UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 23, 2005
HALLMARK FINANCIAL SERVICES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation)
0-16090 87-0447375
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(Commission File Number) (IRS Employer Identification No.)
777 Main Street, Suite 1000, Fort Worth, Texas 76102
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(Address of Principal Executive Offices) (Zip Code)
817-348-1600
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On November 23, 2005, Hallmark Financial Services, Inc. (the "Company")
executed a definitive agreement (the "Purchase Agreement") with Samuel M.
Cangelosi, Donate A. Cangelosi and Carol A. Meyer (collectively, the
"Sellers") with respect to the Company's acquisition of all of the issued
and outstanding capital stock of Pan American Acceptance Corporation
("PAAC"). PAAC is engaged in financing premiums on property and casualty
insurance products marketed by two affiliated entities, Texas General
Agency, Inc. ("TGA") and TGA Special Risk, Inc. ("TGASRI"). The Company has
previously executed a definitive agreement to acquire TGA and TGASRI. Prior
to execution of the Purchase Agreement, there was no material relationship
between the Company or its affiliates and any of the Sellers other than the
definitive agreement to acquire TGA and TGASRI.
Pursuant to the Purchase Agreement, the Company will acquire PAAC for
an aggregate purchase price of $725,000 payable in cash at closing.
Pursuant to the Purchase Agreement, prior to closing the Sellers are
permitted to cause PAAC to distribute to the Sellers cash equal to the
lesser of the net income of PAAC for the nine months ended September 30,
2005, or 110% of the net income of PAAC for the comparable period of 2004.
Pursuant to the Purchase Agreement, the Company's acquisition of PAAC
will be effective as of the earlier of the closing date or January 1, 2006.
The Purchase Agreement provides for closing of the transaction on the first
business day of the calendar month following the satisfaction of all closing
conditions. The closing conditions include, among other things, obtaining
consent to the transaction from the Texas Department of Insurance and the
prior or contemporaneous closing of the Company's acquisition of TGA and
TGASRI. The Purchase Agreement may be terminated by either the Company or
the Sellers if all closing conditions have not been satisfied or waived by
March 30, 2006.
The description of the Purchase Agreement set forth above is qualified
in its entirety by reference to the definitive agreement filed as an exhibit
to this Current Report on Form 8-K and incorporated herein by this
reference.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 4.1 Purchase Agreement dated November 23, 2005, by and among
Hallmark Financial Services, Inc. and Samuel M. Cangelosi,
Donate A. Cangelosi and Carol A. Meyer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
HALLMARK FINANCIAL SERVICES, INC.
Date: November 30, 2005 By: /s/ Mark J. Morrison
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Mark J. Morrison, Chief Operating Officer