Document:

<PAGE>

                                                                    EXHIBIT 10.4

                          TRANSITION SERVICES AGREEMENT

         This TRANSITION SERVICES AGREEMENT (this "Agreement") for the
performance of certain corporate services is executed and made effective as of
February __, 2002, by and among SWS Group, Inc., a Delaware corporation ("SWS"),
Westwood Management Corporation, a New York corporation ("Westwood Management"),
and Westwood Trust, a Texas trust ("Westwood Trust" and together with Westwood
Management, "Westwood"). Unless otherwise defined herein, capitalized terms have
the meaning assigned to them in the Distribution Agreement (defined herein).

         WHEREAS, SWS, through its ownership of 80.18% of the issued and
outstanding common stock, $0.01 par value per share (the "Westwood Common
Stock"), of Westwood Holdings Group, Inc. participates in the business of asset
management;

         WHEREAS, the Board of Directors of SWS has determined that it would be
advisable and in the best interests of SWS and its stockholders for SWS to
distribute all of the shares of Westwood Common Stock that it owns on a pro rata
basis to the holders of SWS common stock (the "Distribution") pursuant to that
certain Distribution Agreement, dated as of the date hereof, between SWS and
Westwood Holdings Group, Inc. (the "Distribution Agreement");

         WHEREAS, the parties intend that the transactions described herein will
be effective at the Distribution Date (as defined in the Distribution
Agreement); and

         WHEREAS, the parties hereto deem it to be appropriate and in the best
interests of the parties that SWS provide certain services to Westwood on the
terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

         1.  Description of Services. Effective as of the Distribution Date, SWS
shall, subject to the terms and provisions of this Agreement, provide Westwood
with the information technology and equipment services listed on Schedule 1.1
                                                                 ------------
and the human resources services listed on Schedule 1.2; provided, however, that
                                           ------------
the human resources services specifically exclude direct involvement with
employees of Westwood in the investigation of employee discipline and
grievances, or regarding an employee's specific question or problem involving
interpretation under any policy, program or benefit document; or any specific
activities involving potential employee complaints under any federal or state
regulations.

<PAGE>

         2. Consideration for Services. Westwood shall pay SWS the fees set
forth on Schedule 1.1 for information technology and equipment services provided
         ------------
and $95.00 per hour for human resources services provided in the first 15 hours
in any calendar week, and $125.00 per hour for all human resources services
provided in excess of 15 hours in any calendar week.

         3. Terms of Payment. Within ten business days after the end of each
month during the term of this Agreement, SWS will submit a written invoice to
Westwood for service fees for services performed during the immediately
preceding month together with an accounting of the charges for such services.
Within 30 business days after the receipt of such invoices, Westwood will remit
payment of the full amount of such invoice to SWS in the manner provided below.
Interest shall accrue at the Prime Rate (defined herein) plus 2% per annum on
any amounts not received by SWS within 30 days after Westwood's receipt of the
SWS invoice. "Prime Rate" means the prime rate of interest as published from
time to time in the Wall Street Journal.

         4. Method of Payment.  All amounts payable by Westwood for the services
rendered by SWS pursuant to this Agreement shall be remitted to SWS in United
States dollars in the form of a check or wire transfer.

         5. Warranties.  THIS IS A SERVICE AGREEMENT.  EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT, THERE ARE NO WARRANTIES OR GUARANTIES, INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR
A PARTICULAR PURPOSE.

         6.  Liability; Indemnification.

             (a) In no event shall either SWS have any liability, whether based
         on contract, tort (including, without limitation, negligence), warranty
         or any other legal or equitable grounds, for any punitive,
         consequential, special, indirect or incidental loss or damage suffered
         by Westwood arising from or related to this Agreement, including
         without limitation, loss of data, profits, interest or revenue, or
         interruption of business, even if the party providing the services
         hereunder is advised of the possibility of such losses or damages.

             (b) The limitations set forth in Section 6(a) above shall not apply
         to liabilities that may arise as the result of willful misconduct,
         gross negligence, fraud or breach of this Agreement of the party
         providing the services hereunder.

             (c) Each party hereto (the "Indemnifying Party") shall indemnify
         and defend the other party and its directors, officers, employees and
         representatives (the "Indemnified Party") from and against any and all
         claim, loss, cost, damage, liability and expense, including reasonable
         counsel fees, incurred by the Indemnified Party resulting from the
         Indemnifying Party's gross negligence, willful misconduct, fraud or
         breach of this Agreement. If for any reason the indemnification
         provided for in this Section 6(c) is unavailable to any Indemnified
         Party, or insufficient to hold it harmless, then the Indemnifying Party
         shall contribute to the amount paid or payable by such Indemnified

                                      -2-

<PAGE>

         Party as a result of such claim, loss, cost, damage, liability and
         expense in such proportion as is appropriate to reflect all relevant
         equitable considerations.

             (d) Any indemnification claim arising under this Agreement shall be
         resolved in accordance with Sections 3.4 and 3.5 of the Distribution
         Agreement.

             (e) The indemnification obligations set forth under Sections 6(c)
         and 6(d) shall terminate two years after the date of this Agreement;
         provided, however, such obligations shall not terminate with respect to
         any claim for indemnification or contribution or with respect to which
         notice is delivered to the Indemnifying Party in accordance with
         Section 3.4 of the Distribution Agreement prior to the date of
         termination.

         7.  Termination.

             (a) SWS will provide Westwood (i) the information technology and
         equipment services for the lesser of one year following the
         Distribution Date or, with respect to each piece of equipment, until
         the expiration of the lease relating to such equipment and (ii) the
         human resources services for a period of six months following the
         Distribution Date; provided, however, that Westwood may, at its option,
         upon no less than 30 days prior written notice to SWS (or such other
         period as the parties may mutually agree in writing), terminate either
         the information technology and equipment services or the human
         resources services.

             (b) SWS and Westwood are parties to the (i) Investment Agreement
         dated June 2, 1999, relating to The Southwest Special Reserve Account
         for the Benefit of PAIB and (ii) Investment Agreement dated October 19,
         1993 relating to The Special Reserve Account for Exclusive Benefit of
         Customers, as such agreements may be amended or superseded from time to
         time (collectively, the "Investment Agreements"). SWS and Westwood
         Trust are parties to the (A) Agency Account without Investment Advice
         Letter of Instruction March 31, 1998 relating to the Special Reserve
         Account and (B) Agency Account without Investment Advice Letter of
         Instruction June 2, 1999 relating to the Special Reserve Account for
         the Exclusive Benefit of PAIB, as such agreements may be amended or
         superseded from time to time (collectively, the "Custodial Agreements"
         and together with the Investment Agreements, the "Management
         Agreements"). Nothing in this Agreement is intended to modify or amend
         the terms of the Management Agreements, except that SWS agrees that,
         except in the event of a default under the terms of the Management
         Agreements, SWS shall not terminate any of the Management Agreements at
         any time less than one year following the Distribution Date.
         Thereafter, the termination provision of each respective Management
         Agreement shall govern the terms of its termination.

             (c) Notwithstanding Section 7(a) above, this Agreement may be
         terminated in its entirety in accordance with the following:

                 (i) Upon written agreement of the parties;

                                      -3-

<PAGE>

                 (ii)  By either SWS or Westwood for material breach hereof by
             the other if the breach is not cured within 30 calendar days after
             written notice of breach is delivered to the breaching party; or

                 (iii) By either SWS or Westwood, upon written notice to the
             other if the other shall become insolvent or shall make an
             assignment of substantially all of its assets for the benefit of
             creditors, or shall be placed in receivership, reorganization,
             liquidation or bankruptcy.

                 Notwithstanding the foregoing, the termination of this
             Agreement shall not affect the continued effectiveness of Section
             7(b)(or Section 9(d) pertaining to the Management Agreements),
             absent the express written stipulation of the parties otherwise.

         8.  Transfer of Software Licenses. SWS agrees to take all necessary
actions on the Distribution Date to transfer and assign to Westwood (i) all
applicable software licenses for the authorized use by Westwood of Microsoft
Office Professional, Symantec NAV software, NT 4.0 Service, Windows 2000 Server
and Norton Antivirus software used by Westwood on the Distribution Date, and
(ii) all upgrade protection or maintenance purchased by SWS related to the
Symantec NAV and Norton Antivirus licenses (collectively, the "Software Licenses
and Maintenance"). Westwood agrees to accept and assume the Software Licenses
and Maintenance as of the Distribution Date.

         9.  General.

             (a) Force Majeure. Any delays in or failure of performance by SWS
         or Westwood shall not constitute a default hereunder if and to the
         extent such delay or failure of performance is caused by occurrences
         beyond the reasonable control of SWS or Westwood, as the case may be,
         including, but not limited to: acts of God or the public enemy;
         compliance with any order or request of any governmental authority;
         acts of war; riots or strikes or other concerted acts of personnel; or
         any other causes beyond the reasonable control of SWS or Westwood,
         whether or not of the same class or kind as those specifically named
         above.

             (b) Confidentiality. Section 5.6 of the Distribution Agreement
         shall govern this Agreement.

             (c) Notices. All notices and other communications to any party
         hereunder shall be in writing (including telecopy or similar writing)
         and, except as noted, shall be deemed given when received addressed as
         follows:

                                      -4-

<PAGE>

         If to SWS, to:

             SWS Group, Inc.
             1201 Elm Street, Suite 3500
             Dallas, Texas 75270
             Telecopy: (214) 859-6020
             Attention: General Counsel

         With a copy to:

             Gardere Wynne Sewell LLP
             1601 Elm Street, Suite 3000
             Dallas, Texas 75201-4761
             Telecopy: (214) 999-4667
             Attention: David G. McLane

         If to Westwood Management or Westwood Trust, to:

             Westwood Management Corporation
             or Westwood Trust
             300 Crescent Court, Suite 1300
             Dallas, Texas 75201
             Telecopy: (214) 756-6979
             Attention:  Brian O. Casey, President

         With a copy to:

             Locke Liddell & Sapp LLP
             2200 Ross Avenue, Suite 2200
             Dallas, Texas 75201
             Telecopy: (214) 740-8800
             Attention: John B. McKnight

         (d) Amendments; No Waivers.

             (i) Any provision of this Agreement may be amended or waived if,
         and only if, such amendment or waiver is in writing and signed, in the
         case of an amendment, by SWS and Westwood, or in the case of a waiver,
         by the party against whom the waiver is to be effective.

             (ii)No failure or delay by any party in exercising any right, power
         or privilege hereunder shall operate as a waiver thereof nor shall any
         single or partial exercise thereof preclude any other or further
         exercise thereof or the exercise of any other right, power or
         privilege. The rights and remedies herein provided shall be cumulative
         and not exclusive of any rights or remedies provided by law.

                                      -5-

<PAGE>

               (e) Entire Agreement. This Agreement constitutes the entire
         understanding of the parties with respect to the subject matter hereof
         and supersedes all prior agreements, understandings and negotiations,
         both written and oral, between the parties with respect to the subject
         matter hereof and thereof. No representation, inducement, promise,
         understanding, condition or warranty not set forth herein has been made
         or relied upon by any party hereto. Neither this Agreement nor any
         provision hereof is intended to confer upon any Person other than the
         parties hereto any rights or remedies hereunder. To the extent that the
         provisions of this Agreement are inconsistent with the provisions of
         any other Distribution Document, the provisions of this Agreement shall
         prevail. The terms of Section 7(b) (as well as the terms of Section
         9(d) pertaining to the Management Agreements) shall prevail over any
         inconsistent terms in the Management Agreements.

               (f) Successors and Assigns. The provisions of this Agreement
         shall be binding upon and inure to the benefit of the parties hereto
         and their respective successors and assigns; provided that neither
         party may assign, delegate or otherwise transfer any of its rights or
         obligations under this Agreement without the consent of the other
         parties hereto. If any party or any of its successors or assigns (i)
         shall consolidate with or merge into any other Person and shall not be
         the continuing or surviving corporation or entity of such consolidation
         or merger or (ii) shall transfer all or substantially all of its
         properties and assets to any Person, then, and in each such case,
         proper provisions shall be made so that the successors and assigns of
         such party shall assume all of the obligations of such party under the
         Distribution documents and the Management Agreements.

               (g) Governing Law. This Agreement shall be construed in
         accordance with and governed by the law of the State of Texas, without
         regard to the conflicts of laws rules thereof.

               (h) Counterparts; Effectiveness. This Agreement may be signed in
         any number of counterparts, each of which shall be an original, with
         the same effect as if the signatures thereto and hereto were upon the
         same instrument. This Agreement shall become effective when each party
         hereto shall have received a counterpart hereof signed by the other
         parties hereto.

               (i) Jurisdiction. Any Action seeking to enforce any provision of,
         or based on any matter arising out of or in connection with, this
         Agreement or the transactions contemplated hereby may be brought in the
         United States District Court for the Northern District of Texas or any
         other Texas state court sitting in Dallas County, and each of the
         parties hereby consents to the jurisdiction of such courts (and of the
         appropriate appellate courts therefrom) in any such suit, action or
         proceeding and irrevocably waives, to the fullest extent permitted by
         law, any objection which it may now or hereafter have to the laying of
         the venue of any such suit, action or proceeding in any such court or
         that any such suit, action or proceeding which is brought in any such
         court has been brought in an inconvenient form. Process in any such
         suit, action or proceeding may be served on any party anywhere in the
         world, whether within or without the jurisdiction of any such court.
         Without limiting the foregoing, each party agrees that service of
         process on such party as provided in Section 9(c) shall be deemed
         effective service of process on such party.

                                      -6-

<PAGE>

               (j) Existing Arrangements. Except as otherwise contemplated
         hereby, by the other Distribution Documents or by the Management
         Agreements, all prior agreements and arrangements, including those
         relating to goods, rights or services provided or licensed, between the
         Westwood and the SWS shall be terminated effective as of the
         Distribution Date, if not theretofore terminated. No such agreements or
         arrangements shall be in effect after the Distribution Date unless
         embodied in the Distribution Documents or by the Management Agreements.

               (k) Severability. If any one or more of the provisions contained
         in this Agreement should be declared invalid, illegal or unenforceable
         in any respect, the validity, legality and enforceability of the
         remaining provisions contained in this Agreement shall not in any way
         be affected or impaired thereby so long as the economic or legal
         substance of the transactions contemplated hereby is not affected in
         any manner materially adverse to any party. Upon such a declaration,
         the parties shall modify this Agreement so as to effect the original
         intent of the parties as closely as possible in an acceptable manner so
         that the transactions contemplated hereby are consummated as originally
         contemplated to the fullest extent possible.

               (l) Captions. The captions herein are included for convenience of
         reference only and shall be ignored in the construction or
         interpretation hereof.

                                      -7-

<PAGE>

         IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.

SWS GROUP, INC.

By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________

WESTWOOD MANAGEMENT CORPORATION

By:__________________________________________________
Name:________________________________________________
Title: ______________________________________________

WESTWOOD TRUST

By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________

Signature Page

<PAGE>

Schedule 1.1

                  Information Technology and Equipment Services

SWS agrees to provide to Westwood information technology and equipment services
to Westwood in a manner that is consistent with the current support services
provided by SWS to Westwood and at a pricing level that is consistent with the
pricing provided to other SWS customers. The prices and support services are
subject to change based on current practices and market conditions.

Internet Access / Email:

SWS will continue to provide Westwood with internet access for a fee of $600 per
                                                                         ---
month. Westwood will be required to purchase the following items in order to
have the equivalent email capabilities it currently has:

Hardware
                                                               $  2,092.00
Upgrade to 1GB Ram                                             $    697.00
5 18 GB Hard Drives                                            $  1,530.00
Smart Array 5302/32                                            $    984.00

                                                               -----------
                    Total Hardware                             $  5,303.00
                                                               -----------

Software                                  Qty      Unit Price   Ext. Price
VLA Windows 2000 Server                   1.00       680.39         680.39
VLA Windows 2000 Client                  51.00        27.59       1,407.09 **
Windows 2000 Server with Boot Disk        1.00           23          23.00
VLA Exchange Server 2000                  1.00       644.46         644.46
VLA Exchange Client 2000                 51.00        61.95       3,159.45 **
Exchange Server 20000 English CD Media    1.00           19          19.00

                       Total Software                             5,933.39
                                                               -----------

Less: Licenses to be transferred to Westwood from SWS
     VLA Windows 2000 Client                                     (1,407.09)
     VLA Exchange Client 2000                                    (3,159.45)

                                                               -----------
               Adjusted Total Software                            1,366.85
                                                               -----------

                                                               -----------
Grand Total                                                    $  6,669.85
                                                               ===========

** The client licenses for Windows 2000 and Exchange are already included in the
core licenses per user that are being transferred to Westwood from SWS.

                              Schedule 1.1 - Page 1

<PAGE>

Westwood will continue to be directly connected to SWS's network. As such,
Westwood will be provided with SWS's standard virus protection, network security
and network monitoring.

Data Lines:

All data line costs that are currently billed to SWS (e.g., T1, circuits, etc.)
for the access and use of Westwood will be billed to Westwood at cost. Currently
these lines include:

<TABLE>
<CAPTION>
    ---------------------------------------------------------------------------------------------------------
    Line                   Vendor                Acct #               Circuit ID             Avg Monthly
                                                                                             Amount (a)
    ---------------------------------------------------------------------------------------------------------
    <S>                    <C>                   <C>                  <C>                    <C>
    T1 (300 Crescent Ct    MCI Worldcom          31187-dal            13-odc-3cr-0007        $375.00
    to 1201 Elm)
    ---------------------------------------------------------------------------------------------------------
    ISDN Backup (300       Southwestern Bell     214-220-0287         11.ibjd.674094         $ 80.00
    Crescent Ct. to 1201   Telephone
    Elm)
    ---------------------------------------------------------------------------------------------------------
    56K private line to    Southwestern Bell     510-072-1015         14.XHGS.65394          $ 80.00
    Bloomberg              Telephone
    ---------------------------------------------------------------------------------------------------------
</TABLE>

(a) Monthly billing is subject to change based on current tariffs and fees.

SWS agrees to work with Westwood in good faith to transfer ownership to, and
obligations for, all data lines, including any modifications thereto specified
by Westwood, as deemed necessary for Westwood's normal course of business.

SOHO / VPN Connections:

SWS will continue to support all current VPN and SOHO connections for the period
of this Agreement.

Westwood will be billed monthly per the following schedule, based on the method
of connection:

         ISDN Connection              $100 per connection per month
                                      ----
         ADSL Connection              $100 per connection per month
                                      ----
         Modem / Dial Up Connection   $ 35 per connection per month
                                      ----
         VPN Connection               $ 30 per connection per month
                                      ----

Desktop, Server and Application Support:

SWS will provide Westwood with help desk support and trouble ticketing services
for a flat fee of $100 per month. In the event that the help desk is unable to
                  ----
provide the assistance requested by Westwood, it will direct the matter to
another support department and monitor the services provided by such department,
which may include on-site services. If this occurs, SWS will charge Westwood at
a rate of $40 per hour, plus out-of-pocket travel expenses.
          ---

                              Schedule 1.1 - Page 2

<PAGE>

ILX or Other Equity Quote Services:

SWS will continue to provide ILX or other equity quote services to Westwood for
the term of this Agreement for a fee equal to the actual fees charged to SWS by
third parties for such services, which may change from time to time.

Equipment Rental:

The equipment attached as Exhibit 1 to this Schedule 1.1 are leased by SWS from
                          ---------         ------------
Winthrop Resources Corporation as of the date of this Agreement. Westwood will
continue to use the equipment set forth on Exhibit 1 until such time the lease
                                           ---------
relating to such equipment expires. Westwood will be billed monthly by SWS at
the rates listed below. Westwood will be subject to the terms and agreements of
the Master Lease Agreement between SWS and Winthrop Resources Corporation.

The equipment lease schedules and monthly rent for the equipment leases in
effect as of the date of the Agreement are listed below. The monthly rent
indicated below includes applicable sales tax.

                      -------------------------------------------
                          Lease    Expiration        Monthly
                        Schedule      Date            Rent

                      -------------------------------------------
                            7         4/30/2002    $  1,010.25
                      -------------------------------------------
                            8         7/31/2002    $    130.71
                      -------------------------------------------
                            9        10/31/2002    $    299.48
                      -------------------------------------------
                           10         1/31/2003    $    444.92
                      -------------------------------------------
                           11         3/31/2002    $    443.49
                      -------------------------------------------
                           12         7/31/2002    $    431.50
                      -------------------------------------------
                           13         7/31/2003    $  1,324.12
                      -------------------------------------------
                           14         9/30/2003    $    719.07
                      -------------------------------------------
                           15        11/30/2003    $    172.96
                      -------------------------------------------
                           16         2/28/2004    $    657.00
                      -------------------------------------------
                           17         4/30/2004    $    126.11
                      -------------------------------------------
                           18**       6/30/2004    $     51.18
                      -------------------------------------------

** more equipment may be added to this lease schedule pursuant to the terms of
the Master Lease Agreement

Website Hosting / Maintenance:

SWS will continue to provide website hosting and co-location services for
Westwood's website through SWS Technologies. The current monthly fee for this
service is $319.80, including applicable sales tax. Westwood will be billed for
           -------
this fee separately by SWS Technologies and is subject to its pricing terms,
which shall not be less favorable than the fair market value for such services.

                              Schedule 1.1 - Page 3

<PAGE>

SWS will provide website maintenance (e.g., updates, modifications, etc.) for
Westwood's website at a rate of $75 per hour plus related out-of-pocket travel
                                ---
expenses.

Disaster Recovery:

Westwood currently performs their own data backup of all servers located at
their offices. This process is coordinated by an SWS employee and monitored by
Westwood. Following the Distribution Date, Westwood will continue to be
responsible for tape storage and monitoring. In the event that Westwood converts
to a different method of tape backup, such as Vytal Vault, Westwood will be
responsible for the conversion to the new method, including all costs and
expenses relating thereto, and SWS will provide any support needed for such
conversion. SWS will charge Westwood a fee of $45 per hour for such conversion
                                              ---
support services.

Any consultation for disaster recovery plan development and testing or Work
Place Area recovery will be quoted under a separate agreement.

                              Schedule 1.1 - Page 4

<PAGE>

Schedule 1.2

                            HUMAN RESOURCES SERVICES

General human resources advisory services involving the evaluation or
development of payroll, benefits and compensation programs and systems

Development of employee handbook and pertinent policies

Development of effective human resources practices

Consultation on setting up proper controls to insure human resources compliance
with various federal and state employee relations regulations

Guidance on proper interviewing procedures and processes

Assistance in identifying effective recruiting resources

Development of human resources forms and documents

Other general human resources related services

                              Schedule 1.1 - Page 5<PAGE>

                                                                    EXHIBIT 10.5

                      PROMISSORY NOTE AND PLEDGE AGREEMENT

$2,766,960.00                                                  December 14, 2001

         FOR VALUE RECEIVED, the undersigned Susan Byrne ("Maker"), hereby
                                                           -----
promises to pay to the order of WESTWOOD HOLDINGS GROUP, INC., a Delaware
Company ("Payee") or holder hereof, at Payee's address, 300 Crescent Court,
          -----
Suite 1300, Dallas, Texas 75201 or such other address as Payee may designate in
writing from time to time, a principal sum of two million seven hundred sixty
six thousand, nine hundred sixty and No/100 Dollars ($2,766,960.00) (the
"Principal Sum"), together with interest thereon, as provided in this promissory
 -------------
note (this "Note").
            ----

         For purposes of this Note, the following terms shall have the following
definitions:

Maturity Date:    the earlier of (i) ninety (90) days after Maker's employment
-------------
                  with Payee is terminated (A) by Payee for Cause, or (B) by
                  Maker without Good Reason, or (ii) December 14, 2010.

Cause:            (i) dishonesty, fraud or gross insubordination with respect to
-----
                  the business or affairs of Payee or, (ii) conviction of a
                  crime or acceptance of a plea bargain relating to a felony or
                  a misdemeanor if, in the opinion of the Board of Directors,
                  the employee's ability to carry out his/her responsibilities
                  would be materially impaired, or (iii) the violation of any
                  substance abuse policy of Payee that would result in discharge
                  under such policy as applied to Payee's employees generally.

Change of
---------
Control:          (i) a merger or consolidation of Payee with or into another
-------
                  corporation in which Payee shall not be the surviving
                  corporation (other than a merger undertaken solely in order to
                  reincorporate in another state) (for purposes hereof, Payee
                  shall not be deemed the surviving corporation in any such
                  transaction if, as the result thereof, it becomes a
                  wholly-owned subsidiary of another corporation), (ii) a
                  dissolution of Payee, (iii) a transfer of all or substantially
                  all of the assets of Payee in one transaction or a series of
                  related transactions to one or more other persons or entities,
                  (iv) a transaction or series of transactions that results in
                  any entity, "Person" or "Group" (as defined below), becoming
                  the beneficial owner, directly or indirectly, of securities of
                  Payee representing more than 50% of the combined voting power
                  of Payee's then outstanding securities, or (v) during any
                  period of two (2) consecutive years commencing on or after
                  January 1, 2002, individuals who at the beginning of the
                  period constituted Payee's Board of Directors cease for any
                  reason to constitute at least a majority, unless the election
                  of each director who was not a director at the beginning of
                  the period has been approved in advance by directors
                  representing at least two-thirds (2/3) of the directors then
                  in office who were directors at the beginning of the period;
                  provided, however, that a "Change of Control" shall not be
                  --------  -------
                  deemed to have occurred if the ownership of 50% or more of the
                  combined voting power of the surviving corporation, asset
                  transferee or Company (as the case may be), after giving
                  effect to the transaction or series of transactions, is
                  directly or indirectly held by (A) a trustee or other
                  fiduciary under an employee benefit plan maintained by Payee,
                  (B) one or more of the "executive officers" of Payee that held
                  such positions prior to the transaction or series of
                  transactions, or any entity, Person or Group under their
                  control. As used herein, "Person" and "Group" shall have the
                  meanings set forth in Sections 13(d)(3) and/or 14(d)(2) of the
                  Securities Exchange Act of 1934, as amended, and "executive
                  officer" shall have the meaning set forth in Rule 3b-7
                  promulgated under such Act.

Collateral:       720 shares of common stock of Westwood Holdings Group, Inc.
----------

Good Reason:      (i) a resignation occurring within ninety (90) days following
-----------
                  a Change in Control; (ii) the relocation of Payee's principal
                  place of business to a location more than 100 miles from its
                  location as of the date of this Note without Maker's consent;
                  or (iii) a material reduction in Maker's salary or bonus
                  opportunity, or Maker's responsibilities.

Page 1 of 3

<PAGE>

Interest Rate:    3.93% per annum, compounded semi-annually.
-------------

     1.   Background. Maker has executed this Note to evidence Maker's
          ----------
obligation to repay the Principal Sum together with interest thereon, as
provided in Section 2 of this Note, and to provide the Collateral as collateral
security for the obligations of Maker evidenced by this Note.

     2.   Interest. This Note shall bear interest at the Interest Rate set forth
          --------
above. Maker shall pay all accrued and unpaid interest annually, with the first
interest payment date being February 1, 2003, and on the first day of each
February thereafter until the Maturity Date.

     3.   Events of Default; Remedies.
          ---------------------------

          (a)  Each of the following shall constitute an "Event of Default"
     under this Note:

               (i)   The failure of Maker to pay when due any part of the
          Principal Sum, interest or other payment required to be made pursuant
          to this Note.

               (ii)  The failure of Maker to observe or perform any other
          obligation set forth in this Note or that certain Stock Purchase
          Agreement between SWS Group, Inc. ("SWS") and Maker, dated as of
          December 14, 2001 (the "SPA");

               (iii) Any transfer of the Collateral by Maker to SWS as a result
          of an exercise (A) by SWS of any call right, or (B) by Maker of any
          put right, pursuant to the terms of the SPA; or

               (iv)  If Maker (a) makes a transfer in fraud of creditors, or
          makes an assignment for the benefit of creditors, of a substantial
          part of Maker's property; (b) admits in writing Maker's inability to
          pay his or her debts as they become due; (c) has a receiver, trustee
          or custodian appointed for, or take possession of, all or
          substantially all of Maker's assets, either in a proceeding brought by
          Maker or in a proceeding brought against Maker and such appointment is
          not discharged or such possession is not terminated within sixty (60)
          days after the effective date thereof or he or she consents to or
          acquiesces in such appointment or possession; (d) files a petition for
          relief under the United States Bankruptcy Code or any other present or
          future federal or state insolvency, bankruptcy or similar laws (all of
          the foregoing hereinafter collectively called "Applicable Bankruptcy
          Law") or an involuntary petition for relief is filed against Maker
          under any Applicable Bankruptcy Law and such involuntary petition is
          not dismissed within sixty (60) days after the filing thereof, or an
          order for relief naming Maker is entered under any Applicable
          Bankruptcy Law, or any composition, rearrangement, extension,
          reorganization or other relief of debtors now or hereafter existing is
          requested or consented to by Maker; (e) fails to have discharged
          within a period of thirty (30) days any attachment, sequestration or
          similar writ levied upon a substantial part of Maker's property; or
          (f) fails to pay within thirty (30) days any final money judgment
          against Maker.

          (b)  Upon the occurrence and during the continuance of an Event of
     Default under this Note, Payee may declare the entire unpaid Principal Sum
     and accrued and unpaid interest on this Note immediately due and payable,
     without further notice, demand, or presentment, foreclose any liens or
     security interests securing all or any part hereof, or exercise any other
     right or remedy to which Payee may be entitled by agreement, at law, or in
     equity; provided, however, that no Event of Default shall be deemed to have
             --------  -------
     occurred unless notice of the event giving rise to a potential Event of
     Default shall have been delivered to Maker and Maker shall have failed to
     correct or cure such event within fifteen (15) days following his receipt
     of such notice; provided further, however, that upon any Event of Default
                     ----------------  -------
     under Section 3(a)(iii) and (iv) hereof, this Note shall automatically
     become due and payable without necessity of any notice or action on the
     part of Payee and without the ability of Maker to cure such event. Payee
     shall have all rights and remedies available to it under the Uniform
     Commercial Code as adopted in the State of Texas.

Page 2 of 3

<PAGE>

     5.   Costs of Collection. If this Note is placed in the hands of an
          -------------------
attorney for collection, or if it is collected through any legal proceedings,
Maker agrees to pay court costs, reasonable attorneys' fees, and other costs of
collection of Payee.

     6.   Certain Waivers. Maker waives presentment and demand for payment,
          ---------------
protest, notice of intention to accelerate, notice of acceleration, and notice
of protest and nonpayment, and agrees that his liability on this Note shall not
be affected by, and hereby consents to, any renewal or extension in the time of
payment hereof, any indulgences, or any release or change in any security for
the payment of this Note.

     7.   Pledge Agreement; Partial Release of Collateral. As security for
          -----------------------------------------------
payment of the Principal Sum and any accrued and unpaid interest thereon, Maker
hereby grants to Payee a continuing interest in all of Maker's right, title and
interest in, to and under the Collateral, which shall be retained by Payee, and
all products and proceeds of such Collateral, now existing or hereafter arising
(the "Pledge"). The Collateral shall be released from the Pledge upon Maker's
payment in full of the Principal Sum, together with all accrued interest
thereon. In addition, upon Maker's request, a partial release of the Collateral
shall be made provided, however, that Maker delivers cash to Payee in an amount
              --------  -------
sufficient to pay the pro-rata portion of the outstanding Principal Sum and any
unpaid interest accrued thereon attributable to the Collateral to be released
(the "Pro-Rata Debt Amount").

     8.   ENTIRETY. THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN MAKER AND
          --------
PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

     9.   GOVERNING LAW. THE VALIDITY, CONSTRUCTION, AND ENFORCEABILITY OF THIS
          -------------
NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES
OF AMERICA.

     10.  Parties Bound. This Note is binding upon and shall inure to the
          -------------
benefit of Maker, Payee, and their respective successors and assigns. Maker may
not assign any of its rights or obligations hereunder without Payee's prior
written consent, and any purported assignment thereof without Payee's prior
written consent shall be void and ineffective. Payee, upon prior written notice
to Maker, shall be entitled to assign its rights and duties hereunder to any
subsequent holder of this Note who shall for all purposes hereof thereafter be
"Payee" hereunder the same as if originally named as "Payee" herein.

                                  MAKER:

                                         /s/ SUSAN BYRNE
                                  ----------------------------------------------
                                  Susan Byrne

                                  PAYEE:

                                  Westwood Holdings Group, Inc.,
                                  a Delaware corporation

                                  By:    /s/ BRIAN O. CASEY
                                     -------------------------------------------
                                  Name:  Brian O. Casey
                                       -----------------------------------------
                                  Title: President & COO
                                        ----------------------------------------

Page 3 of 3

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