<PAGE>

                                                                   EXHIBIT 10.32

                       AMENDMENT TO ACQUISITION AGREEMENT

         This AMENDMENT (the "Amendment") to the Acquisition Agreement is
executed to be effective as of December 2, 2002 by and between GAINSCO Service
Corp., a Texas corporation ("Seller"), and GAINSCO, INC., a Texas corporation
that is the parent company of Seller ("GAINSCO") (collectively, "Sellers"),
Berkeley Management Corporation, a Texas corporation ("Purchaser"), Liberty
Mutual Insurance Company, a Massachusetts stock insurance company ("Liberty"),
and GAINSCO County Mutual Insurance Company, a Texas county mutual insurance
company (the "Company"). This Amendment amends the Acquisition Agreement by and
among Sellers, Purchaser, Liberty, and the Company, dated August 12, 2002 (the
"Acquisition Agreement"), in the particulars set forth herein. All capitalized
terms used but not defined herein shall have the same meaning assigned to such
terms in the Acquisition Agreement.

                                         RECITALS

         WHEREAS, pursuant to the Acquisition Agreement, Sellers agreed to
transfer and assign to Purchaser the exclusive authority and rights to manage
and control the Company under the terms of that certain Management Contract
dated October 12, 1992; and

         WHEREAS, Sellers, Purchaser, Liberty and the Company have agreed to
amend the Acquisition Agreement pursuant to the terms of this Amendment and
consistent with the terms and conditions of the Acquisition Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, warranties, and covenants set forth herein and in the
Acquisition Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows.

         1. AMENDMENTS.

         (a) The first sentence of Section 1.2(d) is amended to read as follows:

         "(d) Surplus Debentures. Simultaneously with the Closing, Purchaser
         shall pay into the surplus of the Company an amount in cash and other
         admissible assets equal to Ten Million Dollars ($10,000,000.00), in
         exchange for the issuance of a surplus debenture note in substantially
         the form attached hereto as Exhibit A, duly executed and delivered by
         Company in favor of Purchaser."

         (b) The first three sentences of Section 1.4 are deleted and replaced
with the following:

         "1.4 Closing. The closing of such purchase and sale of the Management
         Agreement ("Closing") shall take place at 10:00 a.m. Central Time on
         December 2, 2002 (the "Closing Date") and shall take place at the
         offices of Akin, Gump,

                                       1
<PAGE>

         Strauss, Hauer & Feld, L.L.P, 300 West 6th Street, Suite 2100, Austin,
         Texas 78701, counsel for Purchaser; provided, however, all conditions
         to the Closing under this Agreement shall have been satisfied or
         waived."

         (c) Exhibits A and I to the Acquisition Agreement are deleted in their
entirety and replaced with the forms of the surplus debenture note and the
Restated Articles of Incorporation attached hereto. The new Exhibits A and I are
added to the Acquisition Agreement, replace the existing Exhibits A and I, and
are incorporated into the Acquisition Agreement by reference in the forms
attached hereto.

         (d) The second sentence of Section 11.2 is amended to read as follows:

         "Except as set forth in this Section 11.2 or as provided elsewhere in
         this Agreement, nothing in this Agreement shall confer upon any person
         not a party to this Agreement or the legal representatives of such
         person, any rights, remedies of any nature or kind whatsoever under or
         by reason of this Agreement."

         2. AUTHORIZATION. The parties hereto warrant and represent that they
are corporations in good standing in their respective places of domicile; that
the execution of this Amendment is fully authorized by each of them; that the
person or persons executing this Amendment are fully authorized by each of them;
that the person or persons executing this Amendment have the necessary and
appropriate authority to do so; that there are no pending agreements,
transactions, or negotiations to which any of them are a party that would render
this Amendment or any part hereof void, voidable, or unenforceable; and that no
further authorization, consent or approval of any governmental entity or any
other third party is required to make this Amendment valid and binding upon
them.

         3. FURTHER ASSURANCES. The parties hereby agree to execute promptly any
and all supplemental agreements and other documents of any nature or kind, which
the other party may reasonably require in order to implement the provisions or
objectives of this Amendment.

         4. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which when so executed and delivered, shall be an
original. Such counterparts shall together constitute one and the same
instrument and agreement.

         5. AMENDMENTS. This Amendment may not be modified or amended, nor any
of its provisions waived, except by an instrument in writing, signed by the
parties hereto.

         6. Continuity OF TERMS. All other terms and conditions set forth in the
Acquisition Agreement, which are not inconsistent herewith, shall remain valid
and in full force and effect.



                            [SIGNATURE PAGE FOLLOWS]



                                       2
<PAGE>


IN WITNESS WHEREOF, Seller, GAINSCO, the Company, Purchaser and Liberty have
caused this Agreement to be duly executed as of the date first written above.

SELLERS:

GAINSCO SERVICE CORP.

By:         /s/ Glenn W. Anderson
   -------------------------------------
Title:          President
      ----------------------------------


GAINSCO, INC.

By:         /s/ Glenn W. Anderson
   -------------------------------------
Title:          President
      ----------------------------------


THE COMPANY:

GAINSCO COUNTY MUTUAL INSURANCE COMPANY

By:       /s/ Daniel J. Coots
   -------------------------------------
Title:        Senior Vice President and
      ----------------------------------
              Chief Financial Officer
      ----------------------------------


PURCHASER:

BERKELEY MANAGEMENT CORPORATION

By:     /s/ John B. Conners
   -------------------------------------
Title:      Chief Executive Officer
      ----------------------------------


LIBERTY:

LIBERTY MUTUAL INSURANCE COMPANY

By:     /s/ John B. Conners
   -------------------------------------
Title:      Executive Vice President and
      ----------------------------------
            Manager of Personal Markets
      ----------------------------------



                                       3
<PAGE>

                                    EXHIBIT A


                                SURPLUS DEBENTURE

$10,000,000.00                                                 ___________, 2002

NOTWITHSTANDING ANY CONTRARY PROVISION HEREIN, IT IS AGREED AND UNDERSTOOD THAT
THE OBLIGATION TO PAY EITHER INTEREST OR PRINCIPAL UNDER THIS SURPLUS DEBENTURE
IS CONTINGENT UPON LIBERTY COUNTY MUTUAL INSURANCE COMPANY HAVING POLICYHOLDER
SURPLUS IN THE AMOUNT HEREIN SPECIFIED. IN THE EVENT THAT SAID COMPANY DOES NOT
HAVE THE REQUISITE POLICYHOLDER SURPLUS ON THE MATURITY DATE OF THIS SURPLUS
DEBENTURE OR ANY OTHER DATE PRESCRIBED FOR THE PAYMENT OF PRINCIPAL OR INTEREST,
THE DEBT, EITHER AS TO PRINCIPAL OR INTEREST, SHALL NOT BE DISCHARGED, BUT SHALL
BE DEFERRED UNTIL SUCH DATE THAT POLICYHOLDER SURPLUS EXISTS IN THE REQUISITE
AMOUNT.

1.   For value received, receipt of which is hereby acknowledged, Liberty County
     Mutual Insurance Company of Dallas County, Texas (the "Company"), subject
     to all of the terms and contingencies set out herein, promises to pay to
     the order of Berkeley Management Corporation, a Texas corporation (the
     "Holder"), its successors and assigns, the sum of TEN Million and No/100
     Dollars ($10,000,000.00) together with interest at 10% per annum; provided,
     however, that the interest rate as calculated hereunder shall never exceed
     the maximum rate of interest which could be lawfully charged to the Company
     under the applicable laws of the State of Texas or of the United States of
     America then in effect and as construed by the courts having jurisdiction
     thereof. Interest shall be computed on a per annum basis of a year of 365
     days and for the actual number of days (including the first but excluding
     the last day) elapsed. The principal and interest of this Surplus Debenture
     shall be payable only out of policyholder surplus of the Company in excess
     of the minimum surplus floor defined below. For purposes of this Surplus
     Debenture, policyholder surplus shall be defined as all assets of the
     Company remaining after deduction of all liabilities, in accordance with
     the accounting procedures applicable to the Company under the laws of the
     State of Texas, and which is reported as its total policyholder surplus in
     its annual statement filed with the Texas Department of Insurance, and
     currently entered on line 32 of page 3 of the annual statement form.

2.   The minimum surplus floor, as referred to in this Surplus Debenture, shall
     be $2,000,000.00.

3.   Subject to the restrictions in paragraph 1 above, the principal of this
     Surplus Debenture shall be due and payable on demand, but if no demand be
     sooner made all principal and accrued interest then remaining unpaid shall
     be due and payable on or before January 3, 2046, unless an extension is
     granted by the Holder in its sole discretion. In the event that the Company
     is not possessed, at the time when payments of either principal or interest
     are due hereunder, of the requisite policyholder surplus from which to make
     such payments in accordance with the terms hereof, such payments shall be
     deferred but not

<PAGE>

     extinguished. If the policyholder surplus is not sufficient to discharge
     all of the obligations as to both principal and interest, partial payments
     shall be made to the extent that the requisite policyholder surplus does
     exist, with each such payment to be applied first to accrued and unpaid
     interest, and the balance, if any, to principal.

4.   This Surplus Debenture shall bear interest as provided herein to be
     calculated from the date of issuance until paid. Interest, computed on the
     unpaid principal balance of this Surplus Debenture, shall be due and
     payable in quarterly installments, as it accrues, on the first day of each
     calendar quarter commencing January 1, 2003.

5.   No payment shall be made on this Surplus Debenture as to principal or
     interest which shall reduce the policyholder surplus of the Company as
     herein provided, at the time of payment, below the applicable surplus
     requirements of the Texas Insurance Code. The Company reserves the right to
     prepay this Surplus Debenture in whole or in part at any time without
     penalty, but no payment shall be made except from policyholder surplus in
     excess of the minimum surplus floor stated herein.

6.   This Surplus Debenture represents and evidences a loan to the Company by
     the Holder of such funds as are necessary for the purposes of its business
     and further to enable the Company to comply with the applicable surplus
     requirements of the Texas Insurance Code. Pursuant to Article 17.17 of the
     Texas Insurance Code, this Surplus Debenture represents and evidences an
     advance to the Company by the Holder, a policyholder of the Company, of
     such funds as are necessary for the purposes of its business and further to
     enable the Company to comply with the applicable surplus requirements of
     the Texas Insurance Code.

7.   This Surplus Debenture is and shall be binding upon the successors and
     assigns of the Company to the extent herein stated; provided, however, this
     Surplus Debenture shall not create a lien upon or claim against any
     reserves or premiums due in respect of those insurance policies of the
     Company which are reinsured, or the liability of which is assumed, by
     another insurer pursuant to a voluntary or involuntary liquidation of the
     Company. In the event of any liquidation, receivership, or winding up,
     which is involuntary in nature, this Surplus Debenture shall be subordinate
     and inferior to the rights attributable to the insurance policies of the
     Company; but otherwise, such Surplus Debenture shall be prior and superior
     in entitlement to distribution of assets remaining after reinsurance,
     transfer, or extinguishment of obligations under insurance policies and
     payment of expenses of liquidation or sale, whether such distribution be
     pursuant to a voluntary or involuntary liquidation. In the event of the
     voluntary or involuntary liquidation of the Company, the obligations of
     this Surplus Debenture shall become a fully matured liability of the
     Company, as to both principal and interest.

8.   It is understood that this Surplus Debenture, including principal and
     interest, shall not be a liability of the Company or a claim against any of
     its assets except as to the excess of its policyholder surplus over and
     above the minimum surplus floor as herein specified. Furthermore, it shall
     be reflected as a balance sheet liability only to the extent of any amount
     of principal and interest which is due and payable but unpaid. In the event
     of a consolidation or merger of the Company in a manner such that it is not
     the surviving


<PAGE>

     company, this Surplus Debenture shall be and become the obligation of the
     surviving company to the full extent of the principal and interest owing
     hereunder.

9.   The Company further obligates itself, so long as any sums remain unpaid on
     this Surplus Debenture, to conduct its affairs in accordance with
     applicable laws, rules and regulations, including those embodied in the
     Texas Insurance Code and the rules and regulations promulgated pursuant
     thereto.

10.  This Surplus Debenture is a valid and binding obligation of the Company,
     enforceable in accordance with its terms. The execution, delivery and
     performance of this Surplus Debenture has been duly authorized by all
     necessary action, corporate and otherwise, and will not violate or
     constitute a default under any law, requirement or restriction imposed upon
     the Company, or any judicial, arbitral or governmental instrumentality, the
     articles of incorporation or bylaws of the Company or any agreement or
     instrument to which the Company is a party or by which it or its property
     may be bound or affected.

11.  The Company has not offered this Surplus Debenture or any part hereof for
     sale to, or solicited any offers to buy this Surplus Debenture or any part
     hereof from anyone other than the Holder. The Holder shall not sell or
     offer for sale this Surplus Debenture or any part hereof, or solicit any
     offer to buy this Surplus Debenture or any part hereof, or any similar
     obligation or similar security of the Company from any person or persons so
     as to bring the issuance or sale of this Surplus Debenture within the
     provisions of Section 5 of the Securities Act of 1933, as amended.

12.  No recourse shall be had for the payment of the principal of, or the
     interest on, this Surplus Debenture, or for any claims based hereon or
     otherwise in respect hereof, against any past, present, or future member,
     officer, or director of the Company, such liability being, by acceptance
     and as a part of the consideration for the issuance hereof, expressly
     released.

13.  No amendment, modification, or waiver of any provision of this Surplus
     Debenture, nor consent to any departure by the Company therefrom, shall be
     effective unless the same shall be in writing, signed by a duly authorized
     representative of the Company and the Holder, and then only in the specific
     instance and for the purpose for which it is given.

14.  The substantive laws of the State of Texas shall govern the validity,
     construction, enforcement, and interpretation of the provisions of this
     Surplus Debenture. Wherever possible, each provision of this Surplus
     Debenture shall be interpreted in such a manner as to be effective and
     valid under applicable law, but if any provision of this Surplus Debenture
     shall be prohibited or invalid under applicable law, such provision shall
     be ineffective to the extent of such prohibition and/or validity without
     invalidating the remainder of such provision or the remaining provisions of
     this Surplus Debenture.

15.  This Surplus Debenture shall be binding upon the Company and the Holder and
     their respective legal representatives, successors, and permitted assigns.
     The Holder may not assign this Surplus Debenture or any of its rights
     hereunder without the express prior written consent of the Company.


<PAGE>

16.  This Surplus Debenture is performable in Irving, Dallas County, Texas. The
     venue for any action relating to this Surplus Debenture shall be proper
     only in Dallas County, Texas.

17.  This Surplus Debenture has been approved by the Commissioner of Insurance
     of Texas pursuant to Article 1.39 and Article 21.49-1, Section 4(d)(1) of
     the Texas Insurance Code.

18.  In the event this Surplus Debenture is placed in the hands of an attorney
     for collection, or if the Holder incurs any costs incident to the
     collection of the indebtedness evidenced hereby, the Company agrees to pay
     to the Holder an amount equal to all such costs, including without
     limitation, all actual reasonable attorneys' fees and expenses and all
     court costs.

19.  All agreements between the Company and the Holder hereof, whether now
     existing or hereafter arising and whether written or oral, are hereby
     expressly limited so that in no event, whether by reason of acceleration of
     the payment obligations hereunder or otherwise, shall the amount paid or
     agreed to be paid to the Holder hereof for the use, forbearance, or
     detention of money hereunder or otherwise exceed the maximum amount
     permissible under applicable law. If fulfillment of any provision hereof,
     at the time performance of such provision shall be due, shall involve
     transcending the limit of validity prescribed by law, then, ipso facto, the
     obligation to be fulfilled shall be reduced to the limit of such validity;
     and if the Holder hereof shall ever receive anything of value deemed
     interest under applicable law which would exceed interest at the highest
     lawful rate, an amount equal to any excessive interest shall be applied to
     the reduction of the principal amount owing hereunder and not to the
     payment of interest, or if such excessive interest exceeds the unpaid
     balance of principal hereof, such excess shall be refunded to the Company.
     All sums paid or agreed to be paid to the Holder hereof for the use,
     forbearance, or detention of the indebtedness of the Company to the Holder
     hereof shall, to the extent permitted by applicable law, be amortized,
     prorated, allocated, and spread throughout the full term of such
     indebtedness until payment in full so that interest on the account of such
     indebtedness is uniform throughout the term thereof.

20.  To the fullest extent permitted by applicable law, the Company, for itself
     and its successors and assigns, expressly waives presentment, protest,
     notice of protest, notice of dishonor, notice of demand, and nonpayment
     thereof, and the benefit of any exemption or insolvency laws.

                            [SIGNATURE PAGE FOLLOWS]




<PAGE>
IN WITNESS WHEREOF, this Surplus Debenture is executed by the officers of
Liberty County Mutual Insurance Company to be effective on the issue date
specified above.

                                        LIBERTY COUNTY MUTUAL INSURANCE
                                        COMPANY
                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


ATTEST:
By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------





<PAGE>


                                    EXHIBIT I

                       RESTATED ARTICLES OF INCORPORATION
                                (WITH AMENDMENTS)
                                       OF
                     LIBERTY COUNTY MUTUAL INSURANCE COMPANY

                                   SECTION ONE

         GAINSCO COUNTY MUTUAL INSURANCE COMPANY (the "Company"), pursuant to
the provisions of Article 4.06 of the Texas Non-Profit Corporation Act (the
"Act"), hereby adopts these Restated Articles of Incorporation which accurately
copy the Articles of Incorporation and all amendments thereto that are in effect
to date (the "Old Articles") and as further amended by such Restated Articles of
Incorporation as hereinafter set forth and which contain no other change in any
provision thereof.

                                   SECTION TWO

         The Old Articles of the Company are amended by the Restated Articles of
Incorporation as follows:

         Article One of the Old Articles will be amended to change the name of
the Company from "GAINSCO COUNTY MUTUAL INSURANCE COMPANY" to "Liberty County
Mutual Insurance Company".

         Article Two of the Old Articles will be amended to change the home
office and principal office of the Company to Irving, Dallas County, Texas.

         Article Three of the Old Articles will be not changed.

         Article Four of the Old Articles will be amended to clarify the lines
of insurance in which the Company will transact business.

         Article Five of the Old Articles will be amended to clarify that the
business and offices of the Company shall be managed under the direction of the
board of directors of the Company and to set forth the names and addresses of
the persons now serving as directors.

         Article Six of the Old Articles will be amended to clarify the
indemnification obligations and procedures of the Company.

         The Old Articles also were amended to add a new Article Seven,
providing that a director of the Company shall not be held liable to the Company
or its members for monetary damages for any act or omission in the director's
capacity as a director, except to the extent that exculpation from liability is
not permitted under Texas law as in effect at the time such liability is
determined.

         The full text of each of the amended provisions as so amended is set
forth below in Section Six of these Restated Articles of Incorporation.



<PAGE>

                                  SECTION THREE

         Each such amendment made by these Restated Articles of Incorporation
has been effected in conformity with the provisions of the Act and such Restated
Articles of Incorporation and each such amendment made by the Restated Articles
of Incorporation were duly recommended by the board of directors and adopted by
the members of the Company as of the ____ day of _______, 2002.

                                  SECTION FOUR

         The Company has _____ members entitled to vote on the Restated Articles
of Incorporation and the amendments contained therein. Each such member was
entitled to one vote, and no class of members was entitled to vote on the
Restated Articles of Incorporation and the amendments contained therein as a
separate class.

                                  SECTION FIVE

         Of the _____ members of the Company entitled to vote with respect to
the Restated Articles of Incorporation and the amendments contained therein,
_____ members (representing at least two-thirds of the votes which members
present at such meeting in person or by proxy were entitled to cast) voted in
favor, and_____ members voted against. The vote was conducted at a duly convened
special meeting of members of the Company called for that purpose at which a
quorum was present, and all notices required to be given by the Act were given
on a timely basis.

                                   SECTION SIX

         The Old Articles are hereby superseded by the following Restated
Articles of Incorporation which accurately copy the entire text thereof as
further amended as set forth:

                                    ARTICLE I

         The name of this Company shall be Liberty County Mutual Insurance
Company.

                                   ARTICLE II

         The home office and principal office of the Company shall be in Irving,
Dallas County, Texas.

                                   ARTICLE III

         This charter shall have a term extending 50 years after January 3, 1996
and expiring on that day in the year 2046.


<PAGE>

                                   ARTICLE IV

         The purpose for which this Company is organized is to transact the
business of a county mutual insurance company on a statewide basis; namely, to
transact the business of insurance against loss or damage from fire, lightning,
gas explosion, theft, windstorm, hail, or any other hazard that any other fire
and windstorm insurance company operating in Texas may write on property
described in Article 17.01 of the Texas Insurance Code, as amended, all lines of
automobile insurance, including but not limited to automobile liability, bodily
injury, medical payments, property damage, automobile physical damage, fire,
theft, collision and comprehensive, and any other lines of insurance which a
county mutual insurance company may transact under the laws of the State of
Texas; and to issue non-assessable and non-contingent policies covering such
risks.

                                    ARTICLE V

         The number of directors of this Company shall be not less than five,
and all of them shall carry insurance in the Company in an amount not less than
$1,000.00 each. The powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the board of directors of the Company. The current members of
the Board of Directors and their addresses are:

         Robert W. Stallings   1445 Ross Avenue, Suite 5300, Dallas, Texas 75202
         Glenn W. Anderson     1445 Ross Avenue, Suite 5300, Dallas, Texas 75202
         John H. Williams      1445 Ross Avenue, Suite 5300, Dallas, Texas 75202
         Harden H. Wiedemann   1445 Ross Avenue, Suite 5300, Dallas, Texas 75202
         Sam Rosen             1445 Ross Avenue, Suite 5300, Dallas, Texas 75202
         Daniel J. Coots       1445 Ross Avenue, Suite 5300, Dallas, Texas 75202

         A change in the number or names of the directors shall not require an
amendment to these Articles.

                                   ARTICLE VI

A. In this article:

(1) "Company" includes any domestic or foreign predecessor entity of the Company
in a merger, consolidation, or other transaction in which the liabilities of the
predecessor are transferred to the Company by operation of law and in any other
transaction in which the Company assumes the liabilities of the predecessor but
does not specifically exclude liabilities that are the subject matter of this
article.

(2) "Director" means any person who is or was a director of the Company and any
person who, while a director of the Company, is or was serving at the request of
the Company as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise.

(3) "Expenses" includes court costs and attorneys' fees.

(4) "Official capacity" means:

(a) when used with respect to a director, the office of director in the Company;
and


<PAGE>

(b) when used with respect to a person other than a director, the elective
or appointive office in the Company held by the officer or the employment or
agency relationship undertaken by the employee or agent in behalf of the
Company; but

(c) in both Paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise.

(5) "Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or proceeding, and any
inquiry or investigation that could lead to such an action, suit, or proceeding.

B. The Company shall indemnify a person who was, is, or is threatened to be made
a named defendant or respondent in a proceeding because the person is or was a
director only if it is determined in accordance with Section F of this article
that the person:

(1) conducted himself in good faith;

(2) reasonably believed:

(a) in the case of conduct in his official capacity as a director of the
Company, that his conduct was in the Company's best interests; and

(b) in all other cases, that his conduct was at least not opposed to the
Company's best interests; and

(3) in the case of any criminal proceeding, had no reasonable cause to believe
his conduct was unlawful.

C. Except to the extent permitted by Section E of this article, a director may
not be indemnified under Section B of this article in respect of a proceeding:

(1) in which the person is found liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity; or

(2) in which the person is found liable to the Company.

D. The termination of a proceeding by judgment, order, settlement, or conviction
or on a plea of nolo contendere or its equivalent is not of itself determinative
that the person did not meet the requirements set forth in Section B of this
article. A person shall be deemed to have been found liable in respect of any
claim, issue or matter only after the person shall have been so adjudged by a
court of competent jurisdiction after exhaustion of all appeals therefrom.

E. A person shall be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding; but if the person is found liable to the Company or is found liable
on the basis that personal benefit was improperly received by the person, the
indemnification (1) is limited to reasonable expenses actually incurred by the
person in connection with the proceeding, and (2) shall not be made in respect
of any proceeding in which the person shall have been found liable for willful
or intentional misconduct in the performance of his duty to the Company.

F. A determination of indemnification under Section B of this article must be
made:

(1) by a majority vote of a quorum consisting of directors who at the time of
the vote are not named defendants or respondents in the proceeding;

(2) if such a quorum cannot be obtained, by a majority vote of a committee of
the board of directors, designated to act in the matter by a majority vote of
all directors, consisting solely of

<PAGE>

two or more directors who at the time of the vote are not named defendants or
respondents in the proceeding;

(3) by special legal counsel selected by the board of directors or a committee
of the board by vote as set forth in Subsection (1) or (2) of this section, or,
if such a quorum cannot be obtained and such a committee cannot be established,
by a majority vote of all directors; or

(4) by the members in a vote that excludes the vote of directors who are named
defendants or respondents in the proceeding.

G. Authorization of indemnification and determination as to reasonableness of
expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. This provision shall be deemed to
constitute authorization of indemnification in the manner required by applicable
law.

H. The Company shall indemnify a director against reasonable expenses incurred
by him in connection with a proceeding in which he is a named defendant or
respondent because he is or was a director if he has been wholly successful, on
the merits or otherwise, in the defense of the proceeding.

I. If, in a suit for the indemnification required by Section H of this article,
a court of competent jurisdiction determines that the director is entitled to
indemnification under that section, the court shall order indemnification and
shall award to the director the expenses incurred in securing the
indemnification.

J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section B of this article or has been found liable in the circumstances
described by Section C of this article, the court may order the indemnification
that the court determines is proper and equitable; but if the person is found
liable to the Company or is found liable on the basis that personal benefit was
improperly received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection with the
proceeding.

K. Reasonable expenses incurred by a director who was, is, or is threatened to
be made a named defendant or respondent in a proceeding shall be paid or
reimbursed by the Company, in advance of the final disposition of the proceeding
and without the determination specified in Section F of this article or the
authorization or determination specified in Section G of this article, after the
Company receives a written affirmation by the director of his good faith belief
that he has met the standard of conduct necessary for indemnification under this
article and a written undertaking by or on behalf of the director to repay the
amount paid or reimbursed if it is ultimately determined that he has not met
that standard or if it is ultimately determined that indemnification of the
director against expenses incurred by him in connection with that proceeding is
prohibited by Section E of this article. This provision shall be deemed to
constitute authorization of that payment or reimbursement.

L. The written undertaking required by Section K of this article must be an
unlimited general obligation of the director but need not be secured. It may be
accepted without reference to financial ability to make repayment.



                                       11
<PAGE>

M. This article shall be valid only to the extent it is consistent with
applicable law as limited by these articles of incorporation, if such a
limitation exists.

N. Notwithstanding any other provision of this article, the Company may pay or
reimburse expenses incurred by a director in connection with his appearance as a
witness or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.

O. An officer of the Company shall be indemnified as, and to the same extent,
provided by Sections H, I, and J of this article for a director and is entitled
to seek indemnification under those sections to the same extent as a director.
The Company may indemnify and advance expenses to an officer, employee, or agent
of the Company to the same extent that it may indemnify and advance expenses to
directors under this article.

P. The Company may indemnify and advance expenses to a person who is not or was
not an officer, employee, or agent of the Company but who is or was serving at
the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise to the same extent that it may
indemnify and advance expenses to directors under this article.

Q. The Company may indemnify and advance expenses to an officer, employee,
agent, or person identified in Section P of this article and who is not a
director to such further extent, consistent with law, as may be provided by its
bylaws, general or specific action of its board of directors, or contract or as
permitted or required by common law.

R. (1) The Company may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Company or who is
or was serving at the request of the Company as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise against any
liability asserted against him and incurred by him in such a capacity or arising
out of his status as such a person, whether or not the Company would have the
power to indemnify him against that liability under this article.

(2)(a) In addition to the powers described in Subsection (1), the Company may
purchase, maintain, or enter into other arrangements on behalf of any person who
is or was a director, officer, or trustee of the Company against any liability
asserted against him and incurred by him in such capacity or arising out of his
status as such a person, whether or not the Company would have the power to
indemnify him against that liability under this article.

(b) If the other arrangement is with a person or entity that is not regularly
engaged in the business of providing insurance coverage, the arrangement may
provide for payment of a liability with respect to which the Company would not
have the power to indemnify a person only if coverage for that liability has
been approved by the Company's members.

(c) Without limiting the power of the Company to procure or maintain any kind of
other arrangement, the Company, for the benefit of persons described in
Subsection (2)(a) may:

(i) create a trust fund;

(ii) establish any form of self-insurance;

(iii) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the Company; or

(iv) establish a letter of credit, guaranty, or surety arrangement.

                                       12
<PAGE>

(3) The insurance may be procured or maintained with an insurer, or the other
arrangement may be procured, maintained, or established within the Company or
with any insurer or other person considered appropriate by the board of
directors, regardless of whether all or part of the stock or other securities of
the insurer or other person are owned in whole or part by the Company. In the
absence of fraud, the judgment of the board of directors as to the terms and
conditions of the insurance or other arrangement and the identity of the insurer
or other person participating in an arrangement is conclusive, and the insurance
or arrangement is not voidable and does not subject the directors approving the
insurance or arrangement to liability, on any ground, regardless of whether
directors participating in the approval are beneficiaries of the insurance or
arrangement. S. For purposes of this article, the Company is deemed to have
requested a director to serve an employee benefit plan whenever the performance
by him of his duties to the Company also imposes duties on or otherwise involves
services by him to the plan or participants or beneficiaries of the plan. Excise
taxes assessed on a director with respect to an employee benefit plan pursuant
to applicable law are deemed fines. Action taken or omitted by him with respect
to an employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the Company.

                                   ARTICLE VII

         A director of the Company shall not be held liable to the Company or
its members for monetary damages for any act or omission in the director's
capacity as a director, except to the extent that exculpation from liability is
not permitted under Texas law as in effect at the time such liability is
determined.


         DATED ___________, 2002.
                                         LIBERTY COUNTY MUTUAL INSURANCE COMPANY



                                         By:
                                            ------------------------------------
                                              Glenn W. Anderson, its President