 11.4   Discovery........................................... 27
      Section 11.5   Equitable Remedies.................................. 27
      Section 11.6   Exclusive Jurisdiction.............................. 27
      Section 11.7   Judgments........................................... 27
      Section 11.8   Expenses............................................ 27
      Section 11.9   Cost of the Arbitration............................. 27
      Section 11.10  Exclusivity of Remedies............................. 27

 ARTICLE XII MISCELLANEOUS............................................... 27
      Section 12.1   Amendment........................................... 27
      Section 12.2   Counterparts........................................ 27
      Section 12.3   Entire Agreement.................................... 28
      Section 12.4   Expenses............................................ 28
      Section 12.5   GOVERNING LAW....................................... 28
      Section 12.6   Consent to Service of Process....................... 28
      Section 12.7   No Assignment....................................... 28
      Section 12.8   No Third Party Beneficiaries........................ 28
      Section 12.9   Notices............................................. 28
      Section 12.10  Public Announcements................................ 29
      Section 12.11  Representation by Legal Counsel..................... 30
      Section 12.12  Schedules........................................... 30
      Section 12.13  Severability........................................ 30
      Section 12.14  Specific Performance................................ 30
      Section 12.15  Successors.......................................... 30
      Section 12.16  Time of the Essence................................. 30
      Section 12.17  Waiver.............................................. 30

<PAGE>

 SCHEDULES
      Schedule 1.1      Shares
      Schedule 3.7      Capitalization
      Schedule 3.8      Undisclosed Liabilities
      Schedule 3.10(b)  Leased Real Property
      Schedule 3.10(c)  Owned Personal Property
      Schedule 3.10(d)  Leased Personal Property
      Schedule 3.10(e)  Personal Property Owned by Others
      Schedule 3.12     Insurance
      Schedule 3.13     Contracts
      Schedule 3.14     Litigation
      Schedule 3.15     Permits
      Schedule 3.16(a)  Owned Intangible Assets
      Schedule 3.16(b)  Licensed Intangible Assets
      Schedule 3.17(a)  Employees
      Schedule 3.17(b)  Employee Contracts
      Schedule 3.18(a)  Identification of Company Plans and Exceptions
      Schedule 3.19(c)  Taxes
      Schedule 3.20     Bank Accounts; Powers of Attorney
      Schedule 3.21     Affiliated Transactions
      Schedule 3.26     Financial Statements
      Schedule 5.8      Encumbrances Not Discharged
      Schedule 7.3(b)   Pre-Closing; Required Consents
      Schedule 7.4(b)   Pre-Closing; Required Permits
      Schedule 7.8(a)   Assumed Plans



 EXHIBITS

      Exhibit A         Form of Promissory Note
      Exhibit B         Form of Employment Agreement

<PAGE>

                              PURCHASE AGREEMENT


      THIS PURCHASE AGREEMENT  (this "Agreement"),  dated as  of November  9,
 2005 (the "Signing Date"), is made 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").

                            PRELIMINARY STATEMENTS

       A. The  Sellers   collectively  own:  (i)  all   of  the  issued   and
  outstanding  shares of the  Class A common  stock, no par  value per  share
  (the  "TGA Stock"),  of Texas  General Agency,  Inc., a  Texas  corporation
  ("TGA"),  which shares  constitute all  the issued  and outstanding  equity
  securities of  TGA; and (ii) all  of the issued  and outstanding shares  of
  the common  stock, $1.00 par value per share  (the "TGASRI Stock"), of  TGA
  Special  Risk,   Inc.,  a  Texas   corporation  ("TGASRI"),  which   shares
  constitute all the issued and outstanding equity securities of  TGASRI.

       B. TGA owns  all of the  issued and outstanding  shares of the  common
  stock,  $1.00  par value  per  share (the  "GSIC  Stock"), of  Gulf  States
  Insurance   Company,  an  Oklahoma   corporation  ("GSIC"),  which   shares
  constitute all of the issued and outstanding equity securities of GSIC.

       C. The TGA Stock and the TGASRI Stock are collectively referred to  as
  the "Stock."

       D. TGA, GSIC,  and TGASRI are collectively  referred to herein as  the
  "Companies" or individually as a "Company".

       E. Purchaser and  the Sellers are collectively  referred to herein  as
  the "Parties" or individually as a "Party."

       F. The  Sellers  desires  to  sell,  and  the  Purchaser  desires   to
  purchase, all of the  Stock on the terms and subject to the conditions  set
  forth in this Agreement.

       G. Capitalized terms used in this Agreement and rules of  construction
  are defined or indexed in Appendix A for the convenience of the reader  and
  in  order  to eliminate  the  need  for cross-references.   Appendix  A  is
  incorporated herein by this reference.

                            STATEMENT OF AGREEMENT

      NOW, THEREFORE,  in  consideration  of  the  premises  and  the  mutual
 agreements, covenants,  representations and  warranties  set forth  in  this
 Agreement and for other good, valid  and binding consideration, the  receipt
 and sufficiency of which are hereby acknowledged, the Parties, intending  to
 be legally bound, hereby agree as follows:


                                  ARTICLE I
                                  ---------
                        TERMS OF THE PURCHASE AND SALE
                        ------------------------------

      Section 1.1   Sale of Shares.
                    --------------

   Subject  to  the   terms  and  conditions   and  in   reliance  upon   the
 representations and warranties set forth in  this Agreement, at the  Closing
 each Seller shall sell and assign to Purchaser, and Purchaser shall purchase
 and acquire from each Seller,  the number of shares  of the Stock listed  on
 Schedule 1.1 opposite the name of such Seller (collectively, the  "Shares"),
 in each case free and clear of all Encumbrances, for the Purchase Price  set
 forth in Section 1.2 hereof. Such  Shares shall represent all of the  issued
 and outstanding capital stock of any class of TGA and TGASRI.

      Section 1.2   Purchase Price.
                    --------------

   The total consideration for the Shares (the "Total Purchase Price")  shall
 be an amount equal to up to $44,900,000.00, consisting of the sum of:

      (a)  For the purchase of the TGA Stock, an aggregate amount equal to up
 to  $44,700,000.00,  consisting   of  an   unconditional  consideration   of
 $36,700,000.00 (the "TGA  Base Purchase Price")  plus additional  contingent
 consideration of up to $8,000,000.00 (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").

      Section 1.3   Payment of the Purchase Price.
                    -----------------------------

   The TGA Purchase Price and the  TGASRI Purchase Price shall be payable  to
 the Sellers in proportion to their ownership of the TGA Stock and the TGASRI
 Stock, respectively, in each case as set  forth in Schedule 1.1.  The  Total
 Purchase Price shall be payable to the Sellers as follows:

      (a) At the  Closing, Purchaser shall pay to the Sellers an aggregate of
 $13,150,000.00, consisting of the  TGASRI Purchase Price and  $12,950,000.00
 of the  TGA Base  Purchase Price.   Such  payments 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 Closing Date.

      (b) The balance  of the TGA Base Purchase Price shall be payable by the
 Purchaser to the Sellers in two  installments of (i) $14,250,000.00, due  on
 or  before  the  first   anniversary  of  the   Effective  Date,  and   (ii)
 $9,500,000.00, due  on or  before the  second anniversary  of the  Effective
 Date.  The  balance of the  TGA Base Purchase  Price shall  be evidenced  by
 promissory notes  (collectively, the  "Notes" and,  individually, a  "Note")
 issued by Purchaser to the Sellers in substantially the form of Exhibit A.

      (c) The TGA  Contingent Purchase Price, if any, shall be payable by the
 Purchaser to the  Sellers on or  before March 30,  2009; provided,  however,
 that the Sellers may defer payment  of the TGA Contingent Purchase Price  to
 March 30 of  any subsequent calendar  year in accordance  with Section  1.4.
 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.

      Section 1.4   TGA Contingent Purchase Price.
                    ------------------------------

     Payment of  any TGA  Contingent Purchase  Price  is conditioned  on  the
 Sellers' compliance with the covenants contained  in Section 5.9 hereof  and
 TGA achieving the following operational objectives  for 2006, 2007 and  2008
 years: (i)  gross  premium  production, net  of  cancellations,  within  the
 markets in  which  TGA operated  as  of the  Effective  Date at  an  average
 compound annual  growth rate  of  at least  two  percent (2%)  (the  "Growth
 Factor"); and  (ii) a  three year  accident year  loss and  loss  adjustment
 expense ratio  ("3-Year LLAE  Ratio") of  less than  65%.   If Sellers  have
 complied with  the  covenants  contained in  Section  5.9  hereof  and  both
 operational objectives have been satisfied, the amount of the TGA Contingent
 Purchase Price shall be equal to the product of (x) $8,000,000.00, times (y)
 65% minus the greater of the 3-Year LLAE  Ratio or 60%, divided by (z)  five
 percent (5%).

      (a) By  way of illustration, if TGA's  gross premium production, net of
 cancellations, for  the 2005  calendar year  was $100,000,000,  in order  to
 achieve the 2% Growth Factor, TGA  would be required to generate  cumulative
 gross premiums,  net  of  cancellations, during  the  2006,  2007  and  2008
 calendar years of at least $312,160,080, calculated as follows:

    [($100,000,000 x 1.02) + ($100,000,000 x 1.02 x 1.02) + ($100,000,000 x
                           1.02 x 1.02 x 1.02)]  =

         [$102,000,000 + $104,040,000 + $106,120,800] = $312,160,080

      (b)  For purposes hereof, the  3-Year LLAE Ratio  shall be computed  as
 the ratio of the incurred losses and loss adjustment expenses for the  2006,
 2007  and  2008  accident  years  to  the  net  premiums earned for the same
 period, all in accordance with  statutory  insurance  accounting  principles
 consistently  applied.  The  calculation  of  the 3-Year  LLAE  Ratio  shall
 include a reserve for incurred but  not reported claims ("IBNR")  determined
 by Tillinghast, or other actuary mutually  agreeable to the Parties, on  the
 basis of an analysis of data  specific to TGA.  By way  of illustration,  if
 TGA has achieved the 2% Growth Factor and a 3-Year LLAE Ratio of 61.0%,  the
 TGA Contingent Purchase Price due Sellers would be $6,400,000, calculated as
 follows:

                (.65 - .61) / .05 x $8,000,000 = $6,400,000

      (c) In the event TGA has achieved the  2% Growth Factor, the  Purchaser
 shall deliver to the Sellers on or before March 1, 2009, a notice describing
 in reasonable detail the Purchaser's calculation  of the 3-Year LLAE  Ratio,
 including the  IBNR  reserve included therein,  and the  amount of  the  TGA
 Contingent Purchase Price.  In  the  event TGA  has achieved  the 2%  Growth
 Factor but  the Sellers  do not  agree with  the IBNR  reserve used  in  the
 calculation of the 3-Year LLAE Ratio, the Sellers may, by written notice  to
 the Purchaser executed by at least two  (2) of the Sellers and delivered  to
 the Purchaser on  or before March  15, 2009, defer  the payment  of the  TGA
 Contingent Purchase Price, if any, for one (1) year to permit the  continued
 development of loss and loss adjustment expense for the 2006, 2007 and  2008
 accident years.  The  same procedure shall be  used in each successive  year
 until such time  as the Sellers  have not timely  notified the Purchaser  of
 their election to  defer payment of  the TGA Contingent  Purchase Price,  at
 which time payment  of the TGA  Contingent Purchase Price  shall be due  and
 payable within fifteen (15) calendar days.

      (d) Notwithstanding  the foregoing provisions of  this Section 1.4, any
 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.

      Section 1.5   Non-Compete Payments.
                    --------------------

     In addition to the Total Purchase Price, the Purchaser shall pay to  the
 Sellers an aggregate amount of $2,000,000.00 (the "Non-Compete Payments") in
 consideration of their compliance  with the restrictive covenants  contained
 in Section  5.9 hereof.   The  Non-Compete  Payments shall  be paid  to  the
 Sellers in proportion to their ownership of  the TGA Stock, as set forth  in
 Schedule 1.1, and shall  be payable (i) an  aggregate of $750,000.00 at  the
 Closing, (ii) an aggregate of $750,000.00 on or before the first anniversary
 of the Effective Date,  and (iii) an aggregate  of $500,000.00 on or  before
 the second  anniversary of  the Effective  Date.   All Non-Compete  Payments
 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  each
 payment.  The Purchaser and the Sellers  agree that they shall not take  any
 position or  action inconsistent  with the  foregoing determination  of  the
 amount of the Non-Compete Payments in  the filing of any federal income  tax
 returns.

      Section 1.6   Letter of Credit.
                    ----------------

     The Purchaser's payment of the Notes and the Non-Compete Payments  shall
 be secured by  a letter of  credit issued by  a federally chartered  banking
 institution reasonably acceptable  to Sellers or  other security  reasonably
 acceptable to the Sellers.  For so long as  any portion of the Notes or  the
 Non-Compete Payments remains unpaid, such letter of credit or other security
 shall be  maintained  by  the Purchaser  in  an  amount not  less  than  the
 aggregate unpaid balance of the Notes and the Non-Compete Payments.

      Section 1.7   Effective Date of Purchase and Sale.
                    -----------------------------------

     The Parties hereto  agree that the  effective date for  the sale of  the
 Shares shall be  the earlier of  the Closing Date  or January  1, 2006  (the
 "Effective Date").

                                 ARTICLE II
                                 ----------
                                  CLOSING
                                  -------
      Section 2.1   Closing.
                    -------

     The consummation of the transactions contemplated by this Agreement (the
 "Closing") shall take place at the offices of Mark Holland, P.C., 9901 IH-10
 West, Suite 795, San Antonio, Texas  78230 on the first business day of  the
 calendar month following the date on  which all of the conditions set  forth
 in Article VIII, to the extent not  waived, are satisfied.  The Closing  may
 be postponed to such other date as the Parties may mutually agree.  The date
 on which  the Closing  actually occurs  is hereinafter  referred to  as  the
 "Closing Date."

      Section 2.2   Deliveries by the Sellers.
                    -------------------------

   At the Closing,  the Sellers or  each Seller, as  the case  may be,  shall
 deliver the following:

      (a) the  closing and  secretary's certificates  referred to  in Section
 8.1(e) and Section 8.1(f);

      (b) certificates  representing the number of  Shares of TGA and TGASRI,
 as applicable, listed on Schedule 1.1  opposite the name of each Seller,  in
 each case  duly endorsed  in blank  or accompanied  by duly  executed  stock
 transfer powers in favor of Purchaser dated the Effective Date;

      (c) a certificate dated within ten (10) business days prior the Closing
 Date from  the  Secretary  of  State  (or  other  proper  official)  of  the
 jurisdiction of formation of  each Company certifying  as to each  Company's
 valid existence and good standing in such jurisdiction;

      (d) the recorded  Charter Documents of each Company, recently certified
 by the Secretary of State (or other proper official) of the jurisdiction  of
 formation of each Company;

      (e) all Books and Records of each Company;

      (f) executed   counterparts  of  all  Required  Consents  and   Required
 Permits;

      (g) a  receipt for the  payment of the  TGASRI  Purchase  Price and that
 portion of the TGA Base Purchase Price paid at Closing;

      (h) each  of the agreements referred to  in Section 7.6(a) to which any
 Seller is a party, each executed by the appropriate Seller(s);

      (i) each of the consents referred to in Section 7.6(b);

      (j) a  written  opinion of  counsel  to  the Sellers  addressed  to the
 Purchaser confirming that  the representations and  warranties contained  in
 Section 3.1 through Section  3.7 hereof are true,  correct and complete  and
 that,  to  the  best  of  such  counsel's  knowledge,  the  Sellers'   other
 representations and warranties are true, correct and complete, which opinion
 shall be in form and substance reasonably satisfactory to the Purchaser  and
 its counsel; and

      (k) all   other  previously  undelivered   documents,  instruments  and
 writings required to be delivered by the Sellers to Purchaser at or prior to
 the Closing pursuant to this Agreement and such other documents, instruments
 and certificates as Purchaser may reasonably request in connection with  the
 transactions contemplated by this Agreement.

      Section 2.3   Deliveries by Purchaser.
                    -----------------------

     At the Closing, Purchaser  shall deliver, or cause  to be delivered,  to
 the Sellers the following:

      (a) the TGASRI Purchase Price and that portion of the TGA Base Purchase
 Price payable at Closing in accordance with Section 1.3, together with  that
 portion of the Non-Compete  Payments payable at  Closing in accordance  with
 Section 1.5;

      (b) the Notes;

      (c) a  letter of  credit or other  security in  accordance with Section
 1.6;

      (d) the  closing and secretary's  certificates referred  to in Sections
 8.2(d) and 8.2(e);

      (e) each  of  the agreements  referred to  in  Section 7.6(a)  to which
 Purchaser is a party, each executed by Purchaser;

      (f) all   other  previously  undelivered   documents,  instruments  and
 writings required to be delivered by Purchaser to the Sellers at or prior to
 the Closing pursuant to this Agreement and such other documents, instruments
 and certificates as the  Sellers may reasonably  request in connection  with
 the transactions contemplated by this Agreement.

      Section 2.4   Simultaneous Deliveries.
                    -----------------------

     The delivery of the  documents required to be  delivered at the  Closing
 pursuant to this  Agreement shall  be deemed  to occur  simultaneously.   No
 delivery shall be effective until each Party has received, or waived receipt
 of, all the documents that this Agreement entitles such Party to receive.


                                 ARTICLE III
                                 -----------
                  REPRESENTATIONS AND WARRANTIES OF SELLERS
                  -----------------------------------------

      Each Seller, jointly and severally,  hereby represents and warrants  to
 Purchaser that the statements made in this Article III are true, correct and
 complete.

      Section 3.1   Title to Shares.
                    ---------------

     Each Seller is the record and  beneficial owner of the number of  Shares
 of TGA and TGASRI listed on Schedule  1.1 opposite the name of such  Seller,
 free and clear of all Encumbrances.  TGA is the record and beneficial  owner
 of the GSIC Stock free and clear of all Encumbrances.  At the Closing,  each
 Seller will transfer to  Purchaser its entire right,  title and interest  in
 and to the Shares free and clear of all Encumbrances.

      Section 3.2   Power and Authority.
                    -------------------

     Each Seller has the requisite power and authority to execute and deliver
 this Agreement, to perform its obligations  hereunder and to consummate  the
 transactions contemplated  hereby,  including the  execution,  delivery  and
 performance of all of  the Transaction Documents to  which such Seller is  a
 party.

      Section 3.3   Execution and Validity.
                    ----------------------

     Each of  the Transaction  Documents, when  executed by  each Seller  and
 delivered  to  Purchaser,  will  constitute  a  valid,  legal  and   binding
 obligation of such  Seller, enforceable  against such  Seller in  accordance
 with the terms of  such Transaction Document, subject  to any Law  Affecting
 Creditors' Rights.

      Section 3.4   No Conflict; Consents.
                    ---------------------

     The  execution,  delivery  and  performance  by  each  Seller  of   each
 Transaction Document will not  (a) violate any Law,  (b) violate any of  the
 Charter Documents of any  of the Companies, (c)  violate any Order to  which
 such Seller or any of the Companies is a party or by which such Seller,  any
 of the Companies or any of their respective assets are bound, (d) result  in
 the creation of any  Encumbrance on any  of the Shares,  or (e) require  any
 Consent from any Person that will not be obtained and delivered on or before
 the Closing.

      Section 3.5   Company Organization; Good Standing; Delivery of Charter
                    --------------------------------------------------------
                    Documents.
                    ---------

     Each Company is a  corporation duly organized,  validly existing and  in
 good standing  under  the  laws  of  the state  in  which  such  Company  is
 incorporated.   Each Company  is duly  qualified or  licensed as  a  foreign
 corporation in  each jurisdiction  in which  the  nature of  such  Company's
 business makes qualification or licensing necessary.   Prior to the  Signing
 Date, each Company has  delivered, or caused to  be delivered, to  Purchaser
 true and complete  copies of  the Charter Documents  of such  Company as  in
 effect on the Signing Date.

      Section 3.6   Corporate Power and Authority.
                    -----------------------------

     Each Company  has  all  the  requisite  corporate  power  and  authority
 necessary to own, operate and lease its assets and to carry on its  business
 as and where conducted.

      Section 3.7   Capitalization.
                    --------------

     Schedule  3.7  lists  the  total   number  of  authorized,  issued   and
 outstanding shares of all classes of  the capital stock of each Company  and
 the record holder(s) of all such issued and outstanding shares.  All  issued
 and outstanding shares of each Company have been duly authorized and validly
 issued and are  fully paid  and nonassessable.   There is  no authorized  or
 outstanding  option,   subscription,   warrant,  call,   preemptive   right,
 commitment or  other  right  or agreement  (each,  a  "Subscription  Right")
 obligating any Company to issue or sell  any shares of its capital stock  or
 any securities convertible into or exercisable for any shares of its capital
 stock.  None of the shares of any Company were issued or will be transferred
 pursuant to this Agreement  in violation of  any preemptive or  preferential
 rights or rights of first refusal of any Person.  Other than as reflected in
 Schedule 3.7, no Company has any subsidiaries or owns any shares of  capital
 stock, partnership interests or other beneficial ownership interests in  any
 other Person.

      Section 3.8   No Undisclosed Liabilities.
                    --------------------------

     Except as set forth in Schedule 3.8, none of the Companies is subject to
 any Claim of any nature, absolute or contingent, and no events have occurred
 or circumstances exist that could give rise to any future Claim, that  could
 have a Material Adverse Effect on the assets or business of any Company.

      Section 3.9   Sufficiency and Condition of and Title to the Company
                    -----------------------------------------------------
                    Assets.
                    ------

      (a) Sufficiency  of the  Company Assets.  The assets  reflected on  the
 Books and  Records  of each  Company  (collectively, the  "Company  Assets")
 constitute all the assets, properties, licenses and other arrangements which
 are presently being used or are  reasonably related to the business of  such
 Company, and are sufficient to operate such business in a manner  consistent
 with past practice and historic capacity.

      (b) Condition  of  the Company  Assets.   Each of  the  Company  Assets
 complies with Law and is in good and normal operating condition and  repair,
 structurally sound with no known defects (ordinary wear and tear  excepted),
 and suitable for its intended use.

      (c) Title  to the Company  Assets.  At  the Closing,  each Company will
 hold good, valid and  indefeasible title to, or  a valid leasehold  interest
 in, each of the  Company Assets, free and  clear of all Encumbrances,  other
 than Permitted Encumbrances.

      (d) No Transfers.   Except as expressly provided herein, during the six
 month period  preceding the  Closing Date,  no Company  has transferred  any
 Company Assets to a Seller  or affiliate of any  Seller nor has any  Company
 made any distribution  of cash  to any Seller  or affiliate  of any  Seller,
 except for  salaries and  expense reimbursement  in the  ordinary course  of
 business or other payments which, in the aggregate, do not exceed $10,000.

      Section 3.10    Real and Personal Property.
                      --------------------------

      (a)  Owned  Real Property.   None of the  Companies own any interest in
 real property.

      (b) Leased  Real Property.   Schedule 3.10(b) lists,  as of the Signing
 Date, all leases of real property (collectively, the "Real Property Leases")
 to which any of the Companies  is a party.  As of  the Signing Date, all  of
 the Real Property Leases  are valid, binding and  in full force and  effect.
 Neither any Company nor, to the  Sellers' Knowledge, any other Person is  in
 default under any of  the Real Property  Leases, nor is  there any event  or
 circumstance which with notice or lapse of time, or both, would constitute a
 default thereunder by any Company or any other Person.

      (c) Owned Personal Property.  Schedule 3.10(c) lists, as of the Signing
 Date, all of  the depreciable  personal property  (including all  machinery,
 equipment, vehicles,  structures,  fixtures  and furniture)  owned  by  each
 Company and used in the business of such Company or located on its premises.

      (d) Leased  Personal  Property.   Schedule  3.10(d)  lists,  as  of the
 Signing Date, all leases of  personal property (collectively, the  "Personal
 Property Leases") to  which any  of the Companies  is a  party.   As of  the
 Signing Date, all of the Personal Property Leases are valid, binding and  in
 full force and effect.  Neither any Company nor, to the Sellers'  Knowledge,
 any other Person is  in default under any  of the Personal Property  Leases,
 nor is there any event or circumstance  which with notice or lapse of  time,
 or both, would constitute a default  thereunder by any Company or any  other
 Person.

      (e) Personal  Property Owned by Others.   Schedule 3.10(e) lists, as of
 the Signing  Date,  all artwork,  memorabilia  and other  personal  property
 routinely located on the premises of any of the Companies which is not owned
 by the Companies, together with the name(s) of the owner(s) of such personal
 property.

      Section 3.11    Compliance with Laws.
                      --------------------

      Each Company has complied with all Laws in the conduct of its business.
 No Company has received any notice from any Governmental Authority or  other
 Person asserting that  such Company has  violated any Law.   No events  have
 occurred or, to Sellers' Knowledge, circumstances exist that could cause any
 Company to violate any Law in the future.

      Section 3.12    Insurance.
                      ---------

     Schedule 3.12  lists, as  of the  Signing Date,  all insurance  policies
 which insure the business of any Company or any of the assets of any Company
 against  loss  (collectively,  the  "Insurance  Policies"),  including  each
 insurer's name, coverage deductible and  limit, expiration date and  current
 premium.  Each Insurance  Policy is in full  force and effect, all  premiums
 with respect thereto  have been paid  to the extent  due, and  no notice  of
 cancellation or  termination has  been received  with  respect to  any  such
 policy, other than any  policy that will  be replaced or  is intended to  be
 replaced prior to the expiration thereof by policies providing substantially
 the same coverage from an insurer  that is financially sound and  reputable.
 The  Insurance  Policies  provide  the  Companies  with  adequate  insurance
 coverage against the risks  involved in the conduct  of the business of  the
 Companies and  ownership of  the  assets of  the  Companies.   The  coverage
 provided by the Insurance Policies  will not in any  way be affected by,  or
 terminate or  lapse  by reason  of,  the consummation  of  the  transactions
 contemplated by this Agreement.  True  and complete copies of all  Insurance
 Policies have been provided to Purchaser.

      Section 3.13    Contracts.
                      ---------

     Schedule 3.13 lists, as of the  Signing Date, all contracts relating  to
 the business and assets  of each Company or  by which any  of the assets  of
 such Company  is bound,  pursuant  to which  the  obligations of  any  party
 thereto are, or are  contemplated to be, with  respect to any such  contract
 (a) in excess  of $10,000  during any twelve  month period  during the  term
 thereof, (b) not terminable prior to 90 days after the Signing Date, or  (c)
 otherwise material to the  business of such Company.   All of the  contracts
 listed on Schedule  3.13 and any  contracts entered into  after the  Signing
 Date in accordance with Section 5.3 (collectively, the "Material Contracts")
 are or will be valid and  binding and in full  force and effect, subject  to
 Laws Affecting Creditors' Rights.  Neither any Company nor, to the  Sellers'
 Knowledge, any other Person is in  default under any Material Contract,  nor
 is there any event or  circumstance which with notice  or lapse of time,  or
 both, would constitute  a default thereunder  by such Company  or any  other
 Person.   No Company  is a  party to  any contract  which (x)  requires  the
 Consent of any Person in order  to consummate the transactions  contemplated
 by this Agreement, except  as otherwise stated on  Schedule 3.13, (y) is  in
 excess of the  normal, ordinary and  usual requirements of  the business  of
 such Company, or (z) is excessive in  price or quantity.  True and  complete
 copies of all the Material Contracts have been provided to Purchaser.

      Section 3.14    Litigation; Orders.
                      ------------------

     Except as set forth in Schedule  3.14, there are no Actions pending,  or
 to the Sellers' Knowledge, threatened against or affecting any Company,  its
 business or any of its assets as of the Signing Date.  No Company is subject
 to any Order.

      Section 3.15    Permits.
                      -------

     Schedule 3.15 lists  all of the  Permits related to  the assets of  each
 Company or operation of  the business of such  Company, and indicates  those
 Permits for  which the  Consent of  any Person  is required  to assign  such
 Permit.  Each Company has obtained,  maintains in effect, and complies  with
 the terms and conditions of all Permits required by Law.  There is no Action
 pending or, to the  Sellers' Knowledge, threatened in  writing to revoke  or
 limit any Permit  listed on  Schedule 3.15.   Each Company  has all  Permits
 necessary for the business of each Company as presently conducted.

      Section 3.16    Intangible Assets.
                      -----------------

      (a) Owned  Intangible  Assets.   Schedule  3.16(a)  lists  all  of  the
 Intangible Assets  owned by  each Company  as  of the  Signing  Date.   With
 respect to the Intangible Assets listed  on Schedule 3.16(a) and all of  the
 Intangible Assets  obtained or  developed prior  to  the Closing,  (i)  such
 Company owns all right, title and interest in and to such Intangible  Assets
 free and  clear  of  all  Encumbrances, (ii)  such  Company  has  not  sold,
 transferred, licensed, sub-licensed or conveyed any interest in any of  such
 Intangible Assets, and (iii) to Sellers' Knowledge, no Person has  infringed
 upon or misappropriated any of such Intangible Assets.

      (b) Licensed  Intangible Assets.   Schedule 3.16(b)  lists all licenses
 and contracts related to any Intangible Asset used by each Company as of the
 Signing Date.  Each license or contract listed on Schedule 3.16(b) and  each
 license or contract  related to an  Intangible Asset which  is entered  into
 after the Signing Date in accordance with Section 5.3 is valid, binding  and
 in full force and effect.  No Company has infringed upon or  misappropriated
 any Intangible Asset owned by another Person.

      Section 3.17    Employees.
                      ---------

      (a) Employees.   Schedule  3.17(a) lists the  name, job  title, date of
 employment and current annual compensation (salary, bonus and  participation
 in any  non-qualified deferred  or incentive  compensation arrangement)  for
 each employee of each Company employed as of the Signing Date (collectively,
 the  "Employees").  All  Employees  are  either United  States  citizens  or
 otherwise authorized  to  engage  in employment  in  the  United  States  in
 accordance  with  all Laws.  All sums  due  for  Employee  compensation  and
 benefits and all vacation time owing to any Employee (including all  persons
 whose employment by a Company is terminated prior to the Signing Date)  have
 been duly and adequately accrued on the accounting Books and Records of each
 Company.

      (b) Contracts.   Except as set forth in Schedule 3.17(b), no Company is
 a party  to (i)  any contract  for employment  between such  Company and  an
 Employee of such Company that cannot be terminated at will without cost,  or
 (ii) any collective bargaining  agreement or other contract  to or with  any
 labor union, Employee representative or group of Employees.  Each  Company's
 employment of an Employee of such Company is terminable at will without  any
 penalty or severance obligation of any kind on the part of such Company.

      (c) Compliance  with  Labor Laws.   Each  Company  has complied  and is
 presently complying  with  all  Laws respecting  employment  and  employment
 practices, terms and conditions of employment,  and wages and hours, and  is
 not engaged in any unfair labor practice or unlawful employment practice.

      Section 3.18    Employee Benefits.
                      -----------------

      (a) Identification  of Company  Plans.   Schedule 3.18(a)  sets forth a
 list of all Employee Benefit Plans which provide compensation or benefits to
 employees, officers, directors  or consultants of  the Companies  including,
 without limitation,  all  Employee  Benefit  Plans  and  all  employment  or
 executive  compensation  agreements  (collectively,  the  "Company  Plans").
 Sellers have delivered to Purchaser true and complete copies of: (i) each of
 the Company  Plans and  any related  funding agreements  thereto  (including
 insurance contracts)  including all  amendments, all  of which  are  legally
 valid and binding and  in full force  and effect and  there are no  defaults
 thereunder, (ii) the currently effective Summary Plan Description pertaining
 to each of the Company Plans, (iii) the three most recent annual reports for
 each of the Company Plans, (iv) the most recent IRS determination letter for
 each Company Plan  which is intended  to constitute a  qualified plan  under
 Section 401  of the  Code,  and (v)  financial  statements for  each  funded
 Company Plan.  Notwithstanding any statement or indication in this Agreement
 to the  contrary, except  as disclosed  on Schedule  3.18(a), there  are  no
 Company Plans which the Companies or Purchaser will not be able to terminate
 (or in which the Companies will  not be able to terminate the  participation
 of their employees) immediately after the  Closing in accordance with  their
 terms and  ERISA, and  without incurring  any expenses  (including, but  not
 limited to, loads or termination charges  imposed with respect to  insurance
 policies or  mutual funds  used  to fund  such  Company Plans),  other  than
 administrative expenses  in connection  with such  termination and  benefits
 accrued as of the date of termination.

      (b) Compliance with Applicable Laws.  All Company Plans comply with and
 are and  have been  operated in  material  compliance with  each  applicable
 provision of ERISA, the Code, other federal statutes, state Law  (including,
 without limitation,  state  insurance Law)  and  the regulations  and  rules
 promulgated  pursuant  thereto  or  in connection  therewith.   Neither  any
 Company nor any  member of the  same controlled group  of businesses as  any
 Company within  the  meaning of  Section  4001(a)(14) of  ERISA  (an  "ERISA
 Affiliate") has failed  to make  any material  contributions or  to pay  any
 material amounts due and owing as required by the terms of any Company Plan.
 Other than routine claims for benefits under the Company Plans, there are no
 pending or, to Sellers'  Knowledge, threatened investigations,  proceedings,
 claims, lawsuits, disputes, actions,  audits or controversies involving  the
 Company Plans or the fiduciaries, administrators, or trustees of any of  the
 Company Plans or any  ERISA Affiliate as the  employer or sponsor under  any
 Company Plan, with  any of  the IRS, the  Department of  Labor, the  Pension
 Benefit Guaranty  Corporation,  any participant  in  or beneficiary  of  any
 Company Plan or any other Person  whomsoever.  To Sellers' Knowledge,  there
 is no  reasonable basis  for any  such claim,  lawsuit, dispute,  action  or
 controversy.

      (c) Pension Benefit Plans.  Neither any Company nor any ERISA Affiliate
 is or ever has been a sponsor or obligated to contribute to any plan covered
 by Title IV  of ERISA  or Section  412 of  the Code,  or any  "multiemployer
 plan," within the meaning of  Section 3(37) of ERISA.   Each of the  Company
 Plans which is intended to be a  qualified plan under Section 401(a) of  the
 Code has received  a favorable determination  letter from the  IRS, and  has
 been operated  substantially  in accordance  with  its terms  and  with  the
 provisions of the Code.

      (d) Welfare  Benefit Plans.   Each  Company Plan  which is  required to
 comply with the provisions  of Part 6 of  Title I of  ERISA, Section 601  et
 seq., and Code  Section 4980B and  the provisions of  Part 7 of  Title I  of
 ERISA, Section  701 et  seq., and  Code Section  4980D has  complied in  all
 material respects.   Except as  required by such  Sections of  the Code,  no
 Company Plan  which  is  a  Welfare Benefit  Plan  provides  for  any  post-
 employment benefits.

      (e) Effect  of  Consummation.   The  consummation  of  the transactions
 contemplated by this Agreement  will not (i) entitle  any current or  former
 employee of any Company or any  other individual to a bonus, severance  pay,
 unemployment compensation or similar payment by  any of the Companies,  (ii)
 otherwise accelerate the time of payment or vesting, or increase the  amount
 of any compensation due  to any current or  former employee of any  Company,
 (iii) result in any prohibited transaction described in Section 406 of ERISA
 or Section 4975 of the Code for which an exemption is not available, or (iv)
 in any way result in any liability of a Company with respect to any Employee
 Benefit Plan of any Person.  None of the Companies is a party or subject  to
 any agreement, contract or other obligation  which would require the  making
 of any payment, other  than payments as contemplated  by this Agreement,  to
 any employee of the Companies, Sellers or to any other Person as a result of
 the consummation of the transactions contemplated herein.

      Section 3.19    Taxes.
                      -----

      (a) Tax Returns.  All Tax returns (including amended returns and claims
 for refund),  reports,  and  declarations of  estimated  Tax  (collectively,
 "Returns") which  were  required  to  be filed  by  each  Company  with  any
 Governmental Authority have  been timely filed.   All Returns  are true  and
 correct and accurately  reflect the Tax  liabilities of such  Company.   All
 Taxes shown to be due pursuant to such Returns have been paid in full.

      (b) Statute  of Limitations and  Tax Actions.   No Company has executed
 any presently effective waiver  or extension of  any statute of  limitations
 against assessments and collection  of Taxes.  There  are no pending or,  to
 the Sellers' Knowledge, threatened  Claims, assessments, notices,  proposals
 to assess, deficiencies or audits with respect to Taxes.

      (c) Miscellaneous  Tax  Representations.   Proper and  accurate amounts
 have been withheld and remitted by each Company from and with respect to all
 Persons from  whom it  is required  by applicable  law to  withhold for  all
 periods in compliance with the tax  withholding provisions of all Laws.   No
 Company or, to the  Sellers' Knowledge, any other  corporation has filed  an
 election under Section 341(f) of the Code that is applicable to such Company
 or any of the assets of such Company.  Except as listed on Schedule 3.19(c),
 no Company is a party to any tax  sharing agreement.  There is no  contract,
 plan or arrangement covering any Person that, individually or  collectively,
 would give rise to the payment of any amount that would not be deductible by
 any Company by reason  of Section 162(m) or  Section 280G of  the Code.   No
 Company is a "foreign  person" within the meaning  of Section 1445(f)(3)  of
 the Code.  Except as listed on Schedule 3.19(c), no Company has ever been  a
 member of any group that filed a consolidated federal income tax return.

      Section 3.20    Bank Accounts; Powers of Attorney.
                      ---------------------------------

     Schedule 3.20 lists the names of (a) each bank, trust company and  stock
 or other broker with which each Company has an account, credit line or  safe
 deposit  box  or  vault,  or   otherwise  maintains  relations  (the   "Bank
 Accounts"), (b) all  Persons authorized to  draw on, or  to have access  to,
 each of the Bank Accounts, and (c) all Persons authorized by proxies, powers
 of attorney or other like  instruments to act on  behalf of such Company  in
 any matter  concerning the  business of  such  Company.   Each of  the  Bank
 Accounts has a  positive cash balance.   No proxies,  powers of attorney  or
 other like instruments are irrevocable.

      Section 3.21    Affiliated Transactions.
                      -----------------------

     Except as set forth on Schedule 3.21, there are no outstanding loans  or
 other transactions between  any Company and  any Seller, officer,  director,
 shareholder, consultant or affiliate of such Company or any spouse or  child
 of any such person.  No  Seller, officer, director, shareholder,  consultant
 or affiliate of any Company nor any spouse or child of any such person  owns
 or has  any  interest in,  directly  or  indirectly, any  real  or  personal
 property owned by or leased to such Company.

      Section 3.22    Books and Records.
                      -----------------

     The Books  and Records  of each  Company, all  of which  have been  made
 available to Purchaser  prior to  the Signing  Date, are  true, correct  and
 complete  and  have  been  maintained  in  accordance  with  sound  business
 practices, including  the  maintenance of  an  adequate system  of  internal
 controls.

      Section 3.23    Full Disclosure.
                      ---------------

     No representation or warranty of any Seller made in this Agreement,  nor
 any  written  statement  furnished  to  Purchaser  pursuant  hereto  or   in
 connection with  the  transactions  contemplated hereby,  contains  or  will
 contain any untrue statement of a  material fact which affects the  business
 or financial condition  of any Company,  or omits or  will omit  to state  a
 material fact necessary to make the statements or facts contained herein  or
 therein not misleading.

      Section 3.24    Brokers.
                      -------

     Sellers have engaged Philo Smith &  Company to advise them with  respect
 to this Transaction.  The Sellers will pay all fees of Philo Smith & Company
 pursuant to their agreement with funds other than those of any Company.   No
 other person is or will become entitled to receive any brokerage or finder's
 fee, advisory fee or other similar payment for the transactions contemplated
 by this Agreement by virtue of having been engaged by or acted on behalf  of
 any Seller  or any  Company.   Sellers  agree to  indemnify and  defend  the
 Purchaser and to hold Purchaser harmless from any claim by any individual or
 entity  asserting  a  broker  or   agency  relationship  relative  to   this
 Transaction.

      Section 3.25    Absence of Sensitive Payment.
                      ----------------------------

     No Company has  made or maintained  (i) any  contributions, payments  or
 gifts of its  funds or property  to any governmental  official, employee  or
 agent where either the payment or the purpose of such contribution,  payment
 or gift was or is illegal under the laws  of the United States or any  state
 thereof, or  any  other jurisdiction  (foreign  or domestic);  or  (ii)  any
 contribution, or reimbursement of any political gift or contribution made by
 any other person, to candidates for  public office, whether federal,  state,
 local or foreign, where such contributions by such Company were or would  be
 a violation of applicable law.

      Section 3.26    Financial Statements.
                      --------------------

     The Sellers have delivered to the  Purchaser copies of the  consolidated
 financial  statements   of  the   Companies  described   on  Schedule   3.26
 (collectively,  the  "Financial  Statements").   To  the  best  of  Sellers'
 knowledge the Financial  Statements were  prepared in  accordance with  GAAP
 applied on a consistent basis and  fairly present the financial position  of
 the Companies as of their respective dates and the results of operations and
 cash flows of the  Companies for the respective  periods covered thereby  in
 accordance with  GAAP (subject,  in the  case  of unaudited  statements,  to
 normal,  recurring  adjustments,  consistently   applied,  none  of   which,
 individually or in  the aggregate,  is material).   Except as  set forth  in
 Schedule  3.26,  none  of  the  Companies  has  any  material  liability  or
 obligation of  any  kind  or  nature (fixed  or  contingent)  which  is  not
 reflected, reserved against  or disclosed  in the  Financial Statements  and
 accompanying footnotes.

                                 ARTICLE IV
                                 ----------
                 REPRESENTATIONS AND WARRANTIES OF PURCHASER
                 -------------------------------------------

      Purchaser hereby  represents  and  warrants to  the  Sellers  that  the
 statements set forth in this Article IV are correct and complete.

      Section 4.1 Organization; Good Standing; Delivery of Charter Documents.
                  ----------------------------------------------------------

     Purchaser is a corporation duly organized, validly existing and in  good
 standing under the laws of the State of Nevada.  Purchaser is duly qualified
 as a foreign corporation in the State of Texas.

      Section 4.2   Power and Authority.
                    -------------------

     Purchaser has all requisite corporate  power and authority necessary  to
 execute and deliver this Agreement, to perform its obligations hereunder and
 to consummate the transactions contemplated hereby, including the execution,
 delivery and  performance  of all  of  the Transaction  Documents  to  which
 Purchaser is a party.

      Section 4.3   Authorization; Execution and Validity.
                    -------------------------------------

     Each of  the  Transaction  Documents, when  executed  and  delivered  by
 Purchaser, will  be  duly  authorized,  executed  and  delivered,  and  will
 constitute a valid, legal and  binding obligation of Purchaser,  enforceable
 against Purchaser in accordance with the terms of such Transaction Document,
 subject to any Law Affecting Creditors' Rights.

      Section 4.4   No Conflict; Purchaser Consents.
                    -------------------------------

     The execution, delivery and performance by Purchaser of each Transaction
 Document to which it is a  party will not (a)  violate any Law, (b)  violate
 any Charter Document of Purchaser, (c) violate any Order to which  Purchaser
 is a party or by which Purchaser or its assets is bound, or (d) require  any
 Consent from any Person.

      Section 4.5   Full Disclosure.
                    ---------------

     No representation or warranty of Purchaser  made in this Agreement,  nor
 any written  statement  furnished  to the  Sellers  pursuant  hereto  or  in
 connection with  the  transactions  contemplated hereby,  contains  or  will
 contain any untrue statement of a  material fact which affects the  business
 or financial  condition of  Purchaser, or  omits  or will  omit to  state  a
 material fact necessary to make the statements or facts contained herein  or
 therein not misleading.

      Section 4.6   Brokers.
                    -------

     No Person  is  or will  become  entitled  to receive  any  brokerage  or
 finder's fee, advisory  fee or other  similar payment  for the  transactions
 contemplated by this Agreement by virtue of having been engaged by or  acted
 on behalf of Purchaser. Purchaser agrees to indemnify and defend Sellers and
 to hold  Sellers  harmless  from  any claim  by  any  individual  or  entity
 asserting a broker or  agency relationship with  Purchaser relating to  this
 Transaction.

                                  ARTICLE V
                                  ---------
                             COVENANTS OF SELLERS
                             --------------------

      Section 5.1   Cooperation of the Sellers.
                    --------------------------

     From the Signing Date  through the Closing Date,  the Sellers shall  use
 all reasonable  efforts  (a)  to take  all  actions  and to  do  all  things
 necessary or advisable to consummate  the transactions contemplated by  this
 Agreement, (b) to cooperate with Purchaser in connection with the foregoing,
 including using reasonable efforts  to obtain all of  the Consents, and  (c)
 subject to the other  terms and conditions of  this Agreement, to cause  all
 the conditions set forth in Section 8.1, the satisfaction of which is in the
 reasonable control of such Seller, to be satisfied on or prior to Closing.

      Section 5.2   Pre-Closing Access to Information.
                    ---------------------------------

     From the Signing Date through the Closing Date, the Sellers shall afford
 to Purchaser and its Representatives access to the properties and the  Books
 and Records of each Company.

      Section 5.3   Conduct of Business.
                    -------------------

     Except as provided in Section 5.5  below, from the Signing Date  through
 the Closing Date, the  Sellers shall, and shall  cause each Company to,  use
 all reasonable efforts to (i) preserve substantially the relationships  with
 its Representatives, suppliers and  customers, (ii) perform its  obligations
 under all  contracts, leases  and Permits  in all  material respects,  (iii)
 comply with  all  Laws, (iv)  confer  with Purchaser  regarding  operational
 matters of a material nature, (v) report periodically to Purchaser regarding
 the status  of its  business and  the results  of its  operations, and  (vi)
 conduct its  business  in  the ordinary  course  and  consistent  with  past
 practices.

      Section 5.4   No Business Changes.
                    -------------------

       Except as provided in Section 5.5 below, from the Signing Date through
 the Closing Date, the  Sellers shall not, and  shall cause each Company  not
 to, without the express  written consent of the  Purchaser:  (i) enter  into
 any material agreement relating to the assets, properties or business of any
 of the Companies, other than in the ordinary course of business;  (ii) incur
 or discharge any material  obligation or liability,  except in the  ordinary
 course of business; (iii) commit to make  or make any capital  expenditures;
 (iv) cancel or  fail to renew  any Permit; (v)  impose any  lien, pledge  or
 encumbrance upon the Shares or  any of the assets  of any of the  Companies;
 (vi) make any  change or  authorize to  be made  any change  to the  Charter
 Documents of any  of the  Companies; (vii) declare,  set aside,  or pay  any
 dividend or make  any distribution with  respect to the  Shares (whether  in
 cash or  in kind)  or redeem,  purchase,  or otherwise  acquire any  of  the
 Shares; (viii) issue, deliver or sell any shares of the capital stock of any
 class of any  Company or  split, combine or  reclassify any  of the  capital
 stock of  any  Company;  (ix) incur any  indebtedness  for  borrowed  money;
 (x) forgive or cancel  any indebtedness  owing to  any of  the Companies  or
 waive any  claims or  rights of  value belonging  to any  of the  Companies,
 (xi) sell, lease,  license or  otherwise dispose  of any  of the  assets  or
 properties of any  of the Companies,  other than in  the ordinary course  of
 business; (xii) pay  or  increase  the rate  or  terms  of  compensation  or
 benefits payable to or to become payable to any of the directors,  officers,
 employees, consultants or agents of any  of the Companies above the  amounts
 reflected in Schedule 3.17(a); (xiii) amend or otherwise make any changes to
 any of the  Company Plans  or increase  the rate  or terms  of any  benefits
 payable under the Company Plans; (xiv) make any other change in the terms of
 employment of any Employee, other than  in the ordinary course of  business;
 (xv) make or rescind any express or deemed election relating to any Tax;  or
 (xvi) commit  pursuant to  a legally  binding  agreement to  do any  of  the
 foregoing.

      Section 5.5   Permitted Actions.
                    -----------------

       Notwithstanding the provisions of Section  5.3 and Section 5.4,  after
 the Signing  Date  but prior  to  the Closing  Date,  the Sellers  shall  be
 permitted to  cause  TGA  to declare  and  pay  to Sellers  (or  such  other
 employees of the Companies as the Sellers may determine) or otherwise effect
 bonus compensation consisting of, in the aggregate:

      (a)    Cash  in  an  amount  equal to the lesser  of:  (i) the positive
 difference, if any, between  (y) the net  income of TGA  and TGASRI for  the
 nine months ended September 30, 2005, as reflected in the interim  Financial
 Statements for  such  period  prepared  on  a  consistent  basis  with  past
 practice, minus (z)  $650,000; or (ii)  110% of the  net income  of TGA  and
 TGASRI for the  nine months ended  September 30, 2004,  as reflected in  the
 interim Financial Statements for such period prepared on a consistent  basis
 with past practice; and

      (b)  An assignment of TGA's right  to receive sliding scale  contingent
 commissions due under Paragraph  A.5 of Addendum A  of the Managing  General
 Agency  Agreement  between  the   Republic  Group  of  Insurance   Companies
 ("Republic") and TGA originally effective January  1, 1993, with respect  to
 business produced  on or  before December  31, 2005,  for Republic  and  its
 reinsurers other than GSIC.

           (i)  The Sellers  shall  use their  best  efforts to  arrange  for
      Republic and its reinsurers (other than  GSIC) to make all payments  of
      such assigned  sliding scale  contingent  commissions directly  to  the
      Sellers.

           (ii) Sellers shall in all events be  solely liable for any  refund
      or recoupment  of the  assigned  sliding scale  contingent  commissions
      which may become due to Republic  or its reinsurers (other than  GSIC).
      Sellers shall  indemnify and  hold TGA  harmless  against any  and  all
      refund, recoupment or other liability attributable  to or arising as  a
      result of payments of the assigned sliding scale contingent commissions
      by Republic and its reinsurers (other than GSIC).

           (iii)  If  the  Sellers  are  unable  to  arrange for Republic and
      its reinsurers (other than GSIC) to make all payments of such  assigned
      sliding scale contingent commissions directly to the Sellers, then  TGA
      shall, upon  receipt  of  any  payment  for  sliding  scale  contingent
      commissions assigned to  Sellers, forward such  payment to the  Sellers
      within ten  (10) business  days; provided,  however, that  the  Sellers
      shall have provided to TGA a letter of credit (in an amount  reasonably
      satisfactory to  TGA  and  issued  by  a  federally  chartered  banking
      institution reasonably acceptable to the Purchaser), or other  security
      reasonably acceptable to TGA, to secure the Sellers' liability for  and
      obligation to  indemnify and  hold TGA  harmless  against any  and  all
      refund, recoupment or other liabilities attributable to or arising as a
      result of payments of the assigned sliding scale contingent commissions
      by Republic and its reinsurers (other than GSIC).  If the Sellers  fail
      to provide  to TGA  a letter  of credit  or other  security  reasonably
      acceptable to TGA,  then TGA  shall, upon  receipt of  any payment  for
      sliding scale contingent commissions assigned to Sellers, be authorized
      and entitled  to retain,  as cash  collateral  to secure  the  Sellers'
      liability for and obligation to indemnify and hold TGA harmless against
      any and all refund, recoupment or other liabilities attributable to  or
      arising  as  a  result  of  payments  of  the  assigned  sliding  scale
      contingent commissions  by  Republic  and its  reinsurers  (other  than
      GSIC), an amount  equal to up  to 50% of  each such payment.   In  such
      event, TGA shall release such retained  cash collateral to the  Sellers
      upon the earlier  to occur  of (A) the  Sellers providing  a letter  of
      credit or  other security  reasonably acceptable  to  TGA, or  (B)  the
      extinguishment of any  and all  refund, recoupment  or other  liability
      attributable to or  arising as  a result  of payments  of the  assigned
      sliding scale  contingent commissions  by Republic  and its  reinsurers
      (other  than  GSIC),  either  by  settlement  with  Republic  and   its
      reinsurers (other than GSIC) or the ultimate development of all  losses
      affecting such assigned sliding scale contingent commissions.

      Section 5.6   Supplements to Schedules.
                    ------------------------

     If, between the Signing  Date and the Closing  Date, any Seller  becomes
 aware that any of  its representations and warranties  in this Agreement  or
 the schedules to this Agreement was  inaccurate when made or if during  such
 period any  event  occurs or  condition  changes  that causes  any  of  such
 representations and  warranties to  be inaccurate,  then such  Seller  shall
 notify Purchaser thereof in writing and  supplement the schedules hereto  to
 account for any such  inaccuracy, event or change.   Any such supplement  to
 the schedules shall not be deemed to  have been disclosed as of the  Signing
 Date, or to have cured any breach  of a representation and warranty made  in
 this Agreement, unless so agreed in writing by Purchaser.

      Section 5.7   Standstill.
                    ----------

     Until the earlier  to occur of  the Closing or  the termination of  this
 Agreement pursuant  to Article  IX, each  Seller shall  not, nor  shall  any
 Seller permit any Company or any  of their Representatives to, (a)  directly
 or indirectly encourage, solicit, initiate or participate in discussions  or
 negotiations with, or provide any information  or assistance to, any  Person
 (other than Purchaser and its  Representatives) concerning any merger,  sale
 of securities, sale of substantial  assets, investment proposals or  similar
 transaction involving any Company, (b) entertain or discuss any  acquisition
 or investment proposals whatsoever with respect  to any Company, (c)  except
 as required  by law  after not  less  than five  days notice  to  Purchaser,
 disclose to any  third party  any non-published  information concerning  any
 Company, the business of such Company or such Company's financial condition,
 or (d) withdraw  such Seller's intention  to sell its  Shares to  Purchaser.
 Each Seller  shall,  and  shall  cause  each  Company  to,  promptly  notify
 Purchaser if  it receives  any such  proposal  or offer  or any  inquiry  or
 contact with  respect thereto.   Until  termination  of this  Agreement,  no
 Seller will, directly or indirectly,  (i) sell, transfer, pledge,  encumber,
 assign or otherwise dispose of, or enter into any contract, option or  other
 arrangement or understanding  with respect  to the  sale, transfer,  pledge,
 encumbrance, assignment or other disposition of, any of its Shares, or  (ii)
 grant any proxies, deposit any  Shares into a voting  trust or enter into  a
 voting agreement with respect to such Shares.

      Section 5.8   Discharge of Encumbrances.
                    -------------------------

     Except as set forth in Schedule 5.8, each Company and each Seller  shall
 take all actions  and do  all things  necessary to  cause all  Encumbrances,
 other than Permitted Encumbrances, on any of the Stock or the assets of  any
 of the Companies to be terminated or otherwise discharged at or prior to the
 Closing.

      Section 5.9   Non-Disclosure; Non-Competition; Non-Solicitation.
                    -------------------------------------------------

      (a) Non-Disclosure   Agreement.      Sellers   acknowledge   that   the
 Confidential Information obtained or possessed by them will be the  property
 of Purchaser and the Companies from and after the Closing Date.   Therefore,
 Sellers each agree  that they will  not (i) disclose to  any person,  either
 directly or indirectly, any Confidential  Information, unless and solely  to
 the extent that such Confidential Information is required to be disclosed by
 law or pursuant to a  final judicial order or  decree, (ii) use for its  own
 account  or  use,  cause,  facilitate  or  allow  any  third  party  to  use
 Confidential Information  in  any  way,  or  (iii) remove  any  Confidential
 Information or  any  copy,  summary  or  compilation  of  any  kind  of  any
 Confidential Information from the premises of any Company or the premises of
 any Company's customers following the Closing  Date.  Sellers further  agree
 to deliver to Purchaser  all memoranda, notes,  plans, records, reports  and
 other documents (and copies thereof) relating to any Company or the  conduct
 of any Company's business that they may possess or have under control at the
 Closing Date.

      (b) Work Product.  All records and documents embodying any Confidential
 Information or  pertaining to  the existing  or contemplated  scope of  each
 Company's business, which have  been conceived, prepared  or developed by  a
 Seller in connection  with his ownership  interest in such  Company, use  by
 such Company or otherwise, either alone or with others (herein called  "Work
 Product"), shall be the sole property of such  Company.  At or prior to  the
 Closing Date, such Seller shall deliver all Work Product to such Company.

      (c) Non-Competition  Agreement.  For  a period of  five (5) years after
 the Closing, no Seller  shall, directly or  indirectly, without the  express
 written consent of the Purchaser, (i) own, engage in, manage, operate, join,
 control, or participate in the ownership, management, operation, or  control
 of, or be connected  as a stockholder,  director, officer, employee,  agent,
 partner, joint  venturer, member,  beneficiary, or  otherwise with,  in  any
 "Competing  Business"   (defined   below)  anywhere   in   the   "Restricted
 Territories" (defined below);  (ii) induce any customers  of any Company  to
 patronize any  Competing Business;  (iii) solicit  or accept  any  Competing
 Business from  any  customer of  any  Company; (iv) request  or  advise  any
 customers of  any Company  to withdraw,  curtail or  cancel such  customer's
 business with any  Company; or  (v) disclose to  any other  person, firm  or
 corporation engaged in any Competing Business the names or addresses of  any
 of the customers of any Company.   For purposes of this Agreement, the  term
 "Competing Business" is defined to mean any activity or business that is  or
 would be competitive with the business conducted by any Company at any  time
 prior to the Closing.  The term "Restricted Territories" is defined to  mean
 the states of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas.

      (d) Non-Solicitation  Agreement.  For a period  of five (5) years after
 the Closing each Seller shall not, either on its own behalf or on behalf  of
 any business competing with Purchaser, directly or indirectly (i) solicit or
 induce, or in any  manner attempt to solicit  or induce any person  employed
 by, or an  agent of,  any Company or  Purchaser to  terminate such  person's
 employment or agency, as the case may be, with such entity, or (ii) solicit,
 divert, or attempt to solicit or  divert, or otherwise accept as a  supplier
 or customer, any Person  which sells or furnishes  any products or  services
 to, or receives any products or services from, any Company or Purchaser, nor
 will such Seller attempt  to induce any such  supplier or customer to  cease
 being (or any prospective supplier or customer not to become) a supplier  or
 customer of any Company or Purchaser.

      (e) Modification of  Restrictions.  Sellers agree that if an arbitrator
 or a court of competent jurisdiction  determines that the length of time  or
 any other restriction, or portion thereof, set forth in this Section 5.9  is
 overly restrictive and unenforceable, the  arbitrator or court shall  reduce
 or  modify  such  restrictions  to  those  which  it  deems  reasonable  and
 enforceable under  the circumstances,  and as  so reduced  or modified,  the
 Parties agree that the restrictions of this Section 5.9 shall remain in full
 force and effect.  Sellers further agree  that if an arbitrator or court  of
 competent jurisdiction determines that any provision of this Section 5.9  is
 invalid  or  against  public  policy,  the  remaining  provisions  of   this
 Section 5.9 and  the  remainder of  this  Agreement shall  not  be  affected
 thereby, and shall remain in full force and effect.

      (f) Injunctive  Relief.   In the  event of  any pending,  threatened or
 actual breach of any of the covenants or provisions of this Section 5.9,  as
 determined by an  arbitrator or  a court  of competent  jurisdiction, it  is
 understood and agreed by Sellers that the remedy at law for a breach of  any
 of the covenants or  provisions of this Section  5.9 may be inadequate  and,
 therefore,  the  Purchaser  and  the  Companies  shall  be  entitled  to   a
 restraining order or injunctive relief in addition to any other remedies  at
 law and in equity, as  determined by an arbitrator  or a court of  competent
 jurisdiction.  The Sellers  waive any bond, surety,  or other security  that
 might be required of the Purchaser or any Company as a condition of any such
 restraining order or injunctive relief.

      (g) Acknowledgments of  Sellers.  Each Seller acknowledges that (i) any
 public disclosure  of  the Confidential  Information  will have  an  adverse
 effect on each  Company, Purchaser and  the business of  such Company,  (ii)
 such Company  and Purchaser  would suffer  irreparable  injury if  a  Seller
 breaches any  of the  terms of  this  Section 5.9,  (iii) such  Company  and
 Purchaser will be at a substantial  competitive disadvantage if such  entity
 fails to  acquire  and  maintain exclusive  ownership  of  the  Confidential
 Information or to  abide by the  restrictions provided for  in this  Section
 5.9, (iv) the  scope of  the protective  restrictions provided  for in  this
 Section 5.9 are  reasonable when taking  into account  (A) the  negotiations
 between the Parties and (B) that  the Sellers are the direct beneficiary  of
 the Purchase Price paid  pursuant to this  Agreement, (v) the  consideration
 being  paid  to  the  Sellers  pursuant  to  this  Agreement  is  sufficient
 inducement for the Sellers to agree to the terms hereof, (vi) the provisions
 of this Section 5.9 are reasonable and necessary to protect the business  of
 each Company, to prevent the improper use or disclosure of the  Confidential
 Information and  to  provide  such  Company  and  Purchaser  with  exclusive
 ownership of all such Confidential Information  and (vii) the terms of  this
 Section 5.9  preclude  the Sellers  from  engaging  in the  conduct  of  the
 business of each Company for a reasonable period.

      (h) Release.   Each Seller, in the capacity as a shareholder, director,
 officer and/or employee  of each Company,  as applicable,  hereby agrees  to
 execute and deliver on the Closing  Date, in a form reasonably  satisfactory
 to the Purchaser, a written release of each Company from any and all  claims
 resulting from or related to any  matter arising prior to the Closing  Date,
 except as provided in this Agreement.

                                 ARTICLE VI
                                 ----------
                            COVENANTS OF PURCHASER
                            ----------------------

      Section 6.1   Cooperation by Purchaser.
                    ------------------------

     From the Signing Date through the Closing Date, Purchaser shall use  all
 reasonable efforts (a) to take all actions and to do all things necessary or
 advisable to consummate the transactions contemplated by this Agreement, (b)
 to cooperate  with each  Company  and each  Seller  in connection  with  the
 foregoing, including using reasonable efforts to obtain all of the  Consents
 and the Releases, and (c) subject to the other terms and conditions of  this
 Agreement, to  cause  all the  conditions  set  forth in  Section  8.2,  the
 satisfaction of  which is  in the  reasonable control  of Purchaser,  to  be
 satisfied on or prior to Closing.

      Section 6.2   Confidentiality Agreement.
                    -------------------------

     The Purchaser acknowledges and agrees  that,  through the Closing  Date,
 the Purchaser remains bound by  that certain Confidentiality Agreement  with
 TGA dated May 25, 2005.


                                 ARTICLE VII
                                 -----------
                               MUTUAL COVENANTS
                               ----------------

      Section 7.1   Fees and Expenses.
                    -----------------

    Each Party hereto will be responsible for and bear all its own costs  and
 expenses incurred at any  time in connection  with pursuing, negotiating  or
 consummating this Agreement  and all  other agreements  contemplated by  the
 Transaction  Documents,  including   without  limitation  the   preparation,
 negotiation and execution of  the Letter of Interest  related hereto.   Such
 costs and expenses incurred  by Sellers will be  paid by Sellers with  funds
 other than those of any Company.

      Section 7.2   Governmental Consents.
                    ---------------------

     Promptly after the Signing Date, each  Party shall take all actions  and
 do all things necessary to obtain all Consents required by any  Governmental
 Authority to consummate the transactions contemplated hereby.

      Section 7.3   Consents to Assign Leases and Contracts.
                    ---------------------------------------

      (a) Cooperation  and Reasonable Efforts.   Each Party  hereby agrees to
 use reasonable efforts,  to take reasonable  actions (including  Purchaser's
 delivery to  third  parties of  its  audited financial  statements)  and  to
 cooperate with each other as may be necessary to obtain Consents to transfer
 and assign the Encumbered Instruments.  Except as expressly provided herein,
 no Party shall be  required to pay any  sum, to incur  any obligation or  to
 agree to any amendment of any  Encumbered Instrument in order to obtain  any
 such Consent to transfer and assign the Encumbered Instrument.

      (b) Pre-Closing;   Required  Consents.   Schedule   7.3(b)  lists   the
 Encumbered Instruments to  which a Consent  to transfer and  assign must  be
 obtained from the  appropriate third party  prior to Closing  (collectively,
 the "Required Consents").  Except for  the Required Consents, the  obtaining
 of any  Consents  related to  the  Encumbered  Instruments shall  not  be  a
 condition to Closing, and  Closing shall occur  irrespective of whether  any
 such Consent has been obtained.

      Section 7.4   Permits.
                    -------

      (a) Cooperation  and Reasonable Efforts.   Each Party  hereby agrees to
 use reasonable efforts,  to take reasonable  actions and  to cooperate  with
 each other as may be necessary to transfer to Purchaser, or assist Purchaser
 in obtaining, all Permits required to conduct the business of each  Company.
 On or as soon as practicable after the Signing Date, each Party shall  file,
 separately or  jointly  with  any other  Party,  as  the case  may  be,  all
 applications necessary to transfer or obtain the Permits.  Each Party  shall
 use reasonable  efforts  to resolve  such  objections,  if any,  as  may  be
 asserted by  any Governmental  Authority with  respect to  the  applications
 contemplated hereby.  The Sellers, as a group, and Purchaser shall each  pay
 one-half of the fees and expenses  incurred in connection with  transferring
 or obtaining all Permits.

      (b) Pre-Closing;  Required Permits.  Schedule  7.4(b) lists the Permits
 which must be transferred to or obtained by Purchaser prior to Closing  (the
 "Required Permits").   Except  for the  Required  Permits, the  transfer  or
 issuance to Purchaser of any Permit shall not be a condition to Closing, and
 Closing shall  occur  irrespective  of whether  any  such  Permit  has  been
 transferred or obtained.

      Section 7.5   Further Assurances.
                    ------------------

     Subject to the other terms and conditions of this Agreement, at any time
 and from time  to time, whether  before or after  Closing, each Party  shall
 execute and deliver all instruments and documents and take all other  action
 that the other Parties may reasonably  request to consummate or to  evidence
 the consummation of the transactions contemplated by this Agreement.

      Section 7.6   Supplemental Agreements and Consents.
                    ------------------------------------

      (a) At  or  prior  to  the  Closing,  the  applicable  Parties  and the
 Companies shall  enter  into  the following  agreements  (the  "Supplemental
 Agreements"):

           (i)  the Seller releases required pursuant to Section 5.9(h); and

           (ii) employment agreements  in  substantially  the  form  attached
                hereto as  Exhibit  A  between TGA  and  each  of  Samuel  M.
                Cangelosi, Donate A. Cangelosi and Donald E. Meyer.

      (b) Prior to  the Closing, the Sellers shall have obtained the Required
 Consents, in form and substance reasonably satisfactory to Purchaser, to the
 transactions contemplated by the Transaction Documents.

      Section 7.7   Tax Matters.
                    -----------

      (a) All  federal, state, local and  foreign income, ad valorem, excise,
 sales, use, payroll, unemployment, and other taxes and assessments ("Taxes")
 that are due and payable by  any Company or by any  Seller on behalf of  any
 Company  have  been  properly  computed,  duly  reported,  fully  paid,  and
 discharged.  There are no unpaid  Taxes that are or  could become a lien  on
 the property or  assets of any  Company or require  payment by any  Company,
 except for current Taxes not yet due and payable. All current Taxes not  yet
 due and payable by  each Company have been  properly accrued on the  balance
 sheets  of  each  Company.   No  Company  has  incurred  any  liability  for
 penalties, assessments, or  interest under the  Internal Revenue  Code.   No
 unexpired waiver executed by or on behalf of any Company with respect to any
 Taxes is in effect.

      (b) Tax  Audits.  Whenever any Taxing  Authority asserts a claim, makes
 an assessment,  or otherwise  disputes the  amount of  Taxes of  any of  the
 Companies for which the Sellers are  or may be liable under this  Agreement,
 Purchaser will  promptly notify  the Sellers  and  the Sellers  shall  fully
 cooperate with Purchaser and the Companies in connection with any  disputes,
 proceedings or  determinations relating  to any  Taxes  to the  extent  such
 proceedings or  determinations affect  the amount  of  Taxes for  which  the
 Sellers are liable under this Agreement.

      Section 7.8   Employee Benefit Plans; Employment.
                    ----------------------------------

      (a) Employee  Benefit Plans.   From and  after the  Effective Date, the
 Companies shall elect to continue as a participating employer in the Company
 Plans listed on Schedule  7.8(a) (the "Assumed Plans")  and the coverage  of
 the Employees  under  all  the  Assumed Plans  shall  remain  in  effect  in
 accordance with the terms of the Assumed Plans.  Purchaser may elect in  its
 sole discretion at any time to become the plan administrator and  sponsoring
 employer with  the sole  authority to  designate the  plan administrator  or
 amend or terminate any Assumed Plan.

      (b) No  Representations.   Without  the  written consent  of Purchaser,
 neither Sellers nor any Company will make any promises or commitments to any
 employee of the Companies with regard  to his or her employment status  with
 Purchaser or  any  Company, or  the  terms  or conditions  upon  which  such
 employment might occur or be continued.

                                ARTICLE VIII
                                ------------
                       CONDITIONS PRECEDENT TO CLOSING
                       -------------------------------

      Section 8.1   Conditions Precedent to Purchaser's Obligations.
                    -----------------------------------------------

     The obligation of Purchaser to consummate the transactions  contemplated
 by this Agreement  shall be  subject to  the satisfaction  of the  following
 conditions, any of which may be waived in writing by Purchaser.

      (a) Accuracy  of Representations  and Warranties.  The  representations
 and warranties made by  each Seller in this  Agreement shall have been  true
 and complete as of  the Signing Date and  as of the  Closing Date as  though
 made as of the  Closing Date, except to  the extent such representations  or
 warranties made as of a specific  date shall have been correct and  complete
 as of the specified date.

      (b) Performance of  Covenants.  Each Company and each Seller shall have
 performed and  complied  with  all  agreements,  covenants  and  obligations
 required by this Agreement to be performed by such party prior to or at  the
 Closing.

      (c) No Material  Adverse Change.  No Company has undergone any Material
 Adverse Change since the Signing Date.

      (d) Consents.   Each Company and each Seller, as the case may be, shall
 have received and delivered to Purchaser  all the Required Consents and  the
 Required Permits, each in form and substance satisfactory to Purchaser,  and
 shall have given all notices  required to be given  to any Persons prior  to
 the consummation of the transactions contemplated by this Agreement.

      (e) Closing Certificate.   Each Seller and an executive officer of each
 Company shall have delivered to Purchaser  a certificate confirming (i)  the
 satisfaction of  the conditions  set forth  in Sections  8.1(a), 8.1(b)  and
 8.1(c) and (ii) the continuing force and effect of the Required Consents and
 Required Permits.

      (f) Secretary's  Certificate.   Each  Company  shall have  delivered to
 Purchaser a certificate executed by the secretary or an assistant  secretary
 of such Company certifying as to (i) such Company's Charter Documents,  (ii)
 such Company's good standing, (iii) the resolutions in which such  Company's
 board of directors approved the Transaction Documents to which such  Company
 is  a  party  and  the  transactions  contemplated  thereby,  and  (iv)  the
 incumbency of such Company's officers who execute any documents on behalf of
 such Company in connection with this Agreement.

      (g) Deliveries.   Each  Company and  each Seller,  as the  case may be,
 shall have delivered the documents required  by Sections 2.2 and such  other
 documents as Purchaser may reasonably require.

      (h) No  Order or  Action.  No  Order shall  be in  effect forbidding or
 enjoining  the  consummation of  the transactions  contemplated  hereby.  No
 Action shall be pending or threatened before any court or other Governmental
 Authority seeking to enjoin the Closing or seeking damages against Purchaser
 or any  of  its Representatives  as  a result  of  any of  the  transactions
 contemplated by this Agreement, provided that  neither Purchaser nor any  of
 its affiliates instituted such Action.

      (i) Contemporaneous  Closing.  The  acquisition by Purchaser  of all of
 the issued  and outstanding  equity securities  of Pan  American  Acceptance
 Corporation,  a   Texas  corporation,   shall   have  previously   been   or
 contemporaneously be consummated pursuant to a definitive purchase agreement
 executed by  and  among  the  Purchaser,  Samuel  M.  Cangelosi,  Donate  A.
 Cangelosi and Carol A. Meyer.

      Section 8.2   Conditions Precedent to the Sellers' Obligations.
                    ------------------------------------------------

     The  obligation   of  each   Seller  to   consummate  the   transactions
 contemplated by this Agreement shall be  subject to the satisfaction of  the
 following conditions, any of which may be waived in writing by the Sellers.

      (a) Accuracy  of Representations  and Warranties.  The  representations
 and warranties made by Purchaser in this Agreement shall have been true  and
 complete as of the Signing Date and as of the Closing Date as though made as
 of the Closing Date, except to the extent such representations or warranties
 made as of a specific date  shall have been correct  and complete as of  the
 specified date.

      (b) Performance  of  Covenants.   Purchaser  shall  have  performed and
 complied with all  agreements, covenants  and obligations  required by  this
 Agreement to be performed by Purchaser prior to or at the Closing.

      (c) Closing Certificate.   An executive officer of Purchaser shall have
 delivered to the Sellers  a certificate confirming  the satisfaction of  the
 conditions set forth in Sections 8.2(a) and 8.2(b).

      (d) Secretary's  Certificate.   Purchaser shall  have delivered  to the
 Company and  each Seller  a  certificate executed  by  the secretary  or  an
 assistant secretary of  Purchaser certifying as  to (i)  the resolutions  in
 which Purchaser's  board  of  directors  approved  this  Agreement  and  the
 transactions contemplated  hereby, and  (ii) the  incumbency of  Purchaser's
 officers who execute any documents on behalf of Purchaser in connection with
 this Agreement.

      (e) Deliveries.   Purchaser shall have delivered the documents required
 by Section  2.3 and  such  other documents  as  the Sellers  may  reasonably
 require.

      (f) No  Order or  Action.  No  Order shall  be in  effect forbidding or
 enjoining the  consummation of  the transactions  contemplated  hereby.   No
 Action shall be pending or threatened before any court or other Governmental
 Authority seeking  to enjoin  the Closing  or  seeking damages  against  any
 Company or any Seller or any of their Representatives as a result of any  of
 the transactions contemplated by this  Agreement, provided that neither  any
 Company nor any Seller nor any of their affiliates instituted such Action.


                                 ARTICLE IX
                                 ----------
                         TERMINATION PRIOR TO CLOSING
                         ----------------------------

      Section 9.1   Termination of Agreement.
                    ------------------------

     This Agreement may be terminated at any time prior to the Closing:

      (a) by mutual agreement of Purchaser and the Sellers;

      (b) by Purchaser at any time after the occurrence of a Material Adverse
 Change in any Company; or

      (c) by Purchaser  or any Seller at any time on or after March 30, 2006,
 if any of the conditions provided  for in Section 8.1 or 8.2,  respectively,
 shall not have been met or waived in writing prior to such date.

      Section 9.2   Procedure Upon Termination.
                    --------------------------

     In the  event of  termination pursuant  to Section  9.1, written  notice
 thereof shall be immediately given to the other Parties and the transactions
 contemplated by  this Agreement  shall be  terminated, without  any  further
 action by any Party.  If the transactions contemplated by this Agreement are
 terminated as provided herein:

      (a) each  Party  shall  return all  documents,  work  papers  and other
 materials of  the  other  parties, whether  obtained  before  or  after  the
 execution hereof, to the party furnishing the same; and

      (b) such  termination shall not  in any way  limit, restrict or relieve
 any Party of liability for any breach of this Agreement.

                                  ARTICLE X
                                  ---------
                          INDEMNIFICATION AND OFFSET
                          --------------------------

      Section 10.1  Indemnification by Sellers.
                    --------------------------

 Sellers, jointly and severally, shall indemnify and hold harmless Purchaser,
 each Company, and their  respective directors, officers, employees,  agents,
 attorneys and shareholders (collectively, the "Purchaser Group") in  respect
 of any and all  Claims incurred by the  Purchaser Group, in connection  with
 each and all of the following:

      (a) Any breach of any representation or warranty made by the Sellers in
 this Agreement; and

      (b) The  breach of  any  covenant, agreement  or obligation  of Sellers
 contained in  this  Agreement  or any  other  instrument  delivered  at  the
 Closing, including,  without  limitation,  the agreement  and  covenants  of
 Sellers set forth in Section 5.9 of this Agreement.

      Section 10.2  Indemnification by Buyer.
                    ------------------------

 Purchaser shall indemnify and  hold harmless Sellers in  respect of any  and
 all Claims reasonably incurred by Sellers,  in connection with each and  all
 of the following:

      (a) Any  breach of any representation or  warranty made by Purchaser in
 this Agreement; and

      (b) The  breach of any  covenant, agreement or  obligation of Purchaser
 contained in  this  Agreement  or any  other  instrument  delivered  at  the
 Closing.

      Section 10.3  Claims for Indemnification.
                    --------------------------

 Whenever any  Claim shall  arise for  indemnification hereunder,  the  party
 entitled to indemnification (the "Indemnified Party") shall promptly  notify
 the other party (the "Indemnifying Party") of the Claim and, when known, the
 facts constituting the basis for such Claim.  In the event of any Claim  for
 indemnification hereunder resulting from or in connection with any Claim  or
 legal proceedings by  a third party,  the notice to  the Indemnifying  Party
 shall specify, if  known, the amount  or an estimate  of the  amount of  the
 liability potentially arising  therefrom.  The  Indemnified Party shall  not
 settle or compromise any Claim by a third party for which it is entitled  to
 indemnification  hereunder  without  the   prior  written  consent  of   the
 Indemnifying Party.

      Section 10.4  Defense by Indemnifying Party.
                    -----------------------------

 In connection with any  Claim giving rise  to indemnity hereunder  resulting
 from or arising out of any Claim or legal proceeding by a Person who is  not
 a party  to this  Agreement, the  Indemnifying Party  at its  sole cost  and
 expense may,  upon written  notice to  the  Indemnified Party  given  within
 twenty (20) days after delivery of the written notice referred to in Section
 10.3 hereof assume the defense of any  such Claim or legal proceeding if  it
 acknowledges  to  the  Indemnified  Party  in  writing  its  obligations  to
 indemnify the Indemnified Party with respect to all elements of such  Claim.
 Without the prior written consent of the Indemnified Party, the Indemnifying
 Party will not  enter into  any settlement  of any  third-party claim  which
 would lead to liability or create  any financial or other obligation on  the
 part of  the  Indemnified Party  for  which  the Indemnified  Party  is  not
 entitled to indemnification hereunder, or  which provides for injunctive  or
 other  non-monetary  relief  applicable  to  the  Indemnified Party, or does
 not  include  an  unconditional  release  of  all  Indemnified Parties.  The
 Indemnified Party shall be entitled to participate in (but not control)  the
 defense of any such action, with its own counsel and at its own expense.  If
 the Indemnifying Party  does not  assume the defense  of any  such Claim  or
 litigation resulting therefrom with  counsel reasonably satisfactory to  the
 Indemnified Party, (a) the Indemnified Party  may defend against such  Claim
 or litigation, in such manner as it may deem appropriate, including, but not
 limited to, settling such  Claim or litigation, after  giving notice of  the
 same to the Indemnifying Party, on  such terms as the Indemnified Party  may
 deem appropriate,  and  (b) the  Indemnifying  Party shall  be  entitled  to
 participate in  (but not  control)  the defense  of  such action,  with  its
 counsel and at its own expense.  If the Indemnifying Party thereafter  seeks
 to question the manner  in which the Indemnified  Party defended such  third
 party Claim or the amount or nature of any such settlement, the Indemnifying
 Party shall have the burden to prove by a preponderance of the evidence that
 the Indemnified Party did not defend or  settle such third party Claim in  a
 reasonably prudent manner as  a prudent businessman would  if his own  funds
 were subject to such suit.

      Section 10.5  Offset.
                    ------

 The Indemnified Party shall have the  right to offset any amounts for  which
 it is entitled to indemnification under  this Article X against any  amounts
 otherwise payable by the Indemnified Party  to the Indemnifying Party  under
 this Agreement.   The  Purchaser  shall further  have  the right  to  offset
 against any amounts otherwise payable to the Sellers any liabilities arising
 from any  Claim described  in Schedule  3.8,  as well  as any  other  amount
 expressly permitted under this Agreement.


                                 ARTICLE XI
                                 ----------
                      ARBITRATION AND EQUITABLE REMEDIES
                      ----------------------------------

      Section 11.1  Settlement Meeting.
                    ------------------

     The Parties  shall attempt  in good  faith to  resolve promptly  through
 negotiations any Claim or dispute under  this Agreement.  If any such  Claim
 or dispute should arise, the Parties shall meet at least once to attempt  to
 resolve the matter (the  "Settlement Meeting").  Any  Party may request  the
 other Parties to attend a Settlement  Meeting at a mutually agreed time  and
 place within ten days after delivery of a notice of a Claim or dispute.  The
 occurrence of a Settlement Meeting with respect to a Claim or dispute  shall
 be a  condition precedent  to seeking  any arbitration  or judicial  remedy,
 provided that if a  Party refuses to attend  a Settlement Meeting the  other
 Parties may proceed to seek such remedy.

      Section 11.2  Arbitration Proceedings.
                    -----------------------

     If the Parties  have not  resolved a monetary  Claim or  dispute at  the
 Settlement Meeting, any Party may submit the matter to arbitration.  A panel
 of three arbitrators shall conduct the arbitration proceedings in accordance
 with the provisions of the Federal  Arbitration Act (99 U.S.C. Section 1  et
 seq.) and  the  Commercial Arbitration  Rules  of the  American  Arbitration
 Association (the "Arbitration Rules").   The decision of  a majority of  the
 panel shall be the decision of the arbitrators.

      (a) Arbitration  Notice.   To  submit a  monetary  Claim or  dispute to
 arbitration, a  Party  shall furnish  the  other Parties  and  the  American
 Arbitration Association with a notice (the "Arbitration Notice")  containing
 (i) the name  and address of  such Party, (ii)  the nature  of the  monetary
 Claim or dispute in reasonable detail, (iii) the Party's intent to  commence
 arbitration proceedings under this Agreement, and (iv) the other information
 required under the Federal Arbitration Act and the Arbitration Rules.

      (b) Selection  of Arbitrators.   Within ten days  after delivery of the
 Arbitration Notice, Purchaser and Sellers, as a group, shall each select one
 arbitrator from the list of the American Arbitration Association's  National
 Panel of Commercial Arbitrators.  Within ten days after the selection of the
 last of those two arbitrators, those two arbitrators shall select the  third
 arbitrator from such  list.  If  the first two  arbitrators cannot select  a
 third arbitrator  within  such  ten day  period,  the  American  Arbitration
 Association  shall  select  such  third  arbitrator  from  the  list.   Each
 arbitrator shall be an individual not subject to disqualification under Rule
 No. 19  of  the  Arbitration  Rules  with  experience  in  settling  complex
 litigation involving mergers and acquisitions.

      (c) Arbitration  Final.  The arbitration  of the matters in controversy
 and the determination of any amount  of damages or indemnification shall  be
 final and binding upon the Parties  to the maximum extent permitted by  Law,
 provided that any Party may seek any equitable remedy available under Law as
 provided in this Agreement.  This agreement to arbitrate is irrevocable.

      Section 11.3  Place of Arbitration.
                    --------------------

     Any arbitration proceedings shall be conducted in San Antonio, Texas  or
 at such other location as the Parties may agree.  The arbitrators shall hold
 the arbitration proceedings within  sixty (60) days  after the selection  of
 the third arbitrator.

      Section 11.4  Discovery.
                    ---------

     During the period beginning with the  selection of the third  arbitrator
 and  ending  upon  the  conclusion  of  the  arbitration  proceedings,   the
 arbitrators shall have the authority to  permit the Parties to conduct  such
 discovery as the arbitrators consider appropriate.

      Section 11.5  Equitable Remedies.
                    ------------------

     Notwithstanding anything else in this  Agreement to the contrary,  after
 the Settlement  Meeting a  Party shall  be entitled  to seek  any  equitable
 remedies available under Law, including  an injunction prohibiting a  breach
 of the provisions of Section 5.9 or  an Order requiring a Seller to  perform
 this Agreement.   Any such equitable  remedies shall be  in addition to  any
 damages  or  indemnification  rights  that  such  Party  may  assert  in  an
 arbitration proceeding.

      Section 11.6  Exclusive Jurisdiction.
                    ----------------------

     The Parties agree that any claim  for equitable relief relating to  this
 Agreement shall be  instituted in a  federal or state  court sitting in  San
 Antonio, Texas, which courts and their respective appellate courts shall  be
 the exclusive venue  for any such  claim.  Each  Party waives any  objection
 that it may have to the laying of such venue, and irrevocably submits to the
 jurisdiction of any such court with respect to any such claim.  Any  service
 of process and other notice  in any such case  shall be effective against  a
 Party when  transmitted in  accordance with  Section 12.9,  provided that  a
 Party also may serve process in any manner permitted by Law.

      Section 11.7  Judgments.
                    ---------

     Any arbitration award under this Agreement  shall be final and  binding.
 Any court having jurisdiction may enter  judgment on such arbitration  award
 upon application of a Party.

      Section 11.8  Expenses.
                    --------

     If any  Party commences  arbitration  proceedings or  court  proceedings
 seeking equitable  relief with  respect to  this Agreement,  the  prevailing
 Party in such  arbitration proceedings or  case may receive  as part of  any
 award or judgment reimbursement of  such Party's reasonable attorneys'  fees
 and  expenses  to  the  extent  that  the  arbitrators  or  court  considers
 appropriate.

      Section 11.9  Cost of the Arbitration.
                    -----------------------

     The arbitrators shall assess the  costs of the arbitration  proceedings,
 including their fees, to the Parties in such proportions as the  arbitrators
 consider reasonable under the circumstances.

      Section 11.10  Exclusivity of Remedies.
                     -----------------------

     To the extent permitted  by Law, the  arbitration and judicial  remedies
 set forth in this  Article XI shall be the  exclusive remedies available  to
 the Parties with respect  to any dispute under  this Agreement or Claim  for
 damages under this Agreement.

                                 ARTICLE XII
                                 -----------
                                MISCELLANEOUS
                                -------------

      Section 12.1  Amendment.
                    ---------

     No amendment of this  Agreement shall be effective  unless in a  writing
 signed by Purchaser and each Seller.

      Section 12.2  Counterparts.
                    ------------

     This Agreement may be  executed in any number  of counterparts, each  of
 which shall be deemed to  be an original agreement,  but all of which  shall
 constitute one and the  same agreement.  Any  Party may execute and  deliver
 this Agreement  by an  executed signature  page transmitted  by a  facsimile
 machine.  If a  Party transmits its signature  page by a facsimile  machine,
 such  Party  shall  promptly  thereafter  deliver  an  originally   executed
 signature page to the  other Parties, provided that  any failure to  deliver
 such an originally executed  signature page shall  not affect the  validity,
 legality, or enforceability of this Agreement.

      Section 12.3  Entire Agreement.
                    ----------------

     This  Agreement  constitutes  the  entire  agreement  and  understanding
 between the Parties and supersedes all prior agreements and  understandings,
 both written and oral, with respect to the subject matter of this Agreement.

      Section 12.4  Expenses.
                    --------

     Each Party shall bear its own  expenses with respect to the  negotiation
 and preparation of this  Agreement and the Closing,  including any fees  and
 expenses of its Representatives,  provided that if  a Party terminates  this
 Agreement because  of another  Party's breach  of this  Agreement, the  non-
 breaching Party shall be entitled to  seek reimbursement of its expenses  as
 part of its damages with respect to such  breach.  The Sellers, as a  group,
 shall bear any Tax imposed in connection with the transfer of the Shares  to
 Purchaser pursuant to this Agreement.

      Section 12.5  GOVERNING LAW.
                    -------------

     THIS AGREEMENT SHALL  BE GOVERNED  BY THE LAWS  OF THE  STATE OF  TEXAS,
 REGARDLESS OF THE LAWS  THAT MIGHT OTHERWISE GOVERN  UNDER THE CONFLICTS  OF
 LAWS PRINCIPLES OF SUCH STATE.

      Section 12.6  Consent to Service of Process.
                    -----------------------------

     Each Party waives  any objection that  such party may  now or  hereafter
 have to the laying of venue of  any such Action, and irrevocably submits  to
 the jurisdiction of any such court in any such Action.  Any and all  service
 of process  and any  other notice  in  any such  Action shall  be  effective
 against such  Party  when  transmitted  in  accordance  with  Section  12.9.
 Nothing contained herein shall be deemed to affect the right of any Party to
 serve process in any manner permitted by Law.

      Section 12.7  No Assignment.
                    -------------

     No Party  may assign  its benefits  or delegate  its duties  under  this
 Agreement without the  prior written consent  of all of  the other  Parties.
 Any attempted assignment or delegation without  such prior consent shall  be
 void.  Notwithstanding this  prohibition against assignment and  delegation,
 Purchaser may assign its rights and delegate its duties under this Agreement
 to a  wholly-owned subsidiary  of Purchaser  without the  Sellers'  consent.
 Upon Purchaser's assignment  of its benefits  and delegation  of its  duties
 under this Agreement to such a  wholly owned subsidiary, Purchaser shall  be
 released from any obligations under this Agreement.  In addition, after  the
 Closing, Purchaser may assign its rights under this Agreement to a purchaser
 of all of the  assets or equity of  Purchaser without the Sellers'  consent,
 and any such purchaser and any subsequent purchasers of all of the assets or
 equity of Purchaser may similarly assign such rights.

      Section 12.8  No Third Party Beneficiaries.
                    ----------------------------

     This Agreement is  solely for the  benefit of the  Parties and no  other
 Person shall have any right, interest, or claim under this Agreement.

      Section 12.9  Notices.
                    -------

     All  claims,  consents,  designations,   notices,  waivers,  and   other
 communications in connection with this Agreement shall be in writing.   Such
 claims, consents, designations, notices,  waivers, and other  communications
 shall be  considered received  (i) on  the day  of actual  transmittal  when
 transmitted by facsimile with written confirmation of such transmittal, (ii)
 on the next business day following actual transmittal when transmitted by  a
 nationally recognized overnight courier, or (iii) on the third business  day
 following actual  transmittal when  transmitted by  certified mail,  postage
 prepaid, return receipt requested; in each case when transmitted to a  Party
 at its address set forth below (or to such other address to which such Party
 has notified the other Parties in accordance with this Section to send  such
 claims, consents, designations, notices, waivers, and other communications):

           Purchaser:  Hallmark Financial Services, Inc.
                       777 Main Street, Suite 1000
                       Fort Worth, Texas 76102
                       Phone:  (817) 348-1800
                       Fax:  (817) 348-1815
                       Attn.:  Mr. Mark Morrison

      with a copy to:  McGuire, Craddock & Strother, P.C.
                       3550 Lincoln Plaza
                       500 North Akard
                       Dallas, Texas 75201
                       Phone:  (214) 954-6800
                       Fax:  (214) 954-6868
                       Attn.:  Steven D. Davidson

             Sellers:  Texas General Agency, Inc.
                       7411 John Smith Dr., Ste. 1400
                       San Antonio, Texas  78229
                       Phone:  (210) 949-9100
                       Fax:  (210) 949-9121
                       Attn:  Mr. Samuel M. Cangelosi

      with a copy to:  Mark Holland, P.C.
                       9901 IH-10 West, Suite 795
                       San Antonio, Texas 78230
                       Phone:  (210) 690-1956
                       Fax:  (210) 690-1735
                       Attn.:  Mark Holland

      Section 12.10  Public Announcements.
                     --------------------

     The Parties shall  agree on  the terms of  any press  releases or  other
 public announcements related to this Agreement, and shall consult with  each
 other before  issuing  any  press releases  or  other  public  announcements
 related to this  Agreement; provided,  however, that  any Party  may make  a
 public disclosure if in the opinion  of such Party's counsel it is  required
 by Law or the  rules of the Securities  Exchange Commission, American  Stock
 Exchange or other regulatory  agency to make such  disclosure.  The  Parties
 agree, to the extent practicable, to  consult with each other regarding  any
 such public announcement in advance thereof.

      Section 12.11  Representation by Legal Counsel.
                     -------------------------------

     Each Party is  a sophisticated Person  that was  advised by  experienced
 legal counsel and other advisors in the negotiation and preparation of  this
 Agreement.

      Section 12.12  Schedules.
                     ---------

     All references in this Agreement to  schedules shall mean the  schedules
 identified in this Agreement, which are incorporated into this Agreement and
 shall be deemed a part of this Agreement for all purposes.  Each Section  of
 this Agreement that refers to a schedule shall have a separate schedule.  In
 addition, any disclosure under a particular Section's schedule shall be made
 under the heading of any relevant subsection of such Section.  A  disclosure
 of an item in a schedule  for a particular Section or  under a heading in  a
 schedule corresponding to a particular subsection shall not be a  disclosure
 under any other Section's schedule or any other subsection, unless so  noted
 specifically on such schedule.   The Sellers have  delivered to Purchaser  a
 correct and complete  copy of each  document described on  each schedule  to
 this Agreement  and  a correct  and  complete written  description  of  each
 unwritten arrangement or other item described on each such schedule.

      Section 12.13  Severability.
                     ------------

     Any provision of this Agreement that  is prohibited or unenforceable  in
 any jurisdiction  shall  not invalidate  the  remaining provisions  of  this
 Agreement or affect the validity or enforceability of such provision in  any
 other  jurisdiction.  In  addition,  any  such prohibited  or  unenforceable
 provision shall be given effect to  the extent possible in the  jurisdiction
 where such provision is prohibited or unenforceable.

      Section 12.14  Specific Performance.
                     --------------------

     Each Seller acknowledges  that the benefits  that Purchaser will  derive
 from  the  transactions  contemplated  by  this  Agreement  are  unique  and
 irreplaceable.   Accordingly,   if   such  Seller  improperly  abandons   or
 terminates this Agreement, Purchaser  would not have  an adequate remedy  at
 law.  Purchaser therefore shall be entitled to a court order requiring  such
 Seller to perform this Agreement.   No Seller shall be entitled to  specific
 performance of this Agreement.

      Section 12.15  Successors.
                     ----------

     This Agreement shall be binding upon  and shall inure to the benefit  of
 each Party  and its  heirs, legal  representatives, permitted  assigns,  and
 successors, provided that this  Section shall not  permit the assignment  or
 other transfer of this Agreement, whether by operation of law or  otherwise,
 if such assignment of other transfer  is not otherwise permitted under  this
 Agreement.

      Section 12.16  Time of the Essence.
                     -------------------

     Time is of  the essence  in the performance  of this  Agreement and  all
 dates and periods specified in this Agreement.

      Section 12.17  Waiver.
                     ------

     No provision of this  Agreement shall be  considered waived unless  such
 waiver is  in  writing  and signed  by  the  Party that  benefits  from  the
 enforcement  of  such  provision.   No  waiver  of  any  provision  in  this
 Agreement, however, shall be deemed a waiver of a subsequent breach of  such
 provision or a waiver of a similar provision.  In addition, a waiver of  any
 breach or a failure to enforce any term or condition of this Agreement shall
 not in any way affect, limit, or waive a Party's rights under this Agreement
 at any time  to enforce  strict compliance  thereafter with  every term  and
 condition of this Agreement.

                           [SIGNATURE PAGE FOLLOWS]

<PAGE>

      IN WITNESS WHEREOF, each  Party executed, or  caused a duly  authorized
 officer to execute, this Agreement as of the Signing Date.

 PURCHASER:                    HALLMARK FINANCIAL SERVICES, INC.



                               By:    _______________________________________
                               Name:  _______________________________________
                               Title: _______________________________________




 SELLERS:                      ______________________________________________
                               Samuel M. Cangelosi


                               ______________________________________________
                               Donate A. Cangelosi


                               ______________________________________________
                               Donald E. Meyer

<PAGE>

                                  APPENDIX A
                   DEFINITIONS AND  RULES OF INTERPRETATION

      Definitions.  Unless the context otherwise requires, the terms  defined
 in this Appendix shall have the meanings specified below for all purposes of
 this Agreement:

           "3-Year LLAE Ratio" shall  have the meaning  set forth in  Section
 1.4.

           "Action"  means  any  action,  arbitration  proceeding,  cause  of
 action, charge,  counterclaim, cross  claim, inquiry,  investigation,  legal
 action, litigation, Order, proceeding, or suit.

           "Agreement" shall have the meaning set forth in the Preamble.

           "Arbitration Notice"  shall have the meaning set forth in  Section
 11.2(a).

           "Arbitration Rules" shall  have the meaning  set forth in  Section
 11.2.

           "Assumed  Plans"  shall  have the  meaning  set forth  in  Section
 7.8(a).

           "Bank Accounts" shall have the meaning set forth in Section 3.20.

           "Books  and  Records"  shall  mean  all  the  books  and   records
 maintained by or for  any Person, including  all accounting records,  minute
 books, stock  records,  computerized  records  and  storage  media  and  the
 software used in connection therewith.

           "Charter Documents" shall mean (i) in  the case of a  corporation,
 its articles or  certificate of incorporation  and its bylaws,  (ii) in  the
 case of  a  partnership, its  partnership  certificate and  its  partnership
 agreement, and  (iii) in  the case  of  any other  Person, its  organic  and
 governing documents;  in each  case as  such document  has been  amended  or
 supplemented from time to time prior to the Signing Date.

           "Claim" shall  mean  any arbitration  award,  assessment,  charge,
 citation, claim, damage, demand,  directive, expense, fine, interest,  joint
 or several  liability, lawsuit,  notice,  obligation, payment,  penalty,  or
 summons of any  kind or nature  whatsoever, including  any damages  incurred
 because of  the claimant's  negligence or  gross  negligence or  any  strict
 liability imposed upon the claimant, any consequential or punitive  damages,
 and any  reasonable  attorneys'  fees  and  expenses.    A  Claim  shall  be
 considered to exist even though it may be conditional, contingent, indirect,
 potential,  secondary,  unaccrued,  unasserted,  unknown,  unliquidated,  or
 unmatured.

           "Closing" shall have the meaning set forth in Section 2.1.

           "Closing Date" shall have the meaning set forth in Section 2.1.

           "Code" shall mean the Internal Revenue Code of 1986, as amended.

           "Companies" and  "Company" shall  have the  meaning set  forth  in
 Recital D.

           "Company Assets"  shall  have the  meaning  set forth  in  Section
 3.9(a).
           "Company Plans"  shall  have  the meaning  set  forth  in  Section
 3.18(a).

           "Competing Business" shall have the  meaning set forth in  Section
 5.9(c).

           "Confidential Information" means any proprietary information,  and
 any information  which Purchaser  reasonably  considers to  be  proprietary,
 pertaining to the  Companies' and Purchaser's  past, present or  prospective
 business secrets, methods or policies, earnings, finances, security holders,
 lenders, key employees, nature of services performed by such entity's  sales
 personnel,  procedures,  standards  and  methods,  information  relating  to
 arrangements with suppliers, the  identity and requirements of  arrangements
 with customers,  all policyholder  information of  policyholders, the  type,
 volume or profitability  of services  or products  for customers,  drawings,
 records, reports,  documents,  manuals,  techniques,  ratings,  information,
 data, statistics, trade  secrets and all  other information of  any kind  or
 character relating  to  each of  the  Parties,  whether or  not  reduced  to
 writing.

           "Consent" shall mean a consent, approval, order, authorization  or
 waiver from,  notice to  or declaration,  registration  or filing  with  any
 Person.

           "Effective Date" shall mean  shall have the  meaning set forth  in
 Section 1.7.

            "Employee Benefit Plan" shall mean any  (i) Pension Benefit Plan,
 (ii) Welfare Benefit Plan, (iii) accident, dental, disability, health, life,
 medical,  or  vision  plan  or  insurance  policy,  (iv)  bonus,  executive,
 incentive or deferred compensation  plan, (v) change  in control plan,  (vi)
 fringe benefits and perquisites, (vii)  holiday, sick pay, leave,  vacation,
 moving or  tuition  reimbursement  or other  similar  policy,  (viii)  stock
 option,  stock   purchase,  phantom   stock,  restricted   stock  or   stock
 appreciation plan, (ix) severance plan,  or (x) other employee  arrangement,
 commitment, custom, policy or practice.

           "Employees" shall have the meaning set forth in Section 3.17(a).

           "Encumbered Instrument" shall mean any  contract or lease that  by
 its terms requires Consent from a third party by reason of the  transactions
 contemplated by the Transaction Documents.

           "Encumbrance" shall mean any title defect or objection,  mortgage,
 lien, deed  of trust,  equity, judgment,  claim, restrictive  covenant,  use
 restriction, charge, pledge, security interest  or other encumbrance of  any
 nature whatsoever,  including  all leases,  chattel  mortgages,  conditional
 sales  contracts,  collateral  security  arrangements  and  other  title  or
 interest retention arrangements.

           "ERISA" shall mean the Employee Retirement Income Security Act  of
 1974, as amended.

           "ERISA Affiliate"  shall have  the meaning  set forth  in  Section
 3.18(b).

           "Financial Statements" shall have the meaning set forth in Section
 3.26.

           "GAAP" shall  mean  generally accepted  accounting  principles  in
 effect in the United States of America as of the Signing Date.

           "GPSRI" shall have the meaning set forth in Recital B.

           "GPSRI Stock" shall have the meaning set forth in Recital B.

           "GSIC" shall have the meaning set forth in Recital B.

           "GSIC Stock" shall have the meaning set forth in Recital B.

           "Governmental Authority"  shall mean  any federal,  state,  local,
 tribal,  foreign   or  other   governmental  agency,   department,   branch,
 commission, board, bureau, court, instrumentality or body.

           "Growth Factor" shall have the meaning set forth in Section 1.4

           "IBNR" shall have the meaning set forth in Section 1.4(b).

           "Indemnified  Party"  shall   have  the  meaning   set  forth   in
 Section 10.3.

           "Indemnifying  Party"  shall  have   the  meaning  set  forth   in
 Section 10.3.

           "Insurance Policies" shall have the  meaning set forth in  Section
 3.12.

           "Intangible Asset"  shall mean  any patent,  trademark,  trademark
 license, servicemark, servicemark  license, computer  software, trade  name,
 masthead, brand name, slogan, copyright, reprint right, franchise,  license,
 process, authorization, invention, know-how, formula, trade secret and other
 intangible asset, together  with any  pending application,  continuation-in-
 part or extension therefor.

           "Law" shall mean  any applicable code,  statute, law, common  law,
 rule,  regulation,  order,  ordinance,  judgment,  decree,  order,  writ  or
 injunction of any Governmental Authority.

           "Law Affecting  Creditors'  Rights"  shall  mean  any  bankruptcy,
 fraudulent conveyance or  transfer, insolvency, moratorium,  reorganization,
 or other law affecting the enforcement  of creditors' rights generally,  and
 any general principles of equity.

            "Material Adverse Change" shall mean,  with respect to a  Person,
 that such Person has (i) breached a Material Contract, (ii) incurred a Claim
 or become a party to an Action that could have a significant and detrimental
 effect upon it, (iii) suffered a  Material Adverse Effect, or (iv)  violated
 any Law or Order to which it or any of its assets is subject or bound.

           "Material Adverse Effect"  shall mean, with  respect to a  Person,
 the occurrence of an  event or the  existence of a  circumstance that has  a
 material adverse  effect  on such  Person's  assets, business,  cash  flows,
 financial condition, liabilities,  operations, prospects, or  relationships,
 including the occurrence of any event  or the existence of any  circumstance
 that could cause such an effect in the future in an amount of $100,000.00 or
 more.

           "Material Contracts" shall have the  meaning set forth in  Section
 3.13.

           "Non-Compete Payments" shall have the meaning set forth in Section
 1.5.

           "Note" and "Notes"  shall have the  meaning set  forth in  Section
 1.3(b).
            "Order" shall  mean any  consent decree,  decree,  determination,
 injunction, judgment,  order,  or writ  of  any arbitrator  or  Governmental
 Authority.

            "Parties" and "Party" shall have the meaning set forth in Recital
 E.

           "Pension Benefit Plan" shall mean (i) an "employee pension benefit
 plan" as defined in Section 3(2)  of ERISA, and (ii) a "multiemployer  plan"
 as defined in Section 4001(a)(3) of ERISA.

           "Permit" shall mean any license, approval, certificate, franchise,
 registration,  qualification,  permit  or  authorization  issuable  by   any
 Governmental Authority or industry self-regulating organization.

           "Permitted  Encumbrance"  shall  mean  any  Encumbrance   directly
 related to (i) workers', repairmen's and similar Encumbrances imposed by Law
 that have been incurred in the  ordinary course of business, (ii)  retention
 of title agreements with  suppliers entered into in  the ordinary course  of
 business, and (iii) the rights of others to customer deposits.

           "Person"  shall  mean  any  association,  bank,  business   trust,
 corporation,   estate,   general   partnership,   Governmental    Authority,
 individual,  joint  stock  company,  joint  venture,  labor  union,  limited
 liability company, limited partnership, non-profit corporation, professional
 association, professional corporation, trust,  or any other organization  or
 entity.

           "Personal Property Leases"  shall have  the meaning  set forth  in
 Section 3.10(d).

           "Purchaser" shall have the meaning set forth in the Preamble.

           "Purchaser Group"  shall have  the meaning  set forth  in  Section
 10.1.

           "Real Property Leases" shall have the meaning set forth in Section
 3.10(b).

           "Representatives" shall  mean,  with  respect to  a  Person,  such
 Person's directors,  employees, officers,  agents, accountants,  affiliates,
 consultants, investment  bankers,  attorneys, lenders,  representatives  and
 shareholders.

           "Republic" shall have the meaning set forth in Section 5.5(b).

           "Required Consents" shall  have the meaning  set forth in  Section
 7.3(b).

           "Required Permits" shall  have the  meaning set  forth in  Section
 7.4(b).

           "Restricted Territories"  shall  have  the meaning  set  forth  in
 Section 5.9(c).

           "Returns" shall have the meaning set forth in Section 3.19(a).

           "Sellers" shall have the meaning set forth in the Preamble.

           "Sellers' Knowledge" shall  mean the  actual knowledge  as of  the
 date that a  specific representation  or warranty  is made  or deemed  made,
 after reasonable inquiry, of an individual Seller.

           "Settlement Meeting" shall have the  meaning set forth in  Section
 10.1.

           "Shares" shall have the meaning set forth in Section 1.1.

           "Signing Date" shall have the meaning set forth in the Preamble.

           "Stock" shall have the meaning set forth in Recital C.

           "Subscription Right" shall have the  meaning set forth in  Section
 3.7.

           "Supplemental Agreements"  shall have  the  meaning set  forth  in
 Section 7.6(a).

           "Tax" shall mean any assessment, charge, duty, fee, impost,  levy,
 tariff, or  tax  of  any  nature  whatsoever  imposed  by  any  Governmental
 Authority or payable pursuant  to any tax  sharing agreement, including  any
 income, payroll,  withholding, excise,  gift, alternative  minimum,  capital
 gain, added value, social security, sales, use, real and personal  property,
 use and occupancy, business and occupation, mercantile, real estate, capital
 stock, and  franchise tax  or charge,  together with  any related  interest,
 penalties or additions thereon.

           "Taxing Authority" shall mean the Internal Revenue Service and any
 other  domestic  or  foreign  Governmental  Authority  responsible  for  the
 administration of any Tax.

           "TGA" shall have the meaning set forth in Recital A.

           "TGA Base  Purchase Price"  shall have  the meaning  set forth  in
 Section 1.2(a).

           "TGA Contingent Purchase Price" shall  have the meaning set  forth
 in Section 1.2(a).

           "TGA Purchase Price" shall have the  meaning set forth in  Section
 1.2(a).

           "TGA Stock" shall have the meaning set forth in Recital A.

           "TGASRI" shall have the meaning set forth in Recital A.

           "TGASRI Purchase  Price"  shall  have the  meaning  set  forth  in
 Section 1.2(c).

           "TGASRI Stock" shall have the meaning set forth in Recital A.

           "Total Purchase Price" shall have the meaning set forth in Section
 1.2.

           "Transaction   Documents"   shall   mean   this   Agreement,   the
 Supplemental Agreements, and  all other documents  and instruments  executed
 and delivered pursuant to or in furtherance of this Agreement.

           "Welfare Benefit  Plan" shall  mean an  "employee welfare  benefit
 plan" as defined  in Section 3(1)  of ERISA, including  an employee  welfare
 benefit plan which is a "multiemployer  welfare plan" as defined in  Section
 3(37) of ERISA and a "multiple  employer welfare arrangement" as defined  in
 Section 3(40) of ERISA.

           "Work Product" shall have the meaning set forth in Section 5.9(b).
      Accounting Terms.  Except as otherwise provided in this Agreement,  all
 accounting terms defined in this Agreement, whether defined in this  Article
 or otherwise, shall be construed in  accordance with GAAP on a  consolidated
 basis.

      Articles, Sections,  Exhibits and  Schedules.   Except as  specifically
 stated otherwise, references to  Articles, Sections, Exhibits and  Schedules
 refer to the Articles, Sections, Exhibits and Schedules of this Agreement.

      Attorneys'  Fees.    Whenever  this  Agreement  refers  to  a  Person's
 "attorneys' fees and expenses," such reference  also shall include any  fees
 and expenses of accountants, experts, investigators, and other  professional
 advisors whose  services  such  Person's attorney  considered  advisable  in
 connection with the prosecution or defense of the particular matter.

      Breach.  The term "breach" with  respect to any contract or  instrument
 means any  breach  or violation  of,  or  default under,  such  contract  or
 instrument,  any  conflict  with  another  contract  or  instrument  or  any
 emergence of a  right of  another party to  such contract  or instrument  to
 accelerate,  cancel,  modify  or  terminate  such  contract  or  instrument,
 including any such breach, violation, default, conflict, or right that  will
 arise after notice or lapse of time.

      Drafting.  Neither this Agreement nor  any provision set forth in  this
 Agreement shall be interpreted in favor of or against any Party because such
 Party or its  legal counsel drafted  this Agreement or  such provision.   No
 prior draft of this Agreement or  any provision set forth in this  Agreement
 shall be used when interpreting this Agreement or its provisions.

      Headings.  Article and Section headings are used in this Agreement only
 as a  matter  of  convenience  and  shall  not  have  any  effect  upon  the
 construction or interpretation of this Agreement.

      Include.  The term  "include" or any derivative  of such term does  not
 mean that the items following such term are the only types of such items.

      Or.  The term  "or" shall not  be interpreted as  excluding any of  the
 items described.

      Plural and Singular Words.  Whenever the plural form of a word is  used
 in this Agreement, that word shall  include the singular form of that  word.
 Whenever the singular form of  a word is used  in this Agreement, that  word
 shall include the plural form of that word.

      Predecessors.   Any  of  the Sellers'  representations  and  warranties
 concerning any Claim against any Company, any liability or obligation of any
 Company, or any  violation of Law  by any Company  shall include any  Claims
 with respect to each  predecessor of any Company,  including all direct  and
 indirect predecessors of any such predecessor.

      Pronouns.  Whenever a  pronoun of a particular  gender is used in  this
 Agreement, if appropriate that pronoun also shall refer to the other  gender
 and the neuter.   Whenever a neuter  pronoun is used  in this Agreement,  if
 appropriate that  pronoun also  shall refer  to the  masculine and  feminine
 gender.

      Representations and  Warranties.    The  Sellers'  representations  and
 warranties  under  this  Agreement   shall  mean  the  representations   and
 warranties set forth in  Article III and the  reaffirmation of the  Sellers'
 representations and warranties in certificates delivered pursuant to Article
 II.  Purchaser's representations and  warranties under this Agreement  shall
 mean the representations  and warranties  set forth  in Article  IV and  the
 reaffirmation of those  representations and warranties  in the  certificates
 delivered pursuant to Article II.

      Statutes.  Any reference to Law  or any specific statute shall  include
 any changes to such law or statute after the Signing Date, any successor law
 or statute, and  any regulations  and rules  promulgated under  such law  or
 statute and  any successor  law or  statute, whether  promulgated before  or
 after the Signing Date.

<PAGE>

                                  EXHIBIT A

                               PROMISSORY NOTE
                               ---------------

 $7,916,666.67               San Antonio, Texas               January 1, 2006


      FOR  VALUE  RECEIVED,  HALLMARK  FINANCIAL  SERVICES,  INC.,  a  Nevada
 corporation ("Maker"), promises to pay to the order of _____________________
 (the "Noteholder"), the principal sum  of Seven Million Nine Hundred Sixteen
 Thousand  Six  Hundred  Sixty-Six  and  67/100  Dollars  ($7,916,666.67), as
 provided below.  All  sums  hereunder are  payable at such  place  in  Bexar
 County, Texas, as the Noteholder hereof may designate in writing.

      This Note  shall  be  payable, without  interest,  in  two  (2)  annual
 installments of principal.  The first  annual installment  of  Four  Million
 Seven Hundred Fifty Thousand and No/100 Dollars ($4,750,000.00) shall be due
 and payable on or before January 1, 2007.  The second annual installment  of
 Three Million  One  Hundred Sixty-Six  Thousand  Six Hundred  Sixty-Six  and
 67/100 Dollars ($3,166,666.67) shall be due and payable on or before January
 1, 2008.

      The principal of this Note may be prepaid, in whole or in part, at  any
 time or from time to time, without penalty.  All past due principal on  this
 Note shall bear interest  at the rate  of six percent  (6%) per annum  until
 paid.  All sums called for, payable, or  to be paid hereunder shall be  paid
 in lawful money  of the  United States  of America,  which, at  the time  of
 payment, is legal tender for the payment of public and private debts.

      This Note is executed  by Maker pursuant to  the terms of that  certain
 Purchase Agreement (herein so called) dated  November __, 2005, between  the
 Maker and  Samuel M.  Cangelosi, Donate  A. Cangelosi  and Donald  E.  Meyer
 (collectively, the  "Sellers").   Maker's  payment of  this  Note is  to  be
 secured by  a letter  of  credit issued  by  a federally  chartered  banking
 institution reasonably acceptable  to Sellers or  other security  reasonably
 acceptable to  the Sellers,  as  provided in  Section  1.6 of  the  Purchase
 Agreement.  Payment  of  any installment  of  this Note  is subject  to  the
 Maker's right of offset provided in Section 10.5 of the Purchase Agreement.

      If this  Note is  not paid  at  its maturity,  regardless of  how  such
 maturity may  be brought  about, then  Noteholder may  exercise any  of  its
 rights provided hereunder  or any  of its  remedies at  law or  in equity.
 Failure to exercise any of such rights upon any default shall not constitute
 a waiver of  the right  to exercise  any of  them at  any  time.  If,  after
 default, this Note is placed in the hands of an attorney for collection,  or
 if collected through judicial proceedings, Maker  shall pay, in addition  to
 the sums referred to above, a  reasonable sum as a collection or  attorneys'
 fee, and all other costs reasonably incurred by Holder in collection of  the
 unpaid amounts due hereunder.

      Maker and all sureties, endorsers, guarantors, and any other party  now
 or hereafter liable for the payment of this Note in whole or in part, hereby
 severally (i) agree  to the release  of any party  primarily or  secondarily
 liable hereon, (ii)  agree that Noteholder  shall not be  required first  to
 institute suit or exhaust its remedies hereon against Maker or others liable
 or to become liable hereon or to  enforce its right against them, and  (iii)
 consent to any extension or postponement of time of payment of this Note and
 to any other indulgence with respect hereto without notice thereof to any of
 them.

      This Note shall be governed by  and construed in accordance with  Texas
 law  and  the laws of the United States applicable to transactions in Texas.
 If any term  or provision of  this Note or  the application  thereof to  any
 person or circumstance shall,  to any extent,  be invalid or  unenforceable,
 the remainder of this Note, or the application of such term or provision  to
 persons or circumstances other than those as to which it is held invalid  or
 unenforceable, shall,  at  the  election  of  Noteholder,  not  be  affected
 thereby, and each such other term and provision of this Note shall be  valid
 and be enforced to the fullest extent permitted by law.

      THIS NOTE  SHALL BE  DUE AND  PAYABLE IN  BEXAR  COUNTY,  TEXAS.  MAKER
 CONSENTS TO JURISDICTION AND VENUE FOR ANY SUIT ON OR BY REASON OF THIS NOTE
 IN THE STATE AND FEDERAL COURTS LOCATED IN BEXAR COUNTY, TEXAS.

      IN WITNESS WHEREOF, Maker  has duly executed this  Note as of the  date
 and year first above written.

                          MAKER:

                          HALLMARK FINANCIAL SERVICES, INC.


                          By:  _____________________________________________

                          Name: ____________________________________________

                          Title: ___________________________________________

<PAGE>

                                  EXHIBIT B

                            EMPLOYMENT AGREEMENT
                            --------------------

      This EMPLOYMENT AGREEMENT  (the "Agreement") is  made effective as  the
 _____ day of ___________, 200__  (the  "Effective  Date"),  by  and  between
 TEXAS GENERAL AGENCY, INC.,   a  Texas  corporation   (the  "Company"),  and
 ____________________________, an individual (the "Employee").

                                 Recitals:
                                 --------

      A.   The Company, directly and through subsidiaries, develops,  markets
 and services property and casualty insurance  with a particular emphasis  on
 commercial automobile and general liability risks.

      B.   The Company desires to employ the  Employee pursuant to the  terms
 of this Agreement, and the Employee desires to accept such employment.

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

                                 Agreement:
                                 ---------

      1.   Appointment and Duties.  The Company  employs the Employee on  the
 terms and  conditions  set  forth herein,  and  the  Employee  accepts  such
 employment.  The Employee  shall initially serve as  _______________________
 of the  Company,  and shall  perform  all duties  and  functions  reasonably
 appurtenant to such position and as directed by the Chief Executive  Officer
 or Board of Directors of the Company.  The Company, acting through its Chief
 Executive Officer or Board of Directors, may from time to time redefine  the
 title and  duties of  the Employee  in furtherance  of the  business of  the
 Company.  The  Employee shall  perform his  duties in  accordance with,  and
 shall at all times strictly adhere  to, all rules, regulations and  policies
 as may be adopted from time to time by the Company.

      2.   Full Time Employment.  The Employee  agrees that, during the  term
 of his employment  by the  Company, he will  devote his  full working  time,
 attention and  energies to  the diligent  performance of  his duties  as  an
 employee of the Company.  The Employee shall not, without the prior  written
 consent of the Company, directly or indirectly, at any time during the  term
 of his employment with  the Company:  (a)  accept employment with or  render
 services of  a business,  professional or  commercial  nature to  any  other
 individual,  corporation,  partnership,  governmental  authority  or   other
 entity; (b) engage in  any business venture or  business activity which  the
 Company may in good faith consider to be competitive with or adverse to  the
 business of the  Company, whether  alone, as a  partner, or  as an  officer,
 director, employee or shareholder or otherwise (except that the ownership of
 not more than  one per cent  of the stock  or other equity  interest of  any
 publicly traded corporation or other entity shall not be deemed a  violation
 hereof); or (c) engage in any venture  or activity which the Company may  in
 good faith consider to interfere with  Employee's performance of his  duties
 hereunder.

      3.   Compensation.  All compensation shall  be payable to the  Employee
 in accordance with the  Company's customary payroll  practices and shall  be
 subject to withholding for federal and  state income taxes, social  security
 payments and similar deductions, as required by applicable law.

           a.   Salary.  The Employee shall  initially receive a base  salary
      of $200,000 per year.  Such  salary shall be reviewed annually and  may
      be increased, but not decreased, in the sole discretion of the Board of
      Directors of the Company.

           b.   Bonus.  The Employee shall be entitled to an annual bonus  of
      not less than  $102,000 payable on  or before each  anniversary of  the
      Effective Date  during the  term hereof  and  conditioned only  on  the
      Employee's  continued  employment  with   the  Company  on  each   such
      anniversary date.  At  the request of the  Employee, the Company  shall
      pay all or any portion of such annual bonus to such other employees  of
      the Company as may be specified by the Employee.

      4.   Other Programs and Benefits.   The Employee  shall be entitled  to
 participate  in  other  programs  and  benefits  provided  by  the   Company
 (including, without  limitation, group  insurance plans  and profit  sharing
 plans) to  the same  extent  as other  employees  of the  Company  similarly
 situated.  Without  limiting the generality  of the  foregoing, the  Company
 shall provide health insurance benefits for the Employee comparable to those
 provided  as  of  the  date hereof.  The Company  shall pay  the  reasonable
 expense of mobile telephone usage for  the Employee (but not members of  the
 Employee's family).  Notwithstanding any previous policy of the Company, the
 Employee shall  be responsible  for the  cost of  his automobile  (including
 personal automobile insurance), country club dues and other non-reimbursable
 personal expenses.

      5.   Term.  Unless otherwise terminated  in accordance with Section  6,
 the Employee's  employment  under  this  Agreement  shall  commence  on  the
 Effective Date  and  shall  continue until  the  third  anniversary  of  the
 Effective Date  and  thereafter  at the  will  of  the parties.    Upon  the
 termination of the Employee's employment for  any reason, the Employee  will
 be entitled  to  receive  all  accrued  compensation  through  the  date  of
 termination.

      6.   Termination  and  Severance.    The  employment  of  the  Employee
 hereunder may be  terminated by  the Company at  any time,  with or  without
 Cause  (as  defined below).  In  the  event the  employment of  Employee  is
 terminated by  the Company  without Cause,  the Employee  shall continue  to
 receive an amount equal to his base salary at the time of termination for  a
 period of time following  the date of  termination equal to  the sum of  (i)
 three months,  plus  (ii) one  week  for  each completed  month  of  service
 following the Effective Date; provided, that the total period of base salary
 continuation shall in  no event exceed  12 months.  The  severance  payments
 provided herein are in lieu  of any and all  other benefits or claims  which
 the Employee might assert against the  Company, and may be conditioned  upon
 the Employee's execution of a full and complete release of the Company  from
 any and all  liabilities arising in  connection with his  employment by  the
 Company or the termination  thereof.  Such severance payments shall be  made
 to the Employee in accordance with the Company's customary payroll practices
 and shall be  subject to  withholding for  federal and  state income  taxes,
 social security payments and similar  deductions, as required by  applicable
 law.   For  purposes  of this  Agreement,  "Cause"  shall mean  any  of  the
 following, as  determined  in  the  good faith  judgment  of  the  Board  of
 Directors of  the Company:  (i)  commission of  a  crime (other  than  minor
 traffic violations); (ii) breach of any  of the terms of this Agreement;  or
 (iii) insubordination,  dishonesty  or neglect  in  the performance  of  the
 duties assigned to Employee hereunder.

      7.   Non-Disclosure; Non-Competition;  Non-Solicitation.   The  Company
 covenants and agrees that it will  provide to the Employee all  Confidential
 Information (as defined below) of the Company reasonably necessary to permit
 the Employee  to fulfill  his duties  and responsibilities  hereunder.   The
 Employee acknowledges  that,  as a  consequence  of his  employment  by  the
 Company, the Employee will be furnished and have access to substantially all
 Confidential Information of the Company.  The Employee further  acknowledges
 that (i) any public disclosure of the Confidential Information will have  an
 adverse effect on the Company and its business, (ii) the Company will suffer
 irreparable injury if the Employee breaches any of the terms of this Section
 7, (iii) the Company will be at a substantial competitive disadvantage if it
 fails to  acquire  and  maintain exclusive  ownership  of  the  Confidential
 Information or the Employee fails to abide by the restrictions provided  for
 in this Section 7,  (iv) the scope of  the protective restrictions  provided
 for in this Section 7 are reasonable when taking into account the Employee's
 access to Confidential Information and  the importance of such  Confidential
 Information to the Company, (v) the compensation being paid to the  Employee
 pursuant to this Agreement  and the post-employment  rights of the  Employee
 hereunder are sufficient inducement for the  Employee to agree to the  terms
 hereof, (vi) the provisions of this  Section 7 are reasonable and  necessary
 to protect  the business  of the  Company, to  prevent the  improper use  or
 disclosure of the Confidential Information and  to provide the Company  with
 exclusive ownership  of all  such Confidential  Information, and  (vii)  the
 terms of this Section 7 preclude  the Employee from engaging in the  conduct
 of the business of the Company for a reasonable period.

           a.   Non-Disclosure Agreement.  Employee  agrees that he will  not
      (i) disclose  to  any  person,  either  directly  or  indirectly,   any
      Confidential Information, unless  and solely  to the  extent that  such
      Confidential Information is required to be disclosed by law or pursuant
      to a final judicial  order or decree, (ii) use  for his own account  or
      use, cause, facilitate  or allow any  third party  to use  Confidential
      Information in any way, or (iii) remove any Confidential Information or
      any copy,  summary  or compilation  of  any kind  of  any  Confidential
      Information from the  premises of the  Company or the  premises of  any
      Company's customers.

           b.   Work Product.    All  records  and  documents  embodying  any
      Confidential Information or pertaining to the existing or  contemplated
      scope  of  the  Company's  business,  whether  conceived,  prepared  or
      developed by the Employee,  the Company or  otherwise, either alone  or
      with others  ("Work  Product"),  shall be  the  sole  property  of  the
      Company.

           c.   Return of Materials.  Upon termination of his employment  for
      any reason,  the Employee  shall promptly  deliver to  the Company  all
      materials in any medium  containing, referring to  or derived  from any
      Confidential Information or Work Product of the Company, together  with
      all  other  manuals,   letters,  notes,  reports,   data,  tables   and
      calculations which are the  property of the Company,  which are  in the
      Employee's possession or under his control.

           d.   Non-Competition Agreement.  The Employee covenants and agrees
      that, during the term of his employment by the Company and for a period
      of two (2) years following the  termination of his employment with  the
      Company for any reason, the Employee will not, directly or  indirectly,
      (i) own, engage in, manage, operate,  join, control, or participate  in
      the ownership, management, operation, or control of, or be connected as
      a stockholder,  director,  officer,  employee,  agent,  partner,  joint
      venturer,  member,  beneficiary,  or  otherwise  with,  any  "Competing
      Business" (defined  below)  anywhere in  the  "Restricted  Territories"
      (defined below); (ii) induce any customers of the Company to  patronize
      any Competing Business; (iii) solicit or accept any Competing  Business
      from any customer of the Company; (iv) request or advise any  customers
      of the Company to withdraw, curtail or cancel such customer's  business
      with the  Company;  or  (v) disclose  to  any  other  person,  firm  or
      corporation engaged in any Competing Business the names or addresses of
      any of the customers of the  Company.  For purposes of this  Agreement,
      the term  "Competing  Business" is  defined  to mean  any  activity  or
      business that is or would be competitive with the business conducted by
      the Company at  the time of  termination of  the Employee's  employment
      with the Company.  The term "Restricted Territories" is defined to mean
      any state in which the Company is authorized to conduct its business.

           e.   Non-Solicitation Agreement.   For a period  of two (2)  years
      following the termination of  his employment with  the Company for  any
      reason, the Employee will not, either on his own behalf or on behalf of
      any Competing Business, directly or  indirectly (i) solicit or  induce,
      or in any manner attempt to  solicit or induce any person employed  by,
      or an agent of,  the Company to terminate  such person's employment  or
      agency, as the case may be, with the Company, or (ii) solicit,  divert,
      or attempt to solicit or divert,  or otherwise accept as a supplier  or
      customer,  any  person  which  sells  any  products  and  services  of,
      furnishes products or  services to, or  receives products and  services
      from the Company,  nor will  the Employee  attempt to  induce any  such
      supplier or customer  to cease being  (or any  prospective supplier  or
      customer not to become) a supplier or customer of the Company.

           f.   Modification of Restrictions.  The Employee agrees that if an
      arbitrator or a  court of  competent jurisdiction  determines that  the
      length of time or any other restriction, or portion thereof, set  forth
      in  this  Section  7  is  overly  restrictive  and  unenforceable,  the
      arbitrator or court shall reduce or  modify such restrictions to  those
      which it deems reasonable and enforceable under the circumstances,  and
      as  so  reduced  or  modified,  the  parties  hereto  agree  that   the
      restrictions of this Section 7 shall  remain in full force and  effect.
      The Employee further agrees that if an arbitrator or court of competent
      jurisdiction determines that any provision of this Section 7 is invalid
      or against public policy,  the remaining provisions  of this Section  7
      and the remainder of this Agreement shall not be affected thereby,  and
      shall remain in full force and effect.

           g.   Injunctive Relief.  In the  event of any pending,  threatened
      or actual breach of any of the covenants or provisions of this  Section
      7, as determined by an arbitrator or a court of competent jurisdiction,
      it is understood and agreed by the Employee that the remedy at law  for
      a breach of any of the covenants or provisions of this Section 7 may be
      inadequate  and,  therefore,  the  Company  shall  be  entitled  to   a
      restraining order  or  injunctive  relief  in  addition  to  any  other
      remedies at law  and in  equity, as determined  by an  arbitrator or  a
      court of competent jurisdiction.  The Employee waives any bond, surety,
      or other security that might be required of the Company as a  condition
      of any such restraining order or injunctive relief.

           h.   Confidential  Information  Defined.  For  purposes  of   this
      Agreement,   "Confidential   Information"    means   any    proprietary
      information, and any information which the Company reasonably considers
      to be  proprietary,  pertaining  to  the  Company's  past,  present  or
      prospective business secrets, methods or policies, earnings,  finances,
      security holders, lenders, key employees, nature of services  performed
      by sales  personnel,  procedures, standards  and  methods,  information
      relating to arrangements with suppliers, the identity and  requirements
      of  arrangements  with  customers,  all  policyholder  information   of
      policyholders,  the  type,  volume  or  profitability  of  services  or
      products for customers, drawings, records, reports, documents, manuals,
      techniques, ratings, information, data,  statistics, trade secrets  and
      all other information of any kind or character relating to the Company,
      whether or not reduced to writing.

           i.   Affiliates.  Any reference to the  Company in this Section  7
      shall be deemed  to include the  Company, its  parent corporation,  its
      subsidiaries and any other entity controlled by or under common control
      with such parent or subsidiaries.

      8.   Applicable Law and Venue.   THIS AGREEMENT  SHALL BE CONSTRUED  IN
 ACCORDANCE WITH THE  LAWS OF THE  STATE OF TEXAS.   ALL  OBLIGATIONS OF  THE
 PARTIES CREATED HEREUNDER ARE DEEMED  PERFORMABLE IN TARRANT COUNTY,  TEXAS,
 AND ANY ACTION TO ENFORCE OR CONSTRUE  THE TERMS OF THIS AGREEMENT SHALL  BE
 BROUGHT IN A  STATE OR FEDERAL  COURT OF COMPETENT  JURISDICTION IN  TARRANT
 COUNTY, TEXAS.

      9.   Attorney Fees.  If  any action at law  or in equity, including  an
 action for  injunction  or declaratory  relief,  is brought  to  enforce  or
 interpret the provisions of this Agreement,  each party shall pay their  own
 legal fees and all of their costs and expenses of litigation.

      10.   Non-Waiver.  The failure by the Company to complain of any act  or
 omission on  the part  of the  Employee, no  matter how  long the  same  may
 continue, shall not be deemed to  be a waiver by the  Company of any of  its
 rights under  this  Agreement.   The  waiver by  the  Company at  any  time,
 expressed or implied, of  any breach or attempted  breach of this  Agreement
 shall not  be deemed  a waiver  or a  consent to  any subsequent  breach  or
 attempted breach  of the  same or  any other  type.   If any  action by  the
 Employee shall require the consent or approval of the Company, such  consent
 to or approval of the Company to such  action on any one occasion shall  not
 be deemed a consent to or  approval of any other action  on the same or  any
 subsequent occasion.

      11.  Provisions Severable.    Should  any term  or  provision  of  this
 Agreement for any reason be held to be or declared illegal, invalid, void or
 unenforceable either in  its entirety or  in a  particular application,  the
 remainder of  this Agreement  shall nonetheless  remain  in full  force  and
 effect and,  if the  subject, term  or provision  is deemed  to be  illegal,
 invalid,  void  or   unenforceable  only  with   respect  to  a   particular
 application, such term or  provision shall remain in  full force and  effect
 with respect to all other applications.  In the event that any of the  terms
 or provisions of  this Agreement shall  be held to  be or declared  illegal,
 invalid, void or unenforceable solely by  virtue of the fact that such  term
 or provision exceeds the permissible bounds  of applicable law with  respect
 to its scope or duration, this  Agreement shall be deemed amended,  modified
 and reformed to the extent necessary to reduce the scope or duration of such
 term or provision to that permissible under applicable law, and the  parties
 request that  any  court  examining such  issue  employ  great  latitude  in
 reforming this Agreement so  as to make this  Agreement, as reformed,  valid
 and enforceable.

      12.  Entire  Agreement.     This  Agreement   constitutes  the   entire
 understanding of  the  parties  and supersede  all  prior  understanding  or
 agreements, whether written or oral, between the parties with respect to the
 subject matter of this Agreement.  Except as provided herein, no  amendment,
 modification or alteration of the terms  of this Agreement shall be  binding
 unless in  writing, dated  subsequent to  the date  of this  Agreement,  and
 executed by all parties hereto.

      13.  Binding Effect and  Assignment.  Each  and all  of the  covenants,
 terms and provisions contained herein shall be binding upon and inure to the
 benefit of the  respective successors, heirs,  and legal representatives  of
 the Company and the Employee.  This Agreement may not be assigned by  either
 party without the prior written consent of the other party.

      14.  Notice.   All notices,  requests, demands or other  communications
 required or permitted  to be  given or made  under this  Agreement shall  be
 deemed to have been duly given immediately upon personal delivery or mailing
 by first class, certified mail, postage  prepaid.  Any party may change  the
 address to which notices, requests, demands or other communications to  such
 party shall be mailed or sent by giving  notice to the other parties in  the
 manner provided herein.  The addresses  of the parties for purposes of  this
 Agreement are as set forth on the signature page hereof.

      15.  Headings.  No heading or caption contained in this Agreement shall
 be considered in interpreting any of its terms or provisions.

      16.  Execution in Counterparts.  This  Agreement and any amendment  may
 be executed in any  number of counterparts, either  by the parties or  their
 duly authorized attorney-in-fact, with the same effect as if all parties had
 signed the same document.

      IN WITNESS  WHEREOF, the  Company and  the  Employee have  caused  this
 Agreement  to  be  executed  to  be  effective  as  of  the  Effective  Date
 hereinabove set forth.


                                    COMPANY:
                                    -------

                                    TEXAS GENERAL AGENCY, INC.


                                    ----------------------------------------
                                    Mark E. Schwarz, Chief Executive Officer

                                    Notice Address:
                                    --------------

                                    777 W. Main Street
                                    Suite 1000
                                    Fort Worth, Texas  76102
                                    Attn.:  Chief Executive Officer


                                    EMPLOYEE:
                                    --------


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                                    Notice Address:
                                    --------------

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