Document:

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                                                                   EXHIBIT 10.26

                              ACQUISITION AGREEMENT

                                     BETWEEN

                              GAINSCO SERVICE CORP.

                                       AND

                                  GAINSCO, INC.

                                   ("SELLERS")

                                       AND

                         BERKELEY MANAGEMENT CORPORATION

                                  ("PURCHASER")

                                       AND

                        LIBERTY MUTUAL INSURANCE COMPANY

                                   ("LIBERTY")

                     REGARDING THE ACQUISITION OF CONTROL OF

                     GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                                 (THE "COMPANY")

                                 AUGUST 12, 2002
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                               <C>
ARTICLE 1 TRANSFER AND ASSIGNMENT OF THE MANAGEMENT AGREEMENT..................................    2
         1.1      AGREEMENT TO PURCHASE AND SELL.  ............................................    2
         1.2      PURCHASE PRICE; PAYMENT......................................................    2
         1.3      ASSUMPTION OF LIABILITIES OF THE COMPANY.....................................    4
         1.4      CLOSING......................................................................    4
         1.5      PRO FORMA BALANCE SHEET......................................................    5
         1.6      SELLERS' DELIVERIES AT CLOSING...............................................    5
         1.7      PURCHASER'S AND LIBERTY'S DELIVERIES AT CLOSING..............................    6
         1.8      POST CLOSING ADJUSTMENT......................................................    7
         1.9      ACTIONS SUBSEQUENT TO CLOSING................................................    8

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY............................    8
         2.1      MAKING OF REPRESENTATIONS AND WARRANTIES.....................................    8
         2.2      VALIDITY AND OWNERSHIP OF THE MANAGEMENT AGREEMENT...........................    8
         2.3      COMPANY'S ORGANIZATION AND AUTHORITY.........................................    9
         2.4      CAPITALIZATION OF THE COMPANY................................................    9
         2.5      INTER-AFFILIATE INVESTMENTS/SUBSIDIARIES.....................................   10
         2.6      SELLERS' ORGANIZATION AND AUTHORITY..........................................   10
         2.7      NO VIOLATION.................................................................   10
         2.8      CONSENTS AND APPROVALS.......................................................   11
         2.9      TEXAS DEPARTMENT STATEMENTS..................................................   11
         2.10     BASIC DOCUMENTS..............................................................   12
         2.11     ABSENCE OF CERTAIN CHANGES OR EVENTS.........................................   12
         2.12     COMPLIANCE WITH LAWS.........................................................   12
         2.13     TAX MATTERS..................................................................   13
         2.14     ABSENCE OF UNDISCLOSED LIABILITIES...........................................   14
         2.15     INTERESTS IN REAL PROPERTY...................................................   15
         2.16     TITLE TO ASSETS..............................................................   15
         2.17     TRADEMARKS, SOFTWARE, PATENTS, COPYRIGHTS AND KNOW-HOW.  ....................   15
         2.18     CERTIFICATE OF AUTHORITY; COMPLIANCE WITH LAWS...............................   15
         2.19     COMPLIANCE WITH INSURANCE LAWS...............................................   16
         2.20     LITIGATION...................................................................   16
         2.21     CONTRACTS....................................................................   17
         2.22     INSURANCE CONTRACT FORMS.....................................................   17
         2.23     EMPLOYEES; EMPLOYEE PLANS....................................................   17
         2.24     PROPERTY AND CASUALTY INSURANCE..............................................   17
         2.25     FINANCIAL BOOKS AND RECORDS..................................................   18
         2.26     INFORMATION SUPPLIED TO PURCHASER............................................   18
         2.27     EXAMINATION REPORTS..........................................................   18
         2.28     AGENTS.......................................................................   18
         2.29     REINSURANCE AGREEMENTS.......................................................   18
         2.30     INFORMATION SYSTEMS..........................................................   19
         2.31     BUSINESS IN FORCE............................................................   19
</TABLE>

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<TABLE>
<S>                                                                                               <C>
         2.32     VOTING RIGHTS................................................................   19
         2.33     ASSOCIATIONS.................................................................   19
         2.34     OFFICERS AND DIRECTORS.......................................................   20
         2.35     BROKERS......................................................................   20
         2.36     ACTIONS OF POLICYHOLDERS AND DIRECTORS.......................................   20

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND LIBERTY..............................   20
         3.1      MAKING OF REPRESENTATIONS AND WARRANTIES.....................................   20
         3.2      CORPORATE ORGANIZATION.......................................................   20
         3.3      CORPORATE AUTHORITY..........................................................   20
         3.4      NO VIOLATION.................................................................   20
         3.5      CONSENTS AND APPROVALS.......................................................   21
         3.6      BROKERS......................................................................   21
         3.7      FINANCIAL STATEMENTS.........................................................   21

ARTICLE 4 COVENANTS OF SELLERS AND THE COMPANY.................................................   22
         4.1      CONDUCT OF BUSINESS..........................................................   22
         4.2      NEGATIVE COVENANTS...........................................................   22
         4.3      PREPARATION OF STATUTORY INSURANCE STATEMENTS................................   24
         4.4      ACCESS TO PROPERTIES AND RECORDS.............................................   24
         4.5      CONSENTS AND APPROVALS.......................................................   24
         4.6      INSURANCE LICENSE ...........................................................   24
         4.7      TRANSFER OF INSURANCE BUSINESS LIABILITIES ..................................   25
         4.8      CONTRACTS ...................................................................   25
         4.9      STATE ASSESSMENTS ...........................................................   26
         4.10     REGULATORY EXAMINATIONS......................................................   26
         4.11     THIRD PARTY AGREEMENTS.......................................................   27
         4.12     FURTHER ASSURANCES...........................................................   27
         4.13     SATISFACTION OF CONDITIONS...................................................   27
         4.14     NOTICE AND CURE..............................................................   27
         4.15     NEGOTIATIONS.................................................................   27
         4.16     MAINTENANCE OF POLICYHOLDER SURPLUS AND RESERVES.............................   27
         4.17     RATINGS......................................................................   27
         4.18     CHARTER AND BYLAW AMENDMENTS.................................................   27
         4.19     NON-COMPETITION AGREEMENT....................................................   28

ARTICLE 5 COVENANTS OF PURCHASER...............................................................   28
         5.1      CONSENTS AND APPROVALS.......................................................   28
         5.2      SATISFACTION OF CONDITIONS...................................................   29
         5.3      ACCESS TO RECORDS............................................................   29
         5.4      USE OF NAMES AND MARKS.......................................................   29

ARTICLE 6 CONDITIONS TO OBLIGATIONS OF PURCHASER...............................................   29
         6.1      REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY....................   29
         6.2      PERFORMANCE BY SELLERS AND THE COMPANY.......................................   29
         6.3      CONSENTS AND APPROVALS.......................................................   30
         6.4      NO VIOLATION OF ORDERS.......................................................   30
         6.5      NO MATERIAL ADVERSE CHANGE...................................................   30
</TABLE>

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<TABLE>
<S>                                                                                               <C>
         6.6      INTERCOMPANY OR RELATED PARTY DEBT, AGREEMENT OR INVESTMENTS.................   30
         6.7      OTHER CLOSING DOCUMENTS......................................................   31
         6.8      LEGAL MATTERS................................................................   31
         6.9      RESIGNATION OF DIRECTORS AND OFFICERS........................................   31
         6.10     BOOKS AND RECORDS............................................................   31
         6.11     CLOSING PRO FORMA BALANCE SHEET..............................................   31
         6.12     RECEIPT OF DOCUMENTATION PERTAINING TO FINANCIAL ASSURANCES..................   31

ARTICLE 7 CONDITIONS TO OBLIGATIONS OF SELLERS.................................................   32
         7.1      REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................   32
         7.2      PERFORMANCE BY PURCHASER.....................................................   32
         7.3      CONSENTS AND APPROVALS.......................................................   32
         7.4      NO VIOLATION OF ORDERS.......................................................   32
         7.5      LEGAL MATTERS................................................................   32
         7.6      DISTRIBUTION OF STATUTORY SURPLUS............................................   33

ARTICLE 8 SURVIVAL; INDEMNIFICATION............................................................   33
         8.1      SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.................................   33
         8.2      INDEMNIFICATION BY SELLERS...................................................   33
         8.3      INDEMNIFICATION BY PURCHASER.................................................   35
         8.4      NOTICE; DEFENSE OF THIRD PARTY CLAIMS........................................   35
         8.5      RECOVERIES...................................................................   37
         8.6      SATISFACTION OF INDEMNIFICATION OBLIGATIONS..................................   37
         8.7      SOLE AND EXCLUSIVE REMEDY....................................................   37
         8.8      EXCLUSIONS FROM LOSSES.......................................................   38

ARTICLE 9 TAXES................................................................................   38
         9.1      COOPERATION AND EXCHANGE OF INFORMATION......................................   38
         9.2      SELLERS' ACCESS..............................................................   38
         9.3      PURCHASER'S ACCESS...........................................................   39
         9.4      CONFIDENTIALITY..............................................................   39
         9.5      PREPARATION OF TAX RETURNS...................................................   39
         9.6      ALLOCATION BETWEEN PERIODS...................................................   39
         9.7      TAX TREATMENT OF TRANSACTIONS................................................   39
         9.8      ALLOCATION OF PURCHASE PRICE.................................................   40
         9.9      TRANSFER TAXES...............................................................   40
         9.10     TAX SHARING AGREEMENTS.......................................................   40

ARTICLE 10 TERMINATION AND ABANDONMENT.........................................................   40
         10.1     METHODS OF TERMINATION.......................................................   40
         10.2     EFFECT OF TERMINATION........................................................   41

ARTICLE 11 MISCELLANEOUS PROVISIONS............................................................   41
         11.1     PUBLICITY AND NON-DISCLOSURE.................................................   41
         11.2     SUCCESSORS AND ASSIGNS.......................................................   41
         11.3     CONSTRUCTION OF TERMS........................................................   41
         11.4     EXPENSES.....................................................................   42
         11.5     NOTICES......................................................................   42
         11.6     ENTIRE AGREEMENT.............................................................   43
</TABLE>

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<TABLE>
<S>                                                                                               <C>
         11.7     WAIVERS, AMENDMENTS AND REMEDIES.............................................   43
         11.8     SEVERABILITY.................................................................   43
         11.9     HEADINGS.....................................................................   44
         11.10    COUNTERPARTS.................................................................   44
         11.11    GOVERNING LAW................................................................   44
         11.12    EXHIBITS AND SCHEDULES.......................................................   44
         11.13    NEGOTIATED AGREEMENT.........................................................   44

ARTICLE 12 LIBERTY'S GUARANTY OF PURCHASER OBLIGATIONS.........................................   44

ARTICLE 13 DEFINITIONS.........................................................................   44
</TABLE>

                             EXHIBITS AND SCHEDULES

<TABLE>
<S>               <C>
Exhibit A         Form of Surplus Debenture Note
Exhibit B         Form of Liability Assumption Agreement
Exhibit C         Form of GAIC Reinsurance Agreement
Exhibit D         Form of Assignment Agreement
Exhibit E         Management Agreement
Exhibit F         Certificate of Authority
Exhibit G         Restated Articles of Incorporation and Restated Bylaws
Exhibit H         Form of Proxy
Exhibit I         Form of Amendments to Restated Articles of Incorporation
Exhibit J         Form of Amendments to Restated Bylaws
Exhibit K         Form of Opinion of Counsel for Sellers
Exhibit L         Form of Release and Resignation
Exhibit M         Form of Opinion of Counsel for Purchaser and Liberty
Exhibit N         Form of Attornment Letters
Exhibit O         Form of Escrow Agreement

Schedule 1.5      Pro Forma Balance Sheet
Schedule 2.9      Texas Department Statements
Schedule 2.11     Absence of Certain Changes or Events
Schedule 2.12     Compliance with Laws
Schedule 2.13     Tax Matters
Schedule 2.14     Absence of Undisclosed Liabilities
Schedule 2.17     Trademarks, Software, Patents, Copyrights, and Know-How
Schedule 2.19     Compliance with Insurance Laws
Schedule 2.20     Litigation
Schedule 2.21     Contracts
Schedule 2.22     Insurance Contract Forms
Schedule 2.24     Property and Casualty Insurance
Schedule 2.29     Reinsurance Agreements
Schedule 2.32     Voting Rights
Schedule 2.34     Officers and Directors
</TABLE>

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                              ACQUISITION AGREEMENT

      THIS ACQUISITION AGREEMENT (this "AGREEMENT"), is made and entered into as
of the 12th day of August, 2002 by and among 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"), pursuant to which Sellers shall sell and Purchaser shall
acquire the rights to manage and control the Company.

                                    RECITALS

      WHEREAS, the Company is authorized in the State of Texas to do business as
a county mutual insurance company pursuant to Chapter 17 of the Texas Insurance
Code.

      WHEREAS, the Company is managed and controlled pursuant to the terms of a
Management Contract by and between the Company and Seller dated October 12, 1992
(the "MANAGEMENT AGREEMENT").

      WHEREAS, Purchaser desires to acquire from Sellers, and Sellers desire to
sell to Purchaser, the exclusive authority and right to manage and control the
Company under the terms of the Management Agreement.

      WHEREAS, Purchaser's intent in acquiring the Management Agreement is that,
as of the Closing Date (as defined in Section 1.4 hereof), the Company shall be
a "clean shell" and its assets will consist only of the Company's corporate
franchise, its license to transact insurance pursuant to Chapter 17 of the Texas
Insurance Code, and certain other assets as contemplated herein and that the
Company shall have no liabilities that have not been provided for as
contemplated herein.

      WHEREAS, in connection with this Agreement, as of the Closing Date, Seller
is to take the actions provided for herein to (a) cause one hundred percent
(100%) of the Company's existing insurance liabilities and claims under the
GAINSCO Fronting Arrangement (as defined herein) to be reinsured; (b) provide
for the Company's remaining liabilities; and (c) reduce the Company's
policyholder surplus, all as contemplated herein.

      WHEREAS, with respect to certain insurance fronting programs between the
Company and (a) Metropolitan Property & Casualty Insurance Company
("METROPOLITAN") and (b) Omni Insurance Company ("OMNI") (together, the "THIRD
PARTY FRONTING ARRANGEMENTS"), Seller intends that the financial security
provided by Metropolitan and OMNI to the Company (the "FINANCIAL ASSURANCES")
will continue to be held by the Company unaffected by the Closing. The OMNI
fronting program was cancelled in accordance with the applicable contract terms,
statutes and regulations effective January 31, 2002. The Metropolitan fronting
program is continuing and is cancellable by the Company or Metropolitan upon due
notice.

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      WHEREAS, each of the parties acknowledges and agrees that all
representations, warranties and covenants made by it herein have been made to
induce the other parties to enter into and perform this Agreement.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

                                    ARTICLE 1
               TRANSFER AND ASSIGNMENT OF THE MANAGEMENT AGREEMENT

      1.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
set forth in this Agreement, at the Closing, Purchaser shall, on the terms set
forth herein, acquire by transfer and assignment the Management Agreement from
Seller and Seller shall sell, convey, transfer, assign and deliver all rights
and interests in and to the Management Agreement to Purchaser free and clear of
any and all liens, claims, options, charges, encumbrances, rights or
restrictions of any kind or nature, whether or not of record (hereinafter,
"LIENS").

      1.2 PURCHASE PRICE; PAYMENT. As consideration for the assignment of the
Management Agreement to Purchaser and the acquisition of control of the Company
by Purchaser, Purchaser shall pay and deliver to Seller the following payments
(collectively, the "PURCHASE PRICE"):

      (a) Closing Date Payment. At the Closing, Purchaser shall pay Seller, in
immediately available funds, the sum of One Million Dollars ($1,000,000.00),
plus an additional amount equal to the surplus (as defined in Section 1.8(a))
shown on the Closing Pro Forma Balance Sheet (together, the "CLOSING DATE
PAYMENT"). Seller shall designate an account to which the Closing Date Payment
shall be made, and advise Purchaser of same, at least two (2) business days
prior to the Closing Date.

      (b) Additional Consideration. Subject to the conditions described below in
this Section 1.2(b), Purchaser shall pay to Seller an additional sum of Three
Million Dollars ($3,000,000.00) on September 15, 2003 and an additional sum of
One Million Dollars ($1,000,000.00) on each September 15th from 2004 through
2009 (the "POST CLOSING PAYMENTS," and each a "POST CLOSING PAYMENT"), unless,
however, the Texas Legislature has enacted legislation, or the Texas Department
of Insurance (the "TEXAS DEPARTMENT") has adopted regulations, prior to the
applicable date of payment that would have the effect of (x) materially and
adversely altering the rights or flexibility afforded at the Closing Date to the
Company as a Texas county mutual insurance company in relation to rate regulated
entities authorized to write automobile insurance in Texas, or (y) granting to
rate regulated entities authorized to write automobile insurance in Texas a
material portion of the rights or flexibility afforded at the Closing Date to
the Company as a Texas county mutual insurance company (any of the foregoing, a
"MATERIAL ADVERSE LEGAL Change"). Examples of a Material Adverse Legal Change
may include, but are not limited to: (i) materially and adversely reducing the
exemption currently afforded to the Company as a Texas county mutual insurance
company from the rate setting requirements generally applicable to rate
regulated entities authorized to write automobile insurance in Texas; (ii)
materially and adversely restricting the Company's ability as a Texas

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county mutual insurance company to market to the preferred and standard market
segments; (iii) imposing materially adverse volume constraints on the amount of
business that can be written by the Company as a Texas county mutual insurance
company; or (iv) providing that rate regulated entities authorized to write
automobile insurance in Texas do not have to make benchmark rate and rating
manual filings set or required by the Texas Department. In the event that a
Material Adverse Legal Change occurs, the obligation of Purchaser to make Post
Closing Payments shall be suspended. If the Material Adverse Legal Change is
repealed, rescinded or vetoed by legislative, administrative or executive
action, or finally adjudicated to be invalid, within one (1) year of such
suspension, the obligation of Purchaser to make Post Closing Payments shall be
reinstated, beginning with the next scheduled Post Closing Payment and the dates
for the remaining Post Closing Payments shall be pushed back for a period
commensurate with the time that the obligation to make Post Closing Payments was
suspended but not more than one (1) year. The obligation of Purchaser to make
Post Closing Payments shall terminate, except as set forth in Section 1.2(c)
below, if such Material Adverse Legal Change is not repealed, rescinded or
vetoed by legislative, administrative or executive action, or finally
adjudicated to be invalid within such one (1) year period. Seller shall not be
obligated to refund any Post Closing Payments that have been paid.

      (c) Subsequent Sale. If at any time after the Closing and prior to the
September 15, 2009 Post Closing Payment, (i) any Post Closing Payment is not
made when scheduled on the basis that a Material Adverse Legal Change has
occurred and is continuing; (ii) beneficial ownership or control of the Company
has been, or is thereafter, transferred to an unaffiliated party (excluding any
change in ownership or control due to a de-mutualization, initial public
offering, corporate reorganization, sale of all or substantially all of the
assets or beneficial ownership of Liberty or its affiliates, which sale involves
four or more affiliated companies of Liberty (one of which is the Company), or
any comparable transaction); and (iii) the total consideration in excess of
policyholder surplus for the sale or transfer of the Company's "shell" together
with its license as a Texas county mutual insurance company is greater than the
total of payments previously made to Seller by Purchaser, then Purchaser shall
forthwith after receipt of consideration therefor, pay to Seller an amount equal
to the lesser of (y) the remainder of the Post Closing Payments minus
$1,500,000.00 or (z) the value of consideration received therefor, excluding the
policyholder surplus component, and minus $1,500,000.00. If the criteria
described in (ii) above are met, and the Company has in force business and/or
other assets that will remain with the Company after such transaction, the
purchase agreement shall assign a fair market value to the Company's "shell" and
license as a Texas county mutual insurance company. Notwithstanding anything
contained herein to the contrary, any rights of Seller with respect to such
subsequent sale shall terminate on September 15, 2009.

      (d) Surplus Debentures. Immediately after the Closing, Purchaser shall pay
into the surplus of the Company an amount in cash and other admissible assets
equal to Two Million Dollars ($2,000,000.00), in exchange for the issuance of a
surplus debenture note in substantially the form attached hereto as Exhibit A,
duly executed and delivered by the Company in favor of Purchaser. The
outstanding principal and interest due under the Seller Debenture, as described
in Section 2.4 hereto, shall be repaid by the Company on or before the Closing,
to the extent allowed by its terms and applicable law, and the remainder of such
principal and interest, if any, shall be waived and/or forgiven by Seller. The
Seller Debenture shall be surrendered to the Company at Closing for
cancellation, along with evidence reasonably satisfactory to Purchaser

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that any and all Liens encumbering the Seller Debenture have been released. The
only assets existing in the Company as of the Closing Date, and prior to the
contribution to surplus by Purchaser described above in this Section 1.2(d),
shall consist of (i) guaranty funds receivable or on deposit (calculated as the
net present value of the guaranty funds receivable or on deposit (after
deduction of any year 2002 amounts which are due to, or which could become
payable to, Metropolitan, OMNI or GAIC or any of its affiliates) using a 10%
discount rate and a 10-year life of the credits available); and (ii) premium
taxes receivable (the amount of which shall be net of any amounts which are due
to, or which could become payable to, Metropolitan, OMNI or GAIC or any of its
affiliates).

      1.3 ASSUMPTION OF LIABILITIES OF THE COMPANY.

      (a) As of the Closing Date, GAINSCO and the Company shall have executed a
Liability Assumption Agreement in the form attached hereto as Exhibit B,
pursuant to which GAINSCO shall assume certain liabilities, debts and
obligations of the Company, as described therein (the "LIABILITY ASSUMPTION
AGREEMENT").

      (b) As of the Closing Date, Sellers shall cause their affiliate, General
Agents Insurance Company of America, Inc., an Oklahoma insurance company
("GAIC"), to (i) terminate and commute any and all intercompany cessions,
reinsurance agreements, retrocessions, pooling arrangements or other transfers
of insurance risk by and between the Company and any of Sellers' affiliates, and
(ii) enter into a 100% Quota Share Reinsurance Agreement in all material
respects in the form attached hereto as Exhibit C, pursuant to which GAIC shall
reinsure 100% of the insurance liabilities and obligations of the Company under
all policies, binders, commitments, endorsements and insurance contracts issued
or to be issued, other than those issued or to be issued pursuant to the Third
Party Fronting Arrangements, and including the Company's portfolio of existing
insurance business written pursuant to the GAINSCO Fronting Arrangement (the
"GAIC REINSURANCE AGREEMENT"). The performance of the GAIC Reinsurance
Agreement, including the financial obligations described therein, shall be
secured by a Reinsurance Trust Agreement in all material respects in the form of
Exhibit B to the GAIC Reinsurance Agreement.

      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 the date
set forth in this Section 1.4, and shall take place at the offices of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., 300 West 6th Street, Suite 2100, Austin,
Texas 78701, counsel for Purchaser. The "CLOSING DATE" shall be the date on
which the Closing occurs. The Closing shall occur on the last day of the month
following the day on which all of the conditions to Closing set forth in
Articles 6 and 7 have been satisfied or waived in accordance with the terms
hereof, or some other date mutually agreed upon by the parties in writing,
provided all conditions of this Agreement have been satisfied or waived, and
shall be deemed to occur as of 11:59 p.m. Central Time on the Closing Date. At
the Closing, Sellers shall deliver to Purchaser an assignment agreement, in the
form attached hereto as Exhibit D (the "ASSIGNMENT AGREEMENT"), which agreement
shall transfer and assign the Management Agreement, and such other documents and
instruments as are required under the terms of this Agreement. All such
documents and instruments will be in form and content reasonably satisfactory to
Purchaser and its counsel. When the Closing is completed, Purchaser

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shall thereupon have the right and be entitled to take possession and control of
the Company and all of its assets, books and records.

      1.5 PRO FORMA BALANCE SHEET. The balance sheet of the Company, as of the
Closing Date but prior to the contribution to surplus by Purchaser as described
in Section 1.2(d) hereof, (a) shall consist only of the specific category of
assets reflected in the pro forma balance sheet attached hereto as Schedule 1.5,
which assets shall be determined based on the requirements of Section 1.2(d),
and (b) shall reflect no liabilities (the "PRO FORMA BALANCE SHEET"). Sellers
shall take all necessary action to assure that the Company transfers, assigns
and/or distributes any and all other assets (which are not reflected in the Pro
Forma Balance Sheet), on or before the Closing Date to Seller or its affiliates
pursuant to the terms of the Management Agreement, the Seller Debenture or
otherwise. Notwithstanding any provision herein, in no event shall Sellers be
entitled to any distribution or payment from the Company that results in, or
causes, a reduction in the assets described in Section 1.2(d) hereof or the
assets contributed by Purchaser pursuant to Section 1.2(d).

      1.6 SELLERS' DELIVERIES AT CLOSING. Subject to the terms and conditions
set forth in this Agreement, at the Closing, Sellers shall deliver to Purchaser
the following:

      (a) Possession of any and all books and records of the Company, including
without limitation, all minute books pertaining to meetings of the board of
directors and the members of the Company and all originals (and, where originals
are not available, copies) of the proxies issued or granted by the Company's
policyholders that are in force as of the Closing and in the Company's
possession at Closing;

      (b) The original Management Agreement;

      (c) The original Seller Debenture marked "PAID IN FULL" along with
evidence reasonably satisfactory to Purchaser that any and all Liens encumbering
the Seller Debenture have been released;

      (d) The Assignment Agreement, in the form of Exhibit D, executed by
Sellers and the Company, conveying the Management Agreement, and such other
instruments and agreements as may be reasonably necessary to effect the transfer
of control of the Company;

      (e) All necessary consents, estoppels, approvals, authorizations or other
documents from third parties, including Governmental Entities, in a form
reasonably satisfactory to Purchaser, required to be obtained by Sellers under
the terms of this Agreement, including without limitation, (i) approvals by the
Texas Department of (A) the charter and bylaw amendments described in Section
4.18 of this Agreement, and (B) the transactions contemplated by this Agreement,
(ii) releases of all security interests held by Bank One Texas, N.A. and/or its
affiliates ("BANK ONE") with respect to the Company, its corporate charter, its
Certificate of Authority, all of the Company's assets, the Seller Debenture, and
the Management Agreement, and (iii) termination of the Investment Management
Agreement between the Company and Goff Moore Strategic Partners, L.P.;

      (f) Good standing certificates for Sellers and the Company, dated no
earlier than 30 days before the Closing Date, from their states of
incorporation;

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      (g) Certified copies of the resolutions duly adopted by the Boards of
Directors of Sellers and the Company authorizing the execution, delivery and
performance of this Agreement and of all documents related hereto or
contemplated herein;

      (h) Certificates of Sellers and the Company, dated as of the Closing Date,
signed by authorized representatives and certifying that the respective
covenants and agreements to be performed and complied with by Sellers and the
Company have been performed and complied with in all material respects or have
been waived by Purchaser, as contemplated in Section 6.2 hereof;

      (i) Certificate of Sellers and the Company, dated as of the Closing Date,
signed by authorized representatives and certifying that each of the respective
representations and warranties of Sellers and the Company set forth in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date or has been waived by Purchaser, as contemplated in Section 6.1
hereof;

      (j) Resignations of all officers and directors of the Company in
accordance with Section 6.9 hereof;

      (k) Opinion of counsel of Sellers described in Section 6.8 hereof;

      (l) Originals of the Liability Assumption Agreement, in the form of
Exhibit B, and GAIC Reinsurance Agreement, in the form of Exhibit C, along with
all other agreements and documents contemplated therein, duly executed and
delivered by the parties thereto;

      (m) The Closing Pro Forma Balance Sheet described in Section 6.11 hereof;

      (n) The Attornment Letters, as described in Section 6.12 hereof, in the
form of Exhibit N; and

      (o) Such other documents reasonably required by Purchaser to transfer
fully the Management Agreement or to complete the transactions contemplated
herein.

      1.7 PURCHASER'S AND LIBERTY'S DELIVERIES AT CLOSING. Subject to the terms
and conditions set forth in this Agreement, at the Closing, Purchaser shall
deliver to Seller the following:

      (a) The Closing Date Payment described in Section 1.2(a) hereof;

      (b) The Assignment Agreement, in the form of Exhibit D, executed by
Purchaser, conveying the Management Agreement;

      (c) All necessary consents, estoppels, approvals, authorizations or other
documents from third parties, including Governmental Entities, in a form
reasonably satisfactory to Seller, required to be obtained by Purchaser under
the terms of this Agreement, including without limitation, approval by the Texas
Department of the transactions contemplated by this Agreement;

                                       6
<PAGE>
      (d) Good standing certificates for Purchaser and Liberty, dated no earlier
than 30 days before the Closing Date, from their respective states of
incorporation;

      (e) Certified copies of the resolutions duly adopted by the Boards of
Directors of Purchaser and Liberty authorizing Purchaser's and Liberty's
execution, delivery and performance of this Agreement and of all documents
related hereto or contemplated herein;

      (f) Certificates of Purchaser and Liberty, dated as of the Closing Date,
signed by authorized representatives and certifying that the respective
covenants and agreements to be performed and complied with by Purchaser and
Liberty have been performed and complied with in all material respects or have
been waived by Seller, as contemplated in Section 7.2 hereof;

      (g) Certificates of Purchaser and Liberty, dated as of the Closing Date,
signed by authorized representatives and certifying that each of the
representations and warranties of Purchaser and Liberty set forth in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date or have been waived by Seller, as contemplated by Section 7.1
hereof; and

      (h) Opinions of counsel of Purchaser described in Section 7.5 hereof.

      1.8 POST CLOSING ADJUSTMENT.

      (a) Within forty-five (45) days after the Closing Date, Sellers shall
deliver to Purchaser an adjusted and final balance sheet of the Company,
consistent with the format shown in Schedule 1.5, as of the Closing (the
"ADJUSTED BALANCE SHEET") which shall be prepared, in all material respects, in
accordance with Statutory Accounting Practices and the principles used in the
preparation of the Closing Pro Forma Balance Sheet. If within thirty (30) days
following delivery of the Adjusted Balance Sheet, Purchaser has not given Seller
written notice of its objection thereto (which notice shall state the basis of
Purchaser's objection), then the Adjusted Balance Sheet shall be binding and
conclusive on the parties. In the event that the surplus of the Company as of
the Closing as shown in the Adjusted Balance Sheet is less than the surplus of
the Company as shown in the Closing Pro Forma Balance Sheet, Sellers shall,
within thirty (30) days of its delivery of the Adjusted Balance Sheet, pay such
shortfall to Purchaser. In the event that the surplus of the Company as of the
Closing Date as shown in the Adjusted Balance Sheet exceeds the surplus of the
Company as shown in the Closing Pro Forma Balance Sheet, Purchaser shall, within
thirty (30) days of Sellers' delivery of the Adjusted Balance Sheet (assuming
Purchaser has not objected thereto), pay such excess to Sellers. As used in this
section, "SURPLUS" in respect of the Company shall mean "surplus as regards
policyholders," calculated pursuant to page 3 of the NAIC Annual Statement
Blank.

      (b) In the event that Purchaser disagrees with the Adjusted Balance Sheet,
Purchaser shall provide notice of such disagreement and the nature or reason
therefor to Sellers no later than twenty (20) days (or the next business day
following such period) after the delivery to Purchaser of the Adjusted Balance
Sheet (the "DISPUTE NOTICE," and the date of its delivery, the "DISPUTE NOTICE
DATE"). Sellers and Purchaser shall use their best efforts to resolve such
disagreement by negotiation for five (5) business days following the Dispute
Notice Date, and if resolution is achieved, payment of any amount required
pursuant to Section 1.8(a) shall be made

                                       7
<PAGE>
by Sellers or Purchaser, as the case may be, within five (5) business days after
such resolution. In the event no resolution is reached within such period, the
dispute shall be jointly submitted by Purchaser and Sellers to the Dallas office
of a nationally recognized public accounting firm chosen by Sellers, and which
is reasonably acceptable to the Purchaser (the "ARBITER"), the next business day
following the expiration of such period. The Arbiter shall make its
determination of the dispute within fifteen (15) business days after submission
thereof, which determination shall be binding and conclusive on all of the
parties hereto. Each of the parties to this Agreement shall cooperate fully in
assisting the Arbiter, as it may require or request, to reach such determination
and shall take all actions necessary to expedite and to cause the Arbiter to
expedite such determination. Upon completion of the Arbiter's review, payment of
any amount required pursuant to Section 1.8(a) shall be made by Sellers or
Purchaser, as the case may be, within five (5) business days after such
determination. Each of Seller and Purchaser shall pay fifty percent (50%) of the
total fees and expenses of the Arbiter.

      1.9 ACTIONS SUBSEQUENT TO CLOSING. At the reasonable request of Purchaser
or Sellers, as applicable, after the Closing, and without further consideration,
Sellers or Purchaser, as applicable, shall from time to time execute and deliver
or cause to be executed and delivered such further instruments of transfer,
releases of indebtedness or other liabilities, assignments, assumptions,
consents or documents as may be reasonably necessary or appropriate to carry out
the purposes hereof and will make available to the other such books and records
of the other as may be reasonably requested to carry out obligations created or
contemplated hereunder and to report the transactions hereunder to Governmental
Entities.

                                   ARTICLE 2
            REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY

      2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement to
Purchaser to enter into this Agreement and consummate the transactions
contemplated hereby, Sellers and the Company hereby jointly and severally make
to Purchaser the representations and warranties contained in this Article 2.

      2.2 VALIDITY AND OWNERSHIP OF THE MANAGEMENT AGREEMENT.

      (a) The Management Agreement is the exclusive agreement providing for the
management of the Company and no other agreements exist relating in any way to
the management of the Company. Seller owns the Management Agreement free and
clear of all Liens and has exclusive authority and control over the Company
pursuant thereto. A true and correct copy of the Management Agreement is
attached hereto as Exhibit E. The Management Agreement, and all rights or
interests appurtenant thereto or granted thereunder, is free and clear of any
and all Liens of any kind upon Seller's right to exercise full authority in
accordance with its terms.

      (b) With respect to the Management Agreement: (i) such agreement is
legal, valid, binding, enforceable and in full force and effect; (ii) upon
obtaining any required consents and approvals from Governmental Entities, such
agreement will continue to be legal, valid, binding, and enforceable, and in
full force and effect following the consummation of the transactions
contemplated herein, and (iii) no party is in breach or default beyond any
applicable grace

                                       8
<PAGE>
period, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification or
suspension under such agreement (without limiting the foregoing, neither Seller
nor the Company are in breach or default of any provision of the Management
Agreement beyond any applicable grace period).

      (c) With the exception of the consents and approvals described in Sections
4.5 and 5.1 hereof, Seller may sell, assign, and transfer all of its rights and
interests under the Management Agreement without the approval of any persons,
including, without limitation, the policyholders of the Company. Upon the
transfer and assignment of the Management Agreement to Purchaser, Seller shall
have sold and transferred to Purchaser good and valid title to the Management
Agreement free and clear of any Liens.

      2.3 COMPANY'S ORGANIZATION AND AUTHORITY.

      (a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Texas, including, without limitation,
Chapter 17 of the Texas Insurance Code, and has all requisite power and
authority (corporate and other) to own, lease and operate its properties and
assets and to conduct its business as currently conducted, including, without
limitation, as a Texas county mutual insurance company. The Company has all
permits and governmental authorizations required under all applicable laws,
regulations, ordinances and orders of public authorities necessary to carry on
its business in Texas in the manner now conducted. The Company holds a valid
corporate charter and a valid Certificate of Authority issued by the Texas
Department, a true and correct copy of which is attached as Exhibit F,
authorizing the Company to conduct insurance business in Texas in accordance
with Chapter 17 of the Texas Insurance Code, which Certificate of Authority and
charter are free and clear of all Liens.

      (b) The Company has the requisite power and authority (corporate and
other) to enter into this Agreement and, subject to the requisite approvals
referenced in Sections 4.5 and 4.18, to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance by the Company of
its obligations hereunder have been duly authorized by the board of directors of
the Company, and no other proceedings on the part of or with respect to the
Company are necessary to authorize such execution, delivery and performance.
This Agreement has been duly executed by, and is the valid and binding
obligation of, the Company, enforceable against it in accordance with the terms
hereof, except as such enforcement may be limited by the applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

      2.4 CAPITALIZATION OF THE COMPANY.

      (a) The policyholder surplus of the Company meets the surplus requirements
of the Texas Insurance Code as of the date of this Agreement and will meet such
requirements both immediately prior to the distribution of assets to Seller
described in Section 1.5 and immediately after giving effect to the payment into
surplus of the Company by Purchaser pursuant to Section 1.2(d). No class of
capital stock or other security of the Company, except the Seller Debenture, is
issued and outstanding. There are no outstanding options, warrants, agreements,
exchange

                                       9
<PAGE>
rights, conversion rights, preemptive rights or other rights to subscribe for,
purchase or otherwise acquire any debt or equity interest in the Company.
Neither Sellers nor the Company are parties to any voting trust or other voting
agreement with respect to any voting interest in the Company, or to any
agreement relating to the issuance, sale, redemption, transfer or other
disposition of any debt or equity interest in the Company.

      (b) The Company issued that certain Surplus Debenture dated December 16,
1996 to Seller in the original principal amount of $2,600,000.00 (the "SELLER
DEBENTURE"). As of the date hereof, the total principal amount due and unpaid
under the Seller Debenture is $2,600,000 and the total unpaid interest is
$650,000 as of June 30, 2002. There are no other forms of indebtedness of any
kind, other than the Seller Debenture and the Management Agreement, including
without limitation, surplus notes or debentures, other subordinated
indebtedness, or any other debt instruments, issued by the Company, which remain
outstanding and/or unpaid as of the date hereof. All other prior surplus
debentures issued by the Company, including those certain Surplus Debentures
dated October 5, 1992 (in the amount of $2,500,000.00) and dated December 31,
1993 (in the amount of $2,600,000.00) have been repaid, retired or otherwise
extinguished, and there are no obligations or liabilities of the Company
remaining with respect thereto. Except with respect to the security interest
held by Bank One, neither Seller nor GAINSCO has pledged or encumbered any
interest in or to the Seller Debenture, and neither Seller nor GAINSCO has
allowed any Lien to be created or attached to the Seller Debenture.

      2.5 INTER-AFFILIATE INVESTMENTS/SUBSIDIARIES. The Company does not own,
and is not obligated in any way to acquire, any capital stock, equity interest,
other securities or other ownership or similar interest in any "affiliate" of
the Company as that term is defined in Texas Insurance Code article 21.49-1. The
Company has no subsidiaries.

      2.6 SELLERS' ORGANIZATION AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Texas;
GAINSCO is a corporation duly organized, validly existing and in good standing
under the laws of Texas; and each has the requisite corporate power and
authority to own, lease and operate its property and assets and to conduct its
business as currently conducted. Sellers have the requisite power and authority
(corporate and other) to enter into this Agreement and, subject to the requisite
approvals referenced in Sections 4.5 and 4.18, to carry out the obligations of
Sellers hereunder. The execution and delivery of this Agreement and the
performance by Sellers of Sellers' obligations hereunder have been duly
authorized by the boards of directors of Sellers, and no other proceedings on
the part of or with respect to Sellers are necessary to authorize such
execution, delivery and performance. This Agreement has been duly executed by,
and is the valid and binding obligation of Sellers, enforceable against each in
accordance with the terms hereof, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to or
affecting creditors' rights generally or general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

      2.7 NO VIOLATION. The execution, delivery and performance by Sellers and
the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not:

                                       10
<PAGE>
      (a) violate, conflict with or result in the breach of any of the terms or
provisions of, or constitute a default under, any material term, condition or
provision of the respective articles of incorporation or bylaws of Sellers or
the Company or of the Management Agreement;

      (b) result in or give any contracting party the right of modification,
suspension, termination, cancellation or acceleration of the performance
required by, or constitute (or with notice or lapse of time or both, would
constitute) a default or result in the loss of any material benefit under, any
permit, instrument, contract, mortgage, indenture, lease, deed of trust,
license, note, loan agreement or other agreement to which Sellers or the Company
is a party, or by or to which any of them or any of their respective assets or
properties may be bound or subject;

      (c) violate any order, writ, judgment, ruling, injunction, award or decree
applicable to or binding upon Sellers or the Company or upon the assets or
properties of Sellers or the Company;

      (d) except for lack of any of the requisite consents and approvals
contemplated in Sections 4.5, 4.18 and 5.1 hereof (the "REGULATORY APPROVALS"),
violate any statute, law, rule or regulation of any Governmental Entity
applicable to Seller or the Company or any of their respective assets or
properties;

      (e) except for the lack of any of the Regulatory Approvals, result in the
creation or imposition of any Lien, mortgage, pledge, limitation, restriction,
charge, claim, security interest or encumbrance upon any of the properties or
assets of Sellers or the Company, including but not limited to the Management
Agreement; or

      (f) except for the lack of any of the Regulatory Approvals, violate or
result in the modification, revocation, termination or suspension of any
material license, permit, franchise, authorization or approval of any
Governmental Entity required to permit the continued lawful conduct of Sellers'
or the Company's respective businesses in the manner now conducted.

      2.8 CONSENTS AND APPROVALS. Except as contemplated in Sections 4.5, 4.7,
4.18 and 5.1, no consent, waiver, authorization or approval of, declaration or
notification to, or filing or registration with, any court, administrative
agency, or other governmental authority or instrumentality, whether federal,
state, local or foreign (each, a "GOVERNMENTAL ENTITY") or any individual,
corporation, partnership, limited liability company, joint venture, trust,
association or other entity, is required on the part of Sellers or the Company
in connection with the execution and delivery of this Agreement, the performance
of their obligations hereunder or the compliance by Sellers or the Company with
the provisions hereof.

      2.9 TEXAS DEPARTMENT STATEMENTS. Seller has furnished or will furnish
prior to the Closing to Purchaser complete and correct copies of the audited
annual statements and any quarterly statements of the Company made to or filed
with the Texas Department, for all periods from January 1, 1998 up to and
including the Closing Date, together with all exhibits and schedules thereto.
(All annual statements, quarterly statements and annual audits required by the
Texas Insurance Code referred to in this Section 2.9 are hereinafter referred to
as the "STATUTORY INSURANCE STATEMENTS.") The Statutory Insurance Statements
have been prepared in accordance with the statutory accounting principles and
applicable actuarial standards of practice

                                       11
<PAGE>
consistently applied in accordance with the rules and regulations of the
National Association of Insurance Commissioners and the State of Texas
("STATUTORY ACCOUNTING PRACTICES") and fairly present in all material respects
the financial position and results of operations and cash flows of the Company
as of the dates thereof and for the periods covered thereby. Except as set forth
on Schedule 2.9 hereto, all Statutory Insurance Statements can be reconciled
with the financial statements and the financial records maintained and the
accounting methods applied by the Company for financial accounting and federal
income tax purposes.

      2.10 BASIC DOCUMENTS. The Restated Articles of Incorporation of the
Company dated August 27, 1992 and the Restated Constitution and Bylaws of the
Company under certificate dated August 27, 1992, true and correct copies of
which are attached hereto as Exhibit G, are in full force and effect and have
not been amended or revised since their adoption. The record books and minute
books of the Company have been made available to Purchaser, which books and
records contain a true and complete record of the minutes and records of all
meetings, proceedings and other actions of the policyholders and directors of
the Company since October 12, 1992. The Company is not in violation of any term
or provision of its Restated Articles of Incorporation or Restated Constitution
and Bylaws as in effect on the date hereof.

      2.11 ABSENCE OF CERTAIN CHANGES OR EVENTS.

      (a) Except as set forth in Schedule 2.11, since the last day of the period
covered by the Company's most recently filed Statutory Insurance Statements (i)
there has been no material adverse change in the assets, properties, business,
operations, or financial condition of the Company, and (ii) the business of the
Company has been operated only in the ordinary course of business consistent
with past practice except for the transactions contemplated by this Agreement.
Except as set forth in Schedule 2.11, and to the knowledge of Sellers and the
Company, there is no event, condition or circumstance which will have a material
adverse effect on the assets, properties, operations, or financial condition of
the Company. As used in this Agreement, "MATERIAL ADVERSE CHANGE" or "MATERIAL
ADVERSE EFFECT" means any change, effect, event, occurrence or state of facts
that is, or would reasonably be expected to be, materially adverse to the
assets, properties, business, financial condition or results of operations of
the Company, including without limitation, any restriction, sanction, penalty or
Lien imposed by a Governmental Entity with respect to the Company's Certificate
of Authority, corporate charter, or Management Agreement, excluding (i) any such
change, effect, event, occurrence or state of facts which (A) affects the U.S.
economy or the nonstandard private passenger and/or commercial automobile
insurance industry generally (other than a Material Adverse Legal Change), or
(B) results from the announcement, making or performance of this Agreement; and
(ii) any reduction in the rating of the Company by A.M. Best Company.

      (b) Except as set forth in Schedule 2.11, since the last day of
the period covered by the Company's most recently filed Statutory Insurance
Statements, neither Sellers nor the Company has taken any actions of a type
referred to in Section 4.2 of this Agreement.

      2.12 COMPLIANCE WITH LAWS. Except as set forth in Schedule 2.12, the
business and operations of the Company have been and are being conducted in
accordance and compliance with all laws, statutes, rules, regulations,
judgments, writs, decrees, injunctions, awards, orders, filing requirements and
other legal requirements of any Governmental Entity applicable to the

                                       12
<PAGE>
Company, except for violations which heretofore have been duly cured and except
for violations which individually or in the aggregate would not have a material
adverse effect on the Company. Except as set forth in Schedule 2.12, neither
Sellers nor the Company has received notice of the issuance of, or has actually
received, any notice of, or is aware of a violation or alleged violation by the
Company of any such law, statute, rule, regulation, judgment, writ, decree,
injunction, award, order or other legal requirement, except for violations which
heretofore have been duly cured. Neither Sellers nor the Company is in default
with respect to any order, writ, judgment, award, injunction or decree of any
Governmental Entity applicable to the Company or any of its assets. Except as
set forth on Schedule 2.12, neither Sellers nor the Company has been notified by
a Governmental Entity that an investigation or review by such Governmental
Entity, with respect to the violation by the Company of any applicable law,
statute, rule, regulation, judgment, writ, decree, injunction, award or order,
is pending or has been threatened. The Company is not undergoing any statutory
or similar examination of its books, records, accounts or business by any
federal or state regulatory agency or other Governmental Entity.

      2.13 TAX MATTERS.

      (a) Except as listed in Schedule 2.13 hereto, for all periods from January
1, 1993 up to and including the Closing Date, the Company has filed all material
federal, state, local and foreign tax returns, declarations, documents, reports,
estimates, statements and schedules (collectively, "TAX RETURNS") required to be
filed by it through the date hereof (and will file such Tax Returns as required
in Section 9.2 hereof); all such returns correctly and accurately set forth in
all material respects the amount of any Taxes (as defined below) relating to the
applicable period and any deductions from, or credits against, any Taxes or
taxable income relating to such Returns are valid and proper items of deductions
or credit.

      (b) The Company has paid or caused to be paid all federal, state, local,
foreign and other Taxes, including without limitation, income taxes, estimated
Taxes, alternative minimum Taxes, excise Taxes, sales Taxes, personal property
Taxes, real property Taxes, franchise Taxes, employment and payroll related
Taxes, withholding Taxes, transfer Taxes, premium Taxes, and all deficiencies,
or other additions to Tax, interest, fines and penalties owed by it
(collectively, "TAXES"), required to be paid from, by or with respect to it
through the date hereof whether disputed or not, except Taxes which have not yet
accrued or otherwise become due and for which there is an adequate reserve as of
the date hereof reflected in the financial statements of the Company. All Taxes
and other assessments and levies which the Company was or is required to
withhold or collect have been withheld and collected and have been paid over to
the proper governmental authorities. Schedule 2.13 lists all federal, state,
local, and foreign income Tax Returns filed with respect to the Company for
taxable periods from January 1, 1998 up to and including the Closing Date.
Seller has delivered to Purchaser correct and complete copies of all material
Tax Returns, examination reports, and statements of deficiencies filed by,
assessed against, or agreed to by the Company for all periods since January 1,
1998, and through the Closing Date, and a schedule of any and all Taxes due but
not paid as of the Closing Date. The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to Tax payment, assessment, deficiency or collection.

      (c) Except as set forth in Schedule 2.13, (i) the Company has not received
notice of any audit or of any proposed deficiencies from the Internal Revenue
Service (the "IRS") or any

                                       13
<PAGE>
other taxing authority (other than routine audits undertaken in the ordinary
course and which have been resolved on or prior to the date hereof); (ii) there
are in effect no waivers of applicable statutes of limitations with respect to
any Taxes owed by the Company for any year; (iii) neither the IRS nor any other
taxing authority is now asserting or, to the knowledge of the Company and/or
Sellers, threatening to assert, against the Company any deficiency, claim or
Lien for additional Taxes or interest thereon or penalties in connection
therewith in respect of the income or sales of the Company; (iv) the Company has
never been a member of an affiliated group of corporations filing a combined
federal income Tax Return, a party to a tax-sharing or indemnification agreement
or power of attorney arrangement (that remains in effect as of the date hereof),
nor does the Company have any liability for Taxes of any other person under
Treasury Regulations ss.1.1502.6 (or any similar provision of foreign, state or
local law) or otherwise; and (v) the Company has not filed a consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "CODE")
concerning collapsible corporations.

      (d) The Company has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.

      (e) The Company is not a party to any contract, agreement, plan or
arrangement covering any employee or former employee thereof, that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Section 280G or 162 of the Code.

      (f) The Company is not a "foreign person" within the meaning of
Section 1445 of the Code and Treasury Regulations Section 1.1445-2.

      (g) The taxable year of the Company for federal and state income
Tax purposes is the calendar year.

      (h) The Company has never been (i) a passive foreign investment
company, (ii) a foreign personal holding company, (iii) a foreign sales
corporation, (iv) a foreign investment company, or (v) a person other than a
United States person, each within the meaning of the Code.

      (i) The Company is organized and has been operated as a mutual
insurance company for federal and all applicable state and local Tax purposes.

      2.14 ABSENCE OF UNDISCLOSED LIABILITIES. At the close of business on the
last date of the period covered by the Company's most recently filed Statutory
Insurance Statement, the Company had, and with the exception of (a) any matter
disclosed on Schedule 2.14 hereto, and (b) liabilities incurred in the ordinary
course of business under the GAINSCO Fronting Arrangement or the Third Party
Fronting Arrangements, the Company has, no indebtedness, obligation or
liability, absolute, accrued or contingent, which is not shown or provided for
on such statement or in the notes thereto and is required to be shown or
provided for thereon by Statutory Accounting Practices. Except as shown in the
Company's most recently filed Statutory Insurance Statement and except for
liabilities incurred in the ordinary course of business under the GAINSCO
Fronting Arrangement or the Third Party Fronting Arrangements, as of the Closing
Date, the Company will not directly or indirectly be liable upon, or obligated
in any other way to provide funds in respect of, or to guarantee or assume, any
debt, obligation or

                                       14
<PAGE>
dividend of any person. Since the last date of the period covered by the
Company's most recently filed Statutory Insurance Statement, the Company has not
incurred any indebtedness, obligation or liability of any kind, whether
absolute, accrued, contingent, known or unknown, other than such indebtedness,
obligation or liability incurred in the ordinary course of business in
connection with the GAINSCO Fronting Arrangement or the Third Party Fronting
Arrangements.

      2.15 INTERESTS IN REAL PROPERTY. The Company has no interest in any owned
or leased real properties and is not in violation of any covenant, agreement, or
other obligation with respect to any such interests in real properties.

      2.16 TITLE TO ASSETS. The Company is the owner of, and has good and
marketable title to, all of its assets, free and clear of all Liens.

      2.17 TRADEMARKS, SOFTWARE, PATENTS, COPYRIGHTS AND KNOW-HOW. The Company
uses certain trademarks, software, patents, copyrights, trade secrets (including
policyholder lists, customer lists and renewals) and proprietary know-how
("INTANGIBLE ASSETS") in its operations as conducted on the date hereof. There
is no material restriction affecting the Company's use of any of the Intangible
Assets; each item of the Intangible Assets is free and clear of all material
Liens, security interests, claims, mortgages, pledges, charges, encumbrances and
equities; and no license has been granted by the Company to any third party with
respect thereto. To the knowledge of Sellers, none of the Intangible Assets is
currently being challenged, is involved in any pending or threatened
administrative or judicial proceeding, or conflicts in any respect material to
the Company or its operations with any rights of any other person. To the
knowledge of Sellers, none of the Company's operations involves any infringement
of any proprietary right of any person, except as set forth in Schedule 2.17.
Within the four (4) years preceding the date of this Agreement, neither Sellers
nor the Company has received any written notice from any person with respect to
any such infringement.

      2.18 CERTIFICATE OF AUTHORITY; COMPLIANCE WITH LAWS.

      Except as set forth in Schedule 2.19,

      (a) The Company has all necessary franchises, authorizations,
approvals, orders, consents, licenses, certificates, permits, registrations,
qualifications or other rights and privileges (collectively, the "CERTIFICATE OF
AUTHORITY") necessary to permit it to own its property and to conduct its
business as a county mutual insurance company, and such Certificate of Authority
is valid and in full force and effect. The Company is not a party to any
agreement, and is not subject to any order, formal or informal, specifically
directed to the Company, limiting the Company's ability to make full use of the
Certificate of Authority which has been issued to it or requiring the Company to
comply with regulatory standards, procedures, or requirements different from
those generally applicable to companies with certificates of authority or
licenses similar to those issued to the Company. The Company has not (i)
relinquished or had the Certificate of Authority revoked or suspended, (ii) been
involved in a proceeding, whether formal or informal, to revoke, suspend, limit,
or restrict the Certificate of Authority or the Company's corporate charter,
(iii) been notified by any state insurance department or similar governmental
authority that such insurance department or similar governmental authority might

                                       15
<PAGE>
have cause to revoke, suspend, limit, or restrict such Certificate of Authority
or the Company's corporate charter, or become aware that any such suspension,
revocation, or limitation has been threatened by any state insurance department
or similar governmental authority, or (iv) written or assumed any business in
any jurisdiction other than in which it is qualified to write business or
written or assumed a class or type of business in any jurisdiction other than
the class or type of business which it is authorized to write in such
jurisdiction. Subject to obtaining applicable Regulatory Approvals, the
Certificate of Authority is not subject to termination as a result of the
execution of this Agreement nor the consummation of the transactions
contemplated hereby.

      (b) The Company is now and has heretofore been in compliance with
all applicable statutes, ordinances, orders, rules and regulations (including
all applicable environmental laws and regulations) promulgated by any federal,
state, municipal or other Governmental Entity which apply to the conduct of its
business. The Company has not entered into or been subject to any judgment,
consent decree, compliance order or administrative order with respect to any
environmental or health and safety law or received any request for information,
notice, demand letter, administrative inquiry or formal or informal complaint or
claim with respect to any environmental or health and safety matter or the
enforcement of any such law.

      2.19 COMPLIANCE WITH INSURANCE LAWS. Without limiting the representations
and warranties contained in Sections 2.12 and 2.18 above, except as set forth in
Schedule 2.19:

      (a) The Company has made all required filings and reports under
applicable insurance holding company statutes.

      (b) The Company is in compliance in all material respects with the
requirements of the insurance laws and regulations of Texas and the insurance
laws and regulations of other jurisdictions which are applicable to its
operations, and has filed all notices, reports, statements, registrations,
documents or other information required to be filed thereunder; and the Company
has received no notification from any insurance regulatory authority to the
effect that any additional permit or license from such insurance regulatory
authority is needed to be obtained by the Company.

      (c) The Company is not undergoing any statutory or similar
examination of its books, records, accounts or business by any federal or state
regulatory agency or other Governmental Entity.

      (d) The Company belongs to all guaranty fund associations, pools,
bureaus, and similar organizations required by applicable law for the Company to
conduct its business and has paid or will pay all assessments or other amounts
due to such guaranty fund associations or similar organizations for all periods
through the Closing Date.

      2.20 LITIGATION. Except as set forth in Schedules 2.20 and 2.24, there is
no litigation or governmental or administrative proceeding or investigation
pending or threatened against the Company or affecting any of its properties or
assets, or against any officer, director or key employee of the Company, or
which may call into question the validity or hinder the enforceability or
performance of this Agreement or the agreements and transactions

                                       16
<PAGE>
contemplated hereby. Furthermore, no event has occurred, nor does there exist
any condition, on the basis of which any such claim may be asserted.

      2.21 CONTRACTS.

      (a) Set forth in Schedule 2.21 hereto is a true and complete list
of all material contracts, agreements and other instruments of whatsoever nature
to which the Company is a party or otherwise relating to or affecting any of its
respective assets, properties, agents or operations (indicating such contracts
which shall not survive the Closing), other than the contracts and agreements
set forth in Schedules 2.22, 2.24 and 2.29 hereof. No previous or current party
to any such contract, instrument or agreement has given written notice of or
made a claim with respect to any unremedied breach or default currently existing
thereunder.

      (b) Except for agreements described on Schedule 2.21, the Company
is not a party to, nor bound by, any agreement, other than insurance policies
issued in the ordinary course of business, including any: (i) employment
contract, consulting contract or contract providing for the services of an
independent contractor (other than agency contracts entered into with insurance
agents in the ordinary course of business); (ii) contract with any labor union
or association; (iii) lease with respect to any property, real or personal,
whether as lessor or lessee; (iv) contract or commitment for the purchase of
materials, supplies or equipment; (v) sale or franchise agreement or legally
enforceable commitment or obligation with respect thereto; (vi) contract or
commitment for capital expenditures; (vii) contract relating to patents,
trademarks, trade names, copyrights, inventions, processes, formulae or trade
secrets; or (viii) contract or commitment for the sale of its products.

      2.22 INSURANCE CONTRACT FORMS. Except as set forth on Schedule 2.22
hereof, the Company has no forms of policies, insurance contracts, endorsements
or riders issued, accepted, written, assumed or bound by the Company which are
currently in use.

      2.23 EMPLOYEES; EMPLOYEE PLANS. The Company employs no individuals
(hereinafter, "EMPLOYEES") and has never had any Employees. Company has no, and
has never had any, "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
other benefit arrangement provided by the Company with respect to Employees
("EMPLOYEE BENEFIT PLANS") and has no liability or obligation of any kind or
nature, known or unknown, contingent or otherwise, with respect to Employee
Benefit Plans of any other person, including, without limitation, any
"affiliate" of the Company within the meaning of ERISA.

      2.24 PROPERTY AND CASUALTY INSURANCE. Set forth in Schedule 2.24 hereto is
a true and complete list (specifying the insurer and describing any pending
claims thereunder) of all insurance policies or fidelity bonds in force on the
date hereof with respect to and insuring the directors, officers, employees,
assets, properties or operations of the Company. All such policies and fidelity
bonds are in full force and effect. In the event any such policy is a "claims
made" policy, Sellers represents and warrants that Sellers shall retain all
liabilities for claims against such policy made after the Closing for events
occurring prior to Closing that would have been covered under such policy if it
had been written on an occurrence basis. True and complete copies of all such
insurance policies and fidelity bonds have been made available for review, or

                                       17
<PAGE>
will be made available for review upon Purchaser's request prior to Closing, to
Purchaser by Seller. Except for claims set forth in Schedule 2.24, there are no
outstanding unpaid claims under any of such policies or bonds, and the Company
has received no notice of cancellation or non-renewal thereof.

      2.25 FINANCIAL BOOKS AND RECORDS. The financial books and records of the
Company have been maintained in accordance with generally accepted business
practices and are sufficient for the preparation of the Statutory Insurance
Statements.

      2.26 INFORMATION SUPPLIED TO PURCHASER. There is no material fact known to
Sellers or the Company relating to the business, operations or conditions of the
Company that has had a material adverse effect or, to the Sellers' or the
Company's knowledge, in the future will have a material adverse effect on the
Company that has not been set forth in this Agreement or in a Schedule or
Exhibit, excluding (i) any such change, effect, event, occurrence or state of
facts which (A) affects the U.S. economy or the nonstandard private passenger
and/or commercial automobile insurance industry generally (other than a Material
Adverse Legal Change), or (B) results from the announcement, making or
performance of this Agreement; (ii) any reduction in the rating of the Company
by A.M. Best Company; and (iii) any matters disclosed in any report filed by
GAINSCO with the Securities and Exchange Commission between January 1, 2002 and
the date hereof.

      2.27 EXAMINATION REPORTS. Sellers have furnished or will furnish to
Purchaser true and correct copies of the latest examination report of the Texas
Department and copies of all independent audits of the Company. Sellers will
allow Purchaser access to complete and correct copies of all registrations,
filings, or submissions made by the Company with any Governmental Entity and any
reports of examinations issued by any such Governmental Entity that relate to
the Company.

      2.28 AGENTS. Except as made available to Purchaser, no agent, whether a
producing or general agent, has a contract with the Company.

      2.29 REINSURANCE AGREEMENTS. Schedule 2.29 contains a complete and
accurate list of (a) all in force reinsurance treaties, agreements or
arrangements under which the Company has ceded, on an indemnity or assumption
basis, any liabilities, obligations or losses (including liability for punitive
or exemplary damages) of the Company arising out of or relating to any insurance
risks, policies, contracts, endorsements or riders issued, accepted, written,
assumed or bound by the Company as of the date hereof, regardless of whether
such liabilities, obligations or losses are primary or secondary, direct or
indirect, absolute or contingent, contractual or tortious, or otherwise, and
regardless of whether such liabilities, obligations and losses arise before, on
or after the Closing Date, and (b) all in force retrocession treaties,
agreements or arrangements under which the Company has re-assumed any insurance
liabilities previously ceded by the Company, on any basis whatsoever, to any
other person or entity. Except as set forth on Schedule 2.29, no consent from
any assuming insurer under any such reinsurance agreements is required in order
for either Sellers or the Company to validly and effectively perform its
obligations under this Agreement or for the Company to effectuate the transfer
of the liabilities of the Company as contemplated herein. Furthermore, neither
the execution of this Agreement nor the performance of any obligation or
covenant herein shall adversely affect the Company's

                                       18
<PAGE>
rights and interests in and to any collateral, security interest, trust
arrangement, letter of credit or other form of financial security established
under such reinsurance agreements for the benefit of the Company. Other than as
indicated in Schedule 2.29, each of the treaties, agreements and arrangements
listed in Schedule 2.29, as well as each trust arrangement, letter of credit,
guaranty or other form of financial security which secures the obligations under
such treaties, agreements and arrangements, is in full force and effect and is
valid and enforceable against the parties thereto, in accordance with its terms,
except to the extent limited by applicable bankruptcy, insolvency,
reorganization, and other similar laws of general application affecting the
rights of creditors and secured parties generally.

      2.30 INFORMATION SYSTEMS. To the extent necessary to satisfy all of the
terms and conditions of this Agreement and the obligations of each of the
parties hereunder, including after the Closing, the information systems and
technology and the data storage and retrieval systems and technology of the
Company or of Sellers as of the Closing Date are or will be operational on the
Closing Date and for a period of at least twelve (12) months thereafter.

      2.31 BUSINESS IN FORCE. The insurance business in force represented in the
March 31, 2002 Quarterly Statement of the Company represents all the insurance
business that the Company had insured or reinsured as of such date from any and
all sources. The Third Party Fronting Arrangements, identified in the recitals
to this Agreement, are the only insurance programs produced or offered through
the Company other than business produced or offered by or on behalf of Sellers
and their affiliates (the "GAINSCO FRONTING ARRANGEMENT"). As of the Closing,
the Company shall have no other policies, binders, commitments, endorsements or
insurance contracts of any kind in force other than such policies, binders,
commitments, endorsements and insurance contracts issued on behalf of, or
pursuant to, the Third Party Fronting Arrangements and the GAINSCO Fronting
Arrangement. All insurance-related liabilities of the Company existing as of the
Closing (other than reserves for losses and loss adjustment expenses for claims
incurred but not reported totaling $35,500 at June 30, 2002 that relate to a
fronting program in runoff for Eastern Atlantic Insurance Company, which is
reinsured 100% by unaffiliated reinsurers) shall pertain only to the Third Party
Fronting Arrangements or the GAINSCO Fronting Arrangement.

      2.32 VOTING RIGHTS. The only persons entitled to vote with respect to the
affairs of the Company are its duly elected directors and its members (i.e.
policyholders who are holders of in force policies of insurance issued by the
Company), or the President and Vice President of the Company pursuant to proxies
granted by its members. Except as set forth in Schedule 2.32, all of the
Company's applications for insurance include a proxy, in substantially the form
attached as Exhibit H, granting to the President or Vice President of the
Company the right to vote on behalf of the policyholder under such application
at any meeting of the policyholders of the Company. Except as set forth in
Schedule 2.32, each policyholder of the Company has signed an application
granting the President or Vice President of the Company such proxy prior to the
effectiveness of any insurance policy issued by the Company to such
policyholder.

      2.33 ASSOCIATIONS. The Company is not a member of any guaranty
associations, or any insurance pools, funds or facilities, except for the Texas
Windstorm Insurance Association and the Texas Property and Casualty Guaranty
Insurance Fund.

                                       19
<PAGE>
      2.34 OFFICERS AND DIRECTORS. The individuals listed in Schedule 2.34
constitute all of the officers and directors of the Company as of the date
hereof. Robert W. Stallings is the chairman of the board of directors of the
Company (the "CHAIRMAN").

      2.35 BROKERS. If any broker, finder, or investment banker asserts a claim
for a fee as a result of the transactions contemplated herein, based upon a
contract, written or oral, with either Sellers or the Company, such claim shall
be wholly payable by Sellers, and Purchaser and the Company shall be held
harmless with respect thereto.

      2.36 ACTIONS OF POLICYHOLDERS AND DIRECTORS. All meetings, proceedings and
other actions of the policyholders and directors of the Company, since August
27, 1992, have been duly, legally and properly held or taken.

                                   ARTICLE 3
             REPRESENTATIONS AND WARRANTIES OF PURCHASER AND LIBERTY

      3.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement to
Sellers to enter into this Agreement and consummate the transactions
contemplated hereby, Purchaser and Liberty hereby make to Sellers the
representations and warranties contained in this Article 3.

      3.2 CORPORATE ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has all requisite power and authority (corporate and other) to own its
properties and assets and to conduct its business as now conducted. Liberty is a
stock insurance company duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, and has all requisite power
and authority (corporate and other) to own its properties and assets and to
conduct its business as now conducted.

      3.3 CORPORATE AUTHORITY. Each of Purchaser and Liberty has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement, and the
performance of Purchaser's and Liberty's obligations hereunder have been duly
authorized by the boards of directors of Purchaser and Liberty and no other
corporate proceedings on the part of Purchaser or Liberty are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by Purchaser and Liberty as the valid and binding obligation of
Purchaser and Liberty, enforceable against Purchaser and Liberty in accordance
with the terms hereof, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
creditors' rights generally or general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

      3.4 NO VIOLATION. The execution, delivery and performance by Purchaser and
Liberty of this Agreement and the consummation of the transactions contemplated
hereby do not and will not:

      (a) violate, conflict with or result in the breach of any provision of the
articles of incorporation or bylaws of Purchaser or Liberty;

                                       20
<PAGE>
      (b) result in or give any contracting party the right of modification,
suspension, termination, cancellation or acceleration of the performance
required by, or constitute (or with notice or lapse of time or both, would
constitute) a default, or result in the loss of any material benefit under, any
permit, instrument, contract, mortgage, indenture, lease, deed of trust,
license, note, loan agreement or other agreement to which Purchaser or Liberty
is a party, or by or to which it or any of its assets or properties may be bound
or subject;

      (c) violate any order, writ, judgment, ruling, injunction, award or decree
applicable to or binding upon Purchaser or Liberty or upon the assets or
properties of Purchaser or Liberty; or

      (d) violate any statute, law, rule or regulation of any Governmental
Entity applicable to Purchaser or Liberty or any of their assets or properties.

      3.5 CONSENTS AND APPROVALS. Except as contemplated in Section 5.1, no
consent, waiver, authorization or approval of, declaration or notification to,
or filing or registration with, any Governmental Entity or person is (by law,
regulation, contract or otherwise) required on the part of Purchaser or Liberty
in connection with the execution and delivery of this Agreement by Purchaser and
Liberty or the performance by Purchaser and Liberty of their obligations
hereunder or compliance by Purchaser or Liberty with the provisions hereof.

      3.6 BROKERS. If any broker, finder, or investment banker asserts a claims
for a fee as a result of the transactions contemplated herein, based upon a
contract, written or oral, with either Purchaser or Liberty, such claim shall be
wholly payable by Purchaser or Liberty, and Sellers and the Company shall be
held harmless with respect thereto.

      3.7 FINANCIAL STATEMENTS.

      (a) Liberty has furnished or will furnish prior to the Closing to Sellers
complete and correct copies of the audited annual statements and any quarterly
statements of Liberty made to or filed with the Commissioner of Insurance for
the Commonwealth of Massachusetts, for all periods from January 1, 1998 up to
and including the Closing Date, together with all exhibits and schedules thereto
(with the exception of the Exhibit D thereto for years prior to 2001 which
exhibit shall be excluded), all of which have been prepared in accordance with
the Statutory Accounting Principles and applicable actuarial standards of
practice consistently applied in accordance with the rules and regulations of
the National Association of Insurance Commissioners and the Commonwealth of
Massachusetts and fairly present in all material respects the financial position
and results of operations and cash flows of Liberty as of the dates thereof and
for the periods covered thereby and can be reconciled with the financial
statements and the financial records maintained and the accounting methods
applied by Liberty for financial accounting and federal income tax purposes.

      (b) Purchaser is a wholly owned subsidiary of Liberty, is a holding
company for other indirectly wholly owned subsidiaries of Liberty, and has no
material operations or liabilities.

                                       21
<PAGE>
                                   ARTICLE 4
                      COVENANTS OF SELLERS AND THE COMPANY

      Sellers and the Company each hereby covenants and agrees with and
guarantees to Purchaser as follows:

      4.1 CONDUCT OF BUSINESS. Except as is contemplated in this Agreement, from
the date hereof through the Closing Date, the Company shall not, and Sellers
shall cause the Company not to enter, perform or agree to, enter or perform any
transaction or act that would result in any of the representations and
warranties contained in Article 2 being untrue or incorrect in any material
respect as of the Closing Date or that would cause any condition set forth in
this Agreement to be unsatisfied. Except as is contemplated in this Agreement,
Sellers shall cause the Company to conduct its business only in the ordinary
course of business in all material respects consistent with past practice.

      4.2 NEGATIVE COVENANTS. During the period commencing on the date of this
Agreement and ending on the Closing Date, and except as contemplated in this
Agreement, the Company shall not, and Sellers shall not cause, permit or suffer
the Company to take any action to:

      (a) amend its Restated Articles of Incorporation or Restated Bylaws;

      (b) declare, set aside or pay any amounts out of the Company pursuant to
the Management Agreement;

      (c) transfer, issue, sell or otherwise dispose of any debt or equity
interest in the Company or grant or enter into any options, warrants,
agreements, conversion rights, exchange rights, preemptive rights or other
rights to subscribe for, purchase or otherwise acquire any debt or equity
interest in the Company;

      (d) acquire or dispose of any assets or properties other than in the
ordinary course of business and consistent with past practice;

      (e) sell, lease, transfer or dispose of any assets or properties, or allow
a Lien to be attached thereto, other than for fair consideration in the ordinary
course of business and consistent with past practices, except as specifically
contemplated herein;

      (f) enter into or effect any merger, consolidation, reclassification,
recapitalization or other business combination or reorganization;

      (g) assume, guarantee, endorse or otherwise become liable or responsible
(whether direct, indirect, contingent or otherwise) for the obligations of any
other person, except endorsements in the ordinary course of business and
consistent with past practice in connection with the deposit of items for
collection;

      (h) make any loans, advances or capital contributions to or investments in
any person (other than investments which are consistent with the asset make-up
contemplated by this Agreement);

                                       22
<PAGE>
      (i) except as disclosed in Schedule 2.24, cause or permit any current
property and casualty insurance policies issued to or providing coverage for the
Company to be canceled or terminated or any of the coverage thereunder to lapse
or to be decreased, unless simultaneously with such termination, cancellation or
lapse, the Company obtains replacement policies from the same or comparable
insurers providing coverage which is the same as or comparable to that provided
under the canceled, terminated or lapsed policies;

      (j) sell, transfer, license or otherwise dispose of or encumber any item
of Intangible Assets other than the renewal or lapse of software licenses not
material to the Company's business operations;

      (k) cancel or compromise any debt or claim or waive, release, grant or
transfer any rights of value or modify or change in any respect any existing
license, lease, contract or other document, other than in the ordinary course of
business and consistent with past practice, except as contemplated in this
Agreement;

      (l) hire any Employees or implement any Employee Benefit Plans;

      (m) amend, revise or restate, or take any action that would adversely
affect any rights under, the Management Agreement;

      (n) enter into any contract, lease, commitment or other agreement of any
type whatsoever, unless terminable without liability to Company on notice of
thirty (30) days or less, except with respect to insurance policies renewed in
the ordinary course of business;

      (o) create, incur or assume any indebtedness or Lien;

      (p) cause or permit its assets and properties to not be maintained in
their current condition, ordinary wear and tear excepted;

      (q) (i) not maintain its books, accounts and records in the ordinary
course of business consistent with past practices, (ii) not continue to collect
accounts receivable and pay accounts payable utilizing normal procedures, or
(iii) not comply in all material respects with all contractual and other
obligations applicable to its operations;

      (r) enter into any commitment for capital expenditures of the Company;

      (s) enter into any transaction or make or enter into any contract,
agreement or instrument which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practice;

      (t) write any insurance policy or enter into any reinsurance agreement;

      (u) take any action or fail to take any action which would cause either
the Company's Certificate of Authority or corporate charter to lapse, be
revoked, cancelled or forfeited, or for a Lien to be attached to either; or

                                       23
<PAGE>
      (v) make any material change in the underwriting, actuarial, financial or
accounting practices customarily followed by the Company, unless otherwise
required by applicable law.

      4.3 PREPARATION OF STATUTORY INSURANCE STATEMENTS. For any statutory
accounting period which ends prior to or as of the Closing, Sellers shall
prepare (or have prepared) and file, at the Sellers' expense, any Statutory
Insurance Statements of the Company due after Closing, and shall provide a copy
thereof to Purchaser promptly after such filing, and Purchaser shall cooperate
fully with Seller in the preparation of such statements.

      4.4 ACCESS TO PROPERTIES AND RECORDS. To permit Purchaser to make such
business, accounting and legal review and examination of the Company as
Purchaser shall reasonably desire, Sellers shall afford, and shall cause the
Company to afford, to Purchaser and Purchaser's actuaries, accountants, counsel
and other representatives, access throughout the period prior to the Closing
Date to the business, operations, properties, books, contracts, commitments and
records of the Company as Purchaser or its representatives shall reasonably
request. Sellers shall cause the Company to cooperate with Purchaser and its
representatives in their investigation and examination of the assets and
properties of the Company.

      4.5 CONSENTS AND APPROVALS.

      (a) Sellers shall, and shall cause the Company to, use all commercially
reasonable efforts to promptly obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Entities and persons as may be
required of Sellers in connection with the execution, delivery and performance
of this Agreement and the transactions contemplated hereby, and shall reasonably
assist and cooperate with Purchaser in preparing and filing all documents
required to be submitted by Purchaser to any Governmental Entity in connection
with such transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to Purchaser all information concerning Sellers or
the Company which, in the reasonable opinion of counsel to Purchaser, is
required to be included in such documents), and in obtaining any governmental,
or other third party consents, waivers, authorizations or approvals which may be
required to be obtained by Purchaser in connection with such transactions,
including, without limitation, the approvals contemplated in Section 5.1.

      (b) Sellers shall use all commercially reasonable efforts to cause the
Company to obtain any other consents or approvals for any transactions or
changes involving the Company provided or required by this Agreement for which
the approval of the Texas Department is required prior to Closing, including,
without limitation, (i) the repayment of the Seller Debenture in accordance with
Section 1.2(d), (ii) the issuance of a successor surplus debenture to the
Purchaser, or its designee, in accordance with Section 1.2(d), (iii) the
execution and delivery of the GAIC Reinsurance Agreement and the other
agreements that are exhibits thereto, (iv) the termination of any intercompany
agreements as required herein; and (v) the charter and bylaw amendments
contemplated in Section 4.18 hereof.

      4.6 INSURANCE LICENSE. From the date hereof to the Closing Date, the
Company shall, and Sellers shall cause the Company to, use its best efforts to
preserve and maintain the Company's Certificate of Authority and its corporate
charter issued by the Texas Department.

                                       24
<PAGE>
      4.7 TRANSFER OF INSURANCE BUSINESS LIABILITIES.

      (a) Except for the policies issued pursuant to the Third Party Fronting
Arrangements and the GAINSCO Fronting Arrangement, no insurance risks, policies,
contracts, endorsements or riders of any kind shall be issued, accepted,
written, assumed or bound by or on behalf of the Company at any time from the
date hereof to the Closing Date, inclusive.

      (b) Between the date hereof and the Closing Date, the consummation of the
transactions contemplated by the GAIC Reinsurance Agreement shall be duly
authorized and approved by all necessary corporate action on the part of the
parties thereto. The GAIC Reinsurance Agreement and related agreements (that are
exhibits thereto) shall be duly executed and delivered as of the Closing and
shall be the valid and binding obligations enforceable against the parties
thereto in accordance with their terms, except to the extent limited by
applicable bankruptcy, insolvency, reorganization, and other similar laws of
general application affecting the rights of creditors and secured parties
generally. Between the date hereof and the Closing Date, the Company and Sellers
shall use all commercially reasonable efforts to receive all Regulatory
Approvals required in connection with the execution, delivery and performance of
the GAIC Reinsurance Agreement and related agreements (that are exhibits
thereto). Such Regulatory Approvals shall be in full force and effect and no
additional authorization, consent, approval or other order or action of or
filing with any other person, court, administrative agency or other Governmental
Entity shall be required.

      (c) Sellers shall take all such commercially reasonable efforts to obtain
Attornment Letters from Metropolitan and OMNI with respect to the Financial
Assurances in all material respects in the form attached hereto as Exhibit N.

      4.8 CONTRACTS.

      (a) Effective on the Closing Date, there will be no contracts, agreements,
indentures, instruments, obligations, promises, undertakings, relationships, or
commitments, whether written or oral and whether express or implied, to which
the Company is a party, or by which it, or any asset owned or used by it, is or
may become bound, or by which it has or may acquire rights, including any
agreements between or involving the Company and any of its then affiliates,
other than:

            (i)   this Agreement;

            (ii)  the General Agency Agreement, as amended, with MGA Agency,
Inc.;

            (iii) the GAIC Reinsurance Agreement;

            (iv)  the Reinsurance Trust Agreement by and between GAIC, the
Company, and J.P. Morgan Chase Bank;

            (v)   the Managing General Agency Agreement by and between the
Company and Met P&C Managing General Agency, Inc.;

                                       25
<PAGE>
            (vi)   the 100% Quota Share Reinsurance Agreement by and between the
Company and Metropolitan;

            (vii)  the Guaranty and Indemnity Agreement by and between the
Company and Metropolitan;

            (viii) the Letter of Credit and any amendments (relating to
Metropolitan);

            (ix)   the Agency Agreement by and between the Company and Omni
General Agency, Inc.;

            (x)    the 100% Quota Share Reinsurance Agreement by and between the
Company and OMNI;

            (xi)   the Trust Agreement (relating to OMNI);

            (xii)  the Indemnity Letter (from OMNI);

            (xiii) the insurance contracts providing coverage to the Company,
its business and its employees, officers and directors, as provided herein;

            (xiv)  any insurance policies, contracts, endorsements or riders
issued pursuant to the Third Party Fronting Arrangements and the GAINSCO
Fronting Arrangement, as contemplated in Section 4.7 of this Agreement;

            (xv)   the Management Agreement;

            (xvi)  the surplus debenture note, in the form attached hereto as
Exhibit A; and

            (xvii) the Assignment Agreement.

      (b) All intercompany accounts involving the Company and its affiliates
shall be settled as of the Closing Date.

      4.9 STATE ASSESSMENTS. Sellers agree to pay any and all guaranty fund and
catastrophe pool assessments, assigned risk plan assessments, board and bureau
fees, whether imposed before, on or after the Closing Date, made by any state
guaranty fund, pool, board, bureau, plan or similar entity, net of any premium
tax deductions or offsets, relating to insurance premiums earned or received by
the Company on or before the Closing Date.

      4.10 REGULATORY EXAMINATIONS. Sellers shall cooperate with Purchaser in
providing a response to any reports of examination conducted by any state
insurance regulatory authorities involving matters that occurred on or before
the Closing Date and shall pay any and all fines, penalties or assessments made
against the Company as a result of any examinations that were or are conducted
by an insurance regulatory authority on or before the Closing Date or with
respect to matters that occurred on or before the Closing Date, and in each case
except in respect of the Third Party Fronting Arrangements.

                                       26
<PAGE>
      4.11 THIRD PARTY AGREEMENTS. Sellers shall cooperate with Purchaser and
use its commercially reasonable efforts to assist Purchaser in obtaining any
consents, or similar assurances from third parties required under or reasonably
requested by Purchaser in connection with agreements, licenses, permits and
other documents or instruments of the Company.

      4.12 FURTHER ASSURANCES. Upon the reasonable request of Purchaser at any
time on or after the Closing Date, Sellers will execute and deliver such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as Purchaser or its counsel may reasonably
request in order to perfect title of Purchaser and its successors and assigns in
and to the Management Agreement or otherwise to effect the purposes of this
Agreement.

      4.13 SATISFACTION OF CONDITIONS. Each of the Company and the Sellers agree
to use all commercially reasonable efforts to cause the conditions to
obligations of Purchaser which are set forth in Article 6, and which are
dependent on the actions of Sellers or the Company, to be fulfilled.

      4.14 NOTICE AND CURE. Sellers will notify Purchaser promptly in writing
of, and contemporaneously will provide Purchaser with true and complete copies
of, any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction, or circumstance occurring after the date of this Agreement, that
causes or will cause any covenant or agreement of Seller under this Agreement to
be breached, or that renders or will render untrue any representation or
warranty of Seller contained in this Agreement as if the same were made on or as
of the date of such event, transaction, or circumstance. Seller shall promptly
inform Purchaser in writing of any event or condition which has, or is
reasonably likely to have, a material adverse effect on the Company or the
Management Agreement.

      4.15 NEGOTIATIONS. Until such time, if any, as this Agreement is
terminated pursuant to Article 10 hereof, and subject to the fiduciary duties of
the individual directors of Sellers, Sellers shall not, directly or indirectly,
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any person or entity (other than
Purchaser) relating to any transaction involving the acquisition of control of
the Company (other than as contemplated by this Agreement), or any merger,
consolidation, business combination, or similar transaction with the Company.

      4.16 MAINTENANCE OF POLICYHOLDER SURPLUS AND RESERVES. At all times prior
to the Closing, Sellers and the Company shall maintain the Company's
policyholder surplus in accordance with the Texas Insurance Code.

      4.17 RATINGS. Sellers shall cooperate with Purchaser in notifying rating
services of the proposed transaction. No communication to any such service with
regard to this transaction shall be made by one party without a good faith
effort to obtain prior approval from the other.

      4.18 CHARTER AND BYLAW AMENDMENTS. Following the execution of this
Agreement, Sellers shall cause to be called a meeting of the policyholders of
the Company for the purpose of

                                       27
<PAGE>
amending and restating the Restated Articles of Incorporation and the Restated
Bylaws of the Company. The Restated Articles of Incorporation and the Restated
Bylaws shall be amended and restated consistent with the forms attached hereto
as Exhibits I and J. In connection therewith, the Company shall cause all
applicable notices and disclosures to the policyholders of the Company
pertaining to such amendments to be prepared and distributed in accordance with
all applicable laws and regulations. Such notices shall contain the
recommendation of the board of directors of the Company to its policyholders in
favor of the proposed amendments. Upon receipt of such policyholder approval,
the Company shall promptly take all commercially reasonable action necessary to
secure the approval of the Texas Department; provided, however, the Sellers may
request that such approval be conditioned upon the approval by the Texas
Department of Purchaser's Form A Acquisition Statement. Completion of the
amendments contemplated herein may be conditioned upon the occurrence of the
Closing under this Agreement. In the event approvals from the Texas Department
and the policyholders are not received prior to Closing, Sellers hereby grant a
limited license to Purchaser and the Company to continue to use the name
"GAINSCO County Mutual Insurance Company" and any tradenames or trademarks
derived therefrom (in the same manner and for the same purposes as they are
currently being used) until the name change is effective and, thereafter, for
the purposes described in Section 5.4 hereof.

      4.19 NON-COMPETITION AGREEMENT. Sellers agree that, for the period
commencing as of the Closing Date and ending on the date that Purchaser's
obligation to make Post Closing Payments terminates pursuant to the provisions
of this Agreement, Sellers shall not acquire (i) control of a Texas county
mutual insurance company or (ii) greater than a 50% ownership interest in any
entity that writes nonstandard private passenger and/or commercial automobile
insurance in the State of Texas as a significant and material portion of its
business. The parties specifically acknowledge and agree that the remedy at law
for breach of the foregoing will be inadequate and that Purchaser, in addition
to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage or
posting a bond. Sellers acknowledge and agree that the terms and conditions of
this Section 4.19 are reasonable, are supported by good and sufficient
consideration, and place reasonable restrictions in view of the facts and
circumstances. The agreement set forth in this Section 4.19 shall not apply (i)
to GAINSCO or any successor to GAINSCO, if GAINSCO is sold, consolidated or
merged with or into another entity or entities (except a consolidation or merger
into a subsidiary of GAINSCO, a merger in which GAINSCO is the surviving
corporation (and is not thereafter wholly owned by a previously unrelated
entity), or a transaction in which the holders of GAINSCO's voting securities
outstanding immediately prior to the transaction constitute a majority of the
holders of voting securities immediately following the transaction), or (ii) to
any of GAINSCO's affiliates, if no longer owned or controlled directly or
indirectly by GAINSCO.

                                   ARTICLE 5
                             COVENANTS OF PURCHASER

      Purchaser hereby covenants and agrees with Sellers as follows:

      5.1 CONSENTS AND APPROVALS. Purchaser (i) shall use commercially
reasonable efforts to file a Form A Acquisition Statement with the Texas
Department within thirty (30) days

                                       28
<PAGE>
after the date hereof and promptly obtain all necessary consents, waivers,
authorizations and approvals of appropriate Governmental Entities or other
persons required in connection with the execution, delivery and performance by
Purchaser of this Agreement, and (ii) shall assist and cooperate with Sellers in
preparing and filing all documents required to be submitted by or on behalf of
Sellers to any Governmental Entity in connection with such transactions and in
obtaining any governmental or third party consents, waivers, authorizations or
approvals which may be required to be obtained by Sellers in connection with
such transactions.

      5.2 SATISFACTION OF CONDITIONS. Purchaser agrees to use commercially
reasonable efforts to cause the conditions to obligations of Sellers which are
set forth in Article 7, and which are dependent upon the actions of Purchaser,
to be fulfilled.

      5.3 ACCESS TO RECORDS. After the Closing, Purchaser will afford Seller and
its employees, agents, counselors and advisors reasonable access to the
Company's books, records and data pertaining to pre-Closing activities for the
purpose of preparing any Statutory Insurance Statements or Tax Returns of the
Company due for periods prior to the Closing Date.

      5.4 USE OF NAMES AND MARKS. Purchaser specifically agrees that from and
after the Closing Date, or upon the approval of a new name for the Company, if
later, neither Purchaser nor the Company will make use of the word "GAINSCO" or
any name, mark or term confusingly similar therewith, except for purposes of
historical identification of any products sold by the Company prior to the
Closing Date and as may be necessary for regulatory reporting requirements.

                                   ARTICLE 6
                     CONDITIONS TO OBLIGATIONS OF PURCHASER

      All obligations of Purchaser under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:

      6.1 REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY. All
representations and warranties made by Sellers and/or the Company in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date as if again made by Sellers and/or the Company on and as of such
date (or on the date when made, in the case of any representation or warranty
which specifically relates to an earlier date) without giving effect to any
supplements to the Schedules, except that with respect to all representations
and warranties of Sellers that are modified or limited in any respect by the
phrase "material adverse effect," the word "material" or any other standard term
of materiality shall be true and correct in all respects at and as of the
Closing Date, without giving effect to any supplements to the Schedules. Each of
Seller, GAINSCO and the Company shall have delivered to Purchaser a certificate
of an authorized officer thereof reasonably satisfactory to Purchaser to such
effect.

      6.2 PERFORMANCE BY SELLERS AND THE COMPANY. Sellers and the Company shall
have performed and complied in all material respects with all covenants and
obligations required under this Agreement to be performed by each of them and
with which they must comply on or prior to the Closing Date, and each of Seller,
GAINSCO and the Company shall have delivered

                                       29
<PAGE>
to Purchaser a certificate of an authorized officer thereof to such effect
reasonably satisfactory to Purchaser, and such other evidence as Purchaser may
require.

      6.3 CONSENTS AND APPROVALS. All consents, waivers, authorizations and
approvals of any Governmental Entity or person, required in connection with the
execution, delivery and performance of this Agreement and the transactions
contemplated herein, including, without limitation, (i) the approvals
contemplated in Sections 4.5(a), 4.7, 4.18, and 5.1, (ii) any and all consents
required from third parties under any contracts, agreements, licenses, leases
and other instruments, relating to the business of the Company, shall have been
duly obtained and shall be in full force and effect on the Closing Date and in
form and substance reasonably satisfactory to Purchaser. The approvals obtained
pursuant to Sections 4.5(a), 4.7, 4.18 and 5.1 shall not contain any term or
condition that would materially impair the value of the transactions
contemplated herein to Purchaser. Sellers shall have obtained a release of all
security interests held by Bank One, if any, with respect to the Company, its
corporate charter, its Certificate of Authority, all of the Company's assets
reflected in the Closing Pro Forma Balance Sheet, the Seller Debenture, and the
Management Agreement, in such form that is reasonably satisfactory to Purchaser.

      6.4 NO VIOLATION OF ORDERS. There shall not be in effect on the Closing
Date any statute, rule, regulation, decree, writ, executive order, preliminary
or permanent injunction or other order issued, promulgated or enacted by any
Governmental Entity which makes or declares this Agreement invalid or
unenforceable in any material respect or which prevents the consummation of the
transactions contemplated hereby; and no action or proceeding shall have been
instituted or threatened by any Governmental Entity which seeks to prevent or
delay the consummation of the transactions contemplated by this Agreement or
which challenges the validity or enforceability of this Agreement or any
material term or provision hereof or seeks damages as a result of the
transactions contemplated by this Agreement.

      6.5 NO MATERIAL ADVERSE CHANGE. During the period from the date of this
Agreement to the Closing Date, there shall have been no Material Adverse Legal
Change nor any material adverse change in or any event or occurrence which would
result in a material adverse change in, or any threatened or pending litigation,
which results in any material adverse change in the assets, liabilities,
properties, operations or financial condition of the Company or the Management
Agreement, other than as specifically contemplated in this Agreement, excluding
(i) any such change, effect, event, occurrence or state of facts which (A)
affects the U.S. economy or the nonstandard private passenger and/or commercial
automobile insurance industry generally (other than a Material Adverse Legal
Change), or (B) results from the announcement, making or performance of this
Agreement; and (ii) any reductions in the rating of the Company by A.M. Best
Company. Sellers shall not allow a Lien to be created with respect to, or
otherwise attach to, the Management Agreement, other than in favor of Bank One.

      6.6 INTERCOMPANY OR RELATED PARTY DEBT, AGREEMENT OR INVESTMENTS.
Purchaser shall have received such agreements and assurances as it shall
reasonably require evidencing the satisfaction, forgiveness and release of all
intercompany or other obligations owed by the Company to Sellers or any of their
respective affiliates or related parties, the cancellation, satisfaction and
forgiveness of any obligation under any intercompany or related party contracts,
agreements, arrangements or understandings of any nature, and the elimination of
any

                                       30
<PAGE>
intercompany or related party investment owned by the Company, except as
contemplated by this Agreement. Except as otherwise provided herein, all
intercompany and related party contracts, agreements, arrangements or
understandings shall be terminated prior to the Closing and Sellers shall obtain
any and all Regulatory Approvals required in connection therewith.

      6.7 OTHER CLOSING DOCUMENTS. Purchaser shall have received such other
certificates, instruments and documents in confirmation of the representations,
warranties or covenants of Sellers contained in this Agreement or in furtherance
of the transactions contemplated by this Agreement, as Purchaser or its counsel
may reasonably request.

      6.8 LEGAL MATTERS. All certificates, instruments, opinions and other
documents required to be executed or delivered by or on behalf of Sellers under
the provisions of this Agreement, and all other actions and proceedings required
to be taken by or on behalf of Sellers in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to
counsel for Purchaser. Sellers shall have delivered an opinion of counsel in the
form attached hereto as Exhibit K.

      6.9 RESIGNATION OF DIRECTORS AND OFFICERS. All of the individuals serving
as directors and/or officers of the Company shall deliver to Purchaser their
written resignations from all positions elected to and/or held in such entity
effective on or before the Closing Date and in the form of the Release and
Resignation set forth in Exhibit L hereto. Sellers shall cause such resignations
to occur in such a sequence that will permit Purchaser to substitute and/or
replace such officers and directors in an orderly manner. The Chairman of the
Company shall be the last of the members of the board of directors to resign,
and prior to his resignation, he shall take such action as is necessary, and in
a form acceptable to Purchaser, to appoint a new slate of directors for the
Company, with the names of such directors identified by Purchaser.

      6.10 BOOKS AND RECORDS. The books, records and data (whether stored
electronically or otherwise) of the Company, excluding, however, books and
records relating to Taxes for any Pre-Closing Period (as defined herein), shall
remain the property of the Company through the Closing; provided, however, that
Seller shall be permitted reasonable access to such books, records and data
pertaining to pre-Closing activities following the Closing for the purpose of
preparing any Statutory Insurance Statements or Tax Returns of the Company due
for periods prior to the Closing Date and for any other reasonable purpose of
Seller.

      6.11 CLOSING PRO FORMA BALANCE SHEET. Sellers shall deliver to Purchaser
at Closing a balance sheet prepared to reflect the financial condition of the
Company as of the Closing Date (the "CLOSING PRO FORMA BALANCE SHEET") which
shall be prepared, in all material respects, in accordance with Statutory
Accounting Practices, with the assets determined in accordance with the
requirements of Section 1.2(d), and certified by the Company's treasurer, to the
best of his knowledge, as true, accurate and complete. The Closing Pro Forma
Balance Sheet shall reflect the assets of the same specific categories shown in
the Pro Forma Balance Sheet and shall reflect no liabilities.

      6.12 RECEIPT OF DOCUMENTATION PERTAINING TO FINANCIAL ASSURANCES.
Purchaser shall have received from Sellers the Attornment Letters, as
contemplated in Section 4.7(c) of this

                                       31
<PAGE>
Agreement, executed by Metropolitan and OMNI, and their applicable affiliates,
and in all material respects in the forms attached hereto as Exhibit N.

                                    ARTICLE 7
                      CONDITIONS TO OBLIGATIONS OF SELLERS

      All obligations of Sellers under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:

      7.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER. All representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects as of the Closing Date as if again made by Purchaser on and as
of such date (or on the date when made, in the case of any representation or
warranty which specifically relates to an earlier date) and Purchaser shall have
delivered to Seller a certificate of an officer of Purchaser reasonably
satisfactory to Seller to such effect.

      7.2 PERFORMANCE BY PURCHASER. Purchaser shall have performed and complied
in all material respects with all covenants and obligations required under this
Agreement to be performed by it on or prior to the Closing Date, and Purchaser
shall have delivered to Seller a certificate of an officer of Purchaser
reasonably satisfactory to Seller to such effect.

      7.3 CONSENTS AND APPROVALS. All consents, waivers, authorizations and
approvals of any Governmental Entity or person, required in connection with the
execution, delivery and performance of this Agreement and the transactions
contemplated herein, including, without limitation, (i) the approvals
contemplated in Sections 4.5(a) and 5.1, (ii) any and all consents required from
third parties under any contracts, agreements, licenses, leases and other
instruments, relating to the business of the Company, shall have been duly
obtained and shall be in full force and effect on the Closing Date and in form
and substance reasonably satisfactory to Seller. The approvals obtained pursuant
to Sections 4.5(a) and 5.1 shall not contain any term or condition that would
materially impair the value of the transactions contemplated herein to Seller.
Sellers shall have obtained a release of all security interests held by Bank
One, if any, with respect to the Company, its corporate charter, its Certificate
of Authority, all of the Company's assets reflected in the Closing Pro Forma
Balance Sheet, the Seller Debenture, and the Management Agreement, in such form
that is reasonably satisfactory to Sellers.

      7.4 NO VIOLATION OF ORDERS. There shall not be in effect on the Closing
Date any statute, rule, regulation, decree, writ, executive order, preliminary
or permanent injunction or other order issued by any Governmental Entity which
makes or declares this Agreement invalid or unenforceable in any material
respect or which prevents the consummation of the transactions contemplated
hereby; and no action or proceeding shall have been instituted or threatened by
any Governmental Entity which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement or any material term or provision hereof or
seeks damages as a result of the transactions contemplated by this Agreement.

      7.5 LEGAL MATTERS. All certificates, instruments, opinions and other
documents required to be executed or delivered by or on behalf of Purchaser
under the provisions of this

                                       32
<PAGE>
Agreement, and all other actions and proceedings required to be taken by or on
behalf of Purchaser in furtherance of the transactions contemplated hereby,
shall be reasonably satisfactory in form and substance to counsel for Seller.
Purchaser shall have delivered opinions of counsel in the forms attached hereto
as Exhibit M.

      7.6 DISTRIBUTION OF STATUTORY SURPLUS. On or before the Closing, but prior
to the contribution to surplus by Purchaser pursuant to Section 1.2(d) hereof,
the Company shall have paid in full (i) all principal and accrued interest on
the Seller Debenture and (ii) all amounts accrued to the account of Seller
pursuant to the Management Agreement. Through the foregoing, or otherwise, all
surplus of the Company (as of the Closing but prior to the contribution
described above), other than the surplus shown in the Closing Pro Forma Balance
Sheet, shall have been transferred to Sellers.

                                   ARTICLE 8
                            SURVIVAL; INDEMNIFICATION

      8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. Except as specified
herein, all representations, warranties, agreements, covenants and obligations
herein or in any Exhibit, Schedule or certificate delivered by any party
incident to the transactions contemplated hereby are material and may be relied
upon by the party receiving the same and shall survive the Closing for a period
of five (5) years regardless of any investigation by or knowledge of such party
and shall not merge into the performance of any obligation by any party hereto;
provided, however, if at any time prior to September 15, 2005, a Material
Adverse Legal Change occurs that is not subsequently repealed, rescinded or
vetoed within one (1) year, all representations, warranties, agreements,
covenants and obligations shall survive the Closing for a period of three (3)
years; provided further, however, that any and all of the representations,
warranties, agreements, covenants and obligations of the parties contained in
Sections 1.3(a), 2.2, 2.3(a), 2.18(a), 2.32, 5.3, 5.4 and 6.10 shall survive the
Closing indefinitely and those contained in Section 2.13 and Article 9 shall
survive the Closing until six (6) months after the expiration of the applicable
statute of limitations; provided further, however, that the agreements,
covenants and obligations contained in Sections 1.2 and 4.19 shall survive the
Closing for a period of time consistent with the time periods described therein.
The indemnification rights and obligations of the parties set forth in this
Article 8 shall survive the Closing consistent with the requirements of this
Section 8.1; provided, however, that the indemnification obligations described
in Sections 8.2(f) and (g) shall survive the Closing indefinitely.

      8.2 INDEMNIFICATION BY SELLERS. Sellers jointly and severally agree,
subsequent to the Closing Date, to indemnify and hold harmless the Purchaser,
its affiliates, its subsidiaries (including the Company after the Closing) and
all of their respective officers, directors, employees, agents, successors and
assigns (individually, a "PURCHASER INDEMNIFIED PARTY" and collectively, the
"PURCHASER INDEMNIFIED PARTIES") from and against and in respect of all losses,
claims, causes of action, liabilities, obligations, damages, Taxes,
deficiencies, actions, suits, proceedings, demands, assessments, orders,
judgments, fines, penalties, costs and expenses (including the reasonable fees,
disbursements and expenses of attorneys, accountants and consultants) of any
kind or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense and settlement of the
foregoing) (subject

                                       33
<PAGE>
to the provisions of Section 8.8, a "LOSS" or "LOSSES") sustained, suffered or
incurred by or made against any Purchaser Indemnified Party arising out of,
based upon or in connection with:

      (a) conditions, circumstances or occurrences which constitute or result in
any breach of any representation or warranty made by Sellers and/or the Company
in this Agreement or in any certificate, agreement, document or other instrument
delivered under or in connection with this Agreement, or by reason of any claim,
action or proceeding asserted or instituted arising out of or resulting from an
inaccuracy in any such representations or warranties;

      (b) any breach of any covenant or agreement made by Sellers and/or the
Company in this Agreement or in any certificate, agreement, document or other
instrument delivered under or in connection with this Agreement, or by reason of
any claim, action or proceeding asserted or instituted arising out of or
resulting from the breach of any such covenant or agreement;

      (c) liabilities relating to amounts due in connections with any Employee
Benefit Plan under which the Company may incur liability for Pre-Closing
Periods;

      (d) any and all Taxes imposed on or with respect to or otherwise
attributable to the Company with respect to periods, or portions thereof,
including but not limited to Taxes allocated to the Company pursuant to any tax
allocation agreement between the Company and any other person, ending on or
before the Closing Date ("PRE-CLOSING PERIODS");

      (e) any and all liabilities or obligations of any kind or nature of the
Company, known or unknown, accrued, contingent or otherwise, to the extent they
relate to or to the extent they result from conditions or circumstances arising
or events occurring before the Closing, but excluding in any event (i) any
liabilities or obligations relating to the Third Party Fronting Arrangements or
the GAINSCO Fronting Arrangement (which for the latter is covered by the GAIC
Reinsurance Agreement and Section 8.2(g) hereof), and (ii) the portion of any
Loss that is caused by the wrongful or negligent actions or inactions of any of
the Purchaser Indemnified Parties taken after the Closing Date;

      (f) any and all insurance claims, liabilities and obligations of the
Company, if any, that are not reinsured pursuant to the GAIC Reinsurance
Agreement or the Third Party Fronting Arrangements; and

      (g) any and all insurance claims, liabilities and obligations of GAIC
under the GAIC Reinsurance Agreement, in the event (i) GAIC fails to timely
perform its obligations, covenants and agreements as required under the terms of
the GAIC Reinsurance Agreement, or (ii) a court of competent jurisdiction or
Governmental Entity shall have declared or found GAIC to be insolvent, or places
GAIC in supervision, conservation, rehabilitation or liquidation; provided,
however, with respect to the event described in (g)(i) above, if the parties to
the GAIC Reinsurance Agreement have a disagreement with respect to any amount
that is owed by GAIC to the Company thereunder and such dispute is subject to
the arbitration provisions of the GAIC Reinsurance Agreement, Sellers shall not
be required to satisfy their indemnification obligations set forth above under
(g)(i) until the decision in the arbitration proceeding has become final and
GAIC has had a reasonable period of time (not to exceed seven (7) business days)
to pay any amount owed to the Company pursuant thereto.

                                       34
<PAGE>
      Provided, however, that Sellers' obligations to indemnify, defend and hold
harmless as provided in Sections 8.2(a) through (e) (but excluding (f) and
(g))shall not apply until the cumulative amount of all Losses to Purchaser
Indemnified Parties exceeds $50,000.00, whereupon Sellers shall be responsible
for the full amount of all Losses including the first $50,000.00; and provided,
further, that the amount of any Losses for which indemnification is sought shall
be net of any amount actually recovered with respect thereto by the Purchaser
Indemnified Party or Parties under insurance policies and that the Purchaser
Indemnified Party or Parties shall have attempted in good faith to recover any
Losses that are so insured.

      8.3 INDEMNIFICATION BY PURCHASER. Purchaser agrees, subsequent to the
Closing Date, to indemnify and hold harmless Sellers, their affiliates, their
subsidiaries and all of their respective officers, directors, employees, agents,
successors and assigns (collectively, the "SELLER INDEMNIFIED PARTIES") from and
against and in respect of all Losses sustained, suffered or incurred by or made
against any of the Seller Indemnified Parties arising out of, based upon or in
connection with (a) conditions, circumstances or occurrences which constitute or
result in any breach of any representation or warranty made by Purchaser in this
Agreement or in any certificate, agreement, document or other instrument
delivered under or in connection with this Agreement, or by reason of any claim,
action or proceeding asserted or instituted arising out of or relating to any
inaccuracy in such representations or warranties; (b) any breach of any covenant
or agreement made by Purchaser in this Agreement or in any certificate,
agreement, document or other instrument delivered under or in connection with
this Agreement, or by reason of any claim, action or proceeding asserted or
instituted arising out of or relating to a breach of any such covenant or
agreement; (c) any and all Taxes imposed on or with respect to or otherwise
attributable to the Company with respect to periods, or portions thereof,
including but not limited to Taxes allocated to the Company pursuant to any tax
allocation agreement between the Company and any other person, beginning after
the Closing Date; and (d) any and all liabilities or obligations of any kind or
nature of the Company, known or unknown, accrued, contingent or otherwise, to
the extent they relate to or to the extent they result from conditions or
circumstances arising or events occurring after the Closing, but excluding in
any event (i) any liabilities or obligations relating to the GAINSCO Fronting
Arrangement, and (ii) the portion of any Loss that is caused by the wrongful or
negligent actions or inactions of any of the Seller Indemnified Parties.

      8.4 NOTICE; DEFENSE OF THIRD PARTY CLAIMS.

      (a) Promptly after receipt by an indemnified party of notice of any Loss
to which the indemnification obligations hereunder would apply, the indemnified
party shall give notice thereof in writing to the indemnifying party (the
Purchaser with respect to claims by the Seller Indemnified Parties and Sellers
with respect to claims by the Purchaser Indemnified Parties), but the omission
to so notify the indemnifying party promptly will not relieve the indemnifying
party from any liability except to the extent that the indemnifying party shall
have been prejudiced as a result of the failure or delay in giving such notice.
Such notice shall state the information then available regarding the amount and
nature of such Loss and shall specify the provision or provisions of this
Agreement under which the liability or obligation is asserted.

      (b) In the event an indemnification claim relates to any suit, action, or
proceeding brought by any third party against an indemnified party, if within
twenty (20) days after

                                       35
<PAGE>
receiving such notice, the indemnifying party gives written notice to the
indemnified party stating that the indemnifying party (i) would be liable under
the provisions hereof for indemnity in the amount of such claim if such claim
were successful, (ii) shall be fully responsible (with no reservation of any
rights) for all liabilities relating to such Loss and that it will provide full
indemnification (whether otherwise required hereunder) to the indemnified party
with respect to such Loss, and (iii) disputes the third party claim and intends
to defend against Loss at its own cost and expense, then counsel for the defense
shall be selected by the indemnifying party (subject to the consent of the
indemnified party, which consent shall not be unreasonably withheld) and the
indemnifying party shall not be required to make any payment to the indemnified
party with respect to such Loss if and so long as the indemnifying party is
conducting a good faith and diligent defense at its own expense; provided,
however, that the assumption of defense of any such matters by the indemnifying
party shall relate solely to the claim, liability or expense that is subject or
potentially subject to indemnification, and provided further that prior to such
assumption of defense the indemnifying party shall enter into an agreement with
the indemnified party in form and substance reasonably satisfactory to the
indemnified party pursuant to which the indemnifying party unconditionally
guarantees the payment and performance of any liability or obligation which may
arise out of or in any way relating to such Loss or the facts giving rise
thereto. The indemnifying party shall have the right, with the consent of the
indemnified party, which consent shall not be unreasonably withheld, to settle
all indemnifiable matters related to claims by third parties which are
susceptible to being settled, provided its obligation to indemnify the
indemnifying party therefor will be fully satisfied. The indemnifying party
shall keep the indemnified party apprised of the status of the Loss and any
resulting suit, proceeding or enforcement action, shall furnish the indemnified
party with all documents and information that the indemnified party shall
reasonably request and shall consult with the indemnified party prior to acting
on major matters, including settlement discussions. Notwithstanding anything in
this Section 8.4 (b) to the contrary, the indemnified party shall at all times
have the right to fully participate in such defense at its own expense directly
or through counsel; provided, however, if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel or of the indemnified party
by counsel representing the indemnifying party would be inappropriate under
applicable standards of professional conduct, the expense of separate counsel
for the indemnified party shall be paid by the indemnifying party and the rights
of the indemnifying party to control the defense and settle the claims shall not
apply.

      (c) If no notice of intent to dispute and defend is given by the
indemnifying party as provided in Section 8.4(b), or if such diligent good faith
defense is not being or ceases to be conducted, the indemnified party shall have
the right, at the expense of the indemnifying party, to undertake the defense of
(with counsel selected by the indemnified party), and shall have the right to
compromise or settle (exercising reasonable business judgment) such Losses
applicable to either party. If such Loss is one that by its nature cannot be
defended solely by the indemnifying party or otherwise at the reasonable request
of the indemnifying party, the indemnified party shall make available all
information and assistance that the indemnifying party may reasonably request
and shall cooperate with the indemnifying party in such defense.

      (d) The requirements of Sections 8.4(a), (b) and (c) shall not apply to
the indemnification obligations under Section 8.2(g).

                                       36
<PAGE>
      8.5 RECOVERIES. The amount of any Losses suffered, sustained, incurred or
required to be paid by any indemnifying party shall be reduced by the amount of
any insurance proceeds paid to the indemnified party by any person not a party
to this Agreement.

      8.6 SATISFACTION OF INDEMNIFICATION OBLIGATIONS. Except as provided in
Section 8.4(b) hereof, any indemnity payable pursuant to this Article 8 shall be
paid within twenty (20) business days after the indemnified party's written
request therefor accompanied by reasonably satisfactory documentation supporting
the claim for indemnification, including the amount of Losses and the
calculation of and justification therefor; provided, however, any indemnity
payable pursuant to Section 8.2(g)(i) shall be paid within seven (7) business
days after the decision in the arbitration proceeding referred to therein, if
any, has become final, or if there is no arbitration proceeding initiated
thereunder, then payment will be made upon three (3) business days to notice to
Sellers. Purchaser shall be entitled to offset any indemnity payable to the
Purchaser Indemnified Parties pursuant to this Article 8 against any of the Post
Closing Payments owed by Purchaser pursuant to Section 1.2(b) of this Agreement;
provided, however, with respect to such right of offset, (a) the amount of any
indemnity payable must be based upon a good faith estimate by Purchaser of the
Losses to the Purchaser Indemnified Parties, and supported by reasonably
satisfactory documentation; (b) if it is determined through a judicial or
arbitration proceeding (and such determination has become final) that the
Purchaser Indemnified Parties were ultimately entitled to an amount under
Section 8.2 that was less than the amount Purchaser offset against the Post
Closing Payment(s) pursuant to this section, Sellers shall be entitled to
recover from Purchaser, within seven (7) business days from the date of the
determination, both the difference between the two amounts and interest on the
difference between the two amounts at twelve percent (12%) per annum, subject to
the maximum rate of interest allowed by law, which interest shall accrue from
the date Purchaser exercised its right of offset until the date reimbursement is
made to Sellers (and such interest shall be in lieu of, and not in addition to,
interest awarded pursuant to the judicial or arbitration proceeding); and (c)
unless either of Sellers is insolvent or the subject of bankruptcy or
receivership proceedings, any amounts which Purchaser seeks to offset against
the Post Closing Payment(s) for claims for Losses asserted by the Purchaser
Indemnified Parties after the second anniversary of the Closing Date, which
amounts are disputed in good faith by Sellers, shall be deposited into an escrow
account pursuant to an escrow agreement, in all material respects in form
attached hereto as Exhibit O, and with an independent escrow agent selected by
Purchaser and reasonably acceptable to Sellers, and released to the appropriate
party upon final resolution of the dispute. The requirements under (a), (b) and
(c) above shall not apply to any indemnity owed to the Purchaser Indemnified
Parties under Section 8.2(g)(i), and Purchaser may exercise its right of offset
with respect to all Losses under Section 8.2(g)(i) without complying with such
requirements. Any subsequent reimbursement to Purchaser pursuant to Section 9.5
hereof shall be treated as an adjustment to the Purchase Price.

      8.7 SOLE AND EXCLUSIVE REMEDY. Following the Closing, recourse under the
provisions of this Article 8 shall be the sole and exclusive remedy of any party
to this Agreement for Losses asserted against, resulting to, imposed upon, or
incurred by such party, directly or indirectly, by reason of or resulting from
any breach by any other party of any of such other party's representations,
warranties, covenants or agreements contained in this Agreement or in any
certificate, instrument or document delivered pursuant hereto, but excluding
claims related to fraud and claims for injunctive or other equitable relief for
which monetary damages covered by

                                       37
<PAGE>
an indemnity obligation set forth herein are not available. The foregoing
limitation does not foreclose or otherwise limit the rights and remedies of the
parties to the Liability Assumption Agreement or the GAIC Reinsurance Agreement.

      8.8 EXCLUSIONS FROM LOSSES. For purposes of this Agreement, the term
"LOSSES" shall have the meaning assigned to it in Section 8.2; provided,
however, with respect to indemnification under this Article 8, notwithstanding
any other provision of this Agreement, no indemnifying party shall have any
liability for, and the definition of Losses explicitly excludes, any amounts
that are claimed by any indemnified party arising from, relating to, or
including, in whole or in part, any consequential, special, incidental, or
punitive damages, whether awarded by a court or an arbitrator. The foregoing
exclusion does not apply to amounts paid or owed by an indemnified party with
respect to any claim, suit, action or proceeding brought by any third party.

                                   ARTICLE 9
                                     TAXES

      9.1 COOPERATION AND EXCHANGE OF INFORMATION. The Company and its
affiliates will not, unless otherwise required by law, rule or regulation or
unless doing so would have no effect on any Taxes for which Sellers are or may
be liable under Sections 8.2(d), 9.5 and 9.9 hereof, adopt a Tax treatment of
any material item that is inconsistent with the past treatment of similar items
of the Company in any previously filed Tax Return. Sellers and Purchaser will
provide, or cause to be provided, to each other prompt notice of and copies of
all correspondence received from any taxing authority by Sellers or Purchaser in
connection with any liability for Losses relating to Taxes for which the other
party is or may be liable under Sections 8.2(d), 9.5 and 9.9 hereof. The parties
will provide each other with the cooperation and information as they may
reasonably request of each other in preparing or filing any Return, amended
Return, or claim for refund, in determining a liability or a right to refund or
in conducting any audit or other administrative or judicial proceeding in
respect of Taxes imposed on the parties, the Company or their respective
affiliates, or for which a party may be required to indemnify another party
pursuant to this Agreement. Sellers shall have the right to participate in the
conduct of any Tax audit, assessment or proceeding with respect to Taxes
attributable solely to any Pre-Closing Period at their own expense and with
their own counsel; Purchaser shall agree to any reasonable settlement thereof
recommended by Sellers. If the effect of such settlement would be to increase
the liability of Purchaser or the Company for any post-Closing period, Sellers
agree to pay to Purchaser the full amount of any such increase.

      9.2 SELLERS' ACCESS. Purchaser will grant or cause to be granted to
Sellers access at all reasonable times to all of the information, books and
records relating to the Company within its possession or control (including,
without limitation, Tax work papers, Tax Returns and correspondence with Tax
authorities), including the right to take extracts therefrom and make copies
thereof at Sellers' expense, to the extent reasonably necessary in connection
with Taxes and Tax disputes to which this Agreement applies and shall furnish
the assistance and cooperation of such personnel and affiliates of Purchaser as
Sellers may reasonably request in connection therewith.

                                       38
<PAGE>
      9.3 PURCHASER'S ACCESS. Sellers will grant or cause to be granted to
Purchaser, the Company or their representatives access at all reasonable times
to all of the information, books and records relating to the Company within
Sellers' possession or control (including, without limitation, Tax work papers,
Tax Returns and correspondence with Tax authorities), including the right to
take extracts therefrom and make copies thereof at the expense of the Company,
to the extent reasonably necessary in connection with Taxes and Tax disputes to
which this Agreement applies and shall furnish the assistance and cooperation of
such personnel and affiliates of Sellers as Purchaser may reasonably request in
connection therewith.

      9.4 CONFIDENTIALITY. Any information obtained by a party hereto or its
affiliates from another party hereto or its affiliates in connection with any
Tax matters to which this Agreement applies shall be kept confidential, except
as may be otherwise necessary in connection with the filing of Tax Returns or
claims for refund or in conducting an audit or other proceeding.

      9.5 PREPARATION OF TAX RETURNS. Sellers shall prepare or cause to be
prepared and shall file or cause to be filed all Tax Returns, including premium
Tax Returns, for the Company that are required to be filed after the Closing
Date for all periods ending on or prior to the Closing Date. Sellers shall
permit Purchaser to review and comment on each such Tax Return described in the
preceding sentence and shall make such revisions to such Tax Returns as are
reasonably requested by Purchaser. Sellers shall be liable for and shall
reimburse Purchaser for all Taxes of the Company with respect to all Pre-Closing
Periods, within fifteen (15) days after payment by Purchaser or the Company of
such Taxes. To the extent a short-period Tax Return is not required for the
period from January 1, 2002 through the Closing Date, Sellers shall be
responsible for the portion of such Taxes allocable to the period prior to
Closing and shall reimburse Purchaser with respect to such Taxes. Subject to the
foregoing sentence, Purchaser shall prepare or cause to be prepared and shall
file or cause to be filed all Tax Returns, including premium Tax Returns, for
the Company that are required to be filed after the Closing Date for all periods
ending after the Closing Date.

      9.6 ALLOCATION BETWEEN PERIODS. All Taxes shall be determined on the basis
of an interim closing of the books of the Company as though its Tax year ended
on the Closing Date; provided, that the allocable portion of any periodic Tax
that is not based on income, receipts or transactions shall be determined by
apportioning the Tax for the entire taxable year based upon the number of days
in the Pre-Closing Period and post-Closing period. The books and records of the
Company shall be closed at the end of business on the Closing Date, and for
purposes of this Agreement, a short Tax-year period shall end for the period
January 1, 2002 through the Closing Date. Sellers shall prepare or cause to be
prepared, and shall execute on behalf of the Company and file or cause to be
filed in a timely manner all federal Tax Returns for the Company for all periods
ending on the Closing Date.

      9.7 TAX TREATMENT OF TRANSACTIONS. Sellers and Purchasers agree that for
Tax purposes the transfer of the rights and interests in the Management
Agreement is a sale by Sellers of all of their interests in the Management
Agreement. Except pursuant to any judicial proceeding that has become final,
Sellers and Purchaser agree not to take any position inconsistent with this
position for Tax purposes.

                                       39
<PAGE>
      9.8 ALLOCATION OF PURCHASE PRICE. The parties agree that the consideration
payable pursuant to Article 1 relates to an applicable asset acquisition as
defined in Treas. Reg. 1.1060-1(b) and shall be allocated in accordance with
Section 1060 of the Code and the underlying Treasury Regulations entirely to the
Management Agreement. Each party agrees to file with its federal income Tax
Returns an initial asset acquisition statement and any supplemental statements
on IRS Form 8594 (Asset Acquisition Statement), consistent with the preceding
sentence.

      9.9 TRANSFER TAXES. Sellers shall pay the cost of any and all sales, use,
transfer or other similar Taxes imposed as a result of the consummation of the
transactions contemplated by this Agreement, and Purchaser and the Company shall
have no obligation or liability of any kind to Sellers with respect to such
Taxes.

      9.10 TAX SHARING AGREEMENTS. All tax sharing or indemnification agreements
and all power of attorney arrangements, or any similar agreements of any kind
involving the Company, shall be terminated on or before the Closing, and all
payment obligations thereunder shall be paid, settled, and satisfied prior to
the Closing.

                                   ARTICLE 10
                           TERMINATION AND ABANDONMENT

      10.1 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:

      (a) by the mutual written consent of Sellers and Purchaser;

      (b) by Purchaser, if all of the conditions set forth in Article 6 of this
Agreement shall not have been satisfied or waived within one hundred eighty
(180) days after the date hereof;

      (c) by Sellers, if all of the conditions set forth in Article 7 of this
Agreement shall not have been satisfied or waived within one hundred eighty
(180) days after the date hereof;

      (d) by Purchaser, if any of Sellers' or the Company's representations,
warranties or covenants herein are materially untrue, inaccurate, breached or
failed to be performed and such misrepresentation, breach or failure is not
cured in all material respects within thirty (30) days after Seller receives
notice thereof from Purchaser;

      (e) by Sellers, if any of Purchaser's representations, warranties or
covenants herein are materially untrue, inaccurate, breached or failed to be
performed, and such misrepresentation, breach or failure is not cured in all
material respects within thirty (30) days after Purchaser receives notice
thereof from Seller;

      (f) if a court of competent jurisdiction or Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use all reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable; or

                                       40
<PAGE>
      (g) by Purchaser if, subsequent to the date hereof and prior to the
Closing Date, there is any material adverse change in the Company, as defined in
Section 2.11 hereof.

      Notwithstanding the foregoing, no party shall have the right to terminate
this Agreement unilaterally pursuant to Section 10.1(b), 10.1(c), 10.1(d) or
10.1(e) if the failure to consummate the transactions contemplated hereby shall
be primarily attributable to the party seeking such unilateral termination or to
any affiliate of such party.

      10.2 EFFECT OF TERMINATION. In the event of termination and abandonment of
this Agreement pursuant to Section 10.1 hereof, written notice thereof shall be
given to the other parties hereto (unless termination and abandonment is
pursuant to Section 10.1(a) hereof), and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned without further action by
Sellers or Purchaser. In the event of termination of this Agreement as provided
in Section 10.1, this Agreement shall become void and there shall be no
liability or obligation on the part of any party hereto to any other party,
except for any liability of any party for breaches of any of its
representations, warranties, covenants or agreements set forth herein.

                                   ARTICLE 11
                            MISCELLANEOUS PROVISIONS

      11.1 PUBLICITY AND NON-DISCLOSURE. Prior to the Closing, no party hereto
shall issue any press release or other public announcement or otherwise solicit
publicity with respect to this Agreement or the transactions contemplated hereby
without the prior written consent of the other parties hereto; provided,
however, that any party may make any public disclosure it believes in good faith
and on advice of counsel is required by law or regulation or otherwise in
connection with the approvals under Section 5.1 hereof, in which case the
disclosing party shall advise the other parties hereto and provide each of them
with a copy of the proposed disclosure prior to making such disclosure.

      11.2 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors, heirs,
representatives and permissible assigns, as the case may be; provided, however,
that no party shall assign or delegate this Agreement or any of the rights or
obligations created hereunder without the prior written consent of the other
parties. Except as set forth in this Section 11.2, nothing in this Agreement
shall confer upon any person not a party to this Agreement, or the legal
representatives of such person, any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement.

      11.3 CONSTRUCTION OF TERMS. Whenever used in this Agreement, a singular
number shall include the plural and a plural the singular. Pronouns of one
gender shall include all genders. References herein to articles, sections,
paragraphs, subparagraphs or the like shall refer to the corresponding articles,
sections, paragraphs, subparagraphs or the like of this Agreement. The words
"hereof," "herein," and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use of the terms
"including," "included," "such as," or terms of similar meaning, shall not be
construed to imply the exclusion of any other particular elements and shall be
construed as though followed by the words "without limitation."

                                       41
<PAGE>
      11.4 EXPENSES. Except as otherwise expressly provided in this Agreement,
the parties hereto shall bear their respective expenses incurred in connection
with the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants. Expenses
associated with the notices, policyholder meetings, and applicable regulatory
filing fees, if any, pertaining to the transactions described in Sections 1.3,
4.7, 4.18, and 6.6 hereof (other than fees and expenses of Purchaser's counsel,
representatives, consultants and agents) shall be paid by Sellers.

      11.5 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made, if
delivered personally or transmitted by telex or telecopy (if also sent by
certified mail or overnight delivery), on the date so delivered or transmitted,
if sent by Federal Express or other reputable national overnight carrier, on the
next business day after the date so sent, or if mailed by registered or
certified mail (postage prepaid, return receipt requested), on the fifth
business day after the date so mailed, to the parties at the following
addresses:

      (a) If to Seller or the Company, at:

                                 GAINSCO Service Corp.
                                 500 Commerce Street
                                 Fort Worth, Texas 76102
                                 Attn: Glenn W. Anderson
                                 Facsimile:   (817) 338-1454
                                 Telephone:  (817) 336-2500

      With a copy to:
                                 GAINSCO, INC.
                                 500 Commerce Street
                                 Fort Worth, Texas 76102
                                 Attn: Glenn W. Anderson
                                 Facsimile:   (817) 338-1454
                                 Telephone:  (817) 336-2500

      In either case, with a copy to:

                                 Jackson Walker, L.L.P.
                                 901 Main Street, Suite 6000
                                 Dallas, Texas 75202
                                 Attn: Byron F. Egan
                                 Facsimile: (214) 953-5822
                                 Telephone: (214) 953-5727

      (b) If to Purchaser or Liberty, at:

                                 Liberty Mutual Insurance Company
                                 175 Berkeley Street

                                       42
<PAGE>
                                 Boston, Massachusetts 02117
                                 Attn: General Counsel
                                 Facsimile: (617) 574-5830
                                 Telephone:  (617) 357-9500

      With a copy to:            Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                 300 W. 6th Street, Suite 2100
                                 Austin, TX 78701
                                 Attn: Barry Senterfitt
                                 Facsimile:  (512) 703-1112
                                 Telephone:  (512) 499-6216

or to such other persons or at such other addresses as shall be furnished by any
party by notice in the manner provided above to the others.

      11.6 ENTIRE AGREEMENT. This Agreement, together with the Schedules and
Exhibits attached hereto, represents the entire agreement and understanding of
the parties hereto with reference to the transactions set forth herein, and no
representations, warranties or covenants have been made in connection with this
Agreement, either express or implied, other than those expressly set forth
herein, in the Schedules or Exhibits hereto or in the certificates, agreements
and other documents delivered in connection with the transactions contemplated
hereby. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement and all prior drafts of
this Agreement, all of which are merged into this Agreement; provided, however,
the parties hereto shall remain subject to and bound by that certain
Confidentiality Agreement dated April 8, 2002 between GAINSCO and Liberty, in
accordance with its terms, until the Closing hereunder, at which time such
Confidentiality Agreement shall terminate in its entirety, with the exception of
the provisions in Sections 4 and 8 thereof which shall survive the Closing for
the periods of time indicated therein.

      11.7 WAIVERS, AMENDMENTS AND REMEDIES. This Agreement may be amended,
superseded, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by each of the parties hereto or, in the case of a
waiver, by the party(ies) waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.

      11.8 SEVERABILITY. If any provision of this Agreement shall be held
unlawful, invalid, or unenforceable by any court or administrative agency, it
shall be deemed severable and the remainder of this Agreement shall remain in
full force and effect and be interpreted so as to carry out the intent of the
parties in an equitable manner, unless severance of the provision held unlawful,
invalid or unenforceable would substantially impair the benefits to the parties
of the remaining portions of this Agreement.

                                       43
<PAGE>
      11.9 HEADINGS. The Article and Section headings contained in this
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision hereof.

      11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

      11.11 GOVERNING LAW. This Agreement is made under and shall be governed by
and construed in accordance with the laws of the State of Texas, without regard
to principles of choice of law or conflicts of law which would direct the
application of the laws of a different jurisdiction.

      11.12 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto
are a part of this Agreement as if fully set forth herein. All references herein
to Articles, Sections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require. Disclosure of any matter in any Schedule or Exhibit, as the case may
be, shall not constitute an expression of a view that such matter is material or
is required to be disclosed pursuant to this Agreement.

      11.13 NEGOTIATED AGREEMENT. This Agreement has been negotiated by the
parties hereto. The language used in this Agreement and the other agreements
contemplated herein shall be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction shall be applied
against any party.

                                   ARTICLE 12
                   LIBERTY'S GUARANTY OF PURCHASER OBLIGATIONS

      Liberty hereby unconditionally and irrevocably guarantees the performance
of all of Purchaser's obligations hereunder, subject to any defenses available
to Purchaser under this Agreement. If any of such obligations of Purchaser are
not complied with in any material respect whatsoever, and without the necessity
of any notice from either of Sellers to Liberty, Liberty agrees to timely
perform such obligations. Sellers each will have the right to proceed directly
against Liberty without first exhausting any other remedy it may have against
Purchaser.

                                   ARTICLE 13
                                   DEFINITIONS

      When each of the following terms is used in this Agreement, it shall have
the meaning stated in the Section indicated:

<TABLE>
<CAPTION>
      TERM                                                                                   SECTION
<S>                                                                                   <C>
      Adjusted Balance Sheet.......................................................           1.8(a)
      Agreement ...................................................................         Preamble
      Arbiter......................................................................           1.8(b)
      Assignment Agreement.........................................................              1.4
      Bank One.....................................................................   Section 1.6(e)
</TABLE>

                                       44
<PAGE>
<TABLE>
<S>                                                                                   <C>
      Certificate of Authority ....................................................   Section 2.18(a)
      Chairman ....................................................................      Section 2.34
      Closing .....................................................................       Section 1.4
      Closing Pro Forma Balance Sheet .............................................      Section 6.11
      Closing Date ................................................................       Section 1.4
      Closing Date Payment.........................................................    Section 1.2(a)
      Code ........................................................................   Section 2.13(c)
      Company .....................................................................          Preamble
      Dispute Notice Date..........................................................            1.8(b)
      Dispute Notice...............................................................            1.8(b)
      Employee Benefit Plans ......................................................      Section 2.23
      Employees ...................................................................      Section 2.23
      ERISA .......................................................................      Section 2.23
      Financial Assurances ........................................................          Recitals
      GAIC Reinsurance Agreement ..................................................    Section 1.3(b)
      GAIC.........................................................................    Section 1.3(b)
      GAINSCO .....................................................................          Preamble
      GAINSCO Fronting Arrangement ................................................      Section 2.31
      Governmental Entity .........................................................       Section 2.8
      Intangible Assets ...........................................................      Section 2.17
      IRS..........................................................................   Section 2.13(c)
      Liability Assumption Agreement ..............................................    Section 1.3(a)
      Liberty......................................................................          Preamble
      Liens .......................................................................       Section 1.1
      Loss or Losses ..............................................................       Section 8.2
      Management Agreement ........................................................          Recitals
      material adverse change or material adverse effect ..........................   Section 2.11(a)
      Material Adverse Legal Change ...............................................    Section 1.2(b)
      Metropolitan ................................................................          Recitals
      OMNI ........................................................................          Recitals
      Post Closing Payments .......................................................    Section 1.2(b)
      Pre-Closing Periods .........................................................    Section 8.2(d)
      Pro Forma Balance Sheet .....................................................       Section 1.5
      Purchase Price ..............................................................       Section 1.2
      Purchaser ...................................................................          Preamble
      Purchaser Indemnified Parties ...............................................       Section 8.2
      Regulatory Approvals ........................................................    Section 2.7(d)
      Seller ......................................................................          Preamble
      Seller Debenture ............................................................    Section 2.4(b)
      Seller Indemnified Parties...................................................       Section 8.3
      Sellers .....................................................................          Preamble
      Statutory Accounting Practices ..............................................       Section 2.9
      Statutory Insurance Statements ..............................................       Section 2.9
      surplus......................................................................            1.8(a)
      Tax Returns .................................................................   Section 2.13(a)
      Taxes .......................................................................   Section 2.13(b)
</TABLE>

                                       45
<PAGE>
<TABLE>
<S>                                                                                    <C>
      Texas Department.............................................................    Section 1.2(b)
      Third Party Fronting Arrangements ...........................................          Recitals
</TABLE>

                            [SIGNATURE PAGE FOLLOWS]

                                       46
<PAGE>
IN WITNESS WHEREOF, Seller, GAINSCO, the Company and Purchaser have caused this
Agreement to be duly executed to be effective as of the ___ day of August, 2002.

SELLERS:

GAINSCO SERVICE CORP.

By:      /s/ GLENN W. ANDERSON
     ------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------

GAINSCO, INC.

By:      /s/ GLENN W. ANDERSON
     ------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------

THE COMPANY:

GAINSCO COUNTY MUTUAL INSURANCE COMPANY

By:      /s/ GLENN W. ANDERSON
     ------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------

PURCHASER:

BERKELEY MANAGEMENT CORPORATION

By:      /s/ JOHN B. CONNERS
     ------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------

LIBERTY:

LIBERTY MUTUAL INSURANCE COMPANY

By:      /s/ JOHN B. CONNERS
     ------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------

                                       47
<PAGE>
                                    EXHIBIT A
                         Form of Surplus Debenture Note
<PAGE>
                                SURPLUS DEBENTURE

$10,000,000                                                    ___________, 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 MUTUAL COUNTY 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
      Mutual County 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 _________ Million
      and No/100 Dollars ($___________________) (or the balance of the principal
      sum from time to time advanced and remaining unpaid) 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.

2.    This Surplus Debenture is a draw note on which the Company may draw in
      accordance with the following terms and conditions:

            (a) From and after the date of this Surplus Debenture, the Holder
            may advance up to Ten Million and No/100 Dollars ($10,000,000) to
            the Company hereunder.

            (b) The initial advance under this Surplus Debenture shall be the
            sum of Two Million and No/100 Dollars ($2,000,000.00) (the "Initial
            Advance") and shall be funded as of ___________, 2002.

            (c) If no event of default shall have occurred and be continuing,
            the Company shall be entitled to draw down, upon thirty (30) days
            prior written notice to the Holder, one or more additional advances
            of not less than Five Hundred Thousand and No/100 Dollars ($500,000)
            each; provided, however, that in no event shall all of such
            additional advances, when taken together with the Initial Advance,
            exceed

                                       1
<PAGE>
            the aggregate principal sum of ____________ Million
            _________________ and No/100 Dollars ($___________________).

            (d) The Holder is hereby authorized by the Company to endorse on
            Schedule "A" (or a continuation thereof) attached to this Surplus
            Debenture, the amount and date of any advance that shall be made by
            the Holder hereunder, and the amount and date of each payment of
            principal or interest that shall be received by the Holder
            hereunder, provided that any failure by the Holder to make any such
            endorsement shall not affect the rights of the Holder or the
            obligations of the Company under this Surplus Debenture.

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

4.    Subject to the restrictions in paragraph 2 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 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.

5.    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 October 1, 2002.

6.    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 surplus requirements
      set forth in Article 2.20 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.

7.    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

                                       2
<PAGE>
      Company to comply with the 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 surplus requirements of Articles 2.20 and 17.11 of the Texas
      Insurance Code.

8.    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.

9.    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 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.

10.   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.

11.   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.

12.   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

                                       3
<PAGE>
      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.

13.   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.

14.   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.

15.   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.

16.   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.

17.   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.

18.   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.

19.   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.

20.   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

                                       4
<PAGE>
      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.

21.   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.

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

                                        LIBERTY MUTUAL COUNTY INSURANCE COMPANY

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

ATTEST:

By: ____________________________________
Name: __________________________________
Title: _________________________________

                                       5
<PAGE>
                                   SCHEDULE A

<TABLE>
<CAPTION>
Advances                                   Payments
--------------------------------------     -----------------------------------
Date                    Amount             Date        Principal   Interest
----                    ------             ----        ---------   --------
<S>                     <C>                <C>         <C>         <C>

          , 2002        $2,000,000
----------
</TABLE>

                                       6
<PAGE>
                                    EXHIBIT B
                     Form of Liability Assumption Agreement
<PAGE>
                         LIABILITY ASSUMPTION AGREEMENT

      This Liability Assumption Agreement (this "Agreement") is entered into as
of ____________, 2002 between GAINSCO County Mutual Insurance Company, a county
mutual insurance company organized under Chapter 17 of the Texas Insurance Code
(the "Company"), and GAINSCO, Inc., a Texas corporation ("GAINSCO"). Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Acquisition Agreement (defined below).

      WHEREAS, pursuant to that certain Acquisition Agreement dated as of
_________, 2002 (the "Acquisition Agreement"), by and among Sellers, Purchaser
and the Company, Sellers agreed to transfer and assign to Purchaser the
exclusive authority and right to manage and control the Company under the terms
of the Management Agreement; and

      WHEREAS, prior to the execution of this Agreement, the GAIC Reinsurance
Agreement was entered into by the parties thereto; and

      WHEREAS, in order to induce Purchaser to enter into the Acquisition
Agreement, and as a condition thereof, GAINSCO has agreed to assume certain
liabilities of the Company as set forth herein.

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

      1. ASSUMPTION. GAINSCO agrees to assume, and hereby does assume, (a) any
and all of the liabilities, debts and obligations of the Company existing at the
time of the Closing and (b) any and all liabilities, debts and obligations
incurred by the Company after the Closing to the extent they relate to or to the
extent they result from conditions or circumstances arising or events occurring
before the Closing (with respect to (b), the "Liabilities Incurred
Post-Closing"), in each case whether matured or unmatured, inchoate or choate,
past, present or contingent, and whether known or unknown to GAINSCO or the
Company as of the date hereof or as of the Closing Date, including but not
limited to, any and all liabilities and obligations associated with or arising
out of insurance policies issued or assumed by the Company prior to the Closing,
but excluding any and all insurance liabilities and obligations under any and
all policies, binders, commitments, endorsements, and insurance contracts issued
or to be issued that are the subject of the GAIC Reinsurance Agreement or the
Third Party Fronting Arrangements. With respect to Liabilities Incurred
Post-Closing, GAINSCO shall not be liable for any portion of such liability,
debt or obligation caused by the wrongful or negligent actions of the Company
taken after the Closing.

      2. COOPERATION. GAINSCO shall cooperate fully with the Company in
effecting the transactions contemplated by this Agreement, including, without
limitation, executing and delivering all documents reasonably determined to be
necessary or desirable by the Company. The Company and GAINSCO shall, whenever
and as often as reasonably requested to do so by the other party, do such other
and further acts, execute, acknowledge and deliver such documents
<PAGE>
and instruments, approvals or consents as are necessary or proper in order to
complete, insure and perfect the transactions contemplated hereby.

      3. EXTINGUISHMENT OF SELLER DEBENTURE. GAINSCO hereby acknowledges the
extinguishment of the Seller Debenture, which was paid in full and completely
discharged as of _______, 2002. The Company has no further liability, debt or
obligation of any kind with respect to the Seller Debenture.

      4. MISCELLANEOUS.

            (a) CONTINUITY OF ACQUISITION AGREEMENT. This Agreement is executed
and delivered in furtherance of the Acquisition Agreement. Nothing contained
herein shall be deemed or construed as a waiver, release, amendment,
modification, termination or merger of any agreements, commitments,
representations, warranties, covenants, rights, obligations, responsibilities or
duties of Sellers, the Company, Purchaser or Liberty under the Acquisition
Agreement, and the same shall remain in full force and effect in accordance with
the terms of the Acquisition Agreement.

            (b) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to principles
of choice of law or conflicts of law that would direct the application of the
laws of a different jurisdiction.

            (c) FURTHER ASSURANCES. The parties hereto covenant and agree that
they will execute such further instruments and documents and take such further
actions as are or may be necessary or convenient to effectuate and carry out the
purposes, terms, conditions, and transactions contemplated by this Agreement.

            (d) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
transferees and assigns. In addition to the parties hereto, Purchaser and
Liberty shall be entitled to bring an action to enforce any provision of this
Agreement against any of the parties hereto.

            (e) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which in
the aggregate shall constitute but one agreement.

            (f) CONFLICT BETWEEN DOCUMENTS. If there is a conflict between the
terms of the Acquisition Agreement and this Agreement, the terms of the
Acquisition Agreement shall control.

                            [SIGNATURE PAGE FOLLOWS]

                                       2
<PAGE>
IN WITNESS WHEREOF, GAINSCO and the Company have caused this Agreement to be
duly executed to be effective for all purposes as of the date first written
above.

                                    GAINSCO, INC.

                                    By: _____________________________________
                                    Name: ___________________________________
                                    Title: __________________________________

                                    GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                                    By: _____________________________________
                                    Name: ___________________________________
                                    Title: __________________________________

                                       3
<PAGE>
                                    EXHIBIT C
                       Form of GAIC Reinsurance Agreement
<PAGE>
                     100% QUOTA SHARE REINSURANCE AGREEMENT

      This 100% Quota Share Reinsurance Agreement (this "Agreement") is made and
entered into as of the day of , 2002 by and among General Agents Insurance
Company of America, Inc., an insurance company organized under the laws of the
State of Oklahoma (the "Reinsurer"), GAINSCO County Mutual Insurance Company, a
county mutual insurance company organized under the laws of the State of Texas
(the "Company"), and MGA Agency, Inc., a corporation organized under the laws of
the State of Texas (the "General Agent"). Capitalized terms, used but not
defined herein, shall have the meanings assigned to such terms in the
Acquisition Agreement (defined below). The Effective Date of this Agreement is
established pursuant to Section 5.01 hereof.

      WHEREAS, pursuant to that certain Acquisition Agreement dated as of
_________, 2002 (the "Acquisition Agreement"), by and among GAINSCO Service
Corp., a Texas corporation ("Seller"), and GAINSCO, INC., a Texas corporation
that is the parent company of Seller (collectively, "Sellers"), Berkeley
Management Corporation, a Texas corporation ("Purchaser"), Liberty Mutual
Insurance Company, a Massachusetts stock insurance company and the Company,
Sellers agreed to transfer and assign to Purchaser the exclusive authority and
right to manage and control the Company under the terms of the Management
Agreement;

      WHEREAS, pursuant to the terms of the Acquisition Agreement, Sellers
agreed to cause the Reinsurer to assume and reinsure all losses and liabilities
of the Company under each and every policy or contract of insurance and each
commitment to issue any policy or contract of insurance which are produced or
written by or on behalf of the Company (other than such policies and contracts
of insurance issued pursuant to the Third Party Fronting Arrangements), and (a)
entered into, issued, renewed or assumed by the Company prior to the Effective
Date and still in force (the "In Force Business"), (b) entered into, issued,
renewed or assumed by the Company prior to the Effective Date but no longer in
force (the "Expired Business"), or (c) entered into, issued, renewed or assumed
by the Company after the Effective Date which are produced by, through or on
behalf of the General Agent or any affiliate of the Reinsurer (the
"Post-Effective Date Business"); and

      WHEREAS, the parties to the Acquisition Agreement intend for the Reinsurer
to assume and reinsure any and all liabilities of the Company under all Polices,
as defined herein, of the Company other than such policies written and reinsured
pursuant to the Third Party Fronting Arrangements.

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

                                       1
<PAGE>
                                    PREAMBLE

It is understood that the Company, the Reinsurer and the General Agent
(hereinafter identified collectively as the "Parties") wish to enter into a
reinsurance arrangement through which the Company is to bear no business, credit
or insurance risk whatsoever with respect to any and all Policies reinsured
hereunder. The Reinsurer shall hold the Company harmless and indemnify it for
these and all risks with respect to the business reinsured hereunder. The sole
consideration provided by the Company, in exchange for the fees as agreed to, is
to permit the Policies which are reinsured 100% under this Agreement to be
issued in the name of the Company. All provisions of this Agreement shall be
interpreted so as to be in accordance with this Preamble.

                                    ARTICLE I
                          CLASSES OF BUSINESS REINSURED

1.01 Effective as of the Effective Date of this Agreement, the Company obligates
itself to cede to the Reinsurer, and the Reinsurer obligates itself to accept,
100% of the Company's gross liability under all policies, certificates,
contracts, binders, agreements or other proposals or evidences of insurance, new
and renewal policies, binders, and contracts of insurance issued by and on
behalf of the Company with respect to the In Force Business, the Expired
Business, and the Post-Effective Date Business (collectively, the "Policies").

1.02 The General Agent shall have no authority to solicit new business on behalf
of the Company. The General Agent's authority to issue insurance in the
Company's name or to otherwise bind the Company is limited solely to offers to
renew and/or renewal of the In Force Business where such offer to renew and/or
renewal is required by state law or regulation. Subject to the requirements
imposed by law, all such renewals shall be further subject to terms and limits
of liability that are no greater than, and deductibles that are no less than, as
provided in each Policy that is in force as of the Effective Date.

1.03 Business ceded hereunder shall include every original policy, rewrite,
renewal or extension (whether before or after termination of this Agreement)
required by statute or by rule or regulation of the Texas Department of
Insurance, or other authority having competent jurisdiction, with respect to any
Policy ceded hereunder.

                                   ARTICLE II
                                   EXCLUSIONS

The General Agent shall not solicit or accept proposals or bind the Company for
insurance coverage with respect to any risk not specifically described as
business covered under Sections 1.01 and 1.02 of this Agreement.

                                       2
<PAGE>
                                   ARTICLE III
                            COMMENCEMENT OF LIABILITY

The liability of the Reinsurer shall commence obligatorily and simultaneously
with that of the Company as soon as the Company becomes liable, and the premium
on account of such liability shall be credited to the Reinsurer from the
original date of the Company's liability.

                                   ARTICLE IV
                      REINSURANCE FOLLOWS PRIMARY POLICIES

All reinsurance for which the Reinsurer shall be liable, by virtue of this
Agreement, shall be subject, in all respects, to the same rates, terms,
conditions, interpretations, waivers, the exact proportion of premiums paid to
the Company without any deduction for brokerage, and to the same modifications,
alterations and cancellations, as the respective insurance of the Company to
which such reinsurance relates. The intent of this Agreement is that the
Reinsurer shall, in every case to which this Agreement applies and in the
proportion specified herein, follow the fortunes of the Company.

                                    ARTICLE V
                          COMMENCEMENT AND TERMINATION

5.01 The Effective Date of this Agreement is at 12:01 a.m. Central Time, on
________________, 2002. This Agreement shall remain continuously in force until
terminated according to the provisions set forth herein.

5.02 This Agreement may be terminated as follows:

      (a) By any Party hereto, by providing at least ninety (90) days written
      notice to the other Parties, such notice to be sent by certified mail,
      return receipt requested, postage prepaid;

      (b) Immediately by mutual consent of the Company and Reinsurer;

      (c) Immediately upon written notice by the Reinsurer or the Company in the
      event of the cancellation or non-renewal of the General Agent's license by
      the Texas Department of Insurance;

      (d) By the Reinsurer after thirty (30) days written notice to the General
      Agent and the Company of the General Agent's failure to pay to the
      Reinsurer all payments of premiums due hereunder, provided, however, that
      in the event such payment is received by the Reinsurer prior to the date
      of cancellation stated in the Reinsurer's written notice this Agreement
      shall not be so terminated and said written notice shall be of no further
      force or effect;

      (e) Immediately, upon written notice by the Company, if the Reinsurer or
      General Agent is found to be insolvent by a state insurance department or
      court of competent jurisdiction, or is placed in supervision,
      conservation, rehabilitation, or liquidation, or has a receiver or
      supervisor appointed;

                                       3
<PAGE>
      (f) By the Reinsurer, upon thirty (30) days written notice, if the Company
      or General Agent is found to be insolvent by a state insurance department
      or court of competent jurisdiction, or is placed in supervision,
      conservation, rehabilitation or liquidation, or has a receiver or
      supervisor appointed;

      (g) By the Company, upon ten (10) days prior written notice, should the
      Texas Department of Insurance require cancellation or disallow credit for
      this reinsurance; or

      (h) After thirty (30) days written notice by the Company in the event that
      there is a change of control, sale, transfer, merger or consolidation
      involving the Reinsurer with an insurance company or insurance group that
      has an A.M. Best Company rating that is not "A-" or higher, or if the
      performance of, or liability for, any obligation hereunder is to be
      assumed by an insurance company that has an A.M. Best Company rating that
      is not "A-" or higher.

5.03 When this Agreement terminates for any reason, reinsurance hereunder shall
continue to apply to the business in force at the time and date of termination
until expiration or cancellation of such business. It is understood that any
Policies with effective dates prior to the termination date but issued after the
termination date are covered under this Agreement. Additionally, the reinsurance
hereunder shall continue to apply as to Policies which must be issued or
renewed, as a matter of state law or regulation or because the appointment of a
producing agent has not been timely canceled, until the expiration dates on said
Policies. The General Agent agrees that, notwithstanding anything to the
contrary, its appointment by the Company to produce business terminates when
this Agreement terminates unless the General Agent's authority has been
terminated earlier. The Company may provide the General Agent with the limited
agency authority needed to service the run-off of the business, e.g., issue,
cancel, or offer renewal where required by law.

5.04 Upon termination of this Agreement, the Reinsurer and the General Agent
shall not be relieved of or released from any obligation created by or under
this Agreement in relation to payment, expenses, reports, accounting or
handling, which relate to insurance business reinsured under this Agreement. The
Parties hereto expressly covenant and agree that they will cooperate with each
other in the handling of all such run-off insurance business until all Policies
have expired either by cancellation or by the terms of such Policies and all
outstanding losses and loss adjustment expenses have been settled. While by law
and regulation the Company recognizes its primary obligations to its
policyholders, the Reinsurer and General Agent recognize that to the extent
possible there shall be no cost to or involvement by the Company in servicing
this run-off. Upon termination of this Agreement, the General Agent shall
service the run-off of the business, and its duties for such run-off shall
include, but not be limited to, handling all claims, and handling and servicing
all policies through their natural expiration, together with any policy
renewals, required to be made by provisions of applicable law, whether or not
the effective date of such renewal is subsequent to the effective date of
cancellation of this Agreement. All costs and expenses associated with the
handling of such run-off business following the cancellation or termination of
this Agreement shall be borne solely by the General Agent; however, the
Reinsurer

                                       4
<PAGE>
shall be ultimately responsible for the run-off and shall pay directly any such
costs and/or expenses if the General Agent does not for any reason pay or cause
to be paid such costs and expenses. If for any reason the General Agent fails or
is unable to service any such run-off business (or any business while the
Agreement is still in effect), including the payment of claims, then consistent
with this Agreement, the Reinsurer's obligation with respect to such run-off
business shall continue and the Reinsurer shall appoint a successor to the
General Agent, subject to the approval of the Company, to administer and
otherwise handle the run-off as provided herein. Such successor shall perform
all of the duties and obligations of the General Agent with respect to servicing
such run-off business, including the payment of claims. In addition, the Company
in its sole discretion may terminate the authority of the General Agent or a
successor thereto to handle such run-off business and the Reinsurer shall then
appoint a successor to handle the run-off, subject to the Company's approval, at
no cost to the Company.

5.05 In the event this Agreement is terminated, the Reinsurer shall remain
liable to and shall, immediately upon request, reimburse the Company for any
assessment made upon the Company by the Commissioner of Insurance of the State
of Texas under Article 21.28-C (Texas Property and Casualty Insurance Guaranty
Act) of the Texas Insurance Code, which applies to the risks reinsured
hereunder. The Company shall likewise remain liable for, and account to the
Reinsurer for, any recovery of such assessment or any credit allowed against its
premium tax applicable to the risks reinsured hereunder.

5.06 The title and ownership of all undelivered Policies, books, supplies or
other property related to the reinsured business is in the Company. Such
materials shall be delivered, within thirty (30) days of the termination hereof,
by the Reinsurer and/or General Agent to the Company, without compelling the
Company to resort to any legal proceedings to secure the aforesaid described
property of the Company.

5.07 This Agreement provides for termination on a run-off basis. The relevant
provisions of the Agreement shall apply to the business being run-off and shall
survive the termination of this Agreement.

                                   ARTICLE VI
                             RIGHTS OF THIRD PARTIES

Nothing herein shall in any manner create any obligations, establish any rights
or create any direct right of action against the Reinsurer in favor of any third
party, or other person not party to this Agreement or create any privity of
contract between the policyholders and the Reinsurer.

                                  ARTICLE VII
                              RETENTION AND LIMIT

The Company shall cede and the Reinsurer shall accept 100% of the Company's
gross liability on each Policy reinsured hereunder and with respect to each risk
insured under each Policy.

                                       5
<PAGE>
                                  ARTICLE VIII
                         COMMISSIONS, PAYMENTS AND FEES

8.01 In consideration of the acceptance by the Reinsurer of one hundred percent
(100%) of the Company's liability on insurance business reinsured hereunder, the
Reinsurer is entitled to one hundred percent (100%) of the Net Premiums (as
hereinafter defined) plus policy fees received by the General Agent or the
Company on Policies reinsured less (i) the ceding fee allowed the Company
pursuant to Section 8.02 hereof, (ii) the commission paid to the General Agent,
and (iii) premium taxes on Policies subject to reinsurance hereunder. "Net
Premiums" shall mean the gross premiums (excluding policy fees) charged on all
original and renewal Policies written on behalf of the Company, less return
premiums.

8.02 The Reinsurer shall pay the Company directly a fee, within forty-five (45)
days following the end of each month (as a ceding fee), equal to 2 1/2% of Net
Premiums, plus the amount of assessments and state premium taxes as provided in
this Article VIII. The ceding fee payable to the Company for all periods after
December 31, 2003 shall be 5%. For these purposes, a Policy's entire premium
shall be applied to the period in which the Policy is written.

8.03 The Reinsurer shall allow and pay within forty-five (45) days of the end of
each month to the Company an amount equal to the state premium tax on the net
written premiums reinsured hereunder for the past month. Should any additional
premium tax be assessed at any time on written premium reinsured hereunder, the
Reinsurer shall pay the Company such additional premium tax within fifteen (15)
days of being informed by the Company of such additional premium tax. The
Parties acknowledge that, at the Effective Date of this Agreement, the Texas
Comptroller of Public Accounts (or other state agency responsible for collecting
premium taxes) requires the payment of estimated premium taxes in advance on a
semi-annual basis. The Reinsurer shall, therefore, pay to the Company within
five days prior to the due date of any such estimated premium tax payment, the
amount that would be due based upon the business reinsured hereunder.

8.04 The Reinsurer hereby guarantees that the Company will receive the ceding
fee provided hereunder irrespective of any events, losses or developments for
the term of this Agreement. Such payment is not dependent upon the performance
of the General Agent, underwriting experience, loss experience, whether premium
is collected or not, or any other event foreseen or unforeseen by the parties at
the inception of this Agreement.

8.05 In consideration of the Reinsurer's assumption of the In Force Business, on
or before the Effective Date, the Company shall transfer to the Reinsurer the
assets listed in Schedule 8.05 hereto in an amount equal to (a) statutory loss
reserves (including incurred but not reported loss reserves), (b) loss
adjustment expense reserves, and (c) unearned premium reserves, for the In Force
Business, determined as of the Effective Date. The Reinsurer shall be required
to record and maintain the reserves on the In Force Business, consistent with
the reserving practices previously utilized by the Company, and the Company may
account for the reserves on its balance sheet as net of the reserves ceded to
the Reinsurer.

                                       6
<PAGE>
                                   ARTICLE IX
                         COMMISSION TO THE GENERAL AGENT

The General Agent shall receive direct from the Reinsurer, in full compensation
for the performance of all of its obligations hereunder and under the General
Agency Agreement, a commission based on Net Premium. Nothing in this Agreement
alters the Reinsurer's obligations to pay to the Company directly its ceding
fee, premium taxes and assessments as provided in the Agreement. The commission
owed the General Agent is an obligation owing directly between the Reinsurer and
the General Agent. The General Agent shall not seek to recover from the Company
any commissions due, and the Reinsurer shall not seek to recover from the
Company any return commissions due. No funds shall be due the General Agent from
the Company.

                                   ARTICLE X
          ASSIGNMENTS, ASSESSMENTS, PREMIUM TAXES, FINES AND PENALTIES

10.01 This Agreement shall apply to risks assigned to the Company under any
assigned risk plan if, in the sole discretion of the Company, such risks were
assigned to the Company because of the business written and reinsured hereunder.

10.02 With respect to the business reinsured hereunder, this Agreement shall
apply to and the Reinsurer shall immediately reimburse the Company 100% for any
assessments made against the Company pursuant to those laws and regulations
creating obligatory funds (including, but not limited to, insurance guaranty and
insolvency funds), pools (including catastrophe pools), board and bureau fees,
joint underwriting associations, FAIR plans and similar plans, or any
assessments made pursuant to the provisions of Article 21.28-C (Texas Property
and Insurance Guaranty Act) of the Texas Insurance Code, or successor statute
thereto. Amounts owed by the Reinsurer under this Article shall be payable
directly by the Reinsurer to the Company. The Reinsurer shall be entitled to
receive from the Company on or prior to the 31st day of March of each year
thereafter (or such date on which such premium taxes are paid) a sum equal to
the premium tax credit that is allowed to the Company with respect to such
assessments. The premium tax credit allowed the Reinsurer hereunder is to be on
a pro rata and first-in, first-out basis. The Company shall promptly return to
the Reinsurer any amount of assessment refunded to or credited to the Company
pursuant to the provisions of Article 21.28-C of the Texas Insurance Code.

10.03 The Reinsurer shall also pay promptly and directly to the Company any
fines, penalties, and/or any other charge incurred by the Company as respects
the business reinsured hereunder unless such fines, penalties and/or any other
charge was a direct result of any actual fraud or violation of criminal law by
the Company, which has been finally determined by a court of competent
jurisdiction after the exhaustion of all appeals.

10.04 The Reinsurer is responsible for and shall promptly pay all expenses
attributable to the facilities provided and services rendered under this
Agreement, which are not otherwise paid by the General Agent. These expenses
include, but are not limited to, salaries and all other benefits of all
employees of the Reinsurer; transportation, lodging, and meals of employees of
the Reinsurer; postage, and other delivery charges; advertising relating to the
Policies; printing of all

                                       7
<PAGE>
policies, forms and endorsements; EDP hardware, software, and programming;
countersignature fees or commissions; license and appointment fees for general
agents, agents, brokers, and solicitors; agent's taxes, including, but not
limited to, state and local sales taxes, if any; all taxes on premium and policy
fees produced for the business administered hereunder; adjustment expenses (both
allocated and unallocated) arising from claims on insurance written under this
Agreement; provision of office space, equipment and other facilities necessary
for the operation of Reinsurer; and reasonable legal and auditing expenses
incurred at the direction of the Reinsurer or resulting from the Texas Insurance
Code and/or any regulations affecting the Company with respect to the business
reinsured hereunder.

                                   ARTICLE XI
                                PREMIUM FINANCING

With respect to Policies covered under the provisions of this Agreement, if any
premiums are financed, the General Agent shall receive and accept on behalf of
the Company all notices required by statute, contract or otherwise to be given
to the Company, including, without limitation, notices of the existence of
premium finance agreements or of cancellation of policies the premiums of which
are financed. No producing agent or any other agent shall be entitled to receive
or accept any notice on behalf of the Company, and the General Agent shall be
responsible for and will indemnify and hold the Company harmless from and
against any and all liabilities, losses, claims, damages and expenses incurred
by reason of or arising out of any action taken or inaction suffered as a result
of receipt of any notice by any person, firm or entity other than the General
Agent or the Company. Notwithstanding any other term or provision of this
Agreement, the General Agent agrees to return and pay over to any premium
finance company (whether affiliated with the Company or not) which has sent
notice of cancellation of a financed policy to the General Agent pursuant to
Chapter 24 of the Texas Insurance Code, on behalf of the Company, within 30 days
of receipt of such notice of cancellation, any and all unearned commissions as
of the date of cancellation, together with any and all unearned premiums due any
premium finance company. The General Agent agrees to and does hereby relinquish
any and all rights to any unearned commissions for any such financed policy as
of the date of cancellation. The obligation of the General Agent to refund
unearned commissions and unearned premiums on a canceled financed policy shall
survive the termination or cancellation of this Agreement for so long as any
Policy written under the terms of this Agreement remains in force. If the
General Agent does not fulfill its obligations to refund unearned commissions
and unearned premiums as provided in this Article XI and/or to indemnify the
Company as provided in this Article XI, then the Reinsurer shall pay the amount
of the refund owed and/or shall indemnify the Company even if the premium
finance company is an affiliate of the Company.

                                   ARTICLE XII
                              ACCOUNTS AND REPORTS

12.01 In lieu of the Company furnishing the Reinsurer with bordereaux showing
the particulars of all reinsurance ceded hereunder, the Reinsurer shall furnish
or cause to be furnished to the Company, within thirty (30) days after the close
of each of the respective periods indicated below

                                       8
<PAGE>
(on forms agreeable to the Parties), with monthly, quarterly and annual reports
showing the following statistical data in respect to the business reinsured
hereunder:

      (a) Monthly and Quarterly, with the data segregated by major classes.

            (i)    Number of Policies issued/renewed and aggregate premium for
                   such Policies

            (ii)   Ceded premiums written

            (iii)  Ceded unearned premiums

            (iv)   Ceded losses paid

            (v)    Ceded allocated loss adjustment expenses paid during the
                   month or quarterly (excluding the Reinsurer's claims
                   department salaries and expenses)

            (vi)   Case losses outstanding

            (vii)  Ceding commission due the Company

            (viii) Commission due the General Agent

            (ix)   Ceded losses for claims incurred but not reported (by the
                   37th day after the end of the applicable quarter)

      (b)   Annually, with the data segregated by major classes.

            Annual summaries of net premiums written, net losses paid, net loss
            adjustment expenses (excluding the Reinsurer's claims department
            salaries and expenses) paid during the year in such form so as to
            enable the Company to record such data in its annual statement. Such
            information is to be furnished not later than February 15th of the
            following year. In force and unearned premium segregated as to
            advance premiums, premiums running twelve (12) months or less from
            inception date of policy, and premiums running more than twelve (12)
            months from inception date of Policy in such form as to enable the
            Company to record such data in its convention annual statement.

      (c)   Periodically, with data segregated by major lines.

            Statistical or other data as may be requested from time to time by
            regulatory authorities.

12.02 In order to facilitate the handling of the business reinsured under this
Agreement, the Reinsurer agrees to furnish the Company with any additional
reports with respect to the business reinsured under this Agreement as needed by
the Company to prepare its monthly, quarterly and annual statements to
regulatory authorities.

12.03 All amounts due to the Company or the Reinsurer hereunder shall be
accounted for on a monthly basis by the Reinsurer and shall be settled on a cash
basis consistent with the terms hereof. Upon the termination hereof, a final
accounting and cash settlement shall be completed

                                       9
<PAGE>
within eighteen (18) months of the effective date of termination, or at such
date at which all claims and liabilities reinsured hereunder have been
extinguished.

                                  ARTICLE XIII
                        LOSS AND LOSS ADJUSTMENT EXPENSE

13.01 The Reinsurer shall assume 100% of the risks covered by this Agreement and
shall be liable for and pay directly to the insureds on behalf of the Company
100% of all claims, losses, judgments, interest on judgments, settlements
whether under strict policy conditions or because of compromise, and expenses
incurred by the Company and/or General Agent (including, but not limited to,
costs, expenses and fees, including attorneys' fees and expenses, resulting from
a declaratory judgment or injunctive action brought by an insured or other
person). The Reinsurer shall be credited with 100% of any amount received by the
Company as salvage or recovery.

13.02 The Company hereby empowers the Reinsurer, and the Reinsurer may, in its
discretion, and under its supervision appoint the General Agent, to accept
notice of and investigate any claim arising under any of the Policies, to pay,
adjust, settle, resist, or compromise any such claim, unless the Company with
reasonable justification specifically directs to the contrary with respect to
any individual claim. In the latter event, the Reinsurer and/or General Agent
shall follow the instructions of the Company as respects such claim. All such
loss settlements, whether under strict policy conditions or by way of
compromise, shall be unconditionally binding upon the Reinsurer. However, should
the Company be ordered or instructed by the Texas Department of Insurance or any
other regulatory agency of competent jurisdiction to take any action or refrain
from taking any action with regard to any claim, and prompt notice of such order
or instruction is provided by the Company to the Reinsurer and General Agent,
the Reinsurer and/or the General Agent shall be bound by and shall follow the
order or instructions of such regulatory agency as though the Reinsurer and/or
the General Agent were the object of such order or instruction. The Reinsurer
and/or the General Agent will exercise the authority granted hereunder in good
faith and toward the end of paying any and all valid claims.

13.03 The Company will promptly notify the Reinsurer or the General Agent of any
claim, suit or action brought against the Company under any of the Policies when
actually notified of a claim, suit or action against the Company, and will
promptly furnish to the Reinsurer or the General Agent all summons, citations,
complaints, petitions, counterclaims and other pleadings and legal instruments
served upon the Company in connection therewith. The Company hereby further
empowers the Reinsurer to dispose of any salvage received as the result of any
loss settlement hereunder, and to enforce any right of the Company against any
person or organization for damages or equitable relief for any loss under any of
the Policies, employing legal counsel where necessary, and all sums received as
a result thereof will be treated as current loss recoveries by the Company and
the Reinsurer. The Company further agrees to furnish the Reinsurer, on request,
any and all legal instruments necessary to implement the foregoing
authorizations. Upon reasonable request, the Reinsurer shall furnish to the
Company any or all documents and correspondence relating to the subject matter
hereof.

                                       10
<PAGE>
13.04 All records pertaining to claims arising under the Policies shall be
deemed to be jointly owned records of the Company and the Reinsurer, and shall
be made available to the Company or the Reinsurer or their respective
representatives or any duly appointed examiner for any state within the United
States. The Company, the Reinsurer and the General Agent agree that they will
not destroy any such records in their possession without the prior written
approval of the others, except that the Company and the Reinsurer shall not be
required to retain files longer than required by the guidelines set by the Texas
Department of Insurance.

13.05 The Reinsurer shall, or shall cause the General Agent to, establish a
separate claim register or method of registering claims arising under the
Policies covered by this Agreement so that all claims may be segregated and
identified separate and apart from other records of the Reinsurer or General
Agent, with such claims register to identify each claim on an individual case
basis both as to identify the insured(s) and the claimant and the reserve for
loss and adjusting expense. Such claim register shall be kept in a form whereby
the Company can, at any time, determine the status of any claim arising under
Policies covered by this Agreement. Such records shall reflect the amount of
reserves established for the individual claim and the date when such reserve was
established, and if closed, whether such claim was closed with or without
payment, and if with payment, the amount paid thereon.

13.06 The Reinsurer shall be liable for 100% of the loss adjustment expenses
incurred by the Company in connection with claims and settlements under Policies
subject hereto, including, but not limited to, all attorney's fees, other
litigation expenses and interest on judgments and all other expenses (including
but not limited to attorney's fees and costs incurred in a declaratory judgment
or injunctive action with an insured or other), but not including office
expenses or salaries of the Company's regular employees. The Reinsurer shall be
credited with 100% of any recoveries of such loss adjustment expense.

                                   ARTICLE XIV
                       LOSS IN EXCESS OF POLICY LIMITS/ECO

14.01 In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its Policy
(hereinafter called "loss in excess of policy limits") or any punitive,
exemplary, compensatory or consequential damages other than loss in excess of
policy limits (hereinafter called "extra contractual obligations") in relation
to handling a claim reinsured hereunder or anything else related to the business
reinsured hereunder, 100% of the loss in excess of policy limits and/or 100% of
the extra contractual obligations shall be added to the Company's loss, if any,
under the Policy involved, and the sum thereof shall be reinsured 100% under
this Agreement.

14.02 An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the Policy
involved.

14.03 Notwithstanding any provision herein, this Agreement shall not apply to
any loss incurred by the Company as a result of any actual fraud and/or
violation of a criminal law, which has been finally determined by a court of
competent jurisdiction after the exhaustion of any appeals, by an

                                       11
<PAGE>
officer or director of the Company acting individually or collectively in
collusion with any individual, corporation or any other organization or party
involved in the presentation, defense or settlement of any claim covered
hereunder.

                                   ARTICLE XV
                              ERRORS AND OMISSIONS

The Company shall not be prejudiced, in any way, by any omission through
clerical error, accident or oversight to cede to the Reinsurer any Policy, loss
or liability of any kind rightly falling under the terms of this Agreement, or
by erroneous cancellation, either partial or total, of any cession, or by
omission to report, or by erroneously reporting any losses, or by any other
error or omission, but any such error or omission shall be corrected immediately
upon discovery.

                                   ARTICLE XVI
                                ACCESS TO RECORDS

The Reinsurer or its duly appointed representatives shall have access at any and
all reasonable times to such books and records of the Company or the General
Agent, its departmental or branch offices, as shall reflect premium and loss
transactions of the Company and/or the business produced hereunder, for the
purpose of obtaining any and all information concerning this Agreement or the
subject matter thereof. Likewise, the Company or its duly appointed
representatives shall have access at any and all reasonable times to such books
and records of the Reinsurer and/or General Agent, its departmental or branch
offices as shall reflect premium and loss transactions of the Company and/or the
business produced hereunder, for the purpose of obtaining any and all
information concerning this Agreement or the subject matter hereof.

                                  ARTICLE XVII
                           REINSURER SALE OR TRANSFER

The Reinsurer agrees to give the Company ninety (90) days advance written notice
of any change of control, any sale or transfer of such party's business, or such
party's merger or consolidation with a successor firm, in order that the Company
may, in its sole discretion:

      (a)   Allow assignment of this Agreement to the successor;

      (b)   Enter into a new reinsurance agreement with the successor; or

      (c)   Terminate this Agreement as provided in Section 5.02(h) of this
            Agreement.

Provided, however, if the transaction involving a change of control, sale,
transfer, merger or consolidation of the Reinsurer is with an insurance company
or insurance group that has an A.M. Best Company rating of "A-" or higher, and
the performance of, or liability for, any obligation hereunder is to be assumed
by an insurance company with an A.M. Best Company rating of "A-" or higher, then
the Company shall not terminate this Agreement and shall allow the assignment

                                       12
<PAGE>
and/or delegation of the duties, obligations and liabilities hereunder as long
as the terms thereof are no less favorable to the Company than as set forth
herein.

                                 ARTICLE XVIII
                                  INSOLVENCY

18.01 In the event of insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claims.

18.02 It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of the Company shall give written notice to the Reinsurer of
the pendency of a claim against the Company (indicating the Policy reinsured),
which claim would involve a possible liability on the part of the Reinsurer,
within thirty (30) days after such claim is filed in the insolvency,
conservation or liquidation proceeding or in the receivership, and that during
the pendency of such claim, the Reinsurer may investigate such claims and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that it may deem available to the Company
or its liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable, subject to the approval of
the Court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurer.

18.03 Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Company.

18.04 It is further understood and agreed that, in the event of the insolvency
of the Company, the reinsurance under this Agreement shall be payable directly
by the Reinsurer to the Company or to its liquidator, receiver or statutory
successor, except (i) as provided by applicable law, (ii) where this Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company, and (iii) where the Reinsurer with the consent of the
direct insured or insureds has assumed such Policy obligations of the Company as
direct obligations of the Reinsurer to the payees under such Policies and in
substitution for the obligation of the Company to such payees.

                                   ARTICLE XIX
                                THE GENERAL AGENT

19.01 The Company and the General Agent have entered into the Amendment to
General Agency-Company Agreement effective , 2002 (together with the General
Agency-Company Agreement dated October ____, 1992, the "General Agency
Agreement"), a complete copy of which is attached hereto as Exhibit A and
incorporated herein

                                       13
<PAGE>
by reference. The Reinsurer has selected the General Agent to administer the
business reinsured hereunder. While for regulatory purposes, the General Agent
will need to be appointed as the Company's agent, it is recognized that the
General Agent is acting on behalf of the Reinsurer. The Company has no
obligation to furnish reports or statistics to the Reinsurer. The Company shall
file with the State of Texas all reports requested, based upon information
received from the General Agent and the Reinsurer.

19.02 The General Agent will not establish any sub-general agencies or any
agencies with the authority of a general agency.

19.03 The General Agent shall be responsible for the control of the producing
agents appointed by the Company at the request of and on behalf of the
Reinsurer, including compliance with state licensing laws and the financial
condition of such agents.

19.04 The Reinsurer shall guarantee payment to the Company of any amounts due
the Company from business produced by and/or Policies issued by or through the
producing agents appointed by the Company at the request of and on behalf of the
General Agent and the Reinsurer. The Reinsurer and the General Agent shall be
solely responsible for notifying such agents of this Agreement and of any
termination hereof, and the Reinsurer shall be responsible for the consequences
of any failure to provide such notification.

19.05 The General Agent shall not sue, or seek arbitration, against the Company
for any acts of the Reinsurer and shall indemnify and hold the Company harmless
from and against any damages, liabilities and expenses incurred by reason of the
Reinsurer's acts or failures to act.

19.06 The Company shall conduct or have conducted the examinations of the
General Agent as provided in the General Agency Agreement. The Reinsurer shall
indemnify and hold the Company harmless as respects any liability, damage,
charge, cost, fine, or penalty the Company may incur as a result of such
examinations.

                                   ARTICLE XX
                            HOLD HARMLESS PROVISIONS

20.01 Notwithstanding any provision contained herein, as respects all matters
related to this Agreement, in addition to those specific provisions insulating
the Company from specific risks hereunder, the Reinsurer hereby covenants and
agrees to reimburse and hold the Company harmless from and against every claim,
demand, liability, loss, damage, cost, charge, attorneys' fees, expense, suit,
order, judgment and adjudication of whatever kind or character regarding (i)
this Agreement and/or (ii) the business reinsured hereunder (including, but not
limited to, underwriting loss, credit loss, run-off expenses and all legal fees
and expenses incurred by the Company in asserting its rights under this
Agreement) whether or not such claim, demand, loss, damage, cost, charge,
attorneys' fees, expense, suit, order, judgment or liability is within the terms
of Policies written and reinsured hereunder. The Reinsurer's obligation hereto
relates to, but is not limited to the following: all liability for agents'
balances; return premiums and commissions; deceptive trade practice liability;
premiums, policy fees or other charges (whether collected or

                                       14
<PAGE>
not); costs, liability, damages, fees and/or expenses incurred by the Company
due to a lawsuit between the Reinsurer and/or the General Agent; all actions or
inactions of the General Agent or any other agent relating to performance under
this Agreement, under the General Agency Agreement or under any agreement with a
premium finance company; and all fees and/or commissions owing to the General
Agent under this and the aforementioned related agreements.

20.02 The Company shall not be liable to the Reinsurer for premiums unless the
Company itself has actually received those premiums and wrongfully not remitted
them to the Reinsurer. The Reinsurer may not offset any balances on account of
losses, loss adjustment expenses or any other amounts due except as to premiums
actually received by the Company itself (as distinct from premiums not
collected, premiums collected by the General Agent, or premiums placed in the
premium trust account pursuant to the General Agency Agreement) which have
wrongfully not been transmitted to the Reinsurer.

20.03 If for any reason the General Agent fails or is unable to administer the
Policies reinsured hereunder (whether the Agreement is still in effect or the
business is being run-off), the Reinsurer shall appoint a party (acceptable and
approved by the Company) to administer the business and the Reinsurer shall be
responsible for 100% of the cost of said administration. If return premiums or
other funds need to be returned to premium finance companies, policyholders or
sub-agents, the Reinsurer shall pay these amounts if the successor or
administrator does not.

20.04 The Reinsurer shall not sue, or seek arbitration, against the Company for
any acts of the General Agent for any monies which the General Agent owes unless
the Company has actually received those monies and has wrongfully not remitted
them to the Reinsurer; and the Reinsurer shall indemnify the Company for any
damages, liabilities and expenses incurred by reason of the General Agent's acts
or failure to act. The Company is not responsible for any commissions or other
monies payable to the General Agent in connection with this Agreement and the
General Agent shall not sue, or seek arbitration against, the Company for any
actions by, or debts owing from, the Reinsurer. The Reinsurer shall not seek to
recover from, or offset against, the Company any sums, whether premiums or other
monies, which the General Agent was unable or unwilling to remit to the Company
or the Reinsurer.

20.05 In the event the Reinsurer, or any agent appointed pursuant to this
Agreement, binds the Company for insurance coverage on insurance risks contrary
to the restrictions and limitations set forth in this Agreement, whether
intentional or not, the Reinsurer and General Agent will do such things and take
such actions as may be necessary to reduce the Company's exposure to such risks
and to hold the Company harmless against any liability or loss which may be
incurred by the Company in excess hereof. At the Company's request, the General
Agent in accordance with applicable law, and policy terms, shall cancel or not
renew any risk bound which is not in conformance with this Agreement. Any such
insurance coverage on insurance risks bound contrary to the restrictions and
limitations set forth in this Agreement, whether intentional or not, shall be
100% reinsured and subject to this Agreement.

                                       15
<PAGE>
                                   ARTICLE XXI
                              TRUST FUND AGREEMENT

The Reinsurer shall immediately secure its obligations under this Agreement
pursuant to a trust account established under a Reinsurance Trust Agreement, to
be executed by the Reinsurer and the Company, which Reinsurance Trust Agreement
shall be in the form attached hereto as Exhibit B. The assets deposited in the
trust account shall be valued according to their current fair market values and
shall consist only of cash and other types of assets identified in the
Reinsurance Trust Agreement; provided, however, none of the assets deposited
into the trust account shall consist of investments issued by the parent,
subsidiary or affiliate of either the Reinsurer or the Company. Notwithstanding
any provision in this Agreement, the assets held in the trust account shall only
be withdrawn, utilized and applied in accordance with the terms and conditions
of the Reinsurance Trust Agreement.

                                  ARTICLE XXII
                               REGULATORY MATTERS

22.01 It is the Parties' understanding that the Texas Department of Insurance
views premiums which are over 90 days due (aged by item and effective date) to
the Company as non-admitted assets. In confirmation of the liabilities assumed
by the Reinsurer under this Agreement, the Reinsurer hereby assumes 100% of all
liability and responsibility for all premiums in the course of collection.

22.02 The Reinsurer shall agree, at no cost to the Company, to take those
actions (including, but not limited to, modifications in how funds are handled
and how accounts are cleared and settled) and agree to those arrangements
necessary to ensure that the Company suffers no adverse impact because of this
reinsurance program and is in compliance with the laws of the State of Texas and
regulations promulgated by any governmental entity thereof, including the Texas
Department of Insurance, in so far as this reinsurance program is concerned.

22.03 If at any time during the term of this Agreement, the Reinsurer shall no
longer be licensed or accredited to transact the business of insurance or
reinsurance in the State of Texas, the Reinsurer agrees that it shall submit to
a court of competent jurisdiction within the United States, shall agree to
comply with all requirements necessary to give such court jurisdiction, shall
designate an agent upon whom service of process may be effected, and shall agree
to abide by the final decision of such court or an appellate court to which such
court's decision is appealed.

                                 ARTICLE XXIII

                            [INTENTIONALLY DELETED]

                                       16
<PAGE>
                                  ARTICLE XXIV
                                   ARBITRATION

24.01 As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising between the Company and
the Reinsurer with respect to this Agreement, or with respect to these Parties'
obligations hereunder, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration.

24.02 One arbiter (an "Arbiter") shall be chosen by the Company and one Arbiter
shall be chosen by the Reinsurer and an umpire (an "Umpire") shall be chosen by
the Arbiters, all of whom shall be active or retired disinterested executive
officers of property and casualty insurance or reinsurance companies.

24.03 In the event that a party fails to choose an Arbiter within thirty (30)
days following a written request by either party to the other to name an
Arbiter, the party who has chosen its Arbiter may choose the unchosen Arbiter.
Thereafter, the Arbiters shall choose an Umpire before entering upon
arbitration. If the Arbiters fail to agree upon the selection for the Umpire
within thirty (30) days following their appointment, each Arbiter shall name
three nominees, of whom the other shall decline two, and the decision shall be
made by drawing lots.

24.04 Each party shall present its case to the Arbiters and Umpire within a
reasonable amount of time after selection of the Umpire, unless the period is
extended by the Arbiters and the Umpire in writing and/or at a hearing in
Dallas, Texas. The Arbiters and Umpire shall consider this Agreement as an
honorable engagement, as well as a legal obligation, and they are relieved of
all judicial formalities and may abstain from following the strict rules of law
regarding entering of evidence. The decision in writing by a majority of the
Arbiters and Umpire when filed with the Parties shall be final and binding on
the parties. Judgment upon the final decision of the Arbiters and Umpire may be
entered in any court of competent jurisdiction.

24.05 In the event of a dispute between the Company and the Reinsurer concerning
this Agreement and the General Agency Agreement (regardless of whether either
party has claims against the General Agent), the entire dispute between the
Company and the Reinsurer shall be subject to arbitration as provided in this
Article XXIV.

24.06 The costs of the arbitration, including the fees of the arbitrators and
the umpire, shall be borne equally unless the Arbiters and Umpire shall decide
otherwise.

24.07 This Agreement shall be interpreted under the laws of Texas and the
arbitration shall be governed and conducted according to the Texas General
Arbitration Act.

                                   ARTICLE XXV
                                 SAVINGS CLAUSE

If any law or regulation of any federal, state or local government of the United
States of America, or the ruling of officials having supervision over insurance
companies, should prohibit or render illegal this Agreement, or any portion
hereof, as to risks or properties located in the jurisdiction of such authority,
either the Company or the Reinsurer may upon written notice to the other suspend
or abrogate this Agreement insofar as it relates to risks or properties located
within such

                                       17
<PAGE>
jurisdiction to such extent as may be necessary to comply with such law,
regulations or ruling. Such illegality shall in no way affect any other portion
hereof, provided however, that the Company may terminate or suspend this
Agreement insofar as it relates to the business to which such law or regulation
may apply.

                                  ARTICLE XXVI
                                  MISCELLANEOUS

26.01 This Agreement has been made and entered into in the State of Texas and
the Agreement shall be subject to and construed under the laws of the State of
Texas. This Agreement shall be deemed performable at the Company's
administrative office in Irving, Texas, and it is agreed that the venue of any
controversy arising out of this Agreement, or any breach thereof, shall be in
Dallas County, Texas.

26.02 All notices required to be given hereunder shall be deemed to have been
duly given by personally delivering such notice in writing or by mailing it,
certified mail, return receipt requested, with postage prepaid. Any Party may
change the address to which notices and other communications hereunder are to be
sent to such Party by giving the other Party written notice thereof in
accordance with this provision.

26.03 All acts and payments under this Agreement are performable and payable at
the offices of the Company in Irving, Dallas County, Texas. The address of the
Company, for the purpose of providing notice under this Agreement,
is______________. The address of the Reinsurer for the purpose of providing
notice under this Agreement is 500 Commerce Street, Fort Worth, Texas 76102. The
address of the General Agent for the purpose of providing notice under this
Agreement is 500 Commerce Street, Fort Worth, Texas 76102.

26.04 This Agreement shall be binding upon the Parties hereto, together with
their respective successors and permitted assigns. Neither the Reinsurer nor the
General Agent may assign any of its rights or obligations under this Agreement
without the prior written consent of the Company.

26.05 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

26.06 This Agreement may be amended, modified or supplemented only by a written
instrument executed by all Parties hereto.

26.07 This Agreement is the entire agreement between the Parties and supersedes
any and all previous agreements, written or oral, and amendments thereto with
respect to the business being reinsured, and there are no understandings between
the Parties other than as expressed in this Agreement.

26.08 A waiver by the Company, Reinsurer or General Agent of any breach or
default by the other party under this Agreement shall not constitute a
continuing waiver or a waiver by the Company or the Reinsurer of any subsequent
act in breach or of default hereunder.

                                       18
<PAGE>
26.09 Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.

26.10 The Parties hereto intend all provisions of this Agreement to be enforced
to the fullest extent permitted. Accordingly, should a court of competent
jurisdiction or arbitration panel determine that the scope of any provision is
too broad to be enforced as written, the Parties intend that the court or
arbitration panel should reform the provision to such narrower scope as it
determines to be enforceable under present or future law; such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance.

26.11 This Agreement is not exclusive and the Company reserves the right to
appoint or contract with other reinsurers, agents and/or managing general agents
in the territory covered by this Agreement.

26.12 The Reinsurer or General Agent shall not insert any advertisement
respecting the Company or the business to be written under this Agreement in any
publication or issue any circular or paper referring to the Company or such
business without first obtaining the written consent of the Company. The
Reinsurer and/or General Agent shall establish and maintain records of any such
advertising as required by Texas statute and regulation.

26.13 Policy cancellations at the Company's request will be made strictly
subject to requirements imposed by the Company's underwriting rules and
practices or the Reinsurer's underwriting rules and practices, as approved by
the Company, and in compliance with applicable statutes and regulations and the
applicable provisions contained in this Agreement and the pertinent Policy. Such
cancellation authority shall be exercised only for causes inherent in the
particular risk and shall not be construed as authority to make general or
indiscriminate cancellations or replacement of the Policies with those of
another Company, except upon specific written instructions from the Company.
When directed by the Company, the Reinsurer will cancel any and all Policies
produced by it for any reason the Company deems necessary.

26.14 The Company agrees that the Reinsurer shall have the right, with the
approval of the Company, to determine the rates and prepare the rate filing for
the Company to file during the term of this Agreement and during the term of the
run-off.

26.15 Any offset taken with respect to amounts due to either the Reinsurer or
the Company hereunder shall be strictly limited to amounts due to or from such
Parties pursuant to this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       19
<PAGE>
IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized
representatives have executed this Agreement to be effective as of the date
first above mentioned.

                               GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                               By: ___________________________________________
                               Name: _________________________________________
                               Title: ________________________________________

                               GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC.

                               By: ___________________________________________
                               Name: _________________________________________
                               Title: ________________________________________

                               MGA AGENCY, INC.

                               By: ___________________________________________
                               Name: _________________________________________
                               Title: ________________________________________

                                       20
<PAGE>
                                    EXHIBIT A
                        TO THE GAIC REINSURANCE AGREEMENT

                  AMENDMENT TO GENERAL AGENCY-COMPANY AGREEMENT

      This AMENDMENT (the "Amendment") to the General Agency-Company Agreement
is executed to be effective as of ___________, 2002 (the "Effective Date"), by
and between GAINSCO County Mutual Insurance Company, a Texas county mutual
insurance company (the "Company"), and MGA Agency, Inc., a Texas corporation
(the "General Agent"). This Amendment amends the General Agency-Company
Agreement by and among the Company and the General Agent dated ________________,
1992, a copy of which is attached hereto (the "Agreement") in the particulars
set forth herein. General Agents Insurance Company of America, Inc., an Oklahoma
insurance company ("GAIC"), is made a party to the Agreement for the purposes
described herein. All capitalized terms used but not defined herein shall have
the same meaning assigned to such terms in the Agreement.

                                    RECITALS

      WHEREAS, pursuant to that certain Acquisition Agreement dated as of
____________, 2002 (the "Acquisition Agreement") by and among GAINSCO Service
Corp., GAINSCO, INC., Berkeley Management Corporation, Liberty Mutual Insurance
Company, and the Company, GAINSCO Service Corp. and GAINSCO, INC. agreed to
transfer and assign to Berkeley Management Corporation the exclusive authority
and rights to manage and control the Company under the terms of that certain
Management Contract dated October 12, 1992;

      WHEREAS, all business coming within the scope of the Agreement as amended
hereby shall be reinsured pursuant to a 100% Quota Share Reinsurance Agreement
of even date herewith (the "Reinsurance Agreement") among GAIC, the Company and
the General Agent;

      WHEREAS, it is intended that GAIC shall have the right to act on all such
matters coming within the scope of the Agreement as amended hereby as though it
were the General Agent, but by doing so or not doing so, shall not invalidate
the right of the Company or the General Agent to act hereunder;

      WHEREAS, pursuant to the terms of the Acquisition Agreement, GAINSCO
Service Corp. and GAINSCO, INC. agreed to cause the General Agent to cease
writing new business on behalf of the Company and to renew existing business on
behalf of the Company only for so long as is required by applicable law; and

      WHEREAS, the Company and the General Agent have agreed to amend the
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
<PAGE>
1. AMENDMENTS.

      (a)   Subsection I.a.1. is amended in its entirety to read as follows:

            "The General Agent shall have no authority to solicit new business
      on behalf of the Company. The General Agent's authority to issue insurance
      policies in the Company's name or to otherwise bind the Company is limited
      solely to offers to renew and/or renewal of the policies or contracts of
      insurance which were produced or written by the General Agent prior to
      [the Effective Date] and only in situations where such offer to renew
      and/or renewal is required by state law or regulation. Subject to the
      requirements imposed by law, all such renewals shall be further subject to
      terms and limits of liability that are no greater than, and deductibles
      that are no less than, as provided in each insured's policy that is in
      force as of [the Effective Date]."

      (b)   Subsection I.a.2. is amended in its entirety to read as follows:

            "All policies and contracts of insurance renewed pursuant to
      Subsection I.a.1. above are subject to all manuals and underwriting
      directions of the Company. The General Agent shall take all such action as
      is necessary to assure that (i) the policies and contracts of insurance
      written or renewed pursuant to this Agreement, whether before or after
      [the Effective Date], are terminated or nonrenewed at the earliest
      reasonably practicable date allowed by law, and (ii) the contracts with
      all agents, appointed by the Company at the General Agent's request, are
      terminated at the earliest reasonably practicable date allowed by law."

      (c)   Subsection I.b.3. is deleted in its entirety.

      (d)   Subsection III.a. is amended in its entirety to read as follows:

            "Statements of money due shall be prepared monthly by the General
      Agent and forwarded to the Company within 30 days of the close of the
      account month for which such statement was prepared."

      (e)   Subsection III.b. is amended in its entirety to read as follows:

            "The balance shown in the statement to be due the Company, or due
      the General Agent, shall be payable not later than 45 days after the end
      of the account month for which such statement was prepared."

      (f)   Subsection III.d. is deleted in its entirety.

      (g)   Subsection III.g. is amended in its entirety to read as follows:

            "Unless written authorization is obtained from the Company, the
      General Agent is not authorized to advance premium on behalf of
      policyholders. All policies for which premiums are not timely received
      shall be terminated or cancelled by the General Agent as allowed by law."

                                       2
<PAGE>
      (h)   Subsection III.h. is amended in its entirety to read as follows:

            "The General Agent guarantees the collection of all premiums due
      from insureds and from producing agents."

      (i)   Subsection III.j. is amended in its entirety to read as follows:

            "The General Agent shall provide the Company with a monthly report
      specifying the categories of information reflected in Exhibit A attached
      hereto."

      (j)   Subsection IV.c. is amended in its entirety to read as follows:

            "The General Agent shall send direct notice of cancellation on
      behalf of the Company:

            1. On any policy which has been in effect less than sixty (60) days,
      at the direction of the Company;

            2. On any policy for non-payment of premium; or

            3. At the discretion of the Company, where cancellation or
      termination is legally permissible."

      (k)   Section VII. is deleted in its entirety.

      (l)   Subsection IX.b.3. is amended in its entirety to read as follows:

            "Notwithstanding the termination of this Agreement, the General
      Agent shall continue to service the policies issued pursuant to this
      Agreement, including the handling and adjusting of all claims, through the
      runoff of all such policies."

      (m)   Subsection IX.b.4. is deleted in its entirety.

      (n)   Subsection X.a.1. is amended in its entirety to read as follows:

            "The Company shall indemnify and hold harmless the General Agent
      against any claims or liabilities the General Agent becomes obligated to
      pay to or in behalf of any insured based on the gross negligence, willful
      and wrongful acts or criminal activity of the Company in performing its
      obligations hereunder after [the Effective Date], except to the extent
      that the General Agent has caused, contributed to or compounded such
      error."

      (o)   Subsection X.b. is amended in its entirety to read as follows:

            "The General Agent shall indemnify and hold harmless the Company,
      its successors, and assigns from any and all losses, claims, demands,
      causes of action, damages, judgments, settlements, costs, expenses,
      including all court costs, legal expenses and attorney's fees, and any
      extra-contractual obligations which the Company may at any time sustain
      because of or arising out of (i) the failure of the General Agent or any
      authorized producers or brokers to comply fully with the terms,
      provisions, and obligations of this Agreement, including but not

                                       3
<PAGE>
      limited to, the payment to Company, and its reinsurers, of all sums of
      money due, and the delivery of all premiums, notes, policies, accounts,
      and notices which may become due from the General Agent hereunder; (ii)
      the conduct of the General Agent or any authorized producers or brokers in
      the sale of any policy produced under this Agreement, or in the
      investigation, trial, or settlement of any claim or failure to pay or
      delay in payment of any benefits under any policy, in connection with the
      investigation or settlement or contesting the validity of claims or losses
      covered under this Agreement; (iii) any loss incurred by the Company as a
      result of the General Agent or any authorized producer or broker accepting
      any risk except as authorized under this Agreement; and (iv) any costs,
      fines or penalties levied against the Company by the Texas Department of
      Insurance or any regulatory body for any matter relating to the General
      Agent's failure to comply, either directly or indirectly, with any
      statutory or regulatory requirement in a timely manner, or otherwise. The
      General Agent shall not be liable for the portion of any loss described
      above that is caused by the gross negligence, willful and wrongful acts or
      criminal activity of the Company occurring after [the Effective Date]. All
      indemnifications given the Company by the General Agent under this
      Agreement regarding the performance or non-performance of obligations,
      duties and rights of the General Agent shall apply to all acts and
      consequences of any producers or brokers writing business through the
      Company under this program as if each producer or broker was the General
      Agent."

      (p)   Subsection X.a.2. is deleted in its entirety.

      (q)   Section XI. is amended in its entirety to read as follows:

            "From and after [the Effective Date], subject to the terms and
      conditions of the Reinsurance Agreement, the General Agent shall be
      responsible for handling and adjusting all claims for all policies
      written, renewed or assumed under the terms of this Agreement, regardless
      of when such claims are incurred. The performance of the General Agent's
      obligations pursuant to this Article XI shall be in accordance with, and
      pursuant to, the Reinsurance Agreement and the standards set forth in
      Exhibit B hereto and as otherwise provided to the General Agent by the
      Company. The Company may, in its discretion, reserve the right to assign,
      investigate, adjust and defend any claim resulting from the business
      written pursuant to this Agreement. The Company retains final authority
      over any and all disputes concerning claims settlement and setting of loss
      reserves. The funding for all claims handled by the General Agent shall be
      provided by GAIC directly to the General Agent; the Company shall have no
      obligation to provide any funds for the payment of any claims or losses
      under the policies issued or renewed by the General Agent."

      (r)   Section XIII is deleted in its entirety.

      (s)   Subsection XIV.a. is amended to read as follows:

            "To secure all indebtedness or liabilities ("Obligations") for which
      the General Agent is now or may become liable to the Company in any manner
      pursuant to this Agreement, the General Agent grants to the Company a
      security interest in all accounts ("Accounts") and expirations including
      all records thereof ("Expirations") now owned or hereafter acquired by

                                       4
<PAGE>
      the General Agent relating to insurance policies written by the General
      Agent on behalf of the Company and all proceeds and products of all of the
      foregoing ("Collateral"). The General Agent will execute such additional
      documents and instruments that the Company considers reasonably necessary
      to obtain, maintain and perfect this security interest or to comply with
      any relevant law.

      (t)   Subsection XV.b. is hereby amended to add the following:

            "4. claims procedures;

            5. timeliness of claims payments."

      (u)   Subsection XV.c. is hereby amended in its entirety to read as
follows:

            "Semi-annually, or upon request by the Company, the General Agent
      shall submit to the Company a current financial statement in a form
      reasonably satisfactory to the Company."

      (v)   Subsection XV.g. is amended in its entirety to read as follows:

            "The obligations and undertakings described in this Agreement are
      performable in the County of Dallas, State of Texas."

      (w)   Section XV is amended to add the following provisions:

            "i. The General Agent shall comply with all reasonable written
      instructions of the Company with respect to information, designated by the
      Company as proprietary or confidential, which is made available to the
      General Agent by the Company.

            "j. The provisions of this Agreement shall be deemed to be
      severable, and if any phrase, clause, sentence or provision of this
      Agreement is adjudged void or unenforceable, the remainder of the
      Agreement shall remain in full force and effect. Any provision of this
      Agreement which conflicts with applicable law or regulation will be
      amended to the minimum extent necessary to effectuate compliance with such
      law or regulations.

            "k. Any notice or other communications required or permitted
      hereunder shall be sufficiently given if sent by certified or registered
      mail, postage prepaid, to the following addresses:

            To the General Agent:

            MGA Agency, Inc.
            500 Commerce Street
            Fort Worth, Texas 76102

                                       5
<PAGE>
            To the Company:

            GAINSCO County Mutual Insurance Company
            c/o Liberty Mutual Insurance Company
            175 Berkeley Street
            Boston, Massachusetts 02117

            "l. The General Agent is responsible for assuring that the producer
      or broker writing business through the Company under this program is at
      all times lawfully licensed to transact the type of insurance which he is
      writing through the Company and is not serving on the General Agent's
      board of directors. Any contract made with such producer or broker shall
      be made directly with the General Agent. Payment of all commissions paid
      on policies secured by such producer or broker shall be made directly to
      the producer or broker by the General Agent and these producers or brokers
      shall have no claims whatever against the Company for commissions or
      otherwise. The General Agent shall be responsible to the Company and its
      reinsurers for the fidelity and honesty of these producers or brokers and
      for all funds collected or business entrusted to said producers and
      brokers.

            "m. General Agents Insurance Company of America, Inc. ("GAIC") shall
      have the right to act on all such matters coming within the scope of the
      Agreement, as amended, as though GAIC were the General Agent, but by doing
      so or not doing so, shall not invalidate the right of the Company or the
      General Agent to act hereunder."

      (x)   Schedule A of the Agreement is deleted in its entirety.

      (y)   Exhibits A and B are added to the Agreement and incorporated therein
by reference in the forms attached hereto.

2. RELEASE. The General Agent hereby releases and discharges the Company, its
agents, officers, directors, shareholders, successors and assigns from any and
all past, present and future obligations, actions, causes of action, suits,
debts, sums of money, accounts, covenants, controversies, promises, damages,
judgments, claims, demands, liabilities and/or losses, all whether known or
unknown, which the General Agent, and its successors and assigns ever had, now
have, or hereafter may have, whether grounded in law or in equity, in contract
or in tort, against the Company by reason of any matter whatsoever arising out
of the Agreement prior to the Effective Date of this Amendment.

3. AUTHORIZATION. The parties hereto expressly 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 is 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.

4. FURTHER ASSURANCES. The parties hereby agree to execute promptly any and all
supplemental agreements, releases, affidavits, waivers 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.

                                       6
<PAGE>
5. 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.

6. 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
hereunder.

7. CONTINUITY OF TERMS. All terms and conditions of the Agreement relating to
the authority of the General Agent are hereby amended to be consistent with the
requirements of Section 1 of this Amendment. All other terms and conditions set
forth in the Agreement, which are not inconsistent herewith, shall remain valid
and in full force and effect for the duration of the Agreement. The change of
control of the Company pursuant to the Acquisition Agreement, as well as the
transactions contemplated therein, shall have no effect upon the terms,
conditions, covenants and agreements contained in the Agreement or in this
Amendment.

                            [SIGNATURE PAGE FOLLOWS]

                                       7
<PAGE>
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Amendment to be effective as of the date
first above mentioned.

                             GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                             By: _____________________________________________
                             Name: ___________________________________________
                             Title: __________________________________________

                             MGA AGENCY, INC.

                             By: _____________________________________________
                             Name: ___________________________________________
                             Title: __________________________________________

                             GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC.

                             By: _____________________________________________
                             Name: ___________________________________________
                             Title: __________________________________________

                                    GUARANTY

      GAINSCO, INC. and GAINSCO Service Corp. hereby unconditionally and
irrevocably guarantee, jointly and severally, the performance of all past,
present and future obligations of the General Agent under the Agreement, as
amended hereby. If any of such obligations of the General Agent are not complied
with in any material respect whatsoever, and after the Company has given sixty
(60) days advance written notice to GAINSCO, INC. and GAINSCO Service Corp. of
the General Agent's breach, default or failure to perform, GAINSCO, INC. and
GAINSCO Service Corp. agree to timely perform such obligations of the General
Agent. Assuming that, during the sixty-day period described in the preceding
sentence, the General Agent has not cured the breach, default or failure to
perform to the satisfaction of the Company, the Company shall have the right to
proceed directly against GAINSCO, INC. and/or GAINSCO Service Corp. without
first exhausting any other remedy it may have against the General Agent. This
Guaranty shall be binding upon the successors and assigns of GAINSCO, INC. and
GAINSCO Service Corp. and shall inure to the benefit of any successors and
assigns of the Company.

IN WITNESS WHEREOF, GAINSCO, INC. and GAINSCO Service Corp. have executed this
Amendment to be effective as of the date first above mentioned.

                             GAINSCO, INC.

                             By: _____________________________________________
                             Name: ___________________________________________
                             Title: __________________________________________

                                       8
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                             GAINSCO SERVICE CORP.

                             By: _____________________________________________
                             Name: ___________________________________________
                             Title: __________________________________________

                                       9
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                                   "EXHIBIT A

                              REPORTING OBLIGATIONS

      With regard to business placed by the General Agent with the Company
hereunder, the General Agent shall furnish the following information to the
Company in such form as the Company shall designate from time to time:

      1. Within thirty (30) days after the end of each month, a report of
written, earned and unearned premiums; case claims and case claim adjustment
expenses (excluding applicable claims department salaries and expenses) paid and
outstanding; case claims and case claim adjustment expenses (excluding
applicable claims department salaries and expenses) incurred; commissions earned
by the General Agent; and such other information as may be reasonably requested
by the Company.

      2. Within thirty (30) days after the end of each month, receivable and
payable reports for all insurance and reinsurance transactions.

      3. Within thirty (30) days after the end of each calendar quarter, such
detail and summary reports as are required to meet all reporting requirements of
state regulatory or taxation authorities including, but not limited to:

            a.    direct premiums (written and earned ) and claims (paid and
                  incurred) by class;

            b.    reinsurance ceded to and claims (including paid claims and
                  claim adjustment expense (excluding applicable claims
                  department salaries and expenses) on outstanding cases)
                  recoverable from reinsurers;

            c.    letters of credit, funds or other collateral held on behalf of
                  the Company which relates to reinsurance ceded;

            d.    unearned premiums and in-force premium data; and

            e.    such other information as may be reasonable requested by the
                  Company.

      4. Within thirty-seven (37) days after the end of each applicable calendar
quarter, a report on IBNR for (a) claims and claim adjustment expenses
(excluding applicable claims department salaries and expenses); and (b)
reinsurance ceded to and claims, including claim adjustment expense but
excluding applicable claims department salaries and expenses, recoverable from
reinsurers.

      By February 15th of each year, all information required to complete the
Company's annual statutory financial statements.

      The General Agent shall supply all information necessary for the proper
and timely filings required by the Texas Department of Insurance, any regulatory
agency or other authority to whom the Company is required to report."

                                       10
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                                   "EXHIBIT B

                              PERFORMANCE STANDARDS

      The General Agent shall handle the settlement of all claims under the
insurance policies reinsured under the Reinsurance Agreement; provided that,
without the approval of the Company, the General Agent shall not pay or commit
the Company to pay a claim over an amount equal to one percent (1%) of the
Company's policyholder surplus as of December 31st of the last completed
calendar year or $30,000, whichever is greater.

      The General Agent shall report the following claims to the Company within
thirty (30) days of determination that:

      1.    Any claim involves single or multiple fatalities.

      2.    Any claim involves incapacitating brain injury or blindness.

      3.    Any claim involves paraplegia or quadriplegia or amputation.

      4.    Any claim involves extensive third degree burns over forty percent
            (40%) of the body.

      5.    Any claim involves total disability or inability to return to
            previous occupation.

      6.    Any claim involves or is likely to involve the Company as a
            defendant and involves punitive or exemplary damages, claims for
            extra-contractual damages, negligent or bad faith claim handling or
            violation of any statute or regulation (including deceptive trade
            practices or unfair claims settlement practices). In such cases, the
            Company shall be entitled to participate in such action or to assume
            the defense of such action.

      7.    Any claim involves a coverage dispute.

      8.    Any claim includes a demand in excess of policy limits.

      The General Agent shall maintain a claim file relating to each reported
claim. These claim files shall be maintained for the period of time set forth in
this Agreement. The General Agent shall send the Company a copy of any claim
file, upon request by the Company, within a reasonable time period.

      All claim files will be the joint property of the Company and the General
Agent; provided, however, upon an order of liquidation of the Company such files
shall become the sole property of the Company or its estate, but the General
Agent shall have reasonable access to and the right to copy such files on a
timely basis.

      The Company retains final authority over disputes concerning claims
settlement and setting of claim reserves.

                                       11
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      If this Agreement is terminated at any time for any reason or if the
General Agent is in default of its obligations under this Agreement, the Company
in its sole discretion may assume the responsibility for processing and
adjusting claims under the insurance policies produced pursuant to this
Agreement. In such event, the Company shall be entitled to recover all of its
commercially reasonable costs and expenses of any kind, whether allocated or
unallocated, direct or indirect, in performing the claims processing and
adjusting functions, from either the General Agent or General Agents Insurance
Company of America, Inc."

                                       12
<PAGE>
                            ATTACHMENT TO AMENDMENT
                               TO GENERAL AGENCY
                               COMPANY AGREEMENT

                       GENERAL AGENCY - COMPANY AGREEMENT             [STAMP]

          GAINSCO County Mutual Insurance Company and MGA Agency, Inc.

GAINSCO County Mutual Insurance Company, hereinafter, called the "Company", and
MGA Agency, Inc. hereinafter called the "General Agent", agree as follows:

     It is agreed that the Company appoints the General Agent subject to the
following terms and agreements. This General Agency -- Company Agreement will be
referred to as the "Agreement."

I.   AUTHORITY OF AGENT

     a.   The General Agent is an independent contractor, not an employee of the
          Company and, subject to requirements imposed by law, the terms of this
          Agreement, and the underwriting rules and regulations of the Company,
          is authorized to:

          1.   Solicit, receive and transmit to the Company proposals for
               insurance contracts with respect to risks located in the State of
               Texas, and any other state in which and to the extent the General
               Agent is legally authorized, which is listed in Schedule A which
               is incorporated in and made a part of this Agreement for all
               intents and purposes;

          2.   Bind and execute insurance contracts on those lines of insurance
               as provided in Schedule A and, subject to all written manuals,
               releases and underwriting directions of the Company. The General
               Agent agrees to notify the Company of any binders, insurance
               contracts, endorsements and certificates. If the General Agent
               fails to do so within the number of days for which binding
               authority is indicated in Schedule A, said binders or insurance
               contracts shall be invalid. The General Agent's binding authority
               may not be delegated;

          3.   Provide all usual and customary services of an insurance agent on
               all insurance contracts placed by the General Agent with the
               Company, subject to the limitations provided for herein;

          4.   Collect and receipt for premiums. The General Agent shall not
               receive any commission or other form of compensation for
               performing its duties hereunder. The General Agent agrees to
               refund return commissions on policy cancellations or reductions,
               in each case at the same rate at which such commissions were
               originally retained on behalf of any producing agent;

          5.   Exercise his authority personally or through his authorized
               employees;

          6.   Represent other companies;

          7.   Exercise exclusive and independent control of his time and the
               conduct of his agency.

     b.   The General Agent is not authorized to:

          1.   Appoint or terminate the appointment of agents without the
               approval of the Company;

          2.   Bind reinsurance or retrocessions on behalf of the Company,
               commit the Company to participation in insurance or reinsurance
               syndicates; or collect a payment from a reinsurer or commit the
               insurer to a claim settlement with a reinsurer.

          3.   Adjust or settle claims or set loss reserves.

          4.   Use any advertisement or promotion in which any Company name or
               product is sued without first obtaining the written consent of
               the Company.

II.  TERRITORY

     a.   This Agreement is made with the understanding that the General Agent
          shall be responsible for complete compliance with all laws and
          statutes relating to all lines of insurance, now in force or as
          amended, as promulgated by the State of Texas or the Texas Department
          of Insurance. The General Agent's authority under this Agreement is
          limited to the State of Texas.

     b.   It is understood between the Company and the General Agent that this
          General Agency Agreement is awarded on a nonexclusive basis and the
          Company shall have the right and privilege of appointing one or more
          additional General Agents in the same territory at the Company's
          discretion.

III. PREMIUM ACCOUNTING

     The General Agent and the Company shall employ accounting procedures
     consistent with general insurance industry practices. On business placed by
     the General Agent with the Company;

     a.   Itemized statements of money due shall be prepared monthly by the
          General Agent and forwarded to the Company within 10 days of the close
          of the account month for which such statement was prepared.

     b.   The balance shown in the statement to be due the Company, or due the
          General Agent, shall be payable not later than 45 days after the end
          of the account month for which such statement was prepared. Interest
          at the rate of 12% Per Annum based upon the actual number of days in
          the year shall be assessed on a per day basis on any unpaid balances
          due after the due date for payment from General Agent. Interest shall
          not exceed the maximum amount [illegible] interest that may

                                       1

                                    [STAMP]
<PAGE>
          be contracted for, taken, reserved, charged, or received under law;
          any interest paid which is in excess of that maximum amount shall be
          refunded and the interest rate shall be reduced to the maximum
          nonusurious rate allowed.

     c.   The omission of any item(s) from a monthly statement shall not affect
          the responsibility of either party to account for and pay all amounts
          due the other, nor shall it prejudice the rights of either party to
          collect all such amounts due from the other.

     d.   A General Agent with more than one office shall cause each office to
          separately comply with the terms of these accounting procedures and
          shall not offset any credits due to any one office against any amount
          due by another office.

     e.   The General Agent shall not offset any credits due under any other
          agreement against balances due under this Agreement.

     f.   The General Agent shall not be required to return, as commission or
          return commission, monies greater than the total commission paid or
          otherwise payable to the General Agent.

     g.   The General Agent is authorized to advance premium on behalf of
          policyholders, in which event the General Agent accepts full
          responsibility for such premiums.

     h.   If any final additional premiums developed by premium audit cannot be
          collected by the General Agent, the Company shall undertake direct
          collection and the General Agent shall not be responsible for such
          premiums provided the General Agent notifies the Company within 60
          days of the Company's initial date of billing the General Agent for
          such items.

     i.   The Company shall have access at all reasonable times to the General
          Agent's books and records for the purpose of determining any fact
          relating to money due the Company on business placed with the Company
          by the General Agent.

     j.   The Company shall provide the General Agent with a monthly report
          specifying the amount of written, earned and unearned premiums.

     k.   The General Agent holds all Company funds in a fiduciary capacity, and
          shall maintain the Company's funds in a separate escrow account and/or
          a trust account which holds only funds due to insurance companies and
          shall maintain such account in a bank which is a member of the Federal
          Reserve System and whose accounts are insured by the Federal Deposit
          Insurance Corporation. Such account may consist of any one or more of
          the following investment vehicles:

          1.  Checking accounts;

          2.  Pass book savings accounts;

          3.  Money market accounts;

          4.  Certificates of Deposit;

          5.  United States Treasury bills, notes, or bonds;

          6.  Repurchase agreements for which the underlying collateral is
              United States Government securities;

          7.  Non-assessable money market mutual funds which are primarily
              invested in United States government securities.

     The General Agent also agrees to comply with the state laws and regulations
     with regard to separate accounts or segregation of such funds.

IV.  POLICY CANCELLATION OR NON-RENEWAL

     Subject to requirements imposed by law and compliance with the applicable
     provisions contained in this Agreement and within the policy:

     a.   At the General Agent's request, the Company shall

          1.  Cancel any policy.

          2.  Decline to renew any policy. The General Agent will give advance
              written notice of non-renewal to the policyholder.

     b.   The Company shall not, at its election, cancel or non-renew any policy
          after it has been in effect for 60 days except;

          1.  For non-payment of premium or non-report of the basis of premium.

          2.  When, in the exclusive opinion of the Company:

              (a)  There is an increase in hazard; or

              (b)  There is a material change in the risk; or

              (c)  There is a misrepresentation or non-disclosure to the
                   Company, at time of acceptance, of a material fact;

              (d)  Cancellation or nonrenewal of a line or lines of business
                   within an agency or a state is deemed advisable.

          3.  In the event of loss of reinsurance or in a case where such
              coverage would impair the Company's financial position or at the
              direction of

              (a)  the State Insurance Department or

              (b)  change in underwriting guidelines.

     c.   The General Agent may send direct notice of cancellation on behalf of
          the Company:

          1.  On any policy which has been in effect less than 60 days; or

          2.  On any policy for non-payment of premium or non-report of the
              basis of premium.

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           3. At the discretion of the General Agent where cancellation is
              legally permissible.

V.    DESIGNATION OF GENERAL AGENT BY POLICYHOLDER

      If a conflict exists as to which General Agent is authorized to represent
      an existing or prospective policyholder, the policyholder's written
      statement designating his Agent or broker shall be binding upon the
      General Agent and the Company.

VI.   GENERAL AGENCY SALE OR TRANSFER

      a.   The General Agent agrees to give the Company thirty (30) days advance
           notice of:

           1.   Change of ownership of 10% or more of the outstanding stock of
                the General Agent; or

           2.   Change in any principal officer of the General Agent;

           3.   Change in any director of the General Agent if the General Agent
                is a corporation;

           4.   Sale or transfer of any policies such General Agent has with the
                Company;

           5.   Consolidation with a successor firm.

      b.   In the event of any of the above occurrences the Company may, at is
           election and with the consent of the interested parties:

           1.   Allow for the assignment of this Agreement to the successor; or

           2.   Enter into a new General Agency Agreement with the successor; or

           3.   Place in effect a Limited General Agency Agreement with the
                successor in order to provide the services set forth in Section
                IX.b.2.

      c.   The General Agent agrees not to assign the Agreement directly in
           whole or in part without prior written approval of the Company.

VII.   COMPANY ACQUISITION

       If the Company, or any affiliate, gains management control through
       acquisition or other means of any insurance company with which the
       General Agent does business, the Company or its affiliate shall not
       reduce or eliminate the underwriting capacity of either Company or the
       acquired company on business produced by the General Agent, subject to:

       a.   Rating plans, policy forms and underwriting rules of the Company,
            and

       b.   Continuation by others of reinsurance arrangements with such
            companies.

VIII.  CHANGES IN AGREEMENT

       This Agreement and any addenda and schedules hereto may be revised only
       by written agreement bearing an effective date and signed by the General
       Agent and the Company.

IX.    TERMINATION OR SUSPENSION

       a.   This Agreement shall terminate:

            1.   Automatically if any public authority cancels or declines to
                 renew the General Agent's license or certificate of authority,
                 such termination to become effective on the date of such
                 cancellation or, in the case of non-renewal, on the date of
                 expiration of the license or certificate of authority.

            2.   Automatically on the effective date of the sale or transfer of
                 the General Agent's business, or its consolidation with a
                 successor firm, unless this Agreement is assigned as provided
                 in Section VI.

            3.   Upon either party giving not less than 60 days advance written
                 notice to the other.

            4.   Immediately upon either party giving written notice to the
                 other in the event of abandonment, fraud, insolvency or gross
                 or willful misconduct on the part of such other party.

            5    The General Agent fails to allow the Company to perform an
                 on-site Agency Review, or

            6.   The General Agent is delinquent in resolving outstanding items
                 outlined in the agency Review.

            7.   At the Company's election, upon written notice by the Company
                 to the General Agent, if the General Agent's authority has been
                 continuously suspended for sixty (60) days or more.

            8.   Automatically on the effective date of the sale or transfer,
                 without prior written approval of the Company, or any policies
                 the General Agent has with the Company.

      b.   The effect of termination shall be:

           1.   If this Agreement is terminated pursuant to clause a.1 or a.4 of
                this Section IX, all authority of the General Agent shall
                terminate as of the date of termination (the "Termination
                Date").

           2.   If this Agreement is terminated pursuant to clause a.2 or a.3 of
                this Section IX, the authority of the General Agent shall
                thereafter be limited to:

                (a)  Providing all the usual and customary services of a General
                     Agent on all insurance contracts placed by the General
                     Agent with the Company on or before the Termination Date;

                (b)  Collecting and receipting for premiums;

                (c)  Refunding return commissions on policy cancellations or
                     reductions, in each case at

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                                    [STAMP]
<PAGE>
                    the same rate at which such commissions were originally
                    retained;

               (d)  Issuing routine endorsement on insurance contracts placed by
                    the General Agent with the Company on or before the
                    Termination Date, providing such endorsements do not involve
                    (i) the transfer of coverage from one location to another,
                    (ii) the increase of liability, or (iii) the assignment of
                    such insurance contracts, provided, however, such
                    endorsements may be mad with the prior consent of the
                    company;

               (e)  Anything herein to the contrary notwithstanding, the General
                    Agent shall have no further authority, as of the Termination
                    Date, to solicit, receive and transmit to the Company
                    proposals for any insurance contracts, to issue any binders,
                    or to execute any insurance contracts, endorsements (except
                    otherwise provided in this Section TX.b.2), or certificates
                    on behalf of the Company. The General Agent's authority, as
                    of the Termination Date, shall no longer be the authority
                    set forth in Article I of this Agreement entitled "Authority
                    of Agent" but will thereafter be in accordance with this
                    Section IX.b.2.

          3.   Notwithstanding termination of the General Agent, all terms and
               provisions of this Agreement, including those modified by this
               Section IX.b shall remain in full force and effect until a date
               twelve months subsequent to the Termination date, at which time
               all authority of the General Agent granted under this Agreement
               shall cease.

          4.   If the termination is pursuant to Section IX.a.2 or 4 above, the
               Company shall, at the General Agent's request, authorize on terms
               acceptable to all interested parties the reinsurance of all
               existing policies with another company selected by the General
               Agent and approved by the Company, which approval shall not be
               unreasonably withheld. Any such  reinsurance shall be effective
               as of the termination date of this Agreement and the Company
               agrees promptly to prepare and deliver to the assuming company a
               bordereau of the business insured.

     c.   The Company may, by notice to the General Agent, suspend the General
          Agent's authority to write any new or renewal business or issue any
          endorsements or otherwise restrict the authority of the General Agent
          if:

          1.   The General Agent fails to perform any obligation to be performed
               under this Agreement; or

          2.   The General Agent is delinquent, in either accounting for or
               payment of monies due the Company; or

          3.   During the pendancy of any disputes regarding any event of
               default; or

          4.   The General Agent writes a Contract of Insurance outside his
               authority; or

          5.   The General Agent fails to render timely financial statements in
               form satisfactory to the Company; or

          6.   The General Agent fails to maintain errors and omissions
               insurance coverage as required by Section XII; or

          7.   There exists any of the circumstances under which the General
               Agent may be terminated under Section IX.a., above.

     d.   In the event of suspension of the General Agent's authority or
          termination of this Agreement:

          1.   The General Agent's records, and use and control of expirations
               shall remain the property of the General Agent and shall be left
               in his undisputed possession, provided the General Agent has then
               rendered and continues to render timely accounts and payments of
               all amounts due the Company, or provides security therefor
               acceptable to the Company. Otherwise, the records, use and
               control of all expirations of business placed with the Company
               shall become vested in the Company.

          2.   If, in disposing of such records and expirations, the Company
               does not realize sufficient money to discharge in full the
               General Agent's indebtedness to the Company, the General Agent
               shall remain liable for the balance of such indebtedness. Any
               amount realized in excess of indebtedness, less expense of
               disposing of such records and expiration shall be returned to the
               General Agent.

X. INDEMNIFICATION

     a. Indemnification by Company.

          1.   The Company shall indemnify and hold harmless the General Agent
               against any claims or liabilities the General Agency may become
               obligated to pay to or in behalf of any insured based on actual
               or alleged error of the Company is its processing or handling of
               any business placed by the General Agent with the Company, except
               to the extent the General Agent has caused, contributed to or
               compounded such error.

          2.   The Company shall also reimburse the General Agent to the same
               extent for any legal or other expenses reasonably incurred by the
               General Agent in connection with investigating or defending any
               such claim or liability. The Company shall not indemnify the
               General Agent against claims or expenses caused by acts of
               negligence the General Agent solely commits. The Company shall be
               solely responsible for its acts of negligence and the General
               Agent shall be solely responsible for its acts of negligence.

          3.   The General Agent shall promptly notify the Company when it
               receives notice of the

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                                    [STAMP]
<PAGE>
         commencement of any action relating to any claim or alleged liability
         for which the General Agent is entitled to indemnification, and the
         Company shall be entitled to participate in such action with counsel
         approval by the General Agent which approval shall not be unreasonably
         withheld. The Company may assume the defense of any such action, and if
         it does so it shall not be liable to the General Agent for any legal or
         other expenses subsequently incurred by the General Agent in connection
         with such action.

     b. Indemnification  by General Agent. The General Agent shall indemnify
        and hold harmless the Company from and against any and all expenses,
        costs, losses, licensing fee, claims, liabilities, fines, penalties,
        complaints, damages and expenses, including, but not limited to,
        attorney's fees, arising out of or resulting from any action taken by
        the General Agent under this Agreement, any breach of this Agreement,
        actions necessary to enforce the Company's rights hereunder, any
        violation of law or regulation by the General Agent or any violation of
        the Company's instructions or guidelines.

XI.     CLAIMS

        The General Agent shall accept and promptly forward to the Company or
        its designated adjuster preliminary reports of all claims and such
        reports shall be made on forms approved by the Company. The Company
        reserves the right to assign, investigate, adjust and defend any claim
        resulting from the business written pursuant to this Agreement. The
        Company retains final authority over any and all disputes concerning
        claims settlement and setting of loss reserves.

XII.    ERRORS AND OMISSIONS COVERAGE

        The General Agent shall maintain Errors and Omissions coverage with a
        limit of liability of not less than $500,000 per claim/aggregate and
        with a deductible of not more than $100,000 per claim. The General
        Agent shall give evidence to the Company of such coverage and its
        continued renewal.

XIII.   FIDELITY BOND

        The General Agent shall maintain in force, a Fidelity Bond protecting
        the General Agent against acts of dishonesty by it employees, in the
        amount of $50,000 or 25% of the total premiums due to the Company in
        any 30 day period, whichever is greater, and shall give evidence to the
        Company of such Bond and its continued renewal.

XIV.    SECURITY AGREEMENT

        a.  To secure all indebtedness or liabilities ("Obligations") for which
            the General Agent is now or may become liable to the Company in any
            manner pursuant to this Agreement, the General Agent grants to the
            Company a security interest in all accounts ("Accounts") and
            expirations including all records thereof ("Expirations") now owned
            or hereafter acquired by the General Agent relating to insurance
            policies written by the General Agent on behalf of MGA Insurance
            Company, Inc., General Agents Insurance Company of America Inc.,
            GAINSCO County Mutual Insurance Company, and any other insurance
            companies which are now, or which may hereafter become, affiliated
            with any of the foregoing insurance companies and all proceeds and
            products of all of the foregoing ("Collateral"). The General Agent
            will sign any papers, that the Company considers necessary to
            obtain, maintain and perfect this security interest or to comply
            with any relevant law.

        b.  Upon the occurrence of an Event of Default (as hereinafter
            defined), the General Agent at his own expense shall take all
            necessary action promptly to collect his Accounts and shall pay
            all proceeds to the Company immediately upon receipt in the exact
            form received without commingling with other property. Upon the
            occurrence of an Event of Default, the General Agent shall (i)
            deposit the proceeds with the Company immediately upon receipt or
            (ii) notify account debtors that their accounts have been assigned
            to the Company and shall be paid directly to the Company. Upon the
            occurrence of an Event of Default, the Company may, at its option,
            notify account debtors to pay the Accounts directly to the Company,
            and may collect, sue, compromise on terms it considers proper,
            endorse, sell or otherwise deal with the Accounts either in its own
            name or that of the General Agent.

        c.  The Expirations constitute confidential business information and
            trade secrets which are used by the General Agent in its business
            to obtain a competitive advantage over the General Agent's
            competitors who do not know or have use thereof. The protection of
            the Expirations against unauthorized disclosure and use is of
            critical importance to the Company and the General Agent therefore
            agrees that it shall not at any time sell, copy or have copies made
            of, assign, distribute or disclose the Expirations, or any part
            thereof, to any other person or organization except as specifically
            authorized in writing by the Company and further agrees that it
            shall employ reasonable efforts to confine knowledge and use of the
            Expirations only to its officers and employees who require such
            knowledge and use in the ordinary course and scope of their
            employment by the General Agent. Upon the occurrence of an Event of
            Default, the General Agent, in addition to the foregoing, shall
            make no further use of the Expirations or exercise any rights with
            respect thereto, including use of the Expirations for the purpose
            of solicitation of renewal policies, except at otherwise consented
            to in writing by the Company.

        d.  The General Agent will be in default upon any of these events or
            conditions ("Events of Default"): (i) failure to make payment when
            due of any of the Obligations; or (ii) the termination of the
            Agreement pursuant to paragraphs a.1, a.2 or a.4 of Section IX of
            the Agreement; or (iii) at any time that, in the opinion of
            Company, the financial condition of the General Agent becomes
            impaired or the Collateral becomes insufficient or unsafe.

        e.  Upon the occurrence of an Event of Default, and at any time
            thereafter, the Company may, upon written notice to the General
            Agent, declare all or

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                                    [STAMP]
<PAGE>
          any of the Obligations immediately due and payable and will have, in
          addition to all other rights and remedies, the rights and remedies of
          a secured party under the Uniform Commercial Code, as enacted in the
          State of Texas, and under all other applicable laws. The General Agent
          recognizes that irreparable injury and damage will result to the
          Company in the event of the breach by the General Agent of any
          warranty, representation, or agreement of the General Agent contained
          in this Agreement. The Company shall be entitled, in addition to any
          legal or equitable remedies and damages available, to an injunction to
          restrain the violation of any such warranty, representation or
          agreement by the General Agent and any and all other persons acting
          for or in behalf of the General Agent.

XV. MISCELLANEOUS

     a.   The Company shall have access at all times to the General Agent's
          books and records pertaining to business placed with the Company.

     b.   At least semi-annually, the Company shall conduct examinations of
          each General Agent. An examination report shall be prepared by the
          Company setting forth its findings and must be made available to the
          Commissioner of Insurance for review. Such report must remain on file
          with the Company for at least three years and shall, at a minimum
          contain:

          1.   timeliness of premium reporting and collection;

          2.   compliance with Company's underwriting

          3.   policy inventory reconciliation.

     c.   Semi-annually, or upon request by the Company, the General Agent
          shall submit to the Company a current financial statement in form
          satisfactory to the Company.

     d.   The General Agent agrees that records will be maintained separately
          for each insurer including underwriting files. Separate records will
          be maintained for at least five years or until the completion of a
          financial examination by the Insurance Department, whichever is
          longer.

     e.   This Agreement supersedes all previous agency agreements, whether
          written or oral, between the Company and the General Agent and shall
          remain in full force and effect until terminated as provided herein.

     f.   This Agreement shall be binding upon and inure to the benefit of the
          parties hereto, and their respective successors, legal
          representatives, heirs and permitted assigns.

     g.   The obligations and undertakings described in this Agreement are
          performable in the County of Tarrant, State of Texas.

     h.   This Agreement shall be interpreted in accordance with the laws of
          the State of Texas.

                                       6

                                    [STAMP]
<PAGE>

     In Witness Whereof the General Agent and the Company have caused this
Agreement to be executed and to become effective as of the _________ day of
________, 19__.

FOR THE GENERAL AGENT BY:                      FOR THE COMPANY BY:

---------------------------------              ---------------------------------

---------------------------------              ---------------------------------
(Title)                 (Date)                 (Title)                 (Date)

                                       7

                                    [STAMP]
<PAGE>

                                   SCHEDULE A

<Table>
<Caption>
Days                                                                   Company
Binding          Lines of                                              Portion of
Authority        Authority                                             Policy Fee
---------        ---------                                             ----------
<S>              <C>                                                   <C>
15 days           X   Commercial Auto Liability and Physical Damage       50%
                 ---

15 days           X   General Liability                                   50%
                 ---

15 days           X   Commercial Property Monoline                        50%
                 ---

15 days           X   Commercial Property with General Liability          50%
                 ---

15 days           X   Commercial Property with Auto Garage                50%
                 ---

15 days           X   Auto Garage/Open Lot/GKLL                           50%
                 ---

15 days               Excess Commercial Auto Liability (Calf. only)       50%
                 ---

0 days                Excess Liability                                    50%
                 ---

0 days
                 --------------------------------

0 days
                 --------------------------------
</Table>

Authority limited to the following States:

Maximum Annual Premium Volume: $

Maximum Policy Period: One Year.

Maximum Limits of Liability: Per Company Underwriting, Manual

Surplus Lines taxes shall be paid by the Surplus Lines Broker.

In Witness Whereof the General Agent and the Company have caused this Commission
Schedule A to be effective the ______________ day of ________________, 19__.

FOR THE GENERAL AGENT BY:                      FOR THE COMPANY BY:

---------------------------------              ---------------------------------

---------------------------------              ---------------------------------
(Title)                 (Date)                 (Title)                 (Date)

                                    [STAMP]
<PAGE>
                           REINSURANCE TRUST AGREEMENT

      Trust Agreement (this "Agreement"), dated as of the effective date
("Effective Date") set forth on Schedule 1 attached hereto ("Schedule 1") by and
among the grantor identified on Schedule 1 (the "Grantor"), the beneficiary as
identified on Schedule 1 (together with any successor thereof by operation of
law, including, without limitation, any liquidator, rehabilitator, receiver or
conservator the "Beneficiary") and JPMorgan Chase Bank, as trustee ("Trustee").
(The Grantor, the Beneficiary and the Trustee are hereinafter each sometimes
referred to individually as a "Party" and collectively as the "Parties").

                                   WITNESSETH:

      WHEREAS, the Grantor and the Beneficiary have entered into the reinsurance
agreement listed in Exhibit A hereto (the "Reinsurance Agreement");

      WHEREAS, the Beneficiary desires the Grantor to secure payments of all
amounts at any time and from time to time owing by the Grantor to the
Beneficiary under or in connection with the Reinsurance Agreement and desires to
create a trust arrangement that complies with TEX.INS.CODE Article 5.75-1(d) and
28 TEX. ADMIN. CODE Section  7.609;

      WHEREAS, the Grantor desires to transfer to the Trustee for deposit to a
trust account (the "Trust Account") assets in order to secure payments under or
in connection with the Reinsurance Agreement;

      WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold
such assets in trust in the Trust Account for the sole use and benefit of the
Beneficiary as described herein; and

      WHEREAS, this Agreement is made for the sole use and benefit of the
Beneficiary and for the purpose of setting forth the duties and powers of the
Trustee with respect to the Trust Account;

      NOW, THEREFORE, for and consideration of the premises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Parties hereby agree as follows:

1. DEPOSIT OF ASSETS TO THE TRUST ACCOUNT.

      (a) The Grantor shall establish the Trust Account and the Trustee shall
administer the Trust account in its name as Trustee for the Beneficiary. The
Trust Account shall be subject to withdrawal by the Beneficiary solely as
provided herein.

      (b) Upon the establishment of the Trust Account, the Grantor shall
transfer to the Trustee, for deposit to the Trust Account, the assets listed in
Exhibit B hereto in the amount of $_______ [105% of actuarially determined
reserves for losses, IBNR, loss expenses and unearned premium as

                                       1
<PAGE>
of June 30, 2002 less the lesser of aggregate claims paid and aggregate case
reserves with respect to claims closed prior to Closing], and thereafter may
transfer to the Trustee, for deposit to the Trust Account, such other assets as
it may from time to time desire (all such assets actually received in the Trust
Account are herein referred to individually as an "Asset" and collectively as
the "Assets"). The Assets shall consist only of cash (United States legal
tender) and Eligible Securities (as hereinafter defined).

      (c) The Grantor agrees to deposit with the Trustee additional Assets
necessary to maintain an amount in the Trust Account (based on the market value
of the Assets as of the end of each calendar quarter and including accrued
interest as of the end of each calendar quarter) equal to 105% of the amount of
the Obligations (as hereinafter defined) as of the end of each calendar quarter
(the amount of such Obligations, the "Quarterly Obligations Amount"). The
Quarterly Obligations Amount shall be determined in accordance with Section 1(d)
below. The deposit of any such necessary additional Assets by Grantor will be
made within ten (10) Business Days after the calculation of the Quarterly
Obligations Amount becomes operative for purposes of this Agreement in
accordance with Section 1(d) (or, in the limited case of the calendar quarter
ending December 31, 2003, in accordance with Section 1(e)). Upon delivery of
such Assets, the Grantor shall advise the Beneficiary in writing that such
delivery has been effected.

      (d) Within thirty (30) days after the end of each calendar quarter, the
Grantor shall deliver to Beneficiary all actuarial data reasonably necessary to
calculate the Quarterly Obligations Amount (including updated case reserves and,
at Grantor's sole option and expense, either its own or an independent third
party analysis or calculation of the Quarterly Obligations Amount). Within ten
(10) Business Days after its receipt of such data, Beneficiary shall deliver to
Grantor its calculation of the Quarterly Obligations Amount, including
supporting schedules and analysis. If Grantor objects in writing to
Beneficiary's calculation of the Quarterly Obligations Amount, Grantor and
Beneficiary shall use all commercially reasonable efforts to resolve such
objection within five (5) Business Days after receipt by Grantor of
Beneficiary's calculation of the Quarterly Obligations Amount. If Grantor and
Beneficiary cannot mutually agree on a calculation of the Quarterly Obligations
Amount within such five (5) Business Day period, then Beneficiary's calculation
of the Quarterly Obligations Amount (as modified by any partial agreement
reached between Grantor and Beneficiary during such five (5) Business Day
period) shall be operative for purposes of this Agreement. If Beneficiary does
not deliver the calculation of the Quarterly Obligations Amount to Grantor
within ten (10) Business Days after its receipt of the data set forth in the
first sentence of this Section 1(d), any reasonable calculation by Grantor of
the Quarterly Obligations Amount thereafter delivered to Beneficiary shall be
operative for purposes of this Agreement. All calculations of the Quarterly
Obligations Amount, whether made by Grantor or Beneficiary, shall be made (i) in
accordance with the Standards of Practice issued by the Actuarial Standards
Board (including the Casualty Actuarial Society's Statement of Principles
Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves) as
those standards may exist from time to time and (ii) after analysis of the
claims insured under the Reinsurance Agreement only on their own merits, without
a view to any extraneous factors. Notwithstanding the foregoing provisions of
this Section 1(d), the calculation of the Quarterly Obligations Amount for the
calendar quarter ended December 31, 2003 shall be made in accordance with
Section 1(e) below, and this Section 1(d) shall not apply to such calculation.

                                       2
<PAGE>
      (e) On or before January 31, 2004, Grantor shall submit to
Tillinghast-Towers Perrin or another independent actuarial firm selected by
Grantor and reasonably acceptable to Beneficiary (Tillinghast-Towers Perrin or
such other independent actuarial firm, the "Independent Actuary") such
information as the Independent Actuary shall reasonably require to make a
calculation of the Quarterly Obligations Amount for the calendar quarter ended
December 31, 2003. The Independent Actuary's calculation of the Quarterly
Obligations Amount for the calendar quarter ended December 31, 2003 shall be
operative for purposes of this Agreement. All fees, costs, charges and expenses
of the Independent Actuary shall be borne equally between Grantor and
Beneficiary. Grantor and Beneficiary may at any time, by mutual written consent,
waive the provisions of this Section 1(e) and instead choose to calculate the
Quarterly Obligations Amount for the calendar quarter ended December 31, 2003
pursuant to Section 1(d).

      (f) The Grantor hereby represents and warrants (i) that any Assets
transferred by the Grantor to the Trustee for deposit to the Trust Account will
be in such form that the Beneficiary whenever necessary may, and the Trustee
upon direction by the Beneficiary will, negotiate any such Assets without
consent or signature from the Grantor or any person in accordance with the terms
of this Agreement and (ii) that all Assets transferred by the Grantor to the
Trustee for deposit to the Trust Account consist only of cash and Eligible
Securities, which are free and clear of all liens, claims and encumbrances.

      (g) The Trustee shall have no responsibility to determine whether the
Assets in the Trust Account are sufficient to secure the Grantor's liabilities
under the Reinsurance Agreement.

2. WITHDRAWAL OF ASSETS FROM THE TRUST ACCOUNT.

      (a) The Beneficiary shall have the right, at any time and from time to
time, to withdraw from the Trust Account, upon written notice to the Trustee
with a copy to the Grantor (the "Withdrawal Notice"), such Assets as are
specified in such Withdrawal Notice. The Withdrawal Notice may designate a third
party (the "Designee") to whom Assets specified therein shall be delivered. The
Beneficiary need present no statement or document in addition to a Withdrawal
Notice in order to withdraw any Assets, nor is said right of withdrawal or any
other provision of this Agreement subject to any conditions or qualifications
not contained in this Agreement; provided, however, that subsequent to any
withdrawal, upon Grantor's written request, Beneficiary shall furnish Grantor
with an explanation and reasonably specific supporting documentation for such
withdrawal.

      (b) Upon receipt of a Withdrawal Notice, the Trustee shall immediately
take any and all steps necessary to transfer the Assets specified in such
Withdrawal Notice and shall deliver such assets to or for the account of the
Beneficiary, the Grantor, or such Designee as specified in such Withdrawal
Notice.

      (c) Subject to paragraph (a) of this Section 2 and to Section 4 of this
Agreement, in the absence of a Withdrawal Notice, the Trustee shall allow no
substitution or withdrawal of any Asset from the Trust Account. Subject to this
Section 2, in the absence of a Withdrawal Notice the Trustee shall allow no
withdrawal of any Asset from the Trust Account.

                                       3
<PAGE>
      (d) The Trustee shall have no responsibility whatsoever to determine that
any Assets withdrawn from the Trust Account pursuant to this Section 2 will be
used and applied in the manner contemplated by Section 3 of this Agreement.

      (e) Within five (5) Business Days after the end of each calendar month,
Grantor shall deliver to Beneficiary a notice substantially in the form of
Exhibit C hereto (the "Claims Closed Notice") setting forth the following
information with respect to each individual claimant claim covered by the
Reinsurance Agreement and closed during the last completed calendar month: (A)
the amount of case indemnity reserve (as reported by Grantor pursuant to Section
1(d) above for the most recently evaluated calendar quarter), (B) the amount of
case loss adjustment expense reserve (as updated by Grantor as of the end of the
most recently ended calendar quarter), (C) the amount of indemnity paid and (D)
the amount of allocated loss expense paid. The Claims Closed Notice also shall
set forth, with respect to each individual claimant claim contained therein,
evidence that such claim is closed. Within ten (10) Business Days after its
receipt of the Claims Closed Notice, Beneficiary may object to some or all of
the information contained in the Claims Closed Notice by delivering to Grantor a
notice (the "Claims Objection Notice") providing (i) a reasonably detailed
explanation specifying the reasons for Beneficiary's objections and (ii) a
revised Claims Closed Notice acceptable to Beneficiary. If Beneficiary does not
deliver a Claims Objection Notice to Grantor within such ten (10) Business Day
period, Grantor's Claims Closed Notice shall be operative for purposes of this
Agreement. If Beneficiary does deliver a Claims Objection Notice on a timely
basis, Grantor and Beneficiary shall use all commercially reasonable efforts to
resolve the disagreements within four (4) Business Days after receipt by Grantor
of the Claims Objection Notice. If Grantor and Beneficiary cannot mutually agree
within the four (4) Business Day period, then Beneficiary's Claims Closed Notice
as set forth in Beneficiary's Claims Objection Notice (as modified by any
partial agreement reached between Grantor and Beneficiary during such four (4)
Business Day period) shall be operative for purposes of this Agreement. Subject
to the provisions of the immediately following sentence, within fifteen (15)
Business Days after receipt by the Beneficiary of the Grantor's initial Claims
Closed Notice, Beneficiary shall deliver a Withdrawal Notice to Trustee naming
Grantor as the Designee and instructing the Trustee to pay Grantor an amount
withdrawn from the Trust Account equal to the lesser of (i) the sum of the
aggregate amount of case indemnity reserves plus the aggregate amount of case
loss adjustment expense reserves as set forth in the final Claims Closed Notice
or (ii) the sum of the aggregate amount of indemnity paid plus the aggregate
amount of allocated loss expense paid as set forth in the final Claims Closed
Notice. Notwithstanding the foregoing, to the extent that the calculation of a
Quarterly Obligations Amount in accordance with Section 1(d) or (e) is not
operative for purposes of this Agreement within forty-five (45) days after the
end of a given calendar quarter, Beneficiary's obligation to cause Trustee to
make the payment to Grantor pursuant to the immediately preceding sentence shall
be suspended until such time as the calculation of a Quarterly Obligations
Amount in accordance with Section 1(d) or (e) becomes operative for purposes of
this Agreement.

      (f) Within five (5) Business Days after the calculation of each Quarterly
Obligations Amount becomes operative for purposes of this Agreement in
accordance with Section 1(d) (or, in the limited case of the calendar quarter
ending December 31, 2003, in accordance with Section 1(e)), to the extent that
the amount of Assets in the Trust Account exceeds 105% of the Quarterly
Obligations Amount, Beneficiary shall deliver a Withdrawal Notice to Trustee
naming Grantor as the Designee

                                       4
<PAGE>
and instructing the Trustee to pay Grantor an amount withdrawn from the Trust
Account equal to such excess.

3. APPLICATION OF ASSETS.

      (a) The Beneficiary hereby covenants to the Grantor that it shall use and
apply any withdrawn Assets, without diminution because of the insolvency of the
Beneficiary or the Grantor, for the following purposes only:

            (i)   to pay or reimburse the Beneficiary for the Grantor's share
      under the Reinsurance Agreement regarding any losses and allocated and
      commercially reasonable unallocated loss expenses paid by the Beneficiary
      but not recovered from the Grantor, or for unearned premiums due to the
      Beneficiary, if not otherwise paid by the Grantor in accordance with the
      terms of the Reinsurance Agreement;

            (ii)  to pay Grantor pursuant to Section 2(e) or (f); or

            (iii) where the Beneficiary has received a Termination Notice (as
      hereinafter defined) pursuant to Section 11 of this Agreement and where
      the Grantor's entire Obligations remain unliquidated and undischarged ten
      days prior to the Termination Date (as hereinafter defined), to withdraw
      amounts equal to such Obligations and deposit such amounts in a separate
      account, in the name of the Beneficiary, in any United States bank or
      trust company, apart from its other assets, in trust for the uses and
      purposes specified in subparagraphs (i) and (ii) of this Section as may
      remain executory after such withdrawal and for any period after such
      Termination Date.

      (b) The existence of the Trust Account, as security for the Obligations,
shall not affect the Grantor's liabilities under the Reinsurance Agreement, nor
shall the Assets of the Trust Account be used as an offset by the Grantor
against any Obligations to the Beneficiary.

4. REDEMPTION, INVESTMENT AND SUBSTITUTION OF ASSETS.

      (a) The Trustee shall surrender for payment all maturing Assets and all
Assets called for redemption and deposit the principal amount of the proceeds of
any such payment to the Trust Account.

      (b) From time to time, at the written order and direction of the Grantor
or its designated representative, the Trustee shall invest Assets in the Trust
Account in Eligible Securities.

      (c) From time to time the Grantor or its designated representative may
direct the Trustee to substitute Eligible Securities for other Eligible
Securities held in the Trust Account at such time. The Trustee shall have no
responsibility whatsoever to determine the value of such substituted securities
or that such substituted securities constitute Eligible Securities.

      (d) All investments and substitutions of securities referred to in
paragraphs (b) and (c) of this Section 4 shall be in compliance with the
definition of "Eligible Securities" in Section 12 of this Agreement. The Trustee
shall have no responsibility whatsoever to determine that any Assets in the

                                       5
<PAGE>
Trust Account are or continue to be Eligible Securities. Any instruction or
order concerning such investments or substitutions of securities shall be
referred to herein as an "Investment Order." The Trustee shall execute
Investment Orders and settle securities transactions by itself or by means of an
agent or broker. The Trustee shall not be responsible for any act or omission,
or for the solvency, of any such agent or broker unless said act or omission is
the result, in whole or in part, of the Trustee's negligence, willful misconduct
or lack of good faith. Unless otherwise instructed by Grantor, Trustee shall
invest and reinvest the Assets in the JPMorgan Prime #835 Money Market Fund (the
"Money Market Fund") and the Trustee or any of its affiliates may receive
compensation with respect to Assets invested or reinvested in the Money Market
Fund; provided, however, that notwithstanding the foregoing or anything else to
the contrary contained in this Agreement, the Trustee shall not be permitted to
invade the trust corpus in excess of 1.00% of the corpus per annum for the
purpose of paying compensation to, or reimbursing the expenses of, the Trustee.

      (e) Any loss incurred from any investment pursuant to the terms of this
Section 4 shall be borne exclusively by the Trust Account. The Trustee shall
have no liability for any loss sustained as a result of any investment in an
investment made pursuant to the terms of this Agreement or as a result of any
liquidation of any investment prior to its maturity or for the failure of the
Parties to give the Trustee instructions to invest or reinvest the Trust
Account. Grantor shall make additional deposits pursuant to Section 1(c) in the
event such loss is incurred.

5. INTEREST AND DIVIDENDS. The Trustee shall collect, receive and hold in the
Trust Account in accordance with this Agreement any dividends, interest or other
income received in respect of the Assets in the Trust Account, but shall have no
responsibility with respect to the collection of such income beyond the exercise
of due care.

6. RIGHT TO VOTE ASSETS. The Trustee shall forward all annual and interim
stockholder reports and all proxies and proxy materials relating to the Assets
in the Trust Account to the Grantor. The Grantor shall have the full and
unqualified right to exercise any voting rights associated with the Assets in
the Trust Account.

7. ADDITIONAL RIGHTS AND DUTIES OF THE TRUSTEE.

      (a) The Trustee shall notify the Grantor and the Beneficiary in writing
within ten days following each deposit to, or withdrawal from, the Trust
Account.

      (b) Before accepting any Asset for deposit to the Trust Account, the
Trustee shall determine that such Asset is in such form that the Beneficiary
whenever necessary may, or the Trustee upon direction by the Beneficiary will,
negotiate such Asset without consent or signature from the Grantor or any person
or entity other than the Trustee in accordance with the terms of this Agreement.

      (c) The Trustee may deposit any Assets in the Trust Account in a
book-entry account maintained at the Federal Reserve Bank of New York or in
depositories such as the Depository Trust Company. Assets may be held in the
name of a nominee maintained by the Trustee or by any such depository.

                                       6
<PAGE>
      (d) The Trustee shall accept and open all mail directed to the Grantor or
the Beneficiary in care of the Trustee.

      (e) The Trustee shall furnish to the Grantor and the Beneficiary a
statement of all Assets in the Trust Account upon the inception of the Trust
Account and at least the end of each calendar quarter thereafter.

      (f) Upon the request of the Grantor or the Beneficiary, the Trustee shall
promptly permit the Grantor or the Beneficiary, their respective agents,
employees or independent auditors to examine, audit, excerpt, transcribe and
copy, during the Trustee's normal business hours, any books, documents, papers
and records relating to the Trust Account or the Assets.

      (g) The Trustee is authorized to follow and rely upon all instructions
furnished to the Trustee from time to time by the Grantor and the Beneficiary,
respectively, and by attorneys-in-fact acting under written authority furnished
to the Trustee by the Grantor or the Beneficiary, including, without limitation,
instructions given by letter, facsimile transmission, telegram, teletype,
cablegram or electronic media, if the Trustee believes such instructions to be
genuine and to have been signed, sent or presented by the proper party or
parties. The Trustee shall not incur any liability to anyone resulting from
actions taken by the Trustee in reliance in good faith on such instructions. The
Trustee shall not incur any liability in executing instructions (i) from an
attorney-in-fact prior to receipt by it of notice of the revocation of the
written authority of the attorney-in-fact or (ii) from any officer of the
Grantor or the Beneficiary.

      (h) The duties and obligations of the Trustee shall only be such as are
specifically set forth in this Agreement, as it may from time to time be
amended, and no implied duties or obligations shall be read into this Agreement
against the Trustee. The Trustee shall only be liable for its own negligence,
willful misconduct or lack of good faith.

      (i) No provision of this Agreement shall require the Trustee to take any
action which, in the Trustee's reasonable judgment, would result in any
violation of this Agreement or any provision of law.

      (j) The Trustee may confer with counsel of its own choice in relation to
matters arising under this Agreement and shall have full and complete
authorization from the other Parties hereunder with respect to any action taken
or suffered by it under this Agreement or under any transaction contemplated
hereby in good faith and in accordance with opinion of such counsel.

8. THE TRUSTEE'S COMPENSATION, EXPENSES AND INDEMNIFICATION.

      (a) The Grantor shall pay the Trustee, as compensation for its services
under this Agreement, a fee computed at rates determined by the Trustee from
time to time and communicated in writing to the Grantor and initially as shown
on Schedule 3 attached hereto. The Grantor shall pay or reimburse the Trustee
for all of the Trustee's expenses and disbursements in connection with its
duties under this Agreement (including attorney's fees and expenses), except any
such expense, or disbursement as may arise from the Trustee's negligence,
willful misconduct or lack of good faith. The Grantor also hereby indemnifies
the Trustee for, and holds it harmless against, any loss, liability,

                                       7
<PAGE>
costs or expenses (including attorney's fees and expenses) incurred or made
without negligence, willful misconduct or lack of good faith on the part of the
Trustee, arising out of or in connection with the performance of its obligations
in accordance with the provisions of this Agreement, including any loss,
liability, costs or expenses arising out of or in connection with the status of
the Trustee and its nominee as the holder of record of the Assets. In no event
shall the Trustee be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.

      (b) Except as set forth in Section 4(d), no Assets shall be withdrawn from
the Trust Account or used in any manner for paying compensation to, or
reimbursement or indemnification of, the Trustee.

9. TINS. The Grantor and the Beneficiary each represent that its correct
Taxpayer Identification Number ("TIN") assigned by the Internal Revenue Service
or any other taxing authority is set forth in Schedule 1. Upon execution of this
agreement, the Grantor shall provide the Trustee with a fully executed W-8 or
W-9 Internal Revenue Service form, which shall include the Grantor's Tax
Identification Number (TIN), as assigned by the Internal Revenue Service. All
interest or other income earned under this Agreement shall be deposited pursuant
to the terms of this Agreement and reported by the recipient to the Internal
Revenue Service or any other taxing authority. Notwithstanding such written
directions, Trustee shall report and, as required withhold any taxes as it
determines may be required by any law or regulation in effect at the time of the
distribution. In the event that any earnings remain undeposited at the end of
any calendar year, Trustee shall report to the Internal Revenue Service or such
other authority such earnings as it deems appropriate or as required by any
applicable law or regulation or, to the extent consistent therewith, as directed
in writing by the Grantor. In addition, Trustee shall withhold any taxes it
deems appropriate and shall remit such taxes to the appropriate authorities.

10. RESIGNATION OF THE TRUSTEE.

      (a) The Trustee may resign at any time by giving not less than 90 days'
written notice thereof to the Beneficiary and to the Grantor, such resignation
to become effective on the acceptance of appointment by a successor trustee and
the transfer to such successor trustee of all Assets in the Trust Account in
accordance with paragraph (b) of this section 10.

      (b) Upon receipt of the Trustee's notice of resignation, the Grantor and
the Beneficiary shall appoint a successor trustee. Any successor trustee shall
be a bank that is a member of the Federal Reserve System and shall not be a
Parent, a Subsidiary or an Affiliate of the Grantor or the Beneficiary. Upon the
acceptance of the appointment as trustee hereunder by a successor trustee,
payment of all fees due the Trustee and the transfer to such successor trustee
of all Assets in the Trust Account, the resignation of the Trustee shall become
effective. Thereupon, such successor trustee shall succeed to and become vested
with all the rights, powers, privileges and duties of the Trustee, and the
Trustee shall be discharged from any future duties and obligations under this
Agreement, but the Trustee shall continue after its resignation to be entitled
to the benefits of the indemnities provided herein for the Trustee.

                                       8
<PAGE>
11. TERMINATION OF THE TRUST ACCOUNT.

      (a) The Trust Account and this Agreement, except for the indemnities
provided herein, may be terminated only after (i) the Grantor or the Beneficiary
has given the Trustee written notice of its intention to terminate the Trust
Account (the "Notice of Intention"), (ii) the Trustee has given the Grantor and
the Beneficiary the written notice specified in paragraph (b) of this Section
11, (iii) the Reinsurance Agreement shall have terminated, and (iv) the
Beneficiary has given the Trustee written notice that all Obligations of the
reinsurer under the Reinsurance Agreement have been extinguished. The Notice of
Intention shall specify the date on which the notifying Party intends the Trust
Account to terminate (the "Proposed Date").

      (b) Within ten Business Days following receipt by the Trustee of the
Notice of Intention, the Trustee shall give written notification (the
"Termination Notice") to the Beneficiary and the Grantor of the date (the
"Termination Date") on which the Trust Account shall terminate. The Termination
Date shall be (a) the Proposed Date (or if not a Business Day, the next Business
Day thereafter), if the Proposed Date is at least 30 days but no more than 45
days subsequent to the date the Termination Notice is given; (b) 30 days
subsequent to the date the Termination Notice is given (or if not a Business
Day, the next Business Day thereafter), if the Proposed Date is fewer than 30
days subsequent to the date the Termination Notice is given; or (c) 45 days
subsequent to the date the Termination Notice is given (or if not a Business
Day, the next Business Day thereafter), if the Proposed Date is more than 45
days subsequent to the date the Termination Notice is given.

      (c) On the Termination Date, upon receipt of written approval of the
Beneficiary, the Trustee shall transfer to the Grantor any Assets remaining in
the Trust Account, at which time all liability of the Trustee with respect to
such Assets shall cease.

12. DEFINITIONS.

      Except as the context shall otherwise require, the following terms shall
have the following meanings for all purposes of this Agreement (the definitions
to be applicable to both the singular and the plural forms of each term defined
if both such forms of such term are used in this Agreement):

            The term "Affiliate" with respect to any corporation shall mean a
corporation which directly, or indirectly through one of more intermediaries,
controls or is controlled by, or is under common control with, such corporation.
The term "control" (including the related terms "controlled by" and "under
common control with") shall mean the ownership, directly or indirectly, or more
than fifty percent (50%) of the voting stock of a corporation.

            The term "Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which the Trustee located at the notice address set
forth on Schedule 1 is authorized or required by law or executive order to
remain closed.

            A claimant claim will be considered "closed" when evidence of final
settlement or release in accordance with customary claims handling practices
(which may be comprised of attorney correspondence) has been received by
Grantor, Beneficiary or any of their affiliates.

                                       9
<PAGE>
            The term "Eligible Securities" shall mean and include certificates
of deposit issued by a United States bank and payable in United States legal
tender, securities issued in the United States and readily marketable over a
national exchange with a maturity date of not more than one year listed by the
Securities Valuation Office of the National Association of Insurance
Commissioners and qualifying as admitted assets; provided, however, that no such
securities shall have been issued by a Parent, a Subsidiary or an Affiliate of
either the Grantor or the Beneficiary.

            The term "Obligations" shall mean, with respect to the Reinsurance
Agreement, (a) losses and allocated and unallocated loss expenses paid by or on
behalf of the Beneficiary, but not recovered from the Grantor, (b) reserves for
losses reported and outstanding, (c) reserves for losses incurred but not
reported, (d) reserves for allocated and unallocated loss expenses and (e)
reserves for unearned premiums.

            The term "person" shall mean and include an individual, a
corporation, a partnership, an association, a trust, an unincorporated
organization or a government or political subdivision thereof.

            The term "Parent" shall mean an institution that, directly or
indirectly, controls another institution.

            The term "Subsidiary" shall mean an institution controlled, directly
or indirectly, by another institution.

13. GOVERNING LAW. This Agreement shall be subject to and governed by the laws
of the State of Texas. Each party hereto irrevocably waives any objection on the
grounds of venue, forum non-conveniens or any similar grounds and irrevocably
consents to service of process by mail or in any other manner permitted by
applicable law and consents to the jurisdiction of the courts located in the
State of Texas. The parties further hereby waive any right to a trial by jury
with respect to any lawsuit or judicial proceeding arising or relating to this
Agreement.

14. SUCCESSORS AND ASSIGNS. No Party may assign this Agreement or any of its
obligations hereunder, without the prior, written consent of the other Parties;
provided, however, that this Agreement shall inure to the benefit of and bind
those who, by operation of law, become successors to the Parties, including,
without limitation, any liquidator, rehabilitator, receiver or conservator and
any successor merged or consolidated entity and provided further that, in the
case of the Trustee, the successor trustee is eligible to be a trustee under the
terms hereof. Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
association to which all or substantially all the escrow business of the
Trustee's corporate trust line of business may be transferred, shall be the
Trustee under this Agreement without further act.

15. SEVERABILITY. In the event that any provision of the Agreement shall be
declared invalid or unenforceable by any regulatory body or court having
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining portions of this Agreement.

                                       10
<PAGE>
16. ENTIRE AGREEMENT. This agreement constitutes the entire agreement among the
Parties, and there are no understandings or agreements, conditions or
qualifications relative to this Agreement which are not fully expressed in this
Agreement.

17. AMENDMENTS. This Agreement may be modified or otherwise amended, and the
observance of any term of this Agreement may be waived, if such modification,
amendment or waiver is in writing and signed by all of the Parties.

18. NOTICES. Unless otherwise provided in this Agreement, all notices,
directions, requests, demands, acknowledgments and other communications required
or permitted to be given or made under the terms hereof shall be in writing and
shall be deemed to have been duly given or made (a) (i) when delivered
personally, (ii) when made or given by prepaid telex, telegraph or facsimile, or
(iii) in the case of mail delivery, upon the expiration of three days after any
such notice, direction, request, demand, acknowledgment or other communication
shall have been deposited in the United States mail for transmission by first
class mail, postage prepaid, or upon receipt thereof, whichever shall first
occur and (b) when addressed as shown on Schedule I hereto.

      Notwithstanding the above, communications pursuant to Sections 1(d) or
2(e) may be transmitted via electronic mail. Also notwithstanding the above, in
the case of communications delivered to the Trustee pursuant to (ii) and (iii)
of this Section 18, such communications shall be deemed to have been given on
the date received by the Trustee. In the event that the Trustee, in its sole
discretion, shall determine that an emergency exists, the Trustee may use such
other means of communication as the Trustee deems appropriate.

19. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall constitute an original, but
such counterparts together shall constitute one and the same Agreement. All
signatures of the parties to this Agreement may be transmitted by facsimile, and
such facsimile will, for all purposes, be deemed to be the original signature of
such party whose signature it reproduces, and will be binding upon such party.

20. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Agreement, as indicated
in Schedule 1 attached hereto), whether in writing, by telecopier or otherwise,
the Trustee is authorized to seek confirmation of such instructions by telephone
call-back to the person or persons designated on Schedule 2 hereto ("Schedule
2"), and the Trustee may rely upon the confirmation of anyone purporting to be
the person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Trustee. If the Trustee is unable to contact any of the authorized
representatives identified in Schedule 2, the Trustee is hereby authorized to
seek confirmation of such instructions by telephone call-back to any one or more
of Beneficiary's executive officers, ("Executive Officers"), which shall include
the titles of______________________, as the Trustee may select. Such "Executive
Officer" shall deliver to the Trustee a fully executed Incumbency Certificate,
and the Trustee may rely upon the confirmation of anyone purporting to be any
such officer. The Trustee and the Beneficiary's bank in any funds transfer may
rely solely upon any account numbers or similar identifying numbers provided by
the Beneficiary to identify (i) the Beneficiary, (ii) the Beneficiary's bank, or
(iii) an intermediary bank. The Trustee may apply any of the Trust Account for
any payment order it executes using any such identifying

                                       11
<PAGE>
number, even when its use may result in a person other than the Beneficiary
being paid, or the transfer of funds to a bank other than the Beneficiary's bank
or an intermediary bank designated. The parties to this Agreement acknowledge
that these security procedures are commercially reasonable.

21. FORCE MAJEURE.

      In the event that any Party to this Agreement is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other cause reasonably beyond its control, such Party shall not be liable for
damages to the other Parties for any unforeseeable damages resulting from such
failure to perform or otherwise from such causes. Performance under this
Agreement shall resume when the affected Party is able to perform substantially
that Party's duties.

                                       12
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.

                               GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC.

                               By: _____________________________________________
                               Name: ___________________________________________
                               Title: __________________________________________

                               GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                               By: _____________________________________________
                               Name: ___________________________________________

                               JPMORGAN CHASE BANK
                                 as Trustee

                               Name:____________________________________________
                               Title: __________________________________________

                                       13
<PAGE>
                                   SCHEDULE 1

Effective Date:

Name of Grantor:
Notice Address:
TIN:
Wiring Instructions:

Name of Beneficiary:
Notice Address:
TIN:
Wiring Instructions:

Trustee Notice Address:       JPMorgan Chase Bank
                              600 Travis, Suite 1150
                              Houston, Texas 77002
                              Attn: Ruth Chipongian
                              Fax No.: 713-216-6927
                              Telephone No.: 713-216-6337

                                       14
<PAGE>
                                   SCHEDULE 2

                     TELEPHONE NUMBER(S) FOR CALL-BACKS AND
           PERSON(S) DESIGNATED TO CONFIRM FUNDS TRANSFER INSTRUCTIONS

If to Beneficiary:

         Name                                        Telephone Number

1.   ______________________                          _______________________

2.   ______________________                          _______________________

3.   ______________________                          _______________________

Telephone call-backs shall be made to each Beneficiary required pursuant to the
Agreement.

If to Grantor:

         Name                                        Telephone Number

1.   ______________________                          _______________________

2.   ______________________                          _______________________

3.   ______________________                          _______________________

Telephone call-backs shall be made to each Grantor required pursuant to the
Agreement.

                                       15
<PAGE>
                                   SCHEDULE 3

                                [JPMORGAN LOGO]

--------------------------------------------------------------------------------
                                SCHEDULE OF FEES
                                      FOR
                                TRUSTEE SERVICES
--------------------------------------------------------------------------------

<TABLE>
<S>                                                                      <C>
         NEW ACCOUNT ACCEPTANCE FEE ...............................      $   750
                  Payable upon Account Opening

         MINIMUM  ADMINISTRATIVE FEE ...............................     $ 7,500
                  Payable Upon Account Opening and in Advance for
                  each year in which we act as Trustee
</TABLE>

ACTIVITY FEES:

<TABLE>
<CAPTION>
DISBURSEMENTS

<S>                 <C>                 <C>
Per Check                               $    35
Per Wire            U.S.                $    35
                    International       $   100

RECEIPTS

Per Check                               $    10
Per Wire                                $    10

INVESTMENTS

Deliver/Receipt                         $    75

LEGAL EXPENSES:                         AT COST
</TABLE>

There will be no legal expense for Chase if Chase's standard form Trust
Agreement is employed without substantive amendments.

A New Account Acceptance Fee will be charged for the Bank's review of the Trust
Agreement along with any related account documentation. A one (1) year Minimum
Administrative Fee will be assessed for any account which is funded. The account
will be invoiced in the month in which the account is opened and annually
thereafter. Payment of the invoice is due 30 days following receipt.

                                       16
<PAGE>
The Administrative Fee will cover a maximum of fifteen (15) annual
administrative hours for the Bank's standard Trust services including account
setup, safekeeping of assets, investment of funds, collection of income and
other receipts, preparation of statements comprising account activity and asset
listing, and distribution of assets in accordance with the specific terms of the
Trust Agreement.

EXTRAORDINARY SERVICES AND OUT-OF POCKET EXPENSES:

Any additional services beyond our standard services as specified above, such as
annual administrative activities in excess of fifteen (15) hours and all
reasonable out-of-pocket expenses including attorney's fees will be considered
extraordinary services for which related costs, transaction charges, and
additional fees will be billed at the Bank's standard rate.

MODIFICATION OF FEES:

Circumstances may arise necessitating a change in the foregoing fee schedule.
The Bank will attempt at all times, however, to maintain the fees at a level
which is fair and reasonable in relation to the responsibilities assumed and the
duties performed.

ASSUMPTIONS:

-     The account will be invoiced in the month in which the account is opened
      and annually thereafter.

-     Payment of the invoice is due 30 days following receipt.

--------------------------------------------------------------------------------
All fees quoted are subject to our review and acceptance, and that of our legal
counsel, of the documents governing the Trust. As a condition for acceptance of
an appointment, it is expected that all legal fees and out-of-pocket expenses
incurred by JPMorgan Chase Bank and our counsel in connection with our review of
the transaction will be paid by the client regardless of whether or not the
transaction closes.
--------------------------------------------------------------------------------

                                       17
<PAGE>
                                    EXHIBIT A

                         [List of Reinsurance Agreement]

                                       18
<PAGE>
                                    EXHIBIT B

                 [List of Assets Deposited to the Trust Account]

                                       19
<PAGE>
                                    EXHIBIT C

                         [Form of Claims Closed Notice]

<TABLE>
<CAPTION>
                             CASE INDEMNITY        CASE LOSS ADJUSTMENT         INDEMNITY       ALLOCATED LOSS
        CLAIMANT CLAIM           RESERVE             EXPENSE RESERVE               PAID          EXPENSE PAID
        --------------       --------------        --------------------         ---------       --------------
<S>                          <C>                   <C>                          <C>             <C>

TOTALS:
</TABLE>
<PAGE>
                                    EXHIBIT D
                          Form of Assignment Agreement
<PAGE>
                              ASSIGNMENT AGREEMENT

      This Assignment Agreement (the "Agreement") is entered into as of
________________, 2002 (the "Closing Date"), by and among GAINSCO Service Corp.,
a Texas corporation ("Seller"), GAINSCO, INC., a Texas corporation that is the
parent company of Seller ("GAINSCO") (collectively, "Sellers"), Berkeley
Management Corporation, a Texas corporation ("Purchaser"), and GAINSCO County
Mutual Insurance Company, a Texas county mutual insurance company (the
"Company"). Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Acquisition Agreement (defined below).

      WHEREAS, pursuant to that certain Acquisition Agreement dated as of
_________, 2002 (the "Acquisition Agreement"), by and among Sellers, Purchaser
and the Company, Sellers agreed to transfer and assign to Purchaser the
exclusive authority and right to manage and control the Company under the terms
of the Management Agreement;

      WHEREAS, pursuant to the Acquisition Agreement, Sellers desire to assign
to Purchaser the Management Agreement and any and all other rights and interests
to manage and control the Company;

      WHEREAS, such assignment has been approved by the board of directors of
the Company in accordance with Section V of the Management Agreement.

      WHEREAS, such assignment is permitted by Texas law and has been approved
by the Texas Department of Insurance; and

      WHEREAS, Purchaser and Sellers are closing the transaction set forth in
the Acquisition Agreement effective as of the date of this Agreement.

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

      1. ASSIGNMENT OF THE MANAGEMENT AGREEMENT. Sellers hereby transfer,
assign, grant and convey to Purchaser, its successors, assigns and legal
representatives, and Purchaser hereby accepts, all right, title and interest of
Sellers, in and to the Management Agreement as of the Closing Date, together
with any and all other rights and interests of Sellers to manage and control the
Company. The Company consents to the assignment of the Management Agreement, as
acknowledged by its signature below, and will comply with all terms and
conditions of the Management Agreement on the Closing Date and following such
date.

      2. EFFECT OF ASSIGNMENT. As of the Closing Date, Sellers shall have no
continuing rights in or with respect to the Company or any of its assets or
properties, whether tangible or intangible, and Sellers shall have no further
rights or interests with respect to the Management Agreement as of the Closing
Date. The Company acknowledges and agrees that nothing in this Agreement shall
be construed to modify or amend the Company's duties and obligations under, or
to modify or amend any terms or conditions of, the Management Agreement.
<PAGE>
      3. EXTINGUISHMENT OF SELLER DEBENTURE. Sellers hereby acknowledge the
extinguishment of the Seller Debenture, which was paid in full and completely
discharged as of _______, 2002. The Company has no further liability, debt or
obligation of any kind with respect to the Seller Debenture. Sellers agree that
they have marked or will mark the original of the Seller Debenture as "PAID IN
FULL" and have surrendered or will surrender the same to the Company, in
accordance with Purchaser's instructions.

      4. RELEASE. Sellers agree, on behalf of themselves and their officers,
directors, employees, agents, representatives, successors and assigns, to
release, acquit, discharge and covenant not to sue the Company, its officers,
directors, members, owners, policyholders, agents, attorneys, employees,
successors and assigns, with respect to all past, present and future claims,
expenses, losses, liabilities and obligations of any nature whatsoever, whether
accrued or contingent, known or unknown, whether sounding in contract, tort or
otherwise, including, without limitation, any and all rights and interests under
the Management Agreement. Sellers hereby acknowledge and agree that they are
owed no fees or other amounts under the Management Agreement. Sellers renounce
any form of ownership or control over the Company and acknowledge and agree
that, as of the Closing Date, Sellers and their officers and directors shall
have no rights to vote with respect to any interest of any kind pertaining to
the ownership or membership interests in the Company.

      5. MISCELLANEOUS.

            (a) CONTINUITY OF ACQUISITION AGREEMENT. This Agreement is executed
and delivered in furtherance of the Acquisition Agreement. Nothing contained
herein shall be deemed or construed as a waiver, release, amendment,
modification, termination or merger of any agreements, commitments,
representations, warranties, covenants, rights, obligations, responsibilities or
duties of Sellers, the Company, or Purchaser under the Acquisition Agreement,
and the same shall remain in full force and effect in accordance with the terms
of the Acquisition Agreement.

            (b) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to principles
of choice of law or conflicts of law that would direct the application of the
laws of a different jurisdiction.

            (c) FURTHER ASSURANCES. The parties hereto covenant and agree that
they will execute such further instruments and documents and take such further
actions as are or may be necessary or convenient to effectuate and carry out the
purposes, terms, conditions, and transactions contemplated by the Acquisition
Agreement and by this Agreement.

            (d) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
transferees and assigns. Except for the parties to this Agreement, a successor
in interest, or assignee of a party, no person or entity is or shall be entitled
to bring any action to enforce any provision of this Agreement against any of
the parties hereto.

                                       2
<PAGE>
            (e) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which in
the aggregate shall constitute but one agreement.

            (f) CONFLICT BETWEEN DOCUMENTS. If there is a conflict between the
terms of the Acquisition Agreement and this Agreement, the terms of the
Acquisition Agreement shall control.

            (g) SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS, AND
AGREEMENTS. The parties hereto acknowledge and agree that the representations,
warranties, covenants and agreements set forth in the Acquisition Agreement
shall survive the Closing and shall continue in full force and effect for such
purposes and for such period of time as described in the Acquisition Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       3
<PAGE>
IN WITNESS WHEREOF, Sellers, the Company, and Purchaser have caused this
Agreement to be duly executed and effective for all purposes as of the Closing
Date.

SELLERS:

GAINSCO SERVICE CORP.

By: ____________________________________
Name: __________________________________
Title:  ________________________________

GAINSCO, INC.

By: ____________________________________
Name:    _______________________________
Title: _________________________________

THE COMPANY:

GAINSCO COUNTY MUTUAL INSURANCE COMPANY

By: ____________________________________
Name: __________________________________
Title: _________________________________

PURCHASER:

BERKELEY MANAGEMENT CORPORATION

By: ____________________________________
Name: __________________________________
Title: _________________________________

                                       4
<PAGE>
                                    EXHIBIT E
                              Management Agreement
<PAGE>
                              MANAGEMENT CONTRACT

         GAINSCO County Mutual Insurance Company, a county mutual insurance
company organized and operating under the insurance laws of Texas, with
principal offices at 500 Commerce Street, Ft. Worth, Texas 76102-5439,
hereinafter called the "Company," desires to conduct its business through the
offices and management of GAINSCO Service Corp., a Texas corporation, with
principal offices at 500 Commerce Street, Ft. Worth, Texas 76102-5439,
hereinafter called the "Manager," in consideration of the mutual covenants and
agreements herein contained, the Company and the Manager, do hereby agree as
follows:

SECTION I - APPOINTMENT AND AUTHORITY OF MANAGER

         Company hereby employs Manager to manage the business and affairs of
Company of every kind and character whatsoever, beginning with the date of this
contact and continuing until terminated as provided herein. The Manager is
granted and shall have the responsibility of management of the business of
Company, including the exclusive right of soliciting and issuing all policies
of insurance for Company and the right and privilege of collecting all premiums
due on policies heretofore issued or hereafter issued by Company and of
performing all acts in the name of Company being necessary and proper to
accomplish such end.

         The Manager is hereby authorized to delegate by contract any, but not
all, of the obligations under this Contract to any other person, firm, or
corporation. However, no such delegation shall relieve the Manager of its
responsibilities to Company under this Contract. Manager's authority as manager
of Company shall be complete and without limitation except any authority which
must by law be retained by Company.

SECTION II - DUTIES OF MANAGER

         The Manager shall promote, develop and manage the business of Company
and be responsible for and authorized to appoint general agents and local
agents for Company and enter agreements with such agents. The Manager shall be
responsible for the handling of claims, recommending investments, supervising
the day to day operations of Company, establishing and maintaining proper
insurance accounting procedures, preparing annual statements and reports for
submission to the Commissioner of Insurance and the filing of rates and policy
forms with the Texas Department of Insurance, subject to the authority of the
board of directors and officers of Company. In addition, Company hereby grants
to Manager full and complete power and authority to:

         1.  establish and maintain a complete record of each policyholder of
             Company, the same to be maintained in compliance with any
             requirements of the Texas Department of Insurance;
<PAGE>
         2.  establish and maintain an adequate, complete and detailed
             accounting system with respect to the funds of Company and the
             receipts and disbursements thereof;

         3.  employ all necessary and required personnel deemed proper by
             Manager for carrying on the business and affairs of Company;

         4.  formulate, determine and provided such insurance policy forms,
             application blanks and other necessary forms as manager deems
             advisable or as is otherwise required by the Texas Department of
             Insurance;

         5.  issue policies on behalf of Company under such conditions and
             requirements as Manager determines is for the best interest of
             Company; and

         6.  set and put into effect such premium rates, and the manner of their
             payment, as Manager determines to be in the best interest of
             Company, subject to any required approval of the Texas Department
             of Insurance.

The enumeration of the above-described powers and duties of Manager is not
exclusive, but Manager shall also have such other powers, authority and duties
as are in any way necessary to the operation of Company in carrying out its
business and affairs, subject to any limitations and restrictions of the Texas
Department of Insurance and the Texas Insurance Code. All other powers and
authorities necessary thereto are hereby granted.

SECTION III - PAYMENT OF CLAIMS AND EXPENSES

         Company shall pay all claims, claim expenses and all expenses incident
to the operation of its business including expenses incurred in the
solicitation, issuance and delivery of policies of insurance as well as making
collection of premiums due thereon. The obligation of Company to pay all claims
and expenses shall include all of the expenses incurred by Manager in carrying
out its duties and obligations described herein.

SECTION IV - COMPENSATION

         In consideration of the services rendered and to be rendered by the
Manager, the Company agrees to pay the Manager the Net Income of the Company
subject to the limitations herein. The Manager shall be paid the Net Income
monthly, on or before the 30th day of each month, such amounts from the Net
Income of the Company from the previous month. Should there be no Net Income of
the Company, there shall be no compensation paid to the Manager, and the
Manager shall forego all compensation until the company has Net Income after
offset for prior net losses. On or before April 1st of each year, the Net
Income paid to the Manager shall be adjusted to the actual Net Income of the
Company reflected in its Annual Statement filed with the Texas Department of
Insurance for the previous year and any sum due the Manager or the Company as a
result of such adjustment shall be paid on or before April 30th.
<PAGE>
         For purposes of this Agreement, Net Income shall be calculated on the
basis of the formula currently contained on Page 4 of the Annual Statement form
("Annual Statement"), Lines 1 through 16, excluding the management fee and
adjusted for gains/losses in surplus (Annual Statement, Page 4, Lines 19
through 23) and less ten percent (10%) of net income reflected on Line 16 of
the Annual Statement which the Company shall retain. The 10% of net income so
retained by the Company shall be paid to the Manager as soon as reasonably
possible after the Annual Statement of the Company has been filed for the
previous year, provided the Company has received prior approval of the
Commissioner of Insurance.

         However, in no event shall the management fee reduce the policyholder
surplus of the Company as calculated utilizing the formula on Page 3 of the
current Annual Statement form with all required adjustments for past due
receivables and unauthorized reinsurance below the greatest of the following:
(1) Two Million Dollars ($2,000,000.00); (2) one-third (1/3) of net retained
writings of the Company over the previous twelve (12) months; or (3) the
minimum surplus required by law.

SECTION V - DURATION, ASSIGNMENT

         This Contract shall become effective as of the date hereof and shall
continue in force for a duration of twenty-five (25) years unless terminated in
accordance with the terms hereof. It is mutually understood and agreed that the
Manager shall have the right and privilege of selling, assigning or
transferring this Contract in whole or in part, or any benefits thereunder, to
any person, persons, firm, corporation or legal entity of whatever nature, with
the consent of the board of directors of the Company. This Contract shall be
automatically renewed for additional 25-year periods unless either party gives
the other notice of termination six (6) months in advance of the conclusion of
the 25-year period.

SECTION VI - TERMINATION

         In the event the Manager fails to comply with its obligations under
this Contract, after notice of such failure to Manager, Company may cancel this
Contract on sixty (60) days written notice to Manager. The parties may cancel
this Contract at anytime, without cause, by mutual agreement. In the event it
shall ever be held, pursuant to any law of the State of Texas or any proper
rule of the Texas Department of Insurance, that this contract is contrary to
any such law, rule or regulation, then it is nevertheless declared to be the
intent of the parties to this contract that Manager, or its successor or
assignee, shall continue the exclusive direction of the affairs of Company
indefinitely until this Contract is terminated.

SECTION VII - GENERAL

         A.  This Agreement shall be construed in accordance with the laws of
the State of Texas and shall inure to and be binding upon the parties hereto.
Performance of this contract shall be in the County of Tarrant, State of Texas.

         B.  This Agreement constitutes the entire Agreement between the
parties.
<PAGE>
     C.  No amendments to or modifications of this Agreement shall be valid
unless made in writing and executed by the parties in the form of an amendment
to this Agreement.

     D.  In the event any provision hereof is contrary to any law or regulation
governing the parties hereto, such provision shall be modified if possible to
conform to any such contrary statute or regulation so as to accomplish the
intention of the parities as nearly as possible.

     EXECUTED this 12th day of October, 1992.

                                                GAINSCO COUNTY MUTUAL INSURANCE
                                                COMPANY

                                                By: /s/ [ILLEGIBLE]
                                                    ----------------------------

ATTEST:

/s/ [ILLEGIBLE]
----------------------------
Secretary

                                                GAINSCO SERVICE CORP.

                                                By: /s/ [ILLEGIBLE]
                                                    ----------------------------

ATTEST:

/s/ [ILLEGIBLE]
----------------------------
Senior Vice President

<PAGE>
                                    EXHIBIT F
                            Certificate of Authority
<PAGE>
                         TEXAS DEPARTMENT OF INSURANCE
                                     [SEAL]
Certificate No.  10008                                      Company No. 56-93956

                            CERTIFICATE OF AUTHORITY

THIS IS TO CERTIFY THAT

                    GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                               FORT WORTH, TEXAS

has complied with the laws of the State of Texas applicable thereto and is
hereby authorized to transact the business of

loss or damage by fire, lightning, gas explosion, theft, windstorm and hail, or
any other hazard that any other fire or windstorm insurance company operating
in Texas may write on property described in Article 17.01 of the Texas
Insurance Code; including all forms of automobile liability and physical damage
insurance, including but not limited to automobile liability, bodily injury,
medical payments, property damage, automobile physical damage, fire, theft,
collision and comprehensive and to issue non-assessable and non-contingent
policies covering such risks

within the State of Texas. This Certificate of Authority shall be in full force
and effect until it is revoked, canceled or suspended according to law.

                                                   IN TESTIMONY WHEREOF, witness
                               my hand and seal of office at Austin, Texas, this
                                                  2nd day of November, A.D. 1992
       [SEAL]
                                                 [ILLEGIBLE]
                               -------------------------------------------------
                                        COMMISSIONER OF INSURANCE
<PAGE>
                                    EXHIBIT G
             Restated Articles of Incorporation and Restated Bylaws
<PAGE>
                                    RESTATED

                            ARTICLES OF INCORPORATION

                                       OF

                     GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                                 WITH AMENDMENTS

KNOW ALL MEN BY THESE PRESENCE:

         Pursuant to the provisions of Articles 1396-4.03 and 1396-4.06 of the
Texas Non-Profit Corporation Act, the undersigned county mutual insurance
company (formerly known as National County Mutual Fire Insurance Company) adopts
the following restated articles of incorporation. For each amendment made by
this restated articles of incorporation, such amendment has been effected in
conformity with the provisions of the Texas Non-Profit Corporation Act. All
amendments contained in these restated articles of incorporation were adopted at
a meeting of the members on August 27, 1992, at which a quorum was present, and
all amendments received at least two-thirds of the votes of members present at
such meeting in person or by proxy. This instrument accurately sets forth the
articles of incorporation and all amendments thereto that are in effect to date
and as further amended by this restated articles of incorporation; this
instrument contains no other change in any provision thereof. The text of the
entire articles of incorporation as amended and supplemented by all certificates
of amendment and as further amended herein is as follows:

ARTICLES OF INCORPORATION - PAGE 1

<PAGE>

                                    ARTICLE I

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

                                   ARTICLE II

         The home office and principal place of business of the Company shall be
in the city of Fort Worth, Tarrant 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.

                                   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 and to
transact the business of insurance with respect to 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, Texas Insurance Code, as amended, all forms of automobile
liability and physical damage insurance, and any and all other kinds of
insurance business which a county mutual insurance company may engage in 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 following persons, whose addresses are given below, shall be
the current directors of the Company:

ARTICLES OF INCORPORATION - PAGE 2

<PAGE>

<Table>
<Caption>
             NAME                                ADDRESS

<S>                                        <C>
       Joseph Macchia                      500 Commerce Street
                                           Fort Worth, Texas 76102

       Kenneth Peterson                    500 Commerce Street
                                           Fort Worth, Texas 76102

       Sam Rosen                           201 Main Street
                                           Suite 2200
                                           Fort Worth, Texas 76102

       Harden Wiedemann                    12221 Merit Drive
                                           Suite 1325
                                           Dallas, Texas 75251

       John Williams                       1515 Lincoln Plaza
                                           500 North Akard Street
                                           Dallas, Texas 75201
</Table>

A change in the number or names of the directors shall not require an amendment
to these articles. The board of directors shall have full power and authority to
manage the affairs of the Company and to elect such officers as may be provided
for in the Constitution and Bylaws.

                                   ARTICLE VI

                     INDEMNIFICATION OF DIRECTORS, OFFICERS,

                       EMPLOYEES AND AGENTS OF CORPORATION

         The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the

ARTICLES OF INCORPORATION - PAGE 3

<PAGE>

Company) by reason of the fact that he is or was a director, officer, employee
or agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Company, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.

         The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company;
provided however, that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the Company
except to the extent that the court in which such action or suit was brought
shall determine upon application that despite the adjudication of liability but
in view of all circumstances of the

ARTICLES OF INCORPORATION - PAGE 4

<PAGE>

case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.

         The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith or in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was not unlawful.

         Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of a written representation by or
on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company as authorized in this article.

         The indemnification hereunder shall be made only upon a determination
in the specific case that indemnification is proper under the substantive
standards established hereunder. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
members of Company.

ARTICLES OF INCORPORATION - PAGE 5

<PAGE>

         The Company shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this article.

         The indemnification provided by this article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any statute, bylaw, agreement, vote of members or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

         EXECUTED to be effective the 27th day August, 1992.

1. /s/ JOSEPH MACCHIA                     14. /s/ KEITH A. HILL
   -----------------------                    ----------------------
   Joseph Macchia                             Keith A. Hill
   500 Commerce Street                        5117 Sherman Drive
   Fort Worth, Texas 76102                    The Colony, Texas 75056

2. /s/ KENNETH PETERSON                   15. /s/ KATHY E. RAFFEL
   ------------------------                   ----------------------
   Kenneth Peterson                           Kathy E. Raffel
   500 Commerce Street                        4116 Alava Drive
   Fort Worth, Texas 76102                    Fort Worth, Texas 76133

ARTICLES OF INCORPORATION - PAGE 6

<PAGE>
3. /s/ SAM ROSEN                          16. /s/ WILLIE LAVERGNE
   -----------------------                    ----------------------
   Sam Rosen                                  Willie LaVergne
   201 Main Street                            1200 Brookfield Lane
   Suite 2200                                 Mansfield, Texas 76063
   Fort Worth, Texas 76102

4. /s/ HARDEN WIEDEMANN                   17. /s/ BEVERLY D. HUTTON
   ------------------------                   ----------------------
   Harden Wiedemann                           Beverly D. Hutton
   12221 Merit Drive                          6928 Buenos Aires Drive
   Suite 1325                                 North Richland Hills, Texas 76180
   Dallas, Texas 75251

5. /s/ JOHN WILLIAMS                      18. /s/ ARTHUR E. SCHMIDT
   ------------------------                   ----------------------
   John Williams                              Arthur E. Schmidt
   1515 Lincoln Plaza                         8601 Mary's Creek Drive
   500 North Akard Street                     Fort Worth, Texas 76116
   Dallas, Texas 75201

6. /s/ [ILLEGIBLE]                        19. /s/ LORENE A. McKNIGHT
   ------------------------                   ----------------------
   GAINSCO Service Corp.                      Lorene A. McKnight
   500 Commerce Street                        10036 Long Rifle Drive
   Fort Worth, Texas 76102                    Fort Worth, Texas 76108

7. /s/ JACK L. JOHNSON                    20. /s/ THOMAS M. RUELLE
   ------------------------                   ----------------------
   Jack L. Johnson                            Thomas M. Ruelle
   2129 Reflection Bay                        5800 Whitehaven West
   Arlington, Texas 76013                     Colleyville, Texas 76034

8. /s/ HOLMES GWYNN                       21. /s/ NATHAN E. HOLT
   ------------------------                   ----------------------
   Homes Gwynn                                Nathan E. Holt
   2912 Meadowview Drive                      2701 Lucas Drive
   Colleyville, Texas 76034                   Arlington, Texas 76015

9. /s/ DANIEL J. COOTS                    22. /s/ NORMAN ALBERIGO
   ------------------------                   ----------------------
   Daniel J. Coots                            Norman Alberigo
   4930 High Creek Drive                      815 Riviera Drive
   Arlington, Texas 76017                     Mansfield, Texas 76063

ARTICLES OF INCORPORATION - PAGE 7

<PAGE>
10. /s/ TONYA R. TUCKER                    23. /s/ BETTY J. GRAHAM
    -----------------------                    ----------------------
    Tonya R. Tucker                            Betty J. Graham
    4232 Wiman Drive                           1924 Kentwood
    Fort Worth, Texas 76119                    Carrollton, Texas 75007

11. /s/ DEBRA A. SMITH                     24. /s/ CAROLYN E. RAY
    -----------------------                    ----------------------
    Debra A. Smith                             Carolyn E. Ray
    321 Western Street                         3053 Creekbend Circle
    Saginaw, Texas 76179                       Grapevine, Texas 76051

12. /s/ GEORGIA M. HOBBS                   25. /s/ JOSEPH F. HILLS
    -----------------------                    ----------------------
    Georgia M. Hobbs                           Joseph F. Hills
    4100 Blossom Trail                         1001 Fuller-Wiser Road
    Arlington, Texas 76016                     Euless, Texas 76039

13. /s/ CATHERINE HUTYRA
    -----------------------
    Catherine Hutyra
    4917 Crest
    Arlington, Texas 76017

ARTICLES OF INCORPORATION - PAGE 8

<PAGE>

STATE OF TEXAS                )
                              )
COUNTY OF TARRANT             )

         Before me, the undersigned authority, on this day personally appeared
Joseph Macchia, who being by me first duly sworn, severally declared that he is
the person who signed the foregoing document and that the statements therein
contained are true and correct.

         Given under my hand and seal of office this 27th day of August, 1992.

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

STATE OF TEXAS                )
                              )
COUNTY OF TARRANT             )

         Before me, the undersigned authority, on this day personally appeared
Clark L. Johnson, who being by me first duly sworn, severally declared that he
is the person who signed the foregoing document and that the statements therein
contained are true and correct.

         Given under my hand and seal of office this 27th day of August, 1992.

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

ARTICLES OF INCORPORATION - PAGE 9

<PAGE>

STATE OF TEXAS                )
                              )
COUNTY OF TARRANT             )

         Before me, the undersigned authority, on this day personally appeared
Holmes Gwynn, who being by me first duly sworn, severally declared that he is
the person who sighed the foregoing document and that the statements therein
contained are true and correct.

Given under my hand and seal of office this 27th day of August, 1992.

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

STATE OF TEXAS                )
                              )
COUNTY OF TARRANT             )

         Before me, the undersigned authority, on this day personally appeared
Daniel J. Coots, who being by me first duly sworn, severally declared that he is
the person who signed the foregoing document and that the statements therein
contained are true and correct.

         Given under my hand and seal of office this 27th day of August, 1992.

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

ARTICLES OF INCORPORATION - PAGE 10

<PAGE>

STATE OF TEXAS          )
                        )
COUNTY OF TARRANT       )

         Before me, the undersigned authority, on this day personally appeared
Lorene A. McKnight, who being by me first duly sworn, severally declared that he
is the person who signed the foregoing document and that the statements therein
contained are true and correct.

         Given under my hand and seal of office this 27th day of August, 1992.

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

ARTICLES OF INCORPORATION - PAGE 11

<PAGE>

                  CERTIFICATE OF THE PRESIDENT AND SECRETARY OF
                  NATIONAL COUNTY MUTUAL FIRE INSURANCE COMPANY

         We, the undersigned president and secretary of National County Mutual
Fire Insurance Company, a company duly organized and existing under the laws of
the State of Texas, do hereby certify that the attached restated constitution
and bylaws of GAINSCO County Mutual Insurance Company (formerly known as
National County Mutual Fire Insurance Company) is a true and correct copy of
such document duly adopted and approved by the board of directors and membership
of the company.

         In witness whereof, I have hereunto set my hand as president of said
company and have attached hereto the official seal of said company, on this the
27th day of August, 1992.

                                /s/ JOSEPH MACCHIA
                                -----------------------------
                                Joseph Macchia, President

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

         In witness whereof, I have hereunto set my hand as secretary of said
company and have attached hereto the official seal of said company, on this the
27th day of August, 1992.

                                /s/ JACK JOHNSON
                                -----------------------------
                                Jack Johnson, Secretary

                                /s/ JANET HIGGINBOTTOM
                                -----------------------------
                                NOTARY PUBLIC, STATE OF TEXAS
                                Janet Higginbottom
                                -----------------------------
                                Typed or Printed Name
                                Commission Expires: 06-15-93
                                                   ----------

<PAGE>
                                    RESTATED

                           CONSTITUTION AND BYLAWS OF

                     GAINSCO COUNTY MUTUAL INSURANCE COMPANY

                                 WITH AMENDMENTS

                                    ARTICLE I

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

                                   ARTICLE II

         The home office of the Company shall be located in Fort Worth, Tarrant
County, Texas.

                                   ARTICLE III

                               BOARD OF DIRECTORS

         Section A. The affairs of the Company shall be directed by a Board of
Directors consisting of not less than five members of the Company who shall be
elected annually by the members and shall hold office until their successors are
elected and qualified, or until their death, resignation, or removal. Vacancies
in the Board of Directors shall be filled for the unexpired term by the
remaining directors. The Board of Directors may, by contract or otherwise, give
general or limited or special power and authority to the officers and employees
of the Company to transact the general business or any special business of the
Company, and may give powers of attorney to agents of the Company to transact
any special business requiring such authorization. The Directors must be
policyholders of the Company in the amount specified by Article 17.12, Insurance
Code.

         Section B. The entire Board of Directors or any individual director may
be removed from office with or without cause by vote of a majority of the
members of the Company, at any regular or special meeting of such members of the
Company.

<PAGE>

         Section C. All meetings of the Board of Directors shall be held at the
home office of the Company or at any such place within or without the state of
Texas as may be designated from time to time by resolution of the Board or by
written consent of all the directors. Regular meetings of the Board of Directors
shall be held, without call or notice, immediately following each annual meeting
of the members of the Company, and at such times as the directors may determine.
Special meetings of the Board of Directors for any purpose shall be called at
any time by the President or, if he is absent or unable or refuses to act, by
any Vice President or any two directors. Notice of the special meeting, stating
the time, and in general terms the purpose thereof, shall be given in writing to
each director either personally or by mail or other means of written
communication no later than ten days before the day selected for the meeting.

         Section D. A majority of the directors shall be necessary to constitute
a quorum for the transaction of business. Every act or decision done or made by
a majority of the directors shall be regarded as the act of the Board of
Directors, unless a greater number is required by law or by the Articles of
Incorporation of Company. Any action required or permitted to be taken by the
Board of Directors, may be taken without a meeting, and with the same force and
effect as a unanimous vote of directors, if all directors individually or
collectively consent in writing to such action.

         Section E. The President, or in his absence, any director selected by
the directors present, shall preside at meetings of the Board of Directors. The
Secretary of the Company shall act as Secretary at meetings of the Board of
Directors.

<PAGE>

         Section F. Directors and members of committees appointed by the Board
of Directors may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board of
Directors.

                                   ARTICLE IV

                                    OFFICERS

         Section A. The officers of the Company shall be a President, a Vice
President and such additional Vice Presidents as the Board of Directors shall
elect with such special duties, if any, as the Board of Directors shall
determine, a Secretary and such Assistant Secretaries as the Board of Directors
shall elect with such special duties, if any, as the Board of Directors shall
determine, a Treasurer and such Assistant Treasurers as the Board of Directors
shall elect, with such special duties, if any, as the Board of Directors shall
determine. Any two offices mentioned above may be combined and held by one
person, except the offices of president and secretary.

         Section B. The President of the Company shall be the chief executive
officer and manager of the Company, shall preside at all meetings of the
directors and of the Membership, shall sign all policies, subject to the
condition that his signature may be in facsimile if the policies are
countersigned at time of issuance by a person or persons designated to
countersign under rules established by the Board of Directors, and shall perform
all such other duties and shall have all such other powers and authority as may
in anyway reasonably pertain to and be exercised by the chief executive officer
of a company.

                                       3
<PAGE>

                                    ARTICLE V

                                     PURPOSE

         Section A. The purpose for which this Company is organized is to
transact the business of a county mutual insurance company on a statewide basis
and to transact the business of insurance with respect to 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, Texas Insurance Code, as amended, all forms of automobile
liability and physical damage insurance, and any and all other kinds of
insurance business which a county mutual insurance company may engage in under
the laws of the State of Texas, and to issue non-assessable and non-contingent
policies covering such risks.

         Section B. Any person owning property which this Company is authorized
to insure may insure his property with the Company and become a member of
Company, subject to such reasonable and nondiscriminatory rules, regulations and
limits as may be determined and established by the Board of Directors from time
to time, upon paying the required premium pursuant to Company's rates filed as
herein provided.

         Section C. Within the limits of property coverage and amount of
insurance which the Company is authorized to insure under applicable laws, the
type of property the Company will insure, its limits of risk thereon and all
other reasonable and nondiscriminatory rules, conditions and requirements with
respect to its assumption of any insurance risk shall be determined by the Board
of Directors of the Company, provided that such determinations are not contrary
to any law or the rules and regulations of the Tens Department of Insurance.

                                       4
<PAGE>

                                   ARTICLE VI

                               MEETINGS OF MEMBERS

         Section A. The annual meeting of the members of the Company shall be
held at the home office of the Company in Fort Worth, Tarrant County, Texas on
the third Tuesday in February of each year at 10:00 o'clock a.m.

         Section B. Every policy issued by the Company shall provide notice of
the above date of the regular annual meeting. No other notice of the regular
annual meeting of the members shall be necessary.

         Section C. Notice of special meetings of the members must be given to
all members at least ten (10) days prior to the date of any such special meeting
but no more than fifty (50) days before such meeting. Notwithstanding the
immediately foregoing, if the Company shall have more than one thousand (1,000)
members entitled to vote, the Company may give notice of such special meeting by
publication in any newspaper of general circulation in the community in which
the principal office of the Company is located.

         Section D. Special meeting of the members may be held at the call of
the President, the General Manager, or one-third of the Directors of the
Company, or by members having not less than one-tenth (1/10) of the votes
entitled to be cast at such meeting.

         Section E. Voting at either the regular annual meeting or at special
meetings may be either in person or by proxy. All policies of the Company shall
contain a provision in substance providing that each member or policyholder
appoints the President of the Company, with full power of substitution, to be
his lawful attorney-in-fact and in his absence that said attorney-in-fact is
authorized and empowered to vote for him at any meeting unless the member gives
notice to the contrary, in writing, to the Company prior to any such

                                       5
<PAGE>

meeting. Provided also, that applications for Company's insurance may, at the
will of the Board of Directors, contain a substantially similar provision.
Provided also, that such appointment, whether accomplished in the policy and/or
in the application, shall be binding upon each policyholder and shall
effectively grant to the President of the Company, with full power of
substitution, the right to vote as the proxy of each such member or
policyholder, at any regular annual meeting or special meeting of the members of
the Company on all matters which come before any such meeting when any member or
policyholder does not attend the meeting, but subject to the right of each
policyholder to give notice to the contrary, in writing, to the Company prior to
any such meeting or meetings. Provided however, that no such proxy however
granted shall prevent any member or policyholder from casting his individual
vote on all matters which come before any such meeting at which he is attending.

                                   ARTICLE VII

         All premium income of the Company shall be allocated to the appropriate
reserve accounts of the Company in accordance with the laws of the State of
Texas and any applicable rules and regulations promulgated pursuant thereto.

                                  ARTICLE VIII

                           POLICIES ISSUED BY COMPANY

         Section A. Policy forms used by the Company for insurance risks it is
authorized to assume shall be adopted by the Board of Directors, but must
conform to applicable laws and rules and regulations of the Texas Department of
Insurance. Policy forms shall also include the conventionally required
provisions that policies are issued subject to the Constitution and Bylaws of
the Company as then in effect or thereafter amended; shall notify the
policyholder

                                       6

<PAGE>

of the annual meetings and that he is entitled to vote in person or by proxy at
such annual meetings and that he is entitled to vote in person or by proxy at
such meetings; and shall notify the policyholder of his maximum contingent
liability as required by law.

         Section B. All policies of the Company shall be issued for such rates
as are from time to time adopted by the Board of Directors and filed with the
Texas Department of Insurance. Such rates so filed by the Company may provide
for premium payment schedules on a monthly, quarterly, semi-annual or annual
basis or for any other term not exceeding five years.

         Section C. No policy shall be issued to provide a greater amount of
insurance for any one hazard than the amount of statutory deposit posted by the
Company with the State Treasurer of Texas, unless at the time of issuance of the
policy the Company has in force a valid contract of reinsurance for the excess
risk.

         Section D. The Company shall have the authority to issue non-assessable
and non-contingent policies covering all such risks which it may insure under
the authority of its charter and certificate of authority. For assessable and
contingent policies, the contingent liability of the policyholder shall be $2.00
for every $100.00 of property insured. The policies issued by Company shall
state the time and manner of the levy and payment of all premiums and
assessments.

                                   ARTICLE IX

         All valid claims arising under policies issued by the Company shall be
paid in accordance with the terms of the policy and in accordance with the
applicable laws of the State of Texas and any rules and regulations promulgated
pursuant thereto.

                                       7
<PAGE>

                                    ARTICLE X

         Premium rates for all types of risks written by the Company shall be
determined by the Board of Directors and filed with the Texas Department of
Insurance.

                                   ARTICLE XI

         These Bylaws may be amended at any annual meeting of the members of the
Company or at any meeting called for that purpose. These Bylaws may also be
amended by unanimous vote of the Board of Directors at any meeting called for
that purpose. Any amendment by the Board of Directors shall be presented for
ratification at the next annual meeting of the members. Notice of the meeting,
whether regular or special, at which amendments to these bylaws are to be
considered, shall be mailed or delivered personally to all members.

                                       8
<PAGE>
                                    EXHIBIT H
                                  Form of Proxy
<PAGE>

                GAINSCO COUNTY MUTUAL INSURANCE COMPANY POLICIES

                        NOTICE OF PROXY AND POWER TO VOTE

I hereby apply to the above named insurance company for the insurance specified
in the attached application and I hereby appoint the President and
Vice-President of the foregoing company, jointly, with full powers of
substitution, to be my lawful proxy and attorney-in-fact, and in my absence they
are authorized and empowered to vote for me at any membership meeting during the
life of the insurance contract and/or policy, or any renewal thereof, and this
proxy shall remain in force until revoked. There is no contingent liability; the
policy for which I am applying is non-assessable. It is understood that there
shall be no liability against the company until a duly authorized agent has
approved and bound the company for the insurance herein applied for.

Signature of
Applicant X                           Date          Time:              [ ] A.M.
           --------------------------     ---------      ------------- [ ] P.M.

                     GAINSCO County Mutual Insurance Company

<PAGE>
                                    EXHIBIT I
            Form of Amendments to Restated Articles of Incorporation
<PAGE>
                            ARTICLES OF INCORPORATION
                                       OF
                     LIBERTY MUTUAL COUNTY INSURANCE COMPANY

                                    ARTICLE I

      The name of this Company shall be Liberty Mutual County 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.

                                   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.

                                   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,
<PAGE>
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

(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 two
<PAGE>
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.

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
<PAGE>
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.

(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
<PAGE>
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.
<PAGE>
                                    EXHIBIT J
                      Form of Amendments to Restated Bylaws
<PAGE>
                              AMENDED AND RESTATED
                           CONSTITUTION AND BYLAWS OF
                     LIBERTY MUTUAL COUNTY INSURANCE COMPANY

                                    ARTICLE I
                                      NAME

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

                                   ARTICLE II
                                   HOME OFFICE

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

                                   ARTICLE III
                               BOARD OF DIRECTORS

      Section A. The affairs of the Company shall be directed by a Board of
Directors consisting of not less than five members of the Company, the exact
number to be determined from time to time by vote of a majority of the whole
Board, who shall be elected annually by the members and shall hold office until
their successors are elected and qualified, or until their death, resignation,
or removal. At least sixty days prior to the annual meeting of the Company, the
Board shall nominate candidates for the office of director to succeed the
directors whose term of office will expire on the date of such annual meeting
and shall thereupon file the names of such candidates with the secretary. At
least one thousand of the members may also nominate candidates to succeed the
directors whose term of office will expire on the date of such annual meeting by
filing with the secretary at least sixty days before such meeting a certificate
signed and acknowledged by each of such members setting forth the full names and
addresses of such members and giving the names and addresses of the candidates
nominated and by filing with such certificate the written acceptance of such
nominations by each nominee named in such certificate. No person shall be
eligible for election as a director unless nominated in accordance with the
procedures set forth above. The names of all candidates shall be made known by
the secretary to any member upon written request of such member. Any vacancy in
the Board may be filled for the unexpired term by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director. The Board
of Directors may, by contract or otherwise, give general or limited or special
power and authority to the officers and employees of the Company to transact the
general business or any special business of the Company, and may give powers of
attorney to agents of the Company to transact any special business requiring
such authorization.

      Section B. The entire Board of Directors or any individual director may be
removed from office with or without cause by vote of a majority of the members
of the Company, at any regular or special meeting of such members of the
Company.

      Section C. All meetings of the Board of Directors shall be held at the
home office of the Company or at any such place within or without the State of
Texas as may be designated from time to time by resolution of the Board or by
written consent of all the directors. Regular meetings of the Board of Directors
shall be held, without call or notice, immediately following each annual meeting
of the members of the Company, and at such times as the directors may determine.
Special meetings of the Board of Directors for any purpose shall be called at
any time by the President or, if he is absent or unable or refuses to act, by
any Vice President or any two directors. Notice of the special meeting, stating
the time, and in general terms the purpose thereof, shall be given in writing to
each director either personally or by mail or other means of written
communication no later than two days before the day selected for the meeting.
<PAGE>
      Section D. A majority of the directors shall be necessary to constitute a
quorum for the transaction of business. Every act or decision done or made by a
majority of the directors shall be regarded as the act of the Board of
Directors, unless a greater number is required by law or by the Articles of
Incorporation of the Company. Any action required or permitted to be taken by
the Board of Directors, may be taken without a meeting, and with the same force
and effect as a unanimous vote of directors, if all directors individually or
collectively consent in writing to such action.

      Section E. The President, or in his absence, any director selected by the
directors present, shall preside at meetings of the Board of Directors. The
Secretary of the Company shall act as Secretary at meetings of the Board of
Directors.

      Section F. Directors and members of committees appointed by the Board of
Directors may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board of
Directors.

                                   ARTICLE IV
                                    OFFICERS

      Section A. The officers of the Company shall be a President, a Vice
President and such additional Vice Presidents as the Board of Directors shall
elect with such special duties, if any, as the Board of Directors shall
determine, a Secretary and such Assistant Secretaries as the Board of Directors
shall elect with such special duties, if any, as the Board of Directors shall
determine, a Treasurer and such Assistant Treasurers as the Board of Directors
shall elect, with such special duties, if any, as the Board of Directors shall
determine. Any two offices mentioned above may be combined and held by one
person, except the offices of president and secretary.

      Section B The President of the Company shall be the chief executive
officer and manager of the Company, shall preside at all meetings of the
directors and of the Membership, shall sign all policies, subject to the
condition that his signature may be in facsimile if the policies are
countersigned at time of issuance by a person or persons designated to
countersign under rules established by the Board of Directors or the President,
and shall perform all such other duties and shall have all such other powers and
authority as may in any way reasonably pertain to and be exercised by the chief
executive officer of a company.

                                    ARTICLE V
                                 WHO IS A MEMBER

      Any person appearing as the primary insured in a policy shall, while any
such policy is in force, be a member of the Company. As used in these Bylaws,
"policy" shall mean any policy or contract of insurance (other than a
reinsurance contract), including any binder or renewal certificate issued in the
course of business and not terminated.

                                   ARTICLE VI
                               MEETINGS OF MEMBERS

      Section A. The annual meeting of the members of the Company shall be held
at the home office of the Company on the third Tuesday in February of each year
at 10:00 o'clock a.m.

      Section B. Every policy issued by the Company shall provide notice of the
above date of the regular annual meeting. No other notice of the regular annual
meeting of the members shall be necessary.
<PAGE>
      Section C. Notice of special meetings of the members must be given to all
members at least ten (10) days prior to the date of any such special meeting but
no more than fifty (50) days before such meeting. Notwithstanding the
immediately foregoing, if the Company shall have more than one thousand (1,000)
members entitled to vote, the Company may give notice of such special meeting by
publication in any newspaper of general circulation in the community in which
the principal office of the Company is located.

      Section D. Special meetings of the members may be held at the call of the
President, the General Manager, one-third of the Directors of the Company, or by
members having not less than one-tenth (1/10) of the votes entitled to be cast
at such meeting.

      Section E. Voting at either the regular annual meeting or at special
meetings may be either in person or by proxy. All policies of the Company shall
contain a provision in substance providing that each member or policyholder
appoints the President of the Company, with full power of substitution, to be
his lawful attorney-in-fact and in his absence that said attorney-in-fact is
authorized and empowered to vote for him at any meeting unless the member gives
notice to the contrary, in writing, to the Company prior to any such meeting.
Provided also, that applications for Company's insurance may, at the will of the
Board of Directors, contain a substantially similar provision. Provided also,
that such appointment, whether accomplished in the policy and/or in the
application, shall be binding upon each policyholder and shall effectively grant
to the President of the Company, with full power of substitution, the right to
vote as the proxy of each such member or policyholder, at any regular annual
meeting or special meeting of the members of the Company on all matters which
come before any such meeting when any member or policyholder does not attend the
meeting, but subject to the right of each policyholder to give notice to the
contrary, in writing, to the Company prior to any such meeting or meetings.
Provided however, that no such proxy however granted shall prevent any member or
policyholder from casting his individual vote on all matters which come before
any such meeting at which he is attending.

                                   ARTICLE VII
                                    RESERVES

      The Company shall maintain at all times such unearned premium reserves and
other reserves as may be required by law, and the Board of Directors may
authorize any other type of reserves.

                                  ARTICLE VIII
                           POLICIES ISSUED BY COMPANY

      Section A. Policy forms used by the Company for insurance risks it is
authorized to assume shall conform to applicable laws and rules and regulations
of the Texas Department of Insurance. Policy forms shall also include the
conventionally required provisions that policies are issued subject to the
Constitution and Bylaws of the Company as then in effect or thereafter amended;
shall notify the policyholder of the annual meetings and that he is entitled to
vote in person or by proxy at such annual meetings; and shall notify the
policyholder of his maximum contingent liability as required by law.

      Section B. All policies of the Company shall be issued for such rates as
are from time to time filed with the Texas Department of Insurance. Such rates
so filed by the Company may provide for premium payment schedules on a monthly,
quarterly, semi-annual or annual basis or for any other term not exceeding five
years.

      Section C. No policy shall be issued to provide a greater amount of
insurance for any one hazard than the amount of statutory deposit posted by the
Company with the State Treasurer of Texas, unless at the time of issuance of the
policy the Company has in force a valid contract of reinsurance for the excess
risk.

      Section D. No member shall be liable to any assessment by the Company.
<PAGE>
                                   ARTICLE IX
                                 CLAIM PAYMENTS

      All valid claims arising under policies issued by the Company shall be
paid in accordance with the terms of the policy and in accordance with the
applicable laws of the State of Texas and any rules and regulations promulgated
pursuant thereto.

                                    ARTICLE X
                                   AMENDMENTS

      These Bylaws may be amended at any annual meeting of the members of the
Company or at any meeting called for that purpose. These Bylaws may also be
amended by unanimous vote of the Board of Directors at any meeting called for
that purpose. Any amendment by the Board of Directors shall be presented for
ratification at the next annual meeting of the members. Notice of the meeting,
whether regular or special, at which amendments to these Bylaws are to be
considered, shall be mailed or delivered personally to all members. If required
by law at the time of the amendment, amendments to these Bylaws shall not be
effective until approved by the Texas Department of Insurance as being in
conformity with applicable law.
<PAGE>
                                    EXHIBIT K
                     Form of Opinion of Counsel for Sellers
<PAGE>

                                            , 2002
                               -------------

Berkeley Management Corporation
175 Berkeley Street
Boston, Massachusetts 02117
Attn:  General Counsel

Ladies and Gentlemen:

         This opinion is furnished to you pursuant to Section 6.8 of the
Acquisition Agreement dated _________, 2002 (the "Purchase Agreement"), among
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"). Capitalized terms defined in the
Purchase Agreement are used herein with the same meaning unless otherwise
defined herein.

                               DOCUMENTS EXAMINED

         In our capacity as counsel for the Sellers, we have examined the
originals, copies or forms, certified or otherwise identified to our
satisfaction, of the following documents:

                  (i) the Purchase Agreement;

                  (ii) the Liability Assumption Agreement of even date herewith
between the Company and GAINSCO (the "Liability Assumption Agreement");

                  (iii) the Assignment Agreement of even date herewith among
Sellers, Purchaser, Liberty and the Company (the "Assignment Agreement");

                  (iv) the 100% Quota Share Reinsurance Agreement dated
_________, 2002 among General Agents Insurance Company of America, Inc., the
Company and MGA Agency, Inc. (the "Reinsurance Agreement");

                  (v) the Management Agreement dated October 12, 1992 by and
between the Company and Seller (the "Management Agreement");

                  (vi) the Articles of Incorporation of each of the Company,
GAINSCO and Seller; and

                  (vii) the Bylaws of each of the Company, GAINSCO and Seller.

<PAGE>

         In addition, we have examined and relied upon such certificates of
public officials and other certificates, corporate minutes, opinions and
instruments as we have deemed relevant and necessary as a basis for our opinion
hereinafter set forth. As to matters of fact material to our opinion, we have,
when relevant facts were not independently established, relied upon the
foregoing certificates of representatives of the Sellers and representations and
warranties set forth in the Purchase Agreement, the Liability Assumption
Agreement, the Assignment Agreement and the Reinsurance Agreement (collectively,
the "Agreements"), and have not conducted any special inquiry or investigation
in respect of such matters.

                                   ASSUMPTIONS

         In rendering this opinion, we have assumed, with your consent and
without any independent investigation, all of the following:

         (A) the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted as certified, conformed or photostatic
copies;

         (B) that each of the parties to the Agreements other than the Sellers
(the "Other Parties") is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or formation and has full
power and authority to execute, deliver and perform its obligations under each
of the Agreements to which it is a party, that each of the Agreements has been
duly authorized, executed and delivered by each of the parties thereto, that
each of the Agreements constitutes a valid and legally binding obligation of
each of the Other Parties thereto and is enforceable against the Other Parties
in accordance with its terms that each of the Other Parties has fulfilled and
complied with its obligations under the Agreements to the extent required
thereunder to date, and that the Sellers have received or will concurrently
herewith receive the consideration provided in the Agreements to be received at
or prior to the date hereof;

         (C) that all of the Agreements will be performed strictly in accordance
with the terms thereof; and

         (D) that the representations and warranties as to factual matters
contained in the Agreements are true and correct.

                                     OPINION

         Based upon the foregoing and having due regard for the legal
considerations we deem relevant, and subject to the further qualifications and
limitations hereinafter set forth, we are of the opinion that:

         1. Each of the Sellers is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas, and has all
requisite corporate power and authority to enter into and perform the Agreements
to which it is a party and all transactions and agreements contemplated therein
to which it is a party.

                                        2

<PAGE>

         2. Each of the Agreements to which Sellers or the Company is a party
has been duly and validly authorized, executed and delivered by each of the
Sellers and the Company, as the case may be, and constitutes a valid and binding
obligation of each of the Sellers and the Company, as the case may be,
enforceable against it in accordance with its terms, in each case except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, fraudulent transfer, moratorium or other laws
affecting creditors' rights generally, and subject to general equity principles
and to limitations on availability of equitable relief including specific
performance.

         3. The Company is a county mutual insurance company authorized and
formed under Chapter 17 of the Texas Insurance Code and currently holds a valid
certificate of authority and corporate charter to do the business of insurance
described therein, and has all requisite corporate power and authority to enter
into and perform the Agreements to which it is a party and all transactions and
agreements contemplated therein to which it is a party.

         4. The execution and delivery of the Agreements and consummation of the
transactions contemplated thereby will not result in the breach of, or
constitute a default under, the articles of incorporation or bylaws of the
Sellers and the Company or the Management Agreement.

         5. The Management Agreement is a valid, binding and enforceable
agreement that, to our knowledge, is in full force and effect, and, to our
knowledge, Seller is not in breach or default thereof

         6. Except for the approval of the Texas Department of Insurance which,
to our knowledge, has been obtained and is final and in effect (as set forth in
Commissioner's Order No. ___________, dated___________, 2002), no approval,
license or permit of any governmental body or officer of the State of Texas is
required in order to consummate the Purchaser's acquisition of the Management
Agreement in accordance with the Purchase Agreement.

                     FURTHER QUALIFICATIONS AND LIMITATIONS

         The opinions expressed above are expressly subject to the following
qualifications and limitations:

         (a) The enforceability of the Agreements and all transactions and
agreements contemplated therein may be limited by (i) applicable bankruptcy,
insolvency, reorganization, arrangement, fraudulent transfer or conveyance,
moratorium or other laws affecting creditors' rights, and (ii) general equity
principles and limitations on the availability of equitable remedies, as such,
in connection with the enforcement of rights granted under such documents,
including but not limited to specific performance, or as to the effects of the
application of principles of equity (regardless of whether enforcement is
considered in proceedings in law or in equity). We express no opinion as to (i)
the specific remedy that any Governmental Entity might grant in connection with
the enforcement of rights under any of the Agreements and all transactions and
agreements contemplated therein or (ii) the effect of any antitrust,
environmental, securities or tax laws.

         (b) We express no opinion herein as to the validity or enforceability
of(i) any provisions purporting to entitle a party to indemnification in respect
of any matters arising in whole or in part by reason of any illegal, wrongful or
negligent act or omission of such party, (ii) any provisions that

                                        3

<PAGE>

purport to restrict access to or waive remedies or defenses, to waive any rights
to notices or to establish evidentiary standards, (iii) any provisions relating
to choice of law, liquidated damages, waivers, releases, suretyship defenses,
delays or omissions of enforcement of rights or remedies, severability, consent
judgments or summary proceedings, (iv) any provisions purporting to irrevocably
appoint attorneys-in-fact or other agents, (v) any provisions purporting to
restrict or limit transfer, alienation or encumbrancing of property, (vi) any
provisions that relate to submissions to jurisdiction, waivers or ratifications
of future acts, the rights of third parties or transferability of assets which
by their nature are nontransferable, (vii) provisions that contain any agreement
to agree, (viii) provisions that purport to negate or control over present or
future laws which are contrary to such provisions, or (ix) provisions that
contain any covenant or agreement not to compete, or be employed or associated
with any person or entity which is in competition, with any other person or
entity.

         (c) Whenever any opinion expressed herein with respect to the existence
or absence of facts is qualified by the phrase "to our knowledge," such phrase
indicates that (i) no information has come to the attention of any partner or
associate of this firm who has devoted substantive attention to the transactions
contemplated by the Agreements and all transactions and agreements contemplated
therein that has given any such person actual knowledge of the existence of such
facts, (ii) we have not undertaken any independent investigation to determine
the existence or absence of such facts and (iii) no inference as to our
knowledge of the existence of such facts should be drawn from the fact of our
representation of Sellers or our expression of such opinion.

         (d) We are members of the Bar of the State of Texas. This opinion
relates only to the laws of the State of Texas and the federal laws of the
United States, and we express no opinion with regard to any matters that may be
governed or affected by any other laws.

         (e) This opinion is limited solely to the matters stated herein and no
opinion is to be inferred or may be implied beyond the matters expressly stated
herein.

         The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Agreements and may not be used or
relied upon by any other person or entity or for any other purpose whatsoever.
The opinions expressed herein are as of the date first set forth above, and we
do not assume or undertake any responsibility or obligation to supplement or to
update such opinions to reflect any facts or circumstances which may hereafter
come to our attention or any changes in the laws which may hereafter occur.

                                Very truly yours,

                                       4
<PAGE>
                                    EXHIBIT L
                         Form of Release and Resignation

The undersigned is an officer and a member of the Board of Directors of GAINSCO
County Mutual Insurance Company (the "COMPANY"), which is a party to that
certain Acquisition Agreement (the "ACQUISITION AGREEMENT"), dated as of
___________, 2002, by and among 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 the Company. This Release
is executed and delivered pursuant to Section 1.6(j) of the Acquisition
Agreement, in consideration of the execution, delivery and performance of the
Acquisition Agreement by the parties thereto. Capitalized terms not otherwise
defined herein have the meaning ascribed to such terms as set forth in the
Acquisition Agreement.

The undersigned, for himself, his heirs, personal representatives, successors
and assigns, does hereby release, acquit, discharge and covenant not to sue the
Company, its officers, managers, members, owners, agents, attorneys, employees,
successors and assigns, with respect to all past, present and future claims,
expenses, losses, liabilities and obligations of any nature whatsoever
(including, without limitation, rights to indemnification under or pursuant to
any agreement, corporate document, or applicable law), whether accrued or
contingent, known or unknown, whether sounding in contract, tort or otherwise,
based in whole or in any material part upon facts and circumstances in existence
as of the Closing Date.

The undersigned hereby resigns all positions with the Company, including his/her
position as an officer or as a member of the Board of Directors of the Company,
and as a member of any committees of the Board of Directors of the Company,
effective as of [CLOSING DATE].

[PRESIDENT AND VICE PRESIDENT ONLY: The undersigned further releases any and all
rights or interests he/she has had with respect to any proxies granted by the
Company's policyholders.]

This Release may not be amended or terminated, and no provision hereof may be
waived, absent a written agreement executed by the undersigned and the Company.

Executed to be effective the ______ day of ____________, 2002.

                                            _________________________________
                                            [LIST TITLE]
<PAGE>
                                    EXHIBIT M
              Form of Opinions of Counsel for Purchaser and Liberty
<PAGE>
                             ________________, 2002

OPINION OF COUNSEL FOR PURCHASER

GAINSCO, INC.
GAINSCO Service Corp.
500 Commerce Street
Fort Worth, Texas 76102

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section 7.5 of the Acquisition
Agreement dated ___, 2002 (the "Agreement"), among 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"). Capitalized terms defined in the Agreement are used herein with
the same meaning unless otherwise defined herein.

We have examined the documents listed in Exhibit "A" attached to this opinion
letter (despite any contrary definition contained in the Agreement, the
"TRANSACTION DOCUMENTS"). We have also examined those certificates and other
documents listed in Exhibit "B" attached to this opinion letter (the "DUE
DILIGENCE DOCUMENTS"). We have made no other investigations or inquiry.

We have made no special investigation or review of any laws, rules, regulations,
judgments, decrees, franchises, certificates, permits or the like, other than a
review of the Due Diligence Documents and the Included Laws, as defined below.

We have relied as to factual matters solely on the following, each of which we
have assumed, without independent investigation, to be true, correct and
complete: (i) Purchaser's representations and warranties set forth in the
Transaction Documents, (ii) certificates of the officers of Purchaser, and (iii)
the Due Diligence Documents.

We have been retained by Purchaser in connection with the transactions
contemplated in the Agreement, and while we have no current actual knowledge of
anything that would cause our opinion set forth below to be untrue, it is
expressly acknowledged that we have not represented Purchaser prior to this
engagement, and do not have knowledge of legal issues related to Purchaser's
actions prior to that date.

You are hereby notified that (i) we do not consider you to be our client in the
transaction to which this opinion letter relates, (ii) neither the Disciplinary
Rules of the Code of Professional Responsibility governing members of the State
Bar of Texas nor current case law clearly articulates the circumstances under
which an attorney may give a legal opinion to a person other than the attorney's
own client, (iii) a court might determine that it is improper for us to issue,
and for you to rely upon, a legal opinion issued by us when we have acted as
counsel to Purchaser in connection with its execution and delivery of the
Agreement, and (iv) you may wish to obtain a legal opinion from your own legal
counsel as to the matters addressed in this opinion letter. Furthermore,
<PAGE>
GAINSCO, INC.
GAINSCO Service Corp.
Page 2
August 9, 2002

Purchaser has not waived, nor should anything be construed as a waiver of, the
attorney-client privilege as to any communications between Purchaser and us (or
any other legal counsel for Purchaser) or with respect to any attorney work
product in connection with its execution and delivery of the Agreement or any
other matter.

Based upon and subject to the foregoing and the other assumptions,
qualifications, exceptions and limitations stated herein, we are of the opinion
that:

1.    Purchaser is a corporation, validly existing and in good standing under
      the laws of the state of Texas.

2.    Purchaser has all requisite corporate power and authority to enter into
      and perform the Transaction Documents and all transactions and agreements
      contemplated therein.

3.    The Transaction Documents and all transactions and agreements contemplated
      therein have been duly authorized, executed and delivered by Purchaser,
      and constitute valid and binding obligations of Purchaser, enforceable
      against Purchaser in accordance with their terms.

Our opinions expressed herein are further qualified and limited as follows.
These specific qualifications, limitations, exceptions and assumptions are in
addition to and do not supersede or limit the qualifications and limitations
contained elsewhere herein.

      A. We express no opinion as to the laws of any jurisdiction other than the
Included Laws. We have made no special investigation or review of any published
constitutions, treaties, laws, rules or regulations or judicial or
administrative decisions ("LAWS"), other than a review of the Laws of the State
of Texas. For purposes of this opinion, the term "INCLUDED LAWS" means the Laws
described in the preceding sentence and specifically excludes (i) Laws of any
counties, cities, towns, municipalities and special political subdivisions and
any agencies thereof, (ii) Laws relating to land use, zoning and building code
issues, taxes, ERISA, environmental issues, intellectual property Laws,
securities Laws (including without limitation state securities and "blue sky"
Laws) and antitrust issues.

      B. This letter and the matters addressed herein are as of the date hereof
or such earlier date as is specified herein, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
Purchaser, or any other person or entity, or any other circumstance. This
opinion letter is limited to the matters expressly stated herein and no opinions
are to be inferred or may be implied beyond the opinions expressly set forth
herein.
<PAGE>
GAINSCO, INC.
GAINSCO Service Corp.
Page 3
August 9, 2002

      C. The opinion expressed in Paragraph 1 above is given solely on the basis
of the Good Standing Certificate listed in Exhibit "B", item 3 and speaks only
as of the date indicated thereon rather than as of the date hereof. Such opinion
is limited to the meaning ascribed to such certificates by each applicable State
agency and applicable law.

      D. We express no opinion as to (i) the financial condition or solvency of
Purchaser, (ii) the ability (financial or otherwise) of Purchaser or any other
party to meet their respective obligations under the Transaction Documents, and
(iii) the compliance of the Transaction Documents or the transactions
contemplated thereby with, or as to the effect on any of the foregoing of,
antifraud provisions of the federal and state securities laws, rules and
regulations.

      E. This letter is solely for the benefit of Sellers, and no other persons
or entities shall be entitled to rely upon this letter. Without our prior
written consent, this letter may not be quoted in whole or in part or otherwise
referred to in any document and may not be furnished or otherwise disclosed to
or used by any other person or entity, except for (i) delivery of copies hereof
to counsel for the addressees hereof, (ii) inclusion of copies hereof in a
closing file, (iii) use hereof in any legal proceeding arising out of the
transactions contemplated by the Transaction Documents filed by an addressee
hereof against this law firm or in which any addressee hereof is a defendant,
and (iv) after written notice to this law firm, use hereof in any legal
proceeding arising out of the transactions contemplated by the Transaction
Documents filed against any addressee hereof.

      F. This law firm is a registered limited liability partnership organized
under the laws of the State of Texas.

      G. We render no opinion with respect to the accuracy or adequacy of any
disclosure made by Purchaser to you, including, without limitation, any
representations, warranties or exhibits to the Agreement. We render no opinion
with respect to compliance with any state securities or blue sky statutes or
regulations.

      H. The opinions expressed in this letter are subject to and qualified and
limited by: (i) applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally including court decisions interpreting such Laws;
(ii) general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity); (iii) the power of
the courts to award damages in lieu of equitable remedies; and (iv) securities
Laws and public policy underlying such Laws with respect to rights to
indemnification and contribution.

Sincerely,
<PAGE>
GAINSCO, INC.
GAINSCO Service Corp.
Page 4
August 9, 2002

AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE>
                                   EXHIBIT "A"

                              TRANSACTION DOCUMENTS

      In our capacity as counsel for Purchaser, we have examined the originals,
copies or forms, certified or otherwise identified to our satisfaction, of the
following documents:

      1.    the Agreement; and

      2.    the Assignment Agreement by and among Sellers, Purchaser, Liberty
            and the Company.
<PAGE>
                                   EXHIBIT "B"

                             DUE DILIGENCE DOCUMENTS

      1.    Articles of Incorporation of Purchaser.

      2.    Bylaws of Purchaser.

      3.    Texas Certificate of Good Standing and Existence for Purchaser dated
____________, 2002.

      4.    Officer's Certificate in the form of Exhibit "C".
<PAGE>
                                   EXHIBIT "C"

                         BERKELEY MANAGEMENT CORPORATION
                               A TEXAS CORPORATION

                              OFFICER'S CERTIFICATE

      The undersigned does hereby certify to Akin, Gump, Strauss, Hauer & Feld,
L.L.P. that:

      1. I am a duly elected, acting and qualified officer of Berkeley
Management Corporation, a Texas corporation ("PURCHASER"), and am familiar with
the facts herein certified and am duly authorized to certify the same.

      2. I am familiar with the Acquisition Agreement dated _________________,
2002, by and among Purchaser, and the other parties thereto (the "AGREEMENT").

      3. Attached hereto as Exhibit "A" is a true, correct and complete copy of
the Articles of Incorporation of Purchaser, which Articles of Incorporation have
not been modified or amended, except as reflected therein, and which remain in
full force and effect as the date hereof.

      4. Attached hereto as Exhibit "B" is a true, correct and complete copy of
the Bylaws of Purchaser, which Bylaws have not been modified or amended, except
as reflected therein, and which remain in full force and effect as the date
hereof.

      5. Attached hereto as Exhibit "C" is a true, correct and complete copy of
the resolutions of the board of directors of Purchaser regarding the Agreement
and the transactions contemplated therein.

      IN WITNESS WHEREOF, the undersigned has executed this certificate as of
___________________, 2002.

                                   BERKELEY MANAGEMENT CORPORATION

                                   By: _______________________________________
                                   Printed Name: _____________________________
                                   Title: ____________________________________
<PAGE>
                             ________________, 2002

OPINION OF COUNSEL FOR LIBERTY

GAINSCO, INC.
GAINSCO Service Corp.
500 Commerce Street
Fort Worth, Texas 76102

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section 7.5 of the Acquisition
Agreement dated ___, 2002 (the "Agreement"), among 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"). Capitalized terms defined in the Agreement are used herein with
the same meaning unless otherwise defined herein.

I have examined the documents listed in Exhibit "A" attached to this opinion
letter (despite any contrary definition contained in the Agreement, the
"TRANSACTION DOCUMENTS"). I have also examined those certificates and other
documents listed in Exhibit "B" attached to this opinion letter (the "DUE
DILIGENCE DOCUMENTS"). I have made no other investigations or inquiry.

I have made no special investigation or review of any laws, rules, regulations,
judgments, decrees, franchises, certificates, permits or the like, other than a
review of the Due Diligence Documents and the Included Laws, as defined below.

I have relied as to factual matters solely on the following, each of which I
have assumed, without independent investigation, to be true, correct and
complete: (i) Liberty's representations and warranties set forth in the
Transaction Documents, (ii) certificates of the officers of Liberty, and (iii)
the Due Diligence Documents.

You are hereby notified that (i) I do not consider you to be my client in the
transaction to which this opinion letter relates, (ii) neither applicable rules
of professional conduct governing members of the Board of Bar Overseers of The
Commonwealth of Massachusetts nor current case law clearly articulates the
circumstances under which an attorney may give a legal opinion to a person other
than the attorney's own client, (iii) a court might determine that it is
improper for me to issue, and for you to rely upon, a legal opinion issued by me
when I have acted as counsel to Liberty in connection with its execution and
delivery of the Agreement, and (iv) you may wish to obtain a legal opinion from
your own legal counsel as to the matters addressed in this opinion letter.
Furthermore, Liberty has not waived, nor should anything be construed as a
waiver of, the attorney-client privilege as to any communications between
Liberty and me (or any other legal counsel for Liberty) or with respect to any
attorney work product in connection with its execution and delivery of the
Agreement or any other matter.
<PAGE>
Based upon and subject to the foregoing and the other assumptions,
qualifications, exceptions and limitations stated herein, I am of the opinion
that:

1.    Liberty is a corporation, validly existing and in good standing under the
      laws of The Commonwealth of Massachusetts.

2.    Liberty has all requisite corporate power and authority to enter into and
      perform the Transaction Documents and all transactions and agreements
      contemplated therein.

3.    The Transaction Documents and all transactions and agreements contemplated
      therein have been duly authorized, executed and delivered by Liberty, and
      constitute valid and binding obligations of Liberty, enforceable against
      Liberty in accordance with their terms.

The opinions expressed herein are further qualified and limited as follows.
These specific qualifications, limitations, exceptions and assumptions are in
addition to and do not supersede or limit the qualifications and limitations
contained elsewhere herein.

      A. I express no opinion as to the laws of any jurisdiction other than the
Included Laws. I have made no special investigation or review of any published
constitutions, treaties, laws, rules or regulations or judicial or
administrative decisions ("LAWS"), other than a review of the Laws of The
Commonwealth of Massachusetts. For purposes of this opinion, the term "INCLUDED
LAWS" means the Laws described in the preceding sentence and specifically
excludes (i) Laws of any counties, cities, towns, municipalities and special
political subdivisions and any agencies thereof, (ii) Laws relating to land use,
zoning and building code issues, taxes, ERISA, environmental issues,
intellectual property Laws, securities Laws (including without limitation state
securities and "blue sky" Laws) and antitrust issues.

      B. This letter and the matters addressed herein are as of the date hereof
or such earlier date as is specified herein, and I undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
Liberty, or any other person or entity, or any other circumstance. This opinion
letter is limited to the matters expressly stated herein and no opinions are to
be inferred or may be implied beyond the opinions expressly set forth herein.

      C. The opinion expressed in Paragraph 1 above is given solely on the basis
of the Certificates listed in Exhibit "B", item 3, and speaks only as of the
date indicated thereon rather than as of the date hereof. Such opinion is
limited to the meaning ascribed to such certificates by each applicable State
agency and applicable law.

      D. I express no opinion as to (i) the financial condition or solvency of
Liberty, (ii) the ability (financial or otherwise) of Liberty or any other party
to meet their respective obligations under the Transaction Documents, and (iii)
the compliance of the Transaction Documents or the transactions contemplated
thereby with, or as to the effect on any of the foregoing of, antifraud
provisions of the federal and state securities laws, rules and regulations.

      E. This letter is solely for the benefit of Sellers, and no other persons
or entities shall be entitled to rely upon this letter. Without my prior written
consent, this letter may not be quoted in whole or in part or otherwise
<PAGE>
referred to in any document and may not be furnished or otherwise disclosed to
or used by any other person or entity, except for (i) delivery of copies hereof
to counsel for the addressees hereof, (ii) inclusion of copies hereof in a
closing file, and (iii) after written notice to me, use hereof in any legal
proceeding arising out of the transactions contemplated by the Transaction
Documents filed against any addressee hereof.

      F. I render no opinion with respect to the accuracy or adequacy of any
disclosure made by Liberty to you, including, without limitation, any
representations, warranties or exhibits to the Agreement. I render no opinion
with respect to compliance with any state securities or blue sky statutes or
regulations.

      G. The opinions expressed in this letter are subject to and qualified and
limited by: (i) applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally including court decisions interpreting such Laws;
(ii) general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity); (iii) the power of
the courts to award damages in lieu of equitable remedies; and (iv) securities
Laws and public policy underlying such Laws with respect to rights to
indemnification and contribution.

Sincerely,
<PAGE>
                                   EXHIBIT "A"

                              TRANSACTION DOCUMENTS

      In my capacity as counsel for Liberty, I have examined the originals,
copies or forms, certified or otherwise identified to our satisfaction, of the
following documents:

      1.    the Agreement; and

      2.    the Assignment Agreement by and among Sellers, Purchaser, Liberty
            and the Company.
<PAGE>
                                   EXHIBIT "B"

                             DUE DILIGENCE DOCUMENTS

      1. Articles of Incorporation of Liberty.

      2. Bylaws of Liberty.

      3. Certificate of Legal Existence for Liberty dated ____________, 2002,
from the Secretary of The Commonwealth of Massachusetts and a Certificate of
Compliance dated _____________, 2002, from the Division of Insurance of The
Commonwealth of Massachusetts.
<PAGE>
                                    EXHIBIT N
                           Form of Attornment Letters
<PAGE>
                                 July ____, 2002

Liberty Mutual Insurance Company
Berkeley Management Corporation
175 Berkeley Street
Boston, Massachusetts 02117

      Re:   Acquisition Agreement between GAINSCO Service Corp. and GAINSCO,
            Inc. ("Sellers"), Berkeley Management Corporation ("Purchaser") and
            Liberty Mutual Insurance Company ("Liberty") regarding the
            Acquisition of Control of GAINSCO County Mutual Insurance Company
            (the "Company") dated July ___, 2002 (the "Acquisition Agreement")

Dear Sirs:

      The undersigned are duly authorized representatives of OMNI Insurance
Company ("OMNI") and Omni General Agency, Inc. ("OMNI MGA"), and they provide
this letter with the understanding that it will be relied upon by Purchaser and
Liberty in consummating the transactions contemplated in the Acquisition
Agreement. OMNI and OMNI MGA acknowledge the receipt and sufficiency of good and
valuable consideration in exchange for the covenants and agreements provided
herein.

      OMNI and the Company are parties to a 100% Quota Share Reinsurance
Agreement dated as of July 24, 1995, as amended (the "Reinsurance Agreement").
The Reinsurance Agreement reinsures all business produced by OMNI MGA, a wholly
owned subsidiary of OMNI Insurance Company, pursuant to the terms of that
certain Agency Agreement dated July 24, 1995 (the "General Agency Agreement").
The financial obligations of OMNI under the Reinsurance Agreement are secured by
the terms of a certain Trust Agreement dated August 8, 1995, which was amended
and restated as of May ___, 2002 (the "Trust Agreement"). The financial
obligations of OMNI MGA are guaranteed by OMNI Insurance Company pursuant to a
letter of guaranty dated July 13, 1995 (the "Guaranty"). The Reinsurance
Agreement, the General Agency Agreement, the Guaranty and the Trust Agreement
are referred to herein as the "Fronting Agreements."

      OMNI and OMNI MGA agree that the transactions contemplated in the
Acquisition Agreement shall have no effect upon the financial security and
guarantees provided by or on behalf of OMNI and/or OMNI MGA in connection with
the Reinsurance Agreement and the General Agency Agreement. From the date of the
consummation of the transactions contemplated in the Acquisition Agreement, the
Company shall continue to have the same rights, remedies, interests, and
obligations under the Fronting Agreements, and OMNI and OMNI MGA shall continue
to honor and perform any and all terms, conditions, covenants and agreements
contained in the Fronting Agreements. OMNI and OMNI MGA further acknowledge that
the Fronting Agreements are and shall remain in full force and effect, valid and
enforceable against the parties in accordance with their terms, notwithstanding
the consummation of the transactions contemplated in the Acquisition Agreement,
and without prejudice to, or causing any adverse effect upon, the rights of the
Company under or with respect to its rights, remedies and interests under the
Fronting Agreements. Furthermore, the change of the Company's name, the
amendment of its charter and bylaws, as well as the assignment of the Management
Contract pertaining to the Company, shall have no effect upon the Company's
rights, remedies, interests and obligations under the Fronting Agreements.
<PAGE>
      To OMNI's and OMNI MGA's knowledge, the Company is not in default of any
provision of the Fronting Agreements and has committed no breach or repudiation
with respect thereto. Notwithstanding Section VII.I. thereof, nor any other term
to the contrary set forth therein, the General Agency Agreement has remained
continuously in effect from July 24, 1995, as amended on April 1, 1996, through
January 31, 2002, when it was terminated in accordance with its terms. All
terms, conditions, covenants and agreements of the General Agency Agreement
remained valid and enforceable against the parties thereto through January 31,
2002, and all such terms, conditions, covenants and agreements which were to
survive the termination of such agreement (as required by the terms thereof)
remain valid and enforceable against the parties thereto as of the date hereof.
OMNI MGA agrees that, in no event, nor under any circumstances, shall it claim
or assert that the General Agency Agreement terminated, was cancelled or expired
prior to January 31, 2002.

      OMNI and OMNI MGA acknowledge that neither they nor any of their officers,
directors, agents, employees or representatives have any rights or interests
with respect to the management and control of the Company nor with respect to
any voting interest pertaining to the affairs of the Company. Furthermore, the
Company's applications for insurance utilized by OMNI and OMNI MGA or their
agents or representatives include a proxy granting to the President or Vice
President of the Company the right to vote on behalf of the policyholder at any
meeting of the policyholders of the Company. Each policyholder solicited by
OMNI, OMNI MGA, or their agents or representatives has signed such an
application. Upon request by the Company or Purchaser, OMNI shall produce copies
of all proxies granted by the policyholders solicited by OMNI, OMNI MGA or their
agents or representatives.

      The statements made herein are made as of the date first set forth above
for the benefit of Purchaser and Liberty. The statements may not be used or
relied upon by any other person or entity.

                                     Sincerely,

                                     OMNI INSURANCE COMPANY

                                     By: __________________________________
                                     Name: ________________________________
                                     Title: _______________________________

                                     OMNI GENERAL AGENCY, INC.

                                     By: __________________________________
                                     Name: ________________________________
                                     Title: _______________________________

ACCEPTED:

GAINSCO COUNTY MUTUAL INSURANCE COMPANY

By: __________________________________
Name: ________________________________
Title: _______________________________
<PAGE>
                                 July ____, 2002

Liberty Mutual Insurance Company
Berkeley Management Corporation
175 Berkeley Street
Boston, Massachusetts 02117

      Re:   Acquisition Agreement between GAINSCO Service Corp. and GAINSCO,
            Inc. ("Sellers"), Berkeley Management Corporation ("Purchaser") and
            Liberty Mutual Insurance Company ("Liberty") regarding the
            Acquisition of Control of GAINSCO County Mutual Insurance Company
            (the "Company") dated July ___, 2002 (the "Acquisition Agreement")

Dear Sirs:

      The undersigned are duly authorized representatives of Metropolitan
Property and Casualty Insurance Company ("Met P&C") and Met P&C Managing General
Agency, Inc. ("Met MGA"), and they provide this letter with the understanding
that it will be relied upon by Purchaser and Liberty in consummating the
transactions contemplated in the Acquisition Agreement. Met P&C and Met MGA
acknowledge the receipt and sufficiency of good and valuable consideration in
exchange for the covenants and agreements provided herein.

      Met P&C and the Company are parties to a 100% Quota Share Reinsurance
Agreement dated as of May 1, 1996, as amended (the "Reinsurance Agreement"). The
Reinsurance Agreement reinsures all business produced by Met MGA, a wholly owned
subsidiary of Met P&C, pursuant to the terms of that certain Managing General
Agency Agreement dated May 1, 1996 (the "General Agency Agreement"). The
financial obligations of Met P&C under the Reinsurance Agreement are secured by
a certain Letter of Credit issued by Chase Manhattan Bank, N.A. dated April 25,
1996, as amended (the "Letter of Credit"). The obligations of Met MGA are
guaranteed by Met P&C pursuant to that certain Guaranty and Indemnity Agreement
dated April 24, 1996 (the "Guaranty"). The Reinsurance Agreement, the General
Agency Agreement, the Guaranty and the Letter of Credit are referred to herein
as the "Fronting Agreements."

      Met P&C and Met MGA agree that the transactions contemplated in the
Acquisition Agreement shall have no effect upon the financial security and
guarantees provided by or on behalf of Met P&C and/or Met MGA in connection with
the Reinsurance Agreement and the General Agency Agreement. From the date of the
consummation of the transactions contemplated in the Acquisition Agreement, the
Company shall continue to have the same rights, remedies, interests, and
obligations under the Fronting Agreements, and Met P&C and Met MGA shall
continue to honor and perform any and all terms, conditions, covenants and
agreements contained in the Fronting Agreements. Met P&C and Met MGA further
acknowledge that the Fronting Agreements are and shall remain in full force and
effect, valid and enforceable against the parties in accordance with their
terms, notwithstanding the consummation of the transactions contemplated in the
Acquisition Agreement, and without prejudice to, or causing any adverse effect
upon, the rights of the Company under or with respect to its rights, remedies
and interests under the Fronting Agreements. Furthermore, the change of the
Company's name, the amendment of its charter and bylaws, as well as the
assignment of the Management Contract pertaining to the Company, shall have no
effect upon the Company's rights, remedies, interests and obligations under the
Fronting Agreements.
<PAGE>
      To Met P&C's and Met MGA's knowledge, the Company is not in default of any
provision of the Fronting Agreements and has committed no breach or repudiation
with respect thereto. Notwithstanding Section VII.I. thereof, nor any other term
to the contrary set forth therein, the General Agency Agreement has remained
continuously in effect from May 1, 1996 to the present, and the parties agree it
shall continue in force until terminated in accordance with Section V,
subsections A through E thereof. All terms, conditions, covenants and agreements
of the General Agency Agreement remain valid and enforceable against the parties
thereto. Met MGA agrees that, in no event, nor under any circumstances, shall it
claim or assert that the General Agency Agreement has terminated, was cancelled
or has expired prior to the date hereof. The Letter of Credit was validly
extended for additional periods and now expires as of April 25, 2003.

      Met P&C and Met MGA acknowledge that neither they nor any of their
officers, directors, agents, employees or representatives have any rights or
interests with respect to the management and control of the Company nor with
respect to any voting interest pertaining to the affairs of the Company.
Furthermore, the Company's applications for insurance utilized by Met P&C and
Met MGA or their agents or representatives include a proxy granting to the
President or Vice President of the Company the right to vote on behalf of the
policyholder at any meeting of the policyholders of the Company. At least ninety
percent (90%) of all policyholders solicited by Met P&C, Met MGA, or their
agents or representatives, which own or hold an in-force policy of the Company
as of the date hereof, have signed such an application granting the proxy
described above. Upon request by the Company or Purchaser, Met P&C shall produce
copies of all proxies granted by the policyholders solicited by Met P&C, Met MGA
or their agents or representatives.

      The statements made herein are made as of the date first set forth above
for the benefit of Purchaser and Liberty. The statements may not be used or
relied upon by any other person or entity.

                                     Sincerely,

                                     METROPOLITAN PROPERTY AND CASUALTY
                                     INSURANCE COMPANY

                                     By: __________________________________
                                     Name: ________________________________
                                     Title: _______________________________

                                     MET P&C MANAGING GENERAL AGENCY, INC.
                                     By: __________________________________
                                     Name: ________________________________
                                     Title: _______________________________

ACCEPTED:

GAINSCO COUNTY MUTUAL INSURANCE COMPANY

By: __________________________________
Name: ________________________________
Title: _______________________________
<PAGE>
                                    EXHIBIT O
                            Form of Escrow Agreement
<PAGE>
                                ESCROW AGREEMENT

      This Escrow Agreement (this "Agreement") is made as of the ___ day of
______, 2004 (the "Effective Date") by and among 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") and _________________
(the "Escrow Agent").

      WHEREAS, Sellers, Purchaser, Liberty and GAINSCO County Mutual Insurance
Company, a Texas county mutual insurance company (the "Company") entered into an
Acquisition Agreement (the "Acquisition Agreement") effective as of _______,
2002, pursuant to which, among other things, (i) Purchaser is obligated to make
certain Post Closing Payments to Seller; (ii) Sellers have agreed to indemnify
the Purchaser Indemnified Parties with respect to certain matters, and (iii)
Purchaser may, under certain circumstances and from time to time beginning after
the second anniversary of the Closing Date, offset its obligation to make a Post
Closing Payment against a Loss incurred by the Purchaser Indemnified Parties for
which they are entitled to indemnification pursuant to the terms of the
Acquisition Agreement by depositing all or a portion of a Post Closing Payment
(in an amount equal to the amount of the Loss alleged to have been incurred by
the Purchaser Indemnified Parties) that otherwise would be payable to Seller
into an escrow account to be held by the Escrow Agent (the "Escrow Account"),
all as more particularly set forth in the Acquisition Agreement; and

      WHEREAS, the parties hereto desire to establish the Escrow Account and to
make certain provisions related thereto.

      NOW, THEREFORE, the undersigned hereby agree as follows:

                                    ARTICLE I
                              TERMS AND CONDITIONS

      1.1 ESTABLISHMENT OF ESCROW ACCOUNT. The parties hereto hereby establish
the Escrow Account with the Escrow Agent. Any amounts that may be deposited into
the Escrow Account by Purchaser from time to time, if any, are referred to
herein as the "Escrowed Funds".

      1.2 TREATMENT OF ESCROWED FUNDS. The monies constituting the Escrowed
Funds shall be deposited from time to time and maintained in a segregated,
interest-bearing account pursuant to the terms of this Agreement.

      1.3 INTEREST. Any and all interest earned with respect to the Escrowed
Funds while in the Escrow Account shall be the property of Purchaser, and shall
be paid to Purchaser upon the final disposition of the Escrowed Funds. Nothing
in this Section shall be construed to limit Purchaser's obligations to pay
Sellers interest under Article VIII of the Acquisition Agreement.

                                       1
<PAGE>
      1.4 ESCROW PROCEDURE. The Escrow Agent is hereby authorized and directed
to deliver the Escrowed Funds only (i) pursuant to the joint written
instructions of GAINSCO and Purchaser, or their successors, or (ii) to any of
the undersigned in accordance with the terms of a final order, judgment, or
decree of any court of competent jurisdiction, or binding arbitration panel (if
applicable), which may be filed, entered, or issued.

      1.5 TERMINATION. This Agreement shall terminate automatically upon the
later to occur of (i) the date Purchaser's obligation to make Post Closing
Payments pursuant to the Acquisition Agreement terminates and (ii) the date all
the Escrowed Funds deposited into the Escrow Account, if any, are disbursed.

                                   ARTICLE II
                          PROVISIONS AS TO ESCROW AGENT

      2.1 LIMITATION OF ESCROW AGENT'S CAPACITY.

            A. This Agreement expressly and exclusively sets forth the duties of
      Escrow Agent with respect to any and all matters pertinent hereto, and no
      implied duties or obligations shall be read into this Agreement against
      Escrow Agent. This Agreement constitutes the entire agreement among the
      Escrow Agent and the other parties hereto in connection with the subject
      matter of this escrow, and no other agreement entered into among the
      parties, or any of them, shall be considered as adopted or binding, in
      whole or in part upon the Escrow Agent notwithstanding that any such other
      agreement may be deposited with the Escrow Agent or the Escrow Agent may
      have knowledge thereof.

            B. Escrow Agent acts hereunder as a depository only, and is not
      responsible or liable in any manner whatsoever for the sufficiency,
      correctness, genuineness or validity of the subject matter of this
      Agreement or any part thereof, or for the form of execution thereof, or
      for the identify or authority of any person executing or depositing such
      subject matter except as provided in Section 1.4 hereof. Escrow Agent
      shall in no way be responsible for notifying, nor shall it be its duty to
      notify, any party hereto or any other party interested in this Agreement
      of any payment required or maturity occurring under this Agreement or
      under the terms of any instrument deposited herewith.

      2.2 AUTHORITY TO ACT.

            A. Escrow Agent is hereby authorized and directed by the undersigned
      to deliver the Escrowed Funds only in accordance with the provisions of
      Article I of this Agreement.

            B. In the event that Escrow Agent shall, in good faith, be in doubt
      as to what action it should take hereunder, Escrow Agent may, at its
      option, refuse to comply with any claims or demands on it, or refuse to
      take any other action hereunder, so long as such doubt exists, and in any
      such event, Escrow Agent shall not be or become liable in any way or to
      any person for its failure or refusal to act, and Escrow Agent shall be
      entitled to continue to refrain from acting until (i) the rights of all
      interested parties shall have been fully and finally adjudicated by a
      court of competent jurisdiction, or (ii) all disagreements shall have been
      resolved and all doubt resolved by agreement among all of the interested
      persons, and

                                       2
<PAGE>
      Escrow Agent shall have been notified thereof in writing signed by all
      such persons. Notwithstanding the foregoing, the Escrow Agent shall obey
      the order, judgment, decree or levy of any court, whether with or without
      jurisdiction, or of any agency of the United States or any political
      subdivision thereof, or of any agency of the State of Texas or of any
      political subdivision thereof. The rights of Escrow Agent under this
      sub-paragraph are cumulative of all other rights which it may have by law
      or otherwise.

            C. In the event that any controversy should arise among the parties
      with respect to this Agreement, or should the Escrow Agent resign and the
      parties fail to select another Escrow Agent to act in its stead, the
      Escrow Agent shall have the right to institute a bill of interpleader in
      any court of competent jurisdiction to determine the rights of the
      parties.

      2.3 COMPENSATION/INDEMNIFICATION.

            A. Escrow Agent shall be entitled to compensation as set forth in
      Exhibit "A" attached hereto and incorporated herein (the "Fee") as well as
      reimbursement for its reasonable costs and expenses incurred in connection
      with the performance by it of service under this Agreement (including
      reasonable fees and expenses of Escrow Agent's counsel). The Fee shall be
      paid by Purchaser and Seller, split equally between them. All
      reimbursements for Escrow Agent's reasonable costs and expenses as set
      forth in the immediately preceding sentence shall be paid by Purchaser and
      Seller, split equally between them.

            B. The parties to this Agreement (other than Escrow Agent) hereby
      jointly and severally agree to indemnify and hold Escrow Agent harmless
      from all losses, costs, claims, demands, expenses, damages, and attorney's
      fees suffered or incurred by Escrow Agent as a result of anything which it
      may do or refrain from doing in connection with this Agreement or any
      litigation or cause of action arising from or in conjunction with this
      Agreement or involving the Escrowed Funds, except that this
      indemnification shall not apply to the willful misconduct or gross
      negligence of the Escrow Agent. This indemnity shall include, but not be
      limited to, all costs incurred in conjunction with any interpleader action
      brought by the Escrow Agent regarding this Agreement.

      2.4 MISCELLANEOUS.

            A. Escrow Agent may resign at any time by giving sixty (60) days
      prior written notice to the other parties hereto, whereupon the other
      parties hereto will immediately appoint a successor Escrow Agent.

            B. All representations, covenants, and indemnification obligations
      contained in this Article II shall survive the termination of this
      Agreement.

                                   ARTICLE III
                               GENERAL PROVISIONS

      3.1 NOTICE. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made, if
delivered personally or transmitted by telex or telecopy (if also sent by
certified mail or overnight delivery service), on the date so

                                       3
<PAGE>
delivered or transmitted, if sent by Federal Express or other reputable national
overnight carrier, on the next business day after the date so sent, or if mailed
by registered or certified mail (postage prepaid, return receipt requested), on
the fifth business day after the date so mailed, to the parties at the following
addresses:

      (a)   If to Sellers, at:

                        GAINSCO Service Corp.
                        500 Commerce Street
                        Fort Worth, Texas 76102
                        Attn: Glenn W. Anderson
                        Facsimile: (817) 338-1454
                        Telephone: (817) 336-2500

      With a copy to:
                        GAINSCO, INC.
                        500 Commerce Street
                        Fort Worth, Texas 76102
                        Attn: Glenn W. Anderson
                        Facsimile: (817) 338-1454
                        Telephone: (817) 336-2500

      in either case, with a copy to:

                        Jackson Walker L.L.P.
                        901 Main Street, Suite 6000
                        Dallas, Texas 75202
                        Attn: Byron F. Egan
                        Facsimile: (214) 953-5822
                        Telephone: (214) 953-5727

      (b) If to Purchaser, at:

                        Berkeley Management Corporation
                        175 Berkeley Street
                        Boston, Massachusetts 02117
                        Attn: General Counsel
                        Facsimile: (617) 574-5830
                        Telephone: (617) 357-9500

      With a copy to:

                        Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                        300 W. 6th Street, Suite 2100
                        Austin, TX 78701
                        Attn: Barry Senterfitt
                        Facsimile: (512) 703-1112
                        Telephone: (512) 499-6216

                                       4
<PAGE>
      (b) If to Escrow Agent, at:

or to such other persons or at such other addresses as shall be furnished by any
party by notice in the manner provided above to the others.

      3.2 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of Texas without regard to its laws relating to choice of
laws. Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement shall be brought in the courts of the
State of Texas, County of Dallas, or, if it has or can acquire jurisdiction, in
the United States District Court for the Northern District of Texas, Dallas
Division, and each party hereto consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.

      3.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.

      3.4 AMENDMENT. The terms of this Agreement may be altered, amended,
modified or revoked only by an instrument in writing signed by all of the
parties hereto.

      3.5 USE OF TERMS. Any terms used but not otherwise defined in this
Agreement are used with the same meaning as in the Acquisition Agreement.

      3.6 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and there are no
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to herein. This Agreement is not intended
to confer and shall not confer upon any Person not a party hereof (and their
successors and assigns permitted hereby) any rights or remedies hereunder.

      3.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                       5
<PAGE>
      EXECUTED as of the Effective Date.

                                        GAINSCO, INC.

                                        By: __________________________________
                                        Name: ________________________________
                                        Title: _______________________________

                                        GAINSCO SERVICE CORP.

                                        By: __________________________________
                                        Name: ________________________________
                                        Title: _______________________________

                                        BERKELEY MANAGEMENT CORPORATION

                                        By: __________________________________
                                        Name: ________________________________
                                        Title: _______________________________

      Escrow Agent hereby accepts its appointment as Escrow Agent as described
in the foregoing Agreement, subject to the terms and conditions set forth
therein.

                                        By: __________________________________
                                        Name: ________________________________
                                        Title: _______________________________

                                       6
<PAGE>

                                  SCHEDULE 1.5
                            Pro Forma Balance Sheet

<Table>
<S>                                                                                           <C>
ASSETS

         Guaranty funds receivable or on deposit*                                                 33,708
         Premium tax receivable                                                                   41,271
                                                                                              ----------
                  Total Assets                                                                $   74,979

LIABILITIES                                                                                   $        0

SURPLUS AS REGARDS POLICYHOLDERS                                                              $   74,979
</Table>

----------

*        Calculated as the net present value of the guaranty funds receivable or
         on deposit (after deduction of any year 2002 amounts which are due to,
         or which could become payable to, Metropolitan, OMNI or GAIC or any of
         its affiliates) using a 10% discount rate and a 10 year life of the
         credits available.

Note: Balances are as of June 30, 2002

<PAGE>

                                  SCHEDULE 2.9
                           Texas Department Statements

                                      None

<PAGE>

                                  SCHEDULE 2.11
                      Absence of Certain Changes of Events

(a)      None

         None

(b)      None, other than 4.2(t) in the normal course of runoff of the
         commercial insurance business and business written by the Third Party
         Fronting Arrangements

<PAGE>

                                  SCHEDULE 2.12
                              Compliance with Laws

                                      None
                                      None
                                      None

<PAGE>
                                 SCHEDULE 2.13
                                  Tax Matters

(a)  none

(b)  Federal --

     o    Year 2000 Form 1120-PC - U.S. Property and Casualty Insurance Company
          Income Tax Return, along with related forms and schedules

     o    Year 1999 Form 1120-PC - U.S. Property and Casualty Insurance Company
          Income Tax Return, along with related forms and schedules

     o    Year 1998 Form 1120-PC - U.S. Property and Casualty Insurance Company
          Income Tax Return, along with related forms and schedules

     State - none

     Local - none

     Foreign - none

(c)  none
<PAGE>
                                 SCHEDULE 2.14
                       Absence of Undisclosed Liabilities

                                      None
<PAGE>
                                 SCHEDULE 2.17
             Trademarks, Software, Patents, Copyrights and Know-How

                                      None
<PAGE>
                                 SCHEDULE 2.19
                         Compliance with Insurance Laws

Application in process for required county mutual Fidelity Bond payable to the
Commissioner of Insurance of Texas on behalf of GAINSCO County Mutual Insurance
Company

<PAGE>
                                 SCHEDULE 2.20
                                   Litigation

In the normal course of its operations, the Company has been named as defendant
in various legal actions seeking payments for claims denied by the Company and
other monetary damages. In the opinion of the Company's management the ultimate
liability, if any, resulting from the disposition of these claims will not have
a material adverse effect on the Company's consolidated financial position or
results of operations.
<PAGE>
                                 SCHEDULE 2.21
                                   Contracts

*  o  Investment Management Agreement for GAINSCO County Mutual Insurance
      Company, dated October 4, 1999, by and between Goff Moore Strategic
      Partners, L.P. and GAINSCO County Mutual Insurance Company
      Policy Letter dated March 7, 2002, issued pursuant to above agreement

*  o  Restated Pledge Agreement, dated February 27, 2002 by GAINSCO Service
      Corp. in favor of Bank One, N.A.

*  o  Restated Security Agreement, dated February 27, 2002 by GAINSCO Service
      Corp. in favor of Bank One, N.A.

*  o  Confirmation of Pledge by Maker, dated February 27, 2002 from GAINSCO
      County Mutual Insurance Company to Bank One, N.A.

   o  Trust Agreement, by and between GAINSCO County Mutual Insurance Company,
      Omni Insurance Company and The Northern Trust Company, dated August 8,
      1995

   o  Indemnification Letter, for the benefit of GAINSCO County Mutual Insurance
      Company from Omni Insurance Company, dated July 13, 1995

   o  Indemnification Letter, for the benefit of GAINSCO County Mutual Insurance
      Company from Omni Insurance Group, Inc., dated July 13, 1995

   o  Managing General Agency Agreement, between Met P&C Managing General
      Agency, Inc. and GAINSCO County Mutual Insurance Company, dated effective
      May 1, 1996

   o  Guaranty and Indemnity Agreement, between GAINSCO County Mutual Insurance
      Company and Metropolitan Property and Casualty Insurance Company, dated
      April 24, 1996

   o  Indemnification Letter, for the benefit of GAINSCO County Mutual Insurance
      Company from Eastern Atlantic Insurance Company, dated August 4, 1995, as
      amended

   o  Guaranty and Indemnity Agreement, between GAINSCO County Mutual Insurance
      Company and George A. Parmer (an individual), dated August 4, 1995, as
      amended

   o  General Agency-Company Agreement, GAINSCO County Mutual Insurance Company
      and MGA Agency, Inc.

*  o  General Agency Agreements between GAINSCO County Mutual Insurance Company
      and general agents previously writing commercial business:

        4219  Financial Guarantee Underwriters, Inc.

        4223  The Parks Group, Inc.

        4242  Leicht & Assoc., Inc. dba Leicht General Agency

        4254  Metro General Agency, Inc.

        4259  RMI International, Inc.

        4281  Western Surplus Lines, Inc.

        4298  Diversified Insurance Management, Inc.

----------
* Indicates agreement will not survive Closing

<PAGE>
                                 SCHEDULE 2.22
                            Insurance Contract Forms

See Attached Schedules:
 GAINSCO County Mutual Insurance Company -- Business Auto
 GAINSCO County Mutual Insurance Company -- Garage
 GAINSCO County Mutual Insurance Company -- Farm Inland Marine
 Metropolitan Property and Casualty Insurance Company Fronting Program --
  Personal Auto
 Omni Insurance Company Fronting Program -- Personal Auto
<PAGE>
                       SCHEDULE OF FORMS AND ENDORSEMENTS

                                                        Schedule 2.22 Attachment

            GAINSCO County Mutual Insurance Company - Business Auto

<Table>
<Caption>
POLICY NUMBER:                                                NAMED INSURED
SPECIMEN AUTO

-------------------------------------------------------------------------------------------------
Form/Endorsement No./Edition Date                             Form/Endorsement No./Edition Date
<S>                      <C>                                 <C>                <C>
TBA(D) PART 2 (04/89)    BUSINESS AUTO COV DEC               UND74 (01/93)      NOTICE-AUTO THEFT PREV-TX
TE9976B (03/92)          FLEET SCHEDULE                      GBA0001 (04/01)    Declarations
CA190 - (X) (12/90)      SCHEDULE OF COVERED AUTOS           UND-73 (01/93)     Texas Important Notice
BA145 (08/00)            CHANGE IN AUTO ENDT                 GAJ0001 (01/93)    Policy Jacket
BA129 (01/93)            NOTICE - NAMED DRIVER EXCL          GAFMQCS (11/01)    Quality Control Sheet
GCM-PROXY (05/97)        NOTICE OF PROXY                     BA104-TX           Application
TE0001 (3/92)            BUSINESS AUTO COV FORM              BA105-TX (06/94)   Rating Worksheet
TE00398 (12/92)          AMENDATORY ENDORSEMENT
TE0040A (03/98)          AMENDATORY ENDORSEMENT - TX
TE0202A (03/92)          TX CANCELLATION PROVISION
TE0238A (03/92)          REINSTATEMENT OF INSURANCE
TE024A (03/92)           SUSPENSION OF INSURANCE
TE3018 (03/92)           DEDUCTIBLE LIAB INS
TE0401C (03/92)          PERSONAL INJURY PROT END
TE0406B (03/92)          MEXICO COV-LIMITED
TE04090 (05/94)          UNINSURED/UNDERINSURED INS
TE2001A (03/92)          ADDITIONAL INSURED-LESSOR
TE2005A (03/92)          DRIVE-AWAY CONTRACTORS
TE2008 (03/92)           FARM TRACTORS & FARM TRACTORS EQ
TE2009C (03/92)          LEASING OR RENTAL CONCERN-CONT
TE2011B (03/92)          LEASING OR RENTAL CONCERNS
TE2012A (03/92)          LEASING OR RENTAL CONCERNS-RENT
TE2013A (03/92)          LEASING OR RENTAL CONCERNS-SCHED
TE2014B (03/92)          LEASING OR RENTAL CONCERNS-EXCES
TE2015A (03/92)          MOBILE EQUIPMENT
TE2018 (03/92)           PROF SERVICES NOT COVERED
TE2027A (03/92)          REG PLATES NOT ISSUED FOR A SPEC
TE2046A (03/92)          CHANGES IN TRANSFER
TE2303 (03/92)           MULTI-PURPOE EQUIPMENT
TE2304 (03/92)           ROLLING STORES
TE2305 (03/92)           WRONG DELIVERY OF LIQUID PRODU
TE2309 (03/92)           TRUCKERS-INS FOR NON-TRUCKING
TE2313 (03/92)           TRAILER INTERCHANGE
TE2316A (03/92)          FORM F-MOTOR CARRIER
TE2320D (03/92)          TRUCKERS ENDORSEMENT
TE2325A (03/92)          AMUSEMENT DEVICES MOUNTED ON A
TE2326A (03/92)          LIQUIFIED PETROLEUM GAS LICENS
TE2330C (02/96)          TX FORM F-1
TE2402 (03/92)           PUBLIC TRANSPORTATION AUTOS
TE2409A (03/92)          PUBLIC AUTO-PASSENGER HAZARD EXC
TE99018 (03/92)          ADDITIONAL INSURED
TE9903B (03/92)          AUTO MEDICAL PAYMENTS
TE9904A (03/92)          GENERAL CHANGE ENDORSE
TE9908C (03/92)          SOUND RECEIVING
TE9910B (03/92)          DRIVE OTHER CAR COVERAGE
TE9916 (03/92)           HIRED AUTOS SPEC AS COV AUTOS YO
TE9917G (08/95)          INDIVIDUAL NAMED INSURED
TE9930 (03/92)           TAPES AND RECORDS COVERAGE
TE9933 (03/92)           EMPLOYEES AS INSUREDS
TE9936 (03/92)           SOCIAL SERVICE AGENCIES-VOLUNTEE
TE9940A (03/92)          EXCLUSION OR EXCESS C0VERAGE
TE9941B (03/92)          EXL OF NAMED INS
TE9948 (03/92)           POLLUTION LIABILITY
TE9954A (11/93)          COV AUTO DESIG SYMBOL
TE9960A (03/92)          SUPP DEATH BENEFIT
TE9977A (03/92)          POLICY CHANGE
TE9978A (03/92)          LOSS PAYABLE CLAUSE
TE9984A (03/92)          NAMED OPERATOR COV

</Table>

                                    ORIGINAL
<PAGE>
                       SCHEDULE OF FORMS AND ENDORSEMENTS

                                                        Schedule 2.22 Attachment

                GAINSCO County Mutual Insurance Company - Garage

<Table>
<Caption>
POLICY NUMBER:                                                NAMED INSURED
SPECIMEN GARAGE
-------------------------------------------------------------------------------------------------
<S>                 <C>                                       <C>
Form/Endorsement No./Edition Date                             Form/Endorsement No./Edition Date

TE0005 (03/92)      GARAGE COVERAGE FORM
BA149 (08/00)       CHANGE IN AUTO ENDT
CA156(1)b (03/92)   GAR COV FORM-AUTO DEALER-PART1
CA156(2) (11/87)    GAR COV FORM-AUTO DEALER-PART2
CA157(1)a (4/89)    GAR COV FORM-NON DLR-PART1
CA157(2) (11/87)    GAR COV FORM-NON DLR-PART2
GL2040              BROAD FORM PRODUCTS COVERAGE
GL2010              BROADENDED COVERAGE-GARAGES
GL2030              OWNERS OF GARAGE PREMISES
TE00398 (12/92)     AMENDATORY ENDORSEMENT
TE0040  (01/94)     AMENDATORY ENDORSEMENT-TX
TE0202A (03/92)     CANCELLATION PROVISION
TE0301B (03/92)     DEDUCTIBLE LIAB INS
TE0401C (03/92)     PERSONAL INJURY PROT END
TE0406B (03/92)     MEXICO COV-LIMITED
TE0409D (05/94)     UNINSURED/UNDERINSURED INS
TE2001A (03/92)     ADDITIONAL INSURED-LESSOR
TE2046A (03/92)     CHANGES IN TRANSFER
TE2316A (03/92)     FORM F-MOTOR CARRIER
TE2330C (02/96)     FORM F-COMMERCIAL MOTOR
TE2503  (03/92)     FALSE PRETENSE COV
TE2505B (03/92)     GAR LOC & OPER MED PAYMENTS
TE2507A (03/92)     LOCATIONS & OPERATIONS NOT COV
TE9901B (03/92)     ADDITIONAL INSURED
TE9903B (03/92)     AUTO MEDICAL PAYMENTS
TE9904A (03/92)     GENERAL CHANGE ENDORSE
TE9908C (03/92)     SOUND RECEIVING
TE9910B (03/92)     DRIVE OTHER CAR-BROADENED COV
TE9917G (08/95)     INDIVIDUAL NAMED INSURED
TE9923A (03/92)     RENTAL REIMBURSEMENT COV
TE9930  (03/92)     TAPES AND RECORDS COVERAGE
TE9937A (03/92)     GARAGEKEEPERS INSURANCE
TE9940A (03/92)     EXCLUSION OR EXCESS COVERAGE
TE9941B (03/92)     EXL OF NAMED INS
TE9943A (03/92)     INCR LIM-OTHER THAN DES DRIVER
TE9954A (11/93)     COV AUTO DESIG SYMBOL
TE9960A (03/92)     SUPP DEATH BENEFIT
TE9976B (03/92)     FLEET SCHEDULE
TE9977A (03/92)     POLICY CHANGE
TE9978A (03/92)     LOSS PAYABLE CLAUSE
TE9979A (03/92)     TEXAS PREMIUM DISCOUNT
TE9984A (03/92)     NAMED OPERATOR COV
TE9985A (03/92)     NAMED OPERATOR COV (NON-OWNED)

CG(D) (01/93)       Declarations
UND-73 (01/93)      Texas Important Notice
GAJ0001 (01/93)     Policy Jacket
GAFMQCS (11/01)     Quality Control Sheet
</Table>

                                    ORIGINAL

<PAGE>

                       SCHEDULE OF FORMS AND ENDORSEMENTS

                                                        Schedule 2.22 Attachment

         GAINSCO County Mutual Insurance Company -- Farm Inland Marine

<Table>
<Caption>
POLICY NUMBER:                                        NAMED INSURED
SPECIMEN IM
--------------------------------------------------------------------------------

Form/Endorsement No./Edition Date                 Title
<S>                                           <C>
GIM0001 (01/98)                               POLICY JACKET
GIM-DEC (01/98)                               FARM INLAND MARINE DEC
MAG150 (01/98)                                CERT OF INSURANCE
IL1201 (11/85)                                POLICY CHANGES
MAG102 (01/98)                                INSPECTION CHECKLIST
CM0001 (06/95)                                INLAND MARINE CONDITIONS
IL0171 (09/92)                                TX CHANGES -- LOSS PAYMENT
IL0275 (06/95)                                TX CHANGES -- CANCEL NONRENEWAL
MAG1030 (01/98)                               MOBILE AGR MACHINERY COV
UND64 (05/92)                                 TEXAS IMPORTANT NOTICE
INVOICE                                       INVOICE
MAG103 (01/98)                                Rating Worksheet
MAG101 (01/98)                                Application

                       ADDITIONAL FORMS AND ENDORSEMENTS
</Table>

                                    ORIGINAL
<PAGE>
                                                        Schedule 2.22 Attachment

Metropolitan Property and Casualty Insurance Company Fronting Program --
Personal Auto

<Table>
<Caption>
     Form Name                                                    Form Number
     ---------                                                    -----------
<S>  <C>                                                          <C>
 1   Texas Personal Auto Policy                                     7019-042
 2   Texas Auto Insurance Application                               1282-042
 3   Auto Declarations                                              1036-042
 4   Insurance ID Card                                              1044-042
 5   Important Notice                                               1445-042
     (Information About Making a Complaint)
 6   Consumer Bill of Rights                                        1265-042
 7   Cancellation for Nonpayment of Premium                         1378-078
 8   Important Notice                                               1886-042
     (Availability of Discounts)
 9   Important Notice                                               1134-042
     (Nonrenewal for NAF or Claims)
10   Important Notice                                               1428-042
     (Limited Liability Coverage for Family Members)
11   Texas PIP Rejection Form                                       1822-042
12   Notice of Cancellation of Insurance                            1014-042
13   Additional Insured Lessor                                      2531-042
14   Extended Nonowned Coverage for Named Individual                2532-042
15   Designation of Covered Person Organization                     2533-042
16   Federal Employees Using Autos in Government Business           2534-042
17   Exclusion of Named Driver                                      2535-042
18   Coverage for Sound Receiving and Transmitting Equipment        2535-042
19   Rental Reimbursement Coverage                                  2537-042
20   Towing and Labor Cost Coverage                                 2538-042
21   Loss Payable Clause                                            2845-042
22   Suspension of Insurance                                        2539-042
23   Reinstatement of Insurance                                     2540-042
24   Mexico Coverage -- Limited                                     2541-042
25   Amendatory Endorsement (General)                               2850-042
26   Group Form -- No Longer Available for Group Discount           5221-000
27   Expressit Payment Plan                                         1098-000
28   Important Notice                                               9047-000
     (Request to Cancel)
29   Payroll Authorization                                          9106-000
30   Important Notice                                               9187-000
     (Requesting PFM Report)
31   Communications to Leinholder                                   1379-000
32   Consumer Privacy Notice                                        1039-000
33   Notice of Proxy                                                1447-042
34   Supplemental Death Benefit                                     2558-042
35   Service/Claim Directory                                         5045-x
36   Amendatory Endorsement                                         2850-042
     (Duties After an Accident)
37   Good Student Notification                                      1820-000
</Table>
<PAGE>
                                                        Schedule 2.22 Attachment

                             OMNI INSURANCE COMPANY
               REINSURING GAINSCO COUNTY MUTUAL INSURANCE COMPANY
                 BUSINESS PRODUCED BY OMNI GENERAL AGENCY, INC.

                       TEXAS PRIVATE PASSENGER AUTO FORMS

<Table>
<Caption>
FORM                                                                            CORRESPONDING
NUMBER        DESCRIPTION                           COVERAGE                    TEXAS FORM NUMBER
<S>           <C>                                   <C>                         <C>
UW-100TX      Texas Private Passenger               Auto Application
TX-1          Texas Personal Auto Policy            ALL

TX-2-1        Rental Reimbursement Coverage         Rental                       523C.

TX-3          Towing & Labor Costs Coverage         T&L                          524A.

TX-5          Loss Payable Clause                   Comp & Coll.                 530A.

TX-6          Named Non-Owner Coverage              BI, PD, UM/UIM               57B.

TX-7          Exclusion of Named Driver
              Exclusion and Partial Rejection
              of Coverage                           PIP and UM/UIM               515A.

TX-8          Additional Equipment                  Add. Eq.
              Coverage for Tapes, Records
              and Other Devices                                                  520.

TX-9          Coverage For Sound Receiving
              Transmitting Equipment                Add. Eq.                     521A.

TX-10         Federal Employees Using
              Autos in Government Business          All                          513.

TX-11         Additional Insured - Lessor           Comp & Coll.                 510A.

TX-12         Nonrenewal Notice                     All                          None

TX-13         Loss Payable Clause - When            Comp. & Coll.                None
              Deductible is Greater Than            Only
              $500.00

TX-14         Mexico Coverage - Limited             All                          551.

U-71TX        Supplemental Death Benefit            BI                           573a

U-72TX        Supplemental Collision Coverage       Comp. & Coll.                None
</Table>

2nd Edition (03/23/95) addition of TX-13
3rd Edition (02/01/96) addition of TX-14
4th Edition (5/23/96) addition of TX-14 to the policy jacket
5th Edition (1/12/00) addition of U-71TX and U-72TX
<PAGE>
                                 SCHEDULE 2.24
                        Property and Casualty Insurance

<Table>
<Caption>
                                                                           Pending Claims
                                                                           Relating to
                                                                           GAINSCO
Policy Type                            Insurer                             County Mutual           Term
-----------                            -------                             --------------          ----
<S>                                    <C>                                 <C>                     <C>
Insurance Company E&O                  St. Paul                            notice to E&O           9/24/01  -  9/24/02
                                                                           carrier in process      notice of nonrenewal received
                                                                           to claim 33032*         No plans to renew or replace
                                                                                                   due to runoff status

Directors & Officers Liability         Westchester Fire                          none              9/24/00  -  9/24/03

                                       Travelers (excess)                        none

Financial Institution Bond             National Union Fire Ins. Co.              none              11/10/99 - 10/10/02
Fidelity, Forgery or Alteration,
Securities, Basic Bond

Fiduciary Liability                    The St. Paul                              none              1/1/02  -  1/1/03
                                                                                                   notice of nonrenewal received

Employment Practices Liability         The Hartford                              none              9/24/01  - 9/24/02

Insurance Producer Bond                RLI Surety                                none              12/05/01 - 12/05/04

Managing General Agent's Bond          Fidelity & Deposit Co.                    none              10/25/01 - 10/25/02
State of TX DOI Bond

County Mutual Insurance Company        prior bond not found;                     none              to be in place asap
State of TX Crime Bond (statute)       application being completed

Package Policy                         Chubb/Federal Insurance Co                none              12/16/01 - 12/16/02

Texas Business Auto                    Chubb/Federal Insurance Co                none              12/16/01 - 12/16/02

Texas Business Auto                    Chubb/Federal Insurance Co                none              12/16/01 - 12/16/02
 Out of State (FL Operation)

Workers' Comp and Empl Liab            Chubb/Federal Insurance Co                none              12/01/01 - 12/01/02

Commercial Catastrophe Liability       Lumbermens Mutual Casualty                none              12/16/01 - 12/16/02
                                        - Kemper
</Table>
*Note: Claims manager requested review of every open GAINSCO County Mutual claim
file to determine potential E&O related issues. This is the result of that
review. No separate E&O log is maintained.
<PAGE>
                                  SCHEDULE 2.29
                             Reinsurance Agreements

Page 1 of 2

<Table>
<Caption>
                  Reinsurance Contract                                           Effective Date
                  --------------------                                           --------------
<S>                                                                              <C>
(with applicable Interests and Liabilities Agreement(s)
               and Termination Addendum)

Commercial Business
Quota Share Reinsurance Treaty Attaching January 1,                                  1/1/93
1993 between and among General Agents Insurance
Company of America, Inc., MGA Insurance Company,
Inc. and GAINSCO County Mutual Insurance Company,
as amended

Reserve (Loss Portfolio Transfer)                                                   12/31/00
Commercial Quota Share                                                              12/31/00

Excess Casualty                                                                      1/1/95
         Addendum No. 1                                                              1/1/96
         Addendum No. 2                                                              1/1/97
         Addendum No. 3                                                              1/1/98
         Addendum No. 4                                                              3/1/98
         Addendum No. 5                                                              1/1/99
         Addendum No. 6                                                              1/1/99
         Addendum No. 7                                                              10/1/99
Excess Casualty                                                                      1/1/00
         Addendum No. 1                                                              1/1/01
Excess Casualty                                                                      1/1/01
Excess Casualty (originally effective 1/1/00                                         1/1/02

First Excess Casualty Clash                                                          1/1/95
First Excess Casualty Clash                                                          1/1/96
First Excess Casualty Clash                                                          1/1/97
First Excess Casualty Clash                                                          1/1/98
         Addendum No. 1                                                              3/1/98
         Addendum No. 2                                                              4/1/98
First Excess Casualty Clash                                                          1/1/99
         Addendum No. 1                                                              1/1/99
         Addendum No. 2                                                              9/1/99
First Excess Casualty Clash                                                          1/1/00

Second Excess Casualty clash                                                         1/1/95
Second Excess Casualty Clash                                                         1/1/96
Second Excess Casualty Clash                                                         1/1/97
Second Excess Casualty Clash                                                         1/1/98
</Table>

<PAGE>

                                  SCHEDULE 2.29
                             Reinsurance Agreements

Page 2 of 2

<Table>
<S>                                                                              <C>
         Addendum No. 1                                                              3/1/98
         Addendum No. 2                                                              4/1/98
Second Excess Casualty Clash                                                         1/1/99
         Addendum No. 1                                                              1/1/99
         Addendum No. 2                                                              9/1/99
Second Excess Casualty Clash                                                         10/1/99
         Addendum No. 1                                                              1/1/00
Second Excess Casualty Clash                                                         1/1/00

Excess Casualty Clash                                                                1/1/00
Excess Casualty Clash                                                                1/1/02

Fronting Programs

100% Quota Share Reinsurance Agreement between                                       7/24/95
GAINSCO County Mutual Insurance Company and
Omni Insurance Company, as amended

100% Quota Share Reinsurance Agreement between                                       5/1/96
GAINSCO County Mutual Insurance Company and
Metropolitan Property and Casualty Insurance
Company, as amended
</Table>

<PAGE>

                                  SCHEDULE 2.32
                                  Voting Rights

The Company proxy is included either in the application form itself or as a form
accompanying the application (See Schedule 2.22). Policyholders grant their
right to vote at any meeting of the policyholders of the Company under the
proxy.

Of 305 policies in force under the GAINSCO Fronting Arrangement, as of July 26,
2002, at least 55% of these policies are signed by the policyholder and grant
the proxy as indicated.

The Company has been informed by Metropolitan that Metropolitan currently does
not have signed proxies for a majority of its policies in force and that not all
of the applications for policies in force include a form of proxy.

The representations in Section 2.32 and this Schedule 2.32, as regards policies
issued and in force and related proxies under the Third Party Fronting
Arrangements, rely solely on oral or verbal representations from Metropolitan
and OMNI. Neither Sellers nor the Company have made any independent
investigation in this regard.

<PAGE>

                                  SCHEDULE 2.34
                             Officers and Directors

Officers

Robert W. Stallings                     Chairman of the Board
Glenn W. Anderson                       President and CEO
Daniel J. Coots                         Sr. Vice President, Treasurer and CFO
Carolyn E. Ray                          Sr. Vice President and Secretary
Richard M. Buxton                       Sr. Vice President
Richard A. Laabs                        Sr. Vice President
Kimberley L. Burgess                    Vice President
Jack Wisdom                             Vice President
Betty J. Graham                         Second Vice President
Scott A. Marek                          Assistant Vice President
Jeffrey R. Smeltzer                     Assistant Vice President

Directors

Robert W. Stallings
Glenn W. Anderson
Daniel J. Coots
Sam Rosen
Harden H. Wiedemann
John H. Williams<PAGE>
                                                                   EXHIBIT 10.27

                              TRAMMELL CROW COMPANY
               NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS(R)
                           COMMERCIAL LEASE AGREEMENT

TABLE OF CONTENTS

<Table>
<Caption>
Article                                                       PAGE

<S> <C>                                                       <C>
1.   Defined Terms                                               1
2.   Lease and Lease Term                                        2
3.   Rent and Security Deposit                                   3
4.   Taxes                                                       4
5.   Insurance and Indemnity                                     4
6.   Use of Demised Premises                                     5
7.   Property Condition                                          7
8.   Damage and Destruction                                      8
9.   Condemnation                                                9
10.  Assignment and Subletting                                   9
11.  Default and Remedies                                        9
12.  Landlord's Contractual Lien                                11
13.  Protection of Lenders                                      12
14.  Environmental Representations and Indemnity                13
15.  Professional Fees                                          14
16.  Miscellaneous                                              15
17.  Additional Provisions                                      16
</Table>

EXHIBITS AND ADDENDA. Any exhibit or addendum attached to this Lease is
incorporated as a part of this Lease for all purposes. Any term not specifically
defined in the Addenda shall have the same meaning given to it in the body of
this Lease. To the extent any provisions in the body of this Lease conflict with
the Addenda, the Addenda shall control.

(Check all boxes that apply. Boxes not checked do not apply)

<Table>
<S>                             <C>
[ ]  Exhibit A                  Survey and/or Legal Description of Property
[X]  Exhibit B                  Floor Plan and/or Site Plan

[X]  Addendum A                 Expense Reimbursement
[ ]  Addendum B                 Renewal Options
[ ]  Addendum C                 Right of First Refusal for Additional Space
[ ]  Addendum D                 Percentage Rental/Gross Sales Reports
[ ]  Addendum E                 Guarantee
[ ]  Addendum F                 Construction of Improvements
[X]  Addendum G                 Rules and Regulations
[ ]  Addendum H                 Other
</Table>

IN CONSIDERATION of the terms, provisions and agreements contained in this
lease, the parties agree as follows:

ARTICLE ONE: DEFINED TERMS. As used in this Commercial Lease Agreement (the
"Lease"), the terms set forth in this Article One have the following respective
meanings:

1.01. EFFECTIVE DATE: The last date beneath the signatures of Landlord and
Tenant on page 16 below.

<Table>
<S>                            <C>
1.02. LANDLORD:                     JAGEE REAL PROPERTIES, L.P.
                 --------------------------------------------------------------------------------------------
Address:                            P. O. BOX 9600, FORT WORTH, TX 76147
          ---------------------------------------------------------------------------------------------------
 Telephone:       817-335-5881                Fax:   817-335-1905
             -------------------------------       -----------------------------

1.03.  TENANT:                      GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC.
                ---------------------------------------------------------------------------------------------
Address:
          ---------------------------------------------------------------------------------------------------
Telephone:      817/336-2500                Fax:
           -------------------------------       ----------------------------

1.04.  DEMISED PREMISES:            5400 AIRPORT FREEWAY, SUITE A
                         ------------------------------------------------------------------------------------
   A.  Street address:              5400 AIRPORT FREEWAY, SUITE A
                       --------------------------------------------------------------------------------------
         FORT WORTH                                            in               TARRANT
--------------------------------------------------------------    -------------------------------------------
County, Texas.

   B.  LEGAL DESCRIPTION:  The property on which the Demised Premises is situated (the "Property") is more
particularly described as:
                          -----------------------------------------------------------------------------------
                                             or as described ON EXHIBIT A, SURVEY AND/OR LEGAL DESCRIPTION.
--------------------------------------------

   C.  FLOOR PLAN OR SITE PLAN:  Being a floor area of approximately   10,577            square feet and
                                                                     -------------------
being approximately                  feet by                  feet (measured to the exterior of outside walls
                    ----------------         -----------------
and to the center of the interior walls and being more particularly shown in outline form on EXHIBIT B, FLOOR
PLAN AND/OR SITE PLAN.

   D.  Tenant's pro rata share of the Property is 26.18  %.  (See ADDENDUM A, EXPENSE REIMBURSEMENT, if
                                                  ------
applicable)

1.05.  LEASE TERM:          5        years and       0      months beginning on         SEPTEMBER 1, 2002   (the
                   -----------------           ------------                     ---------------------------
"Commencement Date") and ending on       AUGUST 31, 2007    (the "Expiration Date") (See ARTICLE 17,
                                   ------------------------
 SPECIAL STIPULATIONS

1.06.  BASE RENT:  $       528,850.20        total Base Rent for the Lease Term payable in monthly
                    ------------------------
installments of $      8,814.17  per month in advance.  (the total amount of Rent is defined in
                  --------------
Section 3.01.)

1.07.  PERCENTAGE RENTAL RATE:      NA      %. (See ADDENDUM D, PERCENTAGE RENTAL/GROSS SALES REPORTS, if
                               -------------
applicable)
</Table>

                                                                               1
<PAGE>
<Table>
<S>                                 <C>
1.08.  SECURITY DEPOSIT:  $ 8,814.17          (due upon execution of this Lease).  (See Section 3.04)
                            -----------------

1.09.  PERMITTED USE:  OFFICE /WAREHOUSE AND ANY OTHER LAWFUL USE REASONABLY ACCEPTABLE TO LANDLORD  (See
                       -----------------------------------------------------------------------------
section 6.01)

1.10. PARTY TO WHOM TENANT is to deliver payments under this Lease (check one): [X] Landlord, [ ] Principal
Broker, or [ ] Other -----------------------------------------------------------------
Landlord may designate in writing the party authorized to act on behalf of Landlord to
enforce this Lease. Any such authorization will remain in effect until it is revoked by Landlord in
writing.

1.11.  PRINCIPAL BROKER:  TRAMMELL CROW COMPANY   , acting as  (check one): [X] agent for Landlord
                          ------------------------
exclusively, [ ] agent for Tenant exclusively, [ ] an intermediary.
Principal Broker's Address:  411 W. 7th Street, Suite 600, Fort Worth, TX 76102
                             --------------------------------------------------
Telephone:  817-885-8866  Fax:  817-885-8810
            ------------     ---------------

1.12  COOPERATING BROKER: NAI STONELEIGH HUFF BROUS MCDOWELL, INC., acting as (check one):  [ ] agent
                           -------------------------------------------------
for Landlord exclusively, [X] agent for Tenant exclusively, [ ] an intermediary.
Cooperating Broker's Address:       201 Main Street, Suite 500, Fort Worth, TX 76102
                               ------------------------------------------------------------------------------------
Telephone:       817-877-4433                         Fax:   817-877-2910
           -----------------------------------------       --------------------------------------

1.13  THE FEE:  The Professional Service Fee shall be as set forth in (check one): [X] Paragraph A, or
[ ] paragraph B of Section 15.01.
A.  The percentage applicable for leases in Sections 15.01 and 15.03 shall be PER SEPARATE AGREEMENT percent
                                                                              ----------------------
(     %).
B.  The percentage applicable in Section 15.04 in the event of a sale shall be                    percent
                                                                               ------------------
(    %).

1.14.  ACCEPTANCE.  The number of days for acceptance of this offer is                  10        days. (See
                                                                       --------------------------
Section 16.14)
</Table>

ARTICLE TWO:  LEASE AND LEASE TERM

2.01. LEASE OF DEMISED PREMISES FOR LEASE. Landlord leases the Demised Premises
to Tenant and Tenant leases the Demised Premises from Landlord for the Lease
Term stated in Section 1.05. The Commencement Date is the date specified in
Section 1.05. unless advanced or delayed under any provision of this Lease.

2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to Tenant if Landlord
does not deliver possession of the Demised Premises to Tenant on the
Commencement Date specified in Section 1.05 above. Landlord's non-delivery of
possession of the Demised Premises to Tenant on the Commencement Date will not
affect this Lease or the obligations of Tenant under this Lease. However, the
Commencement Date shall be delayed until possession of the Demised Premises is
delivered to Tenant. The Lease Term shall be extended for a period equal to the
delay in delivery of possession of the Demised Premises to Tenant, plus the
number of days necessary for the Lease Term to expire on the last day of a
month. If Landlord does not deliver possession of the Demised Premises to Tenant
within sixty (60) days after the Commencement Date specified in Section 1.05,
Tenant may cancel this Lease by giving written notice to Landlord within ten
(10) days after the 60-day period ends. If Tenant gives such notice, this Lease
shall be canceled effective as of the date of its execution, and no party shall
have any obligations under this Lease. If Tenant does not give such notice
within the time specified, Tenant shall have no right to cancel this Lease, and
the Lease Term shall commence upon the delivery of possession of the Demised
Premises to Tenant. If delivery of possession of the Demised Premises to Tenant
is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment
to this Lease setting forth the revised Commencement Date and Expiration Date of
this Lease Term.

2.03. EARLY OCCUPANCY. If Tenant occupies the Demised Premises prior to the
Commencement Date, Tenant's occupancy of the Demised Premises shall be subject
to all of the provisions of this Lease. Early occupancy of the Demised Premises
shall not advance the Expiration Date. IN ADDITION, Tenant shall NOT BE
OBLIGATED TO pay Base Rent OR ANY other charges specified in this Lease for the
period of SUCH EARLY occupancy.

2.04. HOLDING OVER. Tenant shall vacate the Demised Premises immediately upon
the expiration of the Lease Term or earlier termination of this Lease. Tenant
shall reimburse Landlord for and indemnify Landlord against all damages incurred
by Landlord as a result of any delay by Tenant in vacating the Demised Premises.
If Tenant does not vacate the Demised Premises upon the expiration of the Lease
Term or earlier termination of the Lease, Tenant's occupancy of the Demised
Premises shall be a day-to-day tenancy, subject to all of the terms of this
Lease, except that the Base Rent during the holdover period shall be increased
to an amount which is one-and-one half (1 1/2) times the Base Rent in effect on
the expiration or termination of this Lease, computed on a daily basis for each
day of the holdover period, plus all additional

                                                                               2
<PAGE>

sums due under this Lease. This paragraph shall not be construed as Landlord's
consent for Tenant to hold over or extend this lease.

ARTICLE THREE: RENT AND SECURITY DEPOSIT

3.01. MANNER OF PAYMENT. All sums payable under this Lease by Tenant (the
"Rent") shall be made to the Landlord at the address designated in Section 1.02
unless another person is designated in Section 1.10, or to any other party or
address as Landlord may designate in writing. Any and all payments made to a
designated third party for the account of the Landlord shall be deemed made to
Landlord when received by the designated third party. All sums payable by Tenant
under this Lease, whether or not expressly denominated as rent, shall constitute
rent for the purposes of Section 502(b)(6) of the Bankruptcy Code and for all
other purposes. The Base Rent is the minimum rent for the Demised Premises and
is subject to the terms and conditions contained in this Lease, together with
the attached Addenda, if any.

3.02. TIME OF PAYMENT. Upon THE COMMENCEMENT DATE, Tenant shall pay the
installment of Base Rent for the first month of the Lease Term. On or before the
FIRST DAY of the second month of the Lease Term and of each month thereafter,
the installment of Base Rent and other sums due under this Lease shall be due
and payable, in advance, without off-set, deduction or prior demand. Tenant
shall cause payments to be properly mailed or otherwise delivered so as to be
actually received by the party identified in 1.10 above on or before the due
date (and not merely deposited in the mail). If the Lease Term commences or ends
on a day other than the first or last day of a calendar month, the rent for any
fractional calendar month following Commencement Date or preceding the end of
the Lease Term shall be prorated by days.

3.03. LATE CHARGES. Tenant's failure to promptly pay sums due under this Lease
may cause Landlord to incur unanticipated costs. The exact amount of those costs
is impractical or extremely difficult to ascertain. The costs may include, but
are not limited to, processing and accounting charges and late charges which may
be imposed on Landlord by any ground lease or deed of trust encumbering the
Demised Premises. Payments due to Landlord under this Lease are not an extension
of credit. Therefore, if any payment under the Lease is not actually received on
or before the due date (and not merely deposited in the mail), Landlord may, at
Landlord's option and to the extent allowed by applicable law, impose a Late
Charge on any late payments in an amount equal to one-half of one percent (0.5%)
of the amount of the past due payment ("Late Charge") per day for each day after
the due date, until the past due amount in Good Funds is received by Landlord,
up to a maximum of ten percent (10%) of the past due amount. A Late Charge may
be imposed only once on each past due payment. Any Late Charge will be in
addition to Landlord's other remedies for nonpayment of rent. If any check
tendered to Landlord by Tenant under this Lease is dishonored for any reason,
Tenant shall pay to the party receiving payments under this lease a fee of
twenty-five dollars ($25.00), plus (as Landlord's option) a Late Charge as
provided above until Good Funds are received by Landlord. The parties agree that
any Late Charge and dishonored check fee represent a fair and reasonable
estimate of the costs Landlord will incur by reason of the late payment or
dishonored check. Payments received from Tenant shall be applied first to any
Late Charges, second to Base Rent, and last to other unpaid charges or
reimbursements due to Landlord. Notwithstanding the foregoing, Landlord will not
impose a Late Charge as to the first late payments in any calendar year, unless
Tenant fails to pay the late payment to Landlord within three (3) business days
after the delivery of a written notice from Landlord to Tenant demanding the
late payment be paid. However, Landlord may impose a Late Charge without advance
notice to Tenant on any subsequent late payment in the same calendar year.

3.04. SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall deposit with
Landlord cash Security Deposit in the amount stated in Section 1.08. Landlord
may apply all or part of the Security Deposit to any unpaid Rent or other
charges due from Tenant or to cure any other defaults of Tenant. If Landlord
uses any part of the Security Deposit, Tenant shall restore the Security Deposit
to its full amount within ten (10) days after Landlord's written demand.
Tenant's failure to restore the full amount of the Security Deposit within the
time specified shall be a default under this Lease. No interest will be paid on
the Security Deposit. Landlord will not be required to keep the Security Deposit
separate from its other accounts and no trust relationship is created with
respect to the Security Deposit. Upon any termination of this Lease not
resulting from Tenant's default, and after Tenant has vacated the Property and
cleaned and restored the Demised Premises in the manner required by this Lease,
Landlord shall refund the unused portion of the Security Deposit to Tenant
within thirty days after the Termination Date or thirty days after Tenant fully
complies with the conditions of termination as required in Section 7.05,
whichever is later.

3.05. GOOD FUNDS PAYMENTS. If, for any reason whatsoever, any two or more
payments by check from Tenant to Landlord for Rent are dishonored and returned
unpaid, thereafter Landlord may, at Landlord's sole option, upon written notice
to Tenant, require that all future payments of Rent for the remaining term of
the Lease must be made by cash, certified check, cashier's check, or money order
("Good Funds") and that the delivery of Tenant's personal or corporate check
will no longer constitute payment of Rent under this Lease. Any acceptance by
Landlord of a payment for Rent by

                                                                               3

<PAGE>

Tenant's personal or corporate check thereafter shall not be construed as a
waiver of Landlord's right to insist upon payment by Good Funds as set forth
herein.

ARTICLE FOUR: TAXES

4.01. PAYMENT BY LANDLORD. Landlord shall pay the real estate taxes on the
Demised Premises during the Lease Term.

4.02. IMPROVEMENTS BY TENANT. If the real estate taxes levied against the
Demised Premises for the real estate tax year in which the Lease Term commences
are increased as a result of any alterations, additions or improvements made by
Tenant or by Landlord at the request of Tenant, Tenant shall pay to Landlord
upon demand the amount of the increase and continue to pay the increase during
the Lease Term. Landlord shall use reasonable efforts to obtain from the tax
assessor or assessors a written statement of the total amount of the increase.

4.03. JOINT ASSESSMENT. If the real estate taxes are assessed against the
Demised Premises jointly with other property not constituting a part of the
Demised Premises, the real estate taxes applicable to the Demised Premises shall
be equal to the amount bearing the same proportion to the aggregate assessment
that the total square feet of building area in the Demised Premises bears to the
total square feet of building area included in the joint assessment.

4.04. PERSONAL PROPERTY TAXES. Tenant shall pay all taxes assessed against trade
fixtures, furnishings, equipment, inventory, products, or any other personal
property belonging to Tenant. Tenant shall use reasonable efforts to have
Tenant's property taxed separately from the Demised Premises. If any of Tenant's
property is taxed with the Demised Premises, Tenant shall pay the taxes for its
property to Landlord within fifteen (15) days after Tenant receives a written
statement from Landlord for the property taxes.

ARTICLE FIVE:  INSURANCE AND INDEMNITY

5.01. CASUALTY INSURANCE. During the Lease Term, Landlord shall maintain
policies of insurance covering loss of or damage to the Demised Premises in an
amount or percentage of replacement value as Landlord deems reasonable in
relation to the age, location, type of construction and physical condition of
the Demised Premises and the availability of insurance at reasonable rates. The
policies shall provide protection against all perils included within the
classification of fire and extended coverage and any other perils which Landlord
deems necessary. Landlord may, at Landlord's option, obtain insurance coverage
for Tenant's fixtures, equipment or building improvements installed by Tenant in
or on the Demised Premises. Tenant shall, at Tenant's expense, maintain
insurance on its fixtures, equipment and building improvements as Tenant deems
necessary to protect Tenant's interest. Tenant shall not do or permit to be done
anything which invalidates any insurance policies. Any casualty insurance
carried by Landlord or Tenant shall be for the sole benefit of the party
carrying the insurance and under its sole control.

5.02. INCREASE IN PREMIUMS. Tenant shall not permit any operation or activity to
be conducted, or storage or use of any volatile or any other materials, on or
about the Demised Premises that would cause suspension or cancellation of any
fire and extended coverage insurance policy carried by Landlord, or increase the
premiums therefore, without the prior written consent of Landlord. If Tenant's
use and occupancy of the Demised Premises causes an increase in the premiums for
any fire and extended coverage insurance policy carried by Landlord, Tenant
shall pay to Landlord, as additional rental, the amount of the increase within
ten days after demand and presentation by Landlord or written evidence of the
increase.

5.03. LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
commercial general liability policy of insurance, at Tenant's expense, insuring
Landlord against liability arising out of the ownership, use, occupancy, or
maintenance of the Demised Premises. The initial amounts of the insurance must
be at least $1,000,000 for Each Occurrence, $2,000,000 General Aggregate per
policy year, $100,000 Property Damage for the Demised Premises, and $10,000
Medical Expense: plus a $ 2,000,000 commercial general liability umbrella: and
shall be subject to periodic increases based upon economic factors as Landlord
may determine, in Landlord's discretion, exercised in good faith. However, the
amounts of the insurance shall not limit Tenant's liability nor relieve Tenant
of any obligation under this Lease. The policies must contain cross-liability
endorsements, if applicable, and must insure Tenant's performance of the
indemnity provisions of Section 5.04. The policies must contain a provision
which prohibits cancellation or modification of the policy except upon thirty
(30) days' prior written notice to Landlord. Tenant may discharge Tenant's
obligations under this Section by naming Landlord as an additional insured under
a comprehensive policy of commercial general liability insurance maintained by
Tenant and containing the coverage and provisions described in this Section.
Tenant shall deliver a copy of the policy or certificate (or a renewal) to
Landlord prior to the Commencement Date and prior to the expiration of the
policy during the Lease Term. If Tenant fails to maintain the policy, Landlord
may elect to maintain the insurance at Tenant's expense. Tenant may, at Tenant's
expense, maintain other liability insurance as Tenant deems necessary. LANDLORD
SHALL, AT ITS SOLE COST AND EXPENSE (SUBJECT TO REIMBURSEMENT AS PROVIDED
ABOVE), PROCURE AND MAINTAIN THROUGH THE TERM OF THIS LEASE A POLICY OR POLICIES
OF INSURANCE INSURING LANDLORD AGAINST ANY AND ALL

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<PAGE>

LIABILITY FOR BODILY OR OTHER INJURY TO, OR DEATH OF, A PERSON OR PERSONS AND
FOR DAMAGE TO, OR DESTRUCTION OF, PROPERTY OCCASIONED BY OR ARISING OUT OF, OR
IN CONNECTION WITH, THE USE OR OCCUPANCY OF THE PROPERTY, OR BY THE CONDITION OF
THE PROPERTY (INCLUDING THE CONTRACTUAL LIABILITY OF LANDLORD TO INDEMNIFY
TENANT CONTAINED HEREIN), THE LIMITS OF SUCH POLICY OR POLICIES TO BE NO LESS
THAN $2,000,000, ON AN OCCURRENCE BASIS, OF WHICH COVERAGE IN EXCESS OF
$1,000,000 MAY BE PROVIDED BY WAY OF AN UMBRELLA/EXCESS LIABILITY POLICY.
LANDLORD SHALL INDEMNIFY TENANT AND SAVE IT HARMLESS FROM ALL SUITS, ACTIONS,
DAMAGES, JUDGMENTS, LIABILITIES AND EXPENSES IN CONNECTION WITH LOSS OF LIFE,
BODILY, OR PERSONAL, INJURY, OR PROPERTY DAMAGE ARISING FROM, OR OUT OF, ANY
OCCURRENCE IN, UPON, AT, OR FROM, THE BUILDING PROJECT (OTHER THAN THE DEMISED
PREMISES) OCCASIONED WHOLLY, OR IN PART, BY ANY ACT OR OMISSION OF LANDLORD, ITS
AGENTS, CONTRACTORS, EMPLOYEES, SERVANTS, INVITEES, OR LICENSEES, TO THE EXTENT
OF THE INSURANCE CARRIED BY LANDLORD.

5.04. INDEMNITY. Landlord shall not be liable to Tenant or to Tenant's
employees, agents, invitees or visitors, or to any other person, for any injury
to persons or damage to property on or about the Demised Premises or any
adjacent area owned by Landlord caused by the negligence or misconduct of
Tenant, Tenant's employees, subtenants, agents, licensees or concessionaires or
any other person entering the Demised Premises under express or implied
invitation of Tenant, or arising out of the use of the Demised Premises by
Tenant and the conduct of Tenant's business, or arising out of any breach or
default by Tenant in the performance of Tenant's obligations under this Lease;
and Tenant hereby agrees to indemnify and hold Landlord harmless from any loss,
expense or claims arising out of such damage or injury. Tenant shall not be
liable for any injury or damage caused by the negligence or misconduct of
Landlord, or Landlord's employees or agents, and Landlord agrees to indemnify
and hold Tenant harmless from any loss, expense or damage arising out of such
damage or injury.

5.06. WAIVER OF SUBROGATION. Each party to this Lease waives any and every claim
which arises or may arise in its favor against the other party during the term
of this Lease or any renewal or extension of this Lease for any and all loss of,
or damage to, any of its property located within or upon, or constituting a part
of, the Demised Premises, which loss or damage is covered OR IS REQUIRED TO BE
COVERED BY the insurance policies SPECIFIED ABOVE. These mutual waivers shall be
in addition to, and not in limitation or derogation of, any other waiver or
release contained in this Lease with respect to any loss of, or damage to,
property of the parties. Inasmuch as these mutual waivers will preclude the
assignment of any aforesaid claim by way of subrogation or otherwise to an
insurance company (or any other person), each party hereby agrees to give
immediately to each insurance company (which has issued to such party policies
of fire and extended coverage insurance) written notice of the terms of such
mutual waivers, and to cause such policies to be properly endorsed to prevent
the invalidation of the insurance coverage by reason of these waivers.

ARTICLE SIX: USE OF DEMISED PREMISES

6.01. PERMITTED USE. Tenant may use the Demised Premises only for the Permitted
Use stated in Section 1.09.

                                                                               5
<PAGE>

LANDLORD EXPRESSLY REPRESENTS THAT TENANT'S PROPOSED USE OF THE DEMISED PREMISES
FOR OFFICE AND WAREHOUSE USE WILL NOT VIOLATE ANY RESTRICTION OR OTHER
LIMITATION ON USE RECORDED IN THE REAL PROPERTY RECORDS OF TARRANT COUNTY,
TEXAS, AND AFTER THE IMPROVEMENTS HAVE BEEN MADE BY LANDLORD PURSUANT TO
PARAGRAPH 17.1 OF THIS LEASE, THE IMPROVEMENTS TO THE DEMISED PREMISES WILL
CONFORM TO ALL CITY ZONING ORDINANCES.

6.02. COMPLIANCE WITH LAW. Tenant shall comply with all governmental laws,
ordinances and regulations applicable to the use of the Demised Premises, and
shall promptly comply with all governmental orders and directives for the
correction, prevention and abatement of nuisances and other activities in or
upon, or connected with the Demised Premises, all at Tenant's sole expense,
including any expense or cost resulting from the construction or installation of
fixtures and improvements or other accommodations for handicapped or disabled
persons required for compliance with governmental laws and regulations,
including but not limited to the Texas Architectural Barriers Act (Article 9102
and any successor statute) and the Americans with Disabilities Act (the "ADA").
To the extent any alterations to the Demised Premises are required by the ADA or
other applicable laws or regulations, Tenant shall bear the expense of the
alterations. To the extent any alterations to areas of the Property outside the
Demised Premises are required by Title III of the ADA or other applicable laws
or regulations (for "path of travel" requirements or otherwise), Landlord shall
bear the expense of the alterations.

6.03. CERTIFICATE OF OCCUPANCY. If required, Tenant shall obtain a Certificate
of Occupancy from the municipality in which the Property is located prior to
occupancy of the Demised Premises. Tenant may apply for a Certificate of
Occupancy prior to the Commencement Date and, if Tenant is unable to obtain a
Certificate of Occupancy, Tenant shall have the right to terminate this Lease by
written notice to Landlord if Landlord or Tenant is unwilling or unable to cure
the defects which prevented the issuance of the Certificate of Occupancy.
Landlord may, but has no obligation to, cure any such defects, including any
repairs, installations, or replacements of any items which are not presently
existing on the Demised Premises, or which have not been expressly agreed upon
by Landlord in writing.

6.04. SIGNS. Without the prior written consent of Landlord, Tenant may not place
any signs, ornaments or other objects upon the Demised Premises or on the
Property, including but not limited to the roof or exterior of the building or
other improvements on the Property, or paint or otherwise decorate or deface the
exterior of the building. Any signs installed by Tenant must conform with
applicable laws, deed restrictions on the Property, and other applicable
requirements. Tenant must remove all signs, decorations and ornaments at the
expiration or termination of this Lease and must repair any damage and close any
holes caused by the removal.

6.05. UTILITY SERVICES. THE DEMISED PREMISES ARE SEPARATELY METERED FOR
UTILITIES. Tenant shall pay DIRECTLY TO THE UTILITY COMPANY PROVIDING SUCH
SERVICES the cost of all utility services, including but not limited to initial
connection charges, all charges for gas, water, sewerage, storm water disposal,
communications and electricity used on the Demised Premises, and for replacing
all electric lights, lamps and tubes. LANDLORD AGREES TO ALLOW TENANT ACCESS TO
THE TELEPHONE DEMARC AREA LOCATED ADJACENT TO THE DEMISED PREMISES ON A 24
HOUR/7 DAYS A WEEK BASIS.

6.06. LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to,
during normal business hours and upon reasonable advance notice, and without
unreasonably interfering with Tenant's business, enter the Demised Premises: (a)
to inspect the general condition and state of repair of the Demised Premises,
(b) to make repairs required or permitted under this Lease, (c) to show the
Demised Premises or the Property to any prospective purchaser, (d) TO SHOW THE
DEMISED PREMISES TO ANY PROSPECTIVE TENANT DURING THE LAST 150 DAYS OF THE LEASE
TERM OR ANYTIME IN THE EVENT TENANT IS IN DEFAULT OF THIS LEASE and (e) for any
other reasonable purpose. If Tenant changes the locks on the Demised Premises,
Tenant must provide Landlord with a copy of each separate key. During the final
one hundred fifty (150) days of the Lease Term, Landlord and Landlord's agents
may erect and maintain on or about the Demised Premises signs advertising the
Demised Premises for lease or for sale.

6.07. POSSESSION. If Tenant pays the rent, properly maintains the Demised
Premises, and complies with all other terms of this Lease, Tenant may occupy and
enjoy the Demised Premises for the full Lease Term, subject to the provisions of
this Lease.

6.08. EXEMPTIONS FROM LIABILITY. EXCEPT AS SET FORTH IN THIS LEASE, Landlord
shall not be liable for any damage or injury to the persons, business (or any
loss of income), goods, inventory, furnishings, fixtures, equipment, merchandise
or other property of Tenant, Tenant's employees, invitees, customers or any
other person in or about the Demised Premises, whether the damage or injury is
caused by or results from: (a) fire, steam, electricity, water, gas or wind; (b)
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures or any other cause;
(c) conditions arising on or about the Demised Premises or upon other portions
of any building of which the Demised Premises is a part, or from other sources
or places; or (d) any act or omission of any other tenant of any building on the
Property. EXCEPT AS SET FORTH IN THIS LEASE, Landlord shall not be liable for
any damage or injury even

                                                                               6
<PAGE>

though the cause of or the means of repairing the damage or injury are not
accessible to Tenant. The provisions of this Section 6.08 shall not, however,
exempt Landlord from liability for Landlord's gross negligence or willful
misconduct.

ARTICLE SEVEN: PROPERTY CONDITION, MAINTENANCE, REPAIRS AND ALTERATIONS

7.01. PROPERTY CONDITION. Except as disclosed in writing by Landlord to Tenant
contemporaneously with the execution of this Lease, to the best of Landlord's
actual knowledge the Demised Premises has no known latent structural defects,
construction defects of a material nature, and to the best of Landlord's actual
knowledge none of the improvements has been constructed with materials known to
be a potential health hazard to occupants of the Demised Premises. Tenant
acknowledges that neither the Principal Broker nor any Cooperating Broker has
made any warranty or representation to Tenant with respect to the condition of
the Demised Premises, and that Tenant is relying exclusively upon Tenant's own
investigations and the representations of Landlord, if any, with respect to the
condition of the Demised Premises. Landlord and Tenant agree to hold the Brokers
harmless of and from any and all damages, claims, costs and expenses of every
kind and character resulting from or related to Landlord's furnishing to the
Brokers any false, incorrect or inaccurate information with respect to the
Demised Premises, or Landlord's concealing any material information with respect
to the condition of the Demised Premises. Other than as expressly set forth in
this Lease, Landlord represents that on the Commencement Date (and DURING THE
TERM OF THIS LEASE) the building fixtures and equipment, plumbing and plumbing
fixtures, electrical and lighting system, any fire protection sprinkler system,
ventilating equipment, heating system, air conditioning equipment, roof,
skylights, doors, overhead doors, windows, dock levelers, elevators, and the
interior of the Demised Premises in general are AND WILL BE in good operating
condition. Tenant shall have a period of thirty (30) days following the
Commencement Date in which to inspect the Demised Premises and to notify
Landlord in writing of any defects and maintenance, repairs or replacements
required to the above named equipment, fixtures, systems and interior. Within a
reasonable period of time after the timely receipt of any such written notice
from Tenant, Landlord shall, at Landlord's expense, correct the defects and
perform the maintenance, repairs and replacements.

7.02. ACCEPTANCE OF DEMISED PREMISES. Subject to the provisions in Section 7.01,
Tenant acknowledges that: (a) a full and complete inspection of the Demised
Premises and adjacent common areas has been made and Landlord has fully and
adequately disclosed the existence of any defects which would interfere with
Tenant's use of the Demised Premises for their intended commercial purpose, and
(b) as a result of such inspection and disclosure, Tenant has taken possession
of the Demised Premises and accepts the Demised Premises in its "As Is"
condition.

7.03. MAINTENANCE AND REPAIR.

         A.  LANDLORD'S OBLIGATION

         (1) Subject to the provisions of Article Eight (Damage or Destruction)
and Article Nine (Condemnation) and except for damage caused by any act or
omission of Tenant, Landlord shall keep the HVAC, PLUMBING, ELECTRICAL SYSTEM
roof, skylights, foundation, structural components and the structural portion of
exterior walls of the Demised Premises in good order, condition and repair
EXCEPT TO THE EXTENT SUCH REPAIRS ARE NECESSITATED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF TENANT. Landlord shall ALSO be obligated to maintain AND
repair windows, doors, overhead doors, plate glass or the surfaces of walls. In
addition, Landlord, shall not be obligated to make any repairs under this
Section until a reasonable time after receipt of written notice from Tenant of
the need for repairs. If any repairs are required to be made by Landlord, Tenant
shall, at Tenant's sole cost and expense, promptly remove Tenant's furnishings,
fixtures, inventory, equipment and other property, to the extent required to
enable Landlord to make repairs. Landlord's liability under this Section shall
be limited to the cost of those repairs or corrections.

         (2) All repair, maintenance, management and other services to be
performed by Landlord or Landlord's agents involve the exercise of professional
judgment by service providers, and Tenant expressly waives any claims for breach
of warranty AGAINST SAID PROVIDERS arising from the performance of those
services BUT SAID WAIVER DOES NOT LIMIT TENANT'S RIGHTS WITH RESPECT TO
LANDLORD.

         B.  TENANT'S OBLIGATION

         (1) Subject to the provisions of Section 7.01, Section 7.03. A, Article
Eight (Damage or Destruction) and Article Nine (Condemnation), Tenant shall, at
all times, keep all other portions of the Demised Premises in good order,
condition and repair, ordinary wear and tear excepted, AND PROVIDE REGULAR
JANITORIAL SERVICES.

                                                                               7
<PAGE>

If Tenant fails to maintain and repair the Property as required by this Section,
Landlord may, on ten (10) days' prior written notice, enter the Demised Premises
and perform the maintenance or repair on behalf of Tenant, except that no notice
is required in case of emergency, and Tenant shall reimburse Landlord
immediately upon demand for all REASONABLE, OUT OF POCKET costs incurred in
performing the maintenance or repair, plus a reasonable service charge NOT TO
EXCEED 10% OF SUCH COSTS.

7.04. ALTERATIONS, ADDITIONS AND IMPROVEMENTS. Tenant shall not create any
openings in the roof or exterior walls, or make any alterations, additions or
improvements to the Demised Premises without the prior written consent of
Landlord. Consent for non-structural alterations, additions or improvements
shall not be unreasonably withheld by Landlord. Tenant may erect or install
trade fixtures, shelves, bins, machinery, heating, ventilating and air
conditioning equipment, provided that Tenant complies with all applicable
governmental laws, ordinances, codes and regulations. At the expiration or
termination of this Lease, Tenant shall, subject to the restrictions of Section
7.05 below, have the right to remove items installed by Tenant, provided Tenant
is not in default at the time of the removal and provided further that Tenant
shall, at the time of removal of the items, repair in a good and workmanlike
manner any damage caused by the installation or removal. Tenant shall pay for
all costs incurred or arising out of alterations, additions or improvements in
or to the Demised Premises and shall not permit any mechanic's or materialman's
lien to be filed against the Demised Premises or the Property. Upon request by
Landlord, Tenant shall deliver to Landlord proof of payment reasonably
satisfactory to Landlord of all costs incurred or arising out of any
alterations, additions or improvements.

7.05. CONDITION UPON TERMINATION. Upon the expiration or termination of this
Lease, Tenant shall surrender the Demised Premises to Landlord broom clean and
in the same condition as received, except for ordinary wear and tear which
Tenant is not otherwise obligated to remedy under any provision of this Lease.
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Property Condition) or Article Eight (Damage or
Destruction). In addition, Landlord may require Tenant to remove any
alterations, additions or improvements (whether or not made with Landlord's
consent) prior to the expiration or termination of this Lease and to restore the
Demised Premises to its prior condition, all at Tenant's expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered to Landlord
upon the expiration or termination of this Lease. In no event, however, shall
Tenant remove any of the following materials or equipment without Landlord's
prior written consent: (i) electrical wiring or power panels; (ii) lighting or
lighting fixtures; (iii) wall coverings, drapes, blinds or other window
coverings; (iv) carpets or other floor coverings; (v) heating, ventilating, or
air conditioning equipment; (vi) fencing or security gates; or (vii) any other
fixtures, equipment or items which, if removed, would affect the operation or
the appearance of the Property.

ARTICLE EIGHT:  DAMAGE OR DESTRUCTION

8.01. NOTICE. If any buildings or other improvements situated on the Property
are damaged or destroyed by fire, flood, windstorm, tornado or other casualty,
Tenant shall immediately give written notice of the damage or destruction to
Landlord.

8.02. PARTIAL DAMAGE. If the building or other improvements situated on the
Demised Premises are damaged by fire, tornado, or other casualty but not to such
an extent that rebuilding or repairs cannot reasonably be completed within one
hundred twenty (120) days from the date Landlord receives written notification
by Tenant of the occurrence of the damage, this Lease shall not terminate, but
Landlord shall proceed with reasonable diligence to rebuild or repair the
building and other improvements on the Demised Premises (other than leasehold
improvements made by Tenant or any assignee, subtenant or other occupant of the
Demised Premises) to substantially the condition in which they existed prior to
the damage. If the casualty occurs during the final eighteen (18) months of the
Lease Term, Landlord shall not be required to rebuild or repair the damage
unless Tenant exercises Tenant's renewal option (if any) within fifteen (15)
days after the date of receipt by Landlord of the notification of the occurrence
of the damage. If Tenant does not exercise its renewal option, or if there is no
renewal option contained in this Lease, Landlord may, at Landlord's option,
terminate this Lease by promptly delivering a written termination notice to
Tenant, in which event the Rent shall be abated for the unexpired portion of the
Lease Term, effective from the date of the damage PROVIDED

                                                                               8
<PAGE>
TENANT NOTIFIES LANDLORD WITHIN 24 HOURS OF THE OCCURRENCE OF SAID DAMAGE. To
the extent the Demised Premises cannot be occupied (in whole or in part)
following the casualty, the Rent payable under this Lease during the period in
which the Demised Premises cannot be fully occupied shall be ABATED
PROPORTIONATELY.

8.03. SUBSTANTIAL OR TOTAL DESTRUCTION. If the building or other improvements
situated on the Demised Premises are substantially or totally destroyed by fire,
tornado, or other casualty, or so damaged that rebuilding or repairs cannot
reasonably be completed within one hundred twenty (120) days from the date
Landlord receives written notification by Tenant of the occurrence of the
damage, either Landlord or Tenant may terminate this lease by delivering a
written termination notice to the other party WITHIN 45 DAYS FROM THE DATE OF
SUCH DAMAGE OR DESTRUCTION, in which event the monthly installments of Rent
shall be abated for the unexpired portion of the Lease Term, effective from the
date of the damage or destruction. If neither party terminates this Lease WITHIN
THE TIME PERIOD SET FORTH ABOVE, Landlord shall proceed with reasonable
diligence to rebuild and repair the building and other improvements (except that
Tenant shall rebuild and repair Tenant's fixtures and improvements in the
Demised Premises). To the extent the Demised Premises cannot be occupied (in
whole or in part) following the casualty, the Rent payable under this Lease
during the period in which the Demised Premises cannot be fully occupied shall
be ABATED PROPORTIONATELY. IF LANDLORD HAS NOT COMPLETED THE REBUILDING OR
REPAIRS WITHIN ONE HUNDRED EIGHTY (180) DAYS FROM THE DATE OF THE DAMAGE, TENANT
MAY TERMINATE THIS LEASE IN WHICH EVENT THE MONTHLY INSTALLMENTS OF RENT SHALL
BE ABATED FOR THE UNEXPIRED PORTION OF THE LEASE TERM EFFECTIVE FROM THE DATE OF
THE DAMAGE OR DESTRUCTION.

ARTICLE NINE: CONDEMNATION

If during the Lease Term or any extension thereof, all or a substantial part of
the Demised Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain, or are
conveyed to the condemning authority under threat of condemnation, this Lease
shall terminate and the monthly installments of Rent shall be abated during the
unexpired portion of the Lease Term, effective from the date of the taking. If
less than a substantial part of the Demised Premises is taken for public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, or is conveyed to the condemning authority under threat
of condemnation, Landlord, at its option, may by written notice terminate this
Lease. If Landlord does not terminate this Lease, Landlord shall promptly, at
Landlord's expense restore and reconstruct the buildings and improvements (other
than leasehold improvements made by Tenant or any assignee, subtenant or other
occupant of the Demised Premises) situated on the Demised Premises in order to
make the same reasonably tenantable and suitable for the use for which the
Demised Premises is leased as defined in Section 6.01. The monthly installments
of Rent payable under this Lease during the unexpired portion of the Lease Term
shall be adjusted equitably. Landlord and Tenant shall each be entitled to
receive and retain such separate awards and portions of lump sum awards as may
be allocated to their respective interests in any condemnation proceeding. The
termination of this Lease shall not affect the rights of the parties to such
awards.

ARTICLE TEN: ASSIGNMENT AND SUBLETTING

Tenant shall not, without the prior written consent of Landlord WHICH SHALL NOT
BE UNREASONABLY WITHHELD, assign this Lease or sublet the Demised Premises or
any portion thereof. Any assignment or subletting shall be expressly subject to
all terms and provisions of this Lease, including the provisions of Section 6.01
pertaining to the use of the Demised Premises. In the event of any assignment or
subletting, Tenant shall remain fully liable for the full performance of all
Tenant's obligations under this Lease. Tenant shall not assign its rights under
this Lease or sublet the Demised Premises without first obtaining a written
agreement from the assignee or sublessee whereby the assignee or sublessee
agrees to assume the obligations of Tenant under this Lease and to be bound by
the terms of this Lease. If an event of default occurs while the Demised
Premises is assigned or sublet, Landlord may, at Landlord's option, in addition
to any other remedies provided in this Lease or by Law, collect directly from
the assignee or subtenant all rents becoming due under the terms of the
assignment or subletting and apply the rent against any sums due to Landlord
under this Lease. No direct collection by Landlord from any assignee or
subtenant will release Tenant from Tenant's obligations under this Lease.
NOTWITHSTANDING THE FOREGOING, TENANT SHALL HAVE THE RIGHT TO ASSIGN ITS ENTIRE
INTEREST UNDER THIS LEASE TO AN AFFILIATE (DEFINED BELOW) OR TO A SUCCESSOR TO
TENANT BY PURCHASE, MERGER, CONSOLIDATION OR REORGANIZATION WITHOUT THE CONSENT
OF LANDLORD. THE TERM "AFFILIATE" MEANS ANY PERSON OR ENTITY CONTROLLING,
CONTROLLED BY OR UNDER COMMON CONTROL WITH TENANT. IF REQUESTED BY LANDLORD, THE
AFFILIATE OR TENANT'S SUCCESSOR SHALL SIGN A COMMERCIALLY REASONABLE FORM OF
ASSUMPTION AGREEMENT. BY ASSIGNING THIS LEASE, TENANT IS NOT RELEASED FROM
TENANT'S OBLIGATIONS UNDER THIS LEASE.

ARTICLE ELEVEN: DEFAULT AND REMEDIES

11.01. DEFAULT. Each of the following events is an event of default under this
Lease:

         A. Failure of Tenant to pay any installment of the Rent or other sum
payable to Landlord under this Lease on the date that it is due and the
continuance of that failure for a period of five (5) days after Landlord
delivers written notice of

                                                                               9
<PAGE>

the failure to Tenant. This clause shall not be construed to permit or allow a
delay in paying Rent beyond the due date and shall not affect Landlord's right
to impose a Late Charge as permitted in Section 3.03;

         B. Failure of Tenant to comply with any term, condition or covenant of
this Lease, other than the payment of Rent or other sum of money, and the
continuance of that failure for a period of thirty (30) days after Landlord
delivers written notice of the failure to Tenant;

         C. Failure of Tenant or any guarantor of Tenant's obligations under
this Lease to pay its debts as they become due or an admission in writing of
inability to pay its debts, or the making of a general assignment for the
benefit of creditors;

         D. The commencement by Tenant or any guarantor of Tenant's obligations
under this Lease of any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debts, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property;

         E. The commencement of any case, proceeding or other action against
Tenant or any guarantor of Tenant's obligations under this Lease seeking to have
an order for relief entered against it as debtor, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
Tenant or any guarantor: (i) fails to obtain a dismissal of such case,
proceeding, or other action within sixty (60) days of its commencement; or (ii)
converts the case from one chapter of the Federal Bankruptcy Code to another
chapter; or (iii) is the subject of an order of relief which is not fully stayed
within seven (7) business days after the entry thereof; and

         F.

11.02. REMEDIES. Upon the occurrence of any of the events of default listed in
Section 11.01. Landlord shall have the option to pursue any one or more of the
following remedies without any prior notice or demand. IN ALL CIRCUMSTANCES,
LANDLORD SHALL BE REQUIRED TO USE COMMERCIALLY REASONABLE EFFORTS TO MITIGATE
DAMAGES.

         A. Terminate this Lease, in which event Tenant shall immediately
surrender the Demised Premises to Landlord. If Tenant fails to so surrender the
Demised Premises, Landlord may, without prejudice to any other remedy which it
may have for possession of the Demised Premises or Rent in arrears, enter upon
and take possession of the Demised Premises and expel or remove Tenant and any
other person who may be occupying the Demised Premises or any part thereof, by
force if necessary, without being liable for prosecution of any claim for
damages. Tenant shall pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of the termination, whether through
inability to re-let the Demised Premises on satisfactory terms or otherwise.

         B. Enter upon and take possession of the Demised Premises, by force if
necessary, without terminating this Lease and without being liable for
prosecution or for any claim for damages, and expel or remove Tenant and any
other person who may be occupying the Demised Premises or any part thereof.
Landlord may re-let the Demised Premises and receive the rent thereof. Tenant
agrees to pay to Landlord monthly or on demand from time to time any deficiency
that may arise by reason of any such re-letting. In determining the amount of
the deficiency, the professional service fees, attorneys' fees, court costs,
remodeling expenses and other costs of re-letting shall be subtracted from the
amount of rent received under the re-letting.

         C. Enter upon the Demised Premises, by force if necessary, without
terminating this Lease and without being liable for prosecution or for any claim
for damages, and do whatever Tenant is obligated to do under the terms of this
Lease. Tenant agrees to pay Landlord on demand for expenses which Landlord may
incur in thus effecting compliance with Tenant's obligations under this Lease,
together with interest thereon at the rate of twelve percent (12%) per annum
from the date expended until paid. Landlord shall not be liable for any damages
resulting to Tenant from such action, whether caused by negligence of Landlord
or otherwise.

         D. Accelerate and declare the Rent for the entire Lease Term, and all
other amounts due under this Lease, at once due and payable, and proceed by
attachment, suit or otherwise, to collect all amounts in the same manner as if
all such amounts due or to become due during the entire Lease Term were payable
in advance by the terms of this Lease, and neither the enforcement or collection
by Landlord of such amounts nor the payment by Tenant of such amounts shall
constitute a waiver by Landlord of any breach, existing or in the future, of any
of the terms or provisions of this Lease by Tenant or a waiver of any rights or
remedies which the Landlord may have with respect to any such breach.

                                                                              10
<PAGE>

         E. In addition to the foregoing remedies, Landlord shall have the right
to change or modify the locks on the Demised Premises in the event Tenant fails
to pay the monthly installment of Rent when due. Landlord shall not be obligated
to provide another key to Tenant or allow Tenant to regain entry to the Demised
Premises unless and until Tenant pays Landlord all Rent which is delinquent.
Tenant agrees that Landlord shall not be liable for any damages resulting to the
Tenant from the lockout. At such time that Landlord changes or modifies the
lock, Landlord shall post a "Notice of Change of Locks" on the front of the
Demised Premises. Such Notice shall state that:

         (1) Tenant's monthly installment of Rent is delinquent, and therefore,
under authority of Section 11.02.E of Tenant's Lease, the Landlord has exercised
it's contractual right to change or modify Tenant's door locks;

         (2) The Notice has been posted on the Tenant's front door by a
representative of Landlord and Tenant should make arrangements with the
representative to pay the delinquent installments of Rent when Tenant picks up
the key; and

         (3) The failure of Tenant to comply with the provisions of the Lease
and the Notice and/or tampering with or changing the door lock(s) by Tenant may
subject Tenant to legal liability.

         F. No re-entry or taking possession of the Demised Premises by Landlord
shall be construed as an election to terminate this Lease, unless a written
notice of that intention is given to Tenant. Notwithstanding any such re-letting
or re-entry or taking possession, Landlord may, at any time thereafter, elect to
terminate this Lease for a previous default. Pursuit of any of the foregoing
remedies shall not preclude pursuit of any other remedies provided by law, nor
shall pursuit of any remedy provided in this Lease constitute a forfeiture or
waiver of any monthly installment of Rent due to Landlord under this Lease or of
any damages accruing to Landlord by reason of the violation of any of the terms,
provisions and covenants contained in this Lease. Failure of Landlord to declare
any default immediately upon its occurrence, or failure to enforce one or more
of Landlord's remedies, or forbearance by Landlord to enforce one or more of
Landlord's remedies upon an event of default shall not be deemed or construed to
constitute a waiver of default or waiver of any violation or breach of the terms
of this Lease. Pursuit of any one of the above remedies shall not preclude
pursuit by Landlord of any of the other remedies provided in this Lease. The
loss or damage that Landlord may suffer by reason of termination of this Lease
or the deficiency from any re-letting as provided for above shall include the
expense of repossession and any repairs or remodeling undertaken by Landlord
following possession. If Landlord terminates this Lease at any time for any
default, in addition to other Landlord's remedies, Landlord may recover from
Tenant all damages Landlord may incur by reason of the default, including the
cost of recovering the Demised Premises and the Rent then remaining unpaid.

11.03. NOTICE OF DEFAULT. Tenant shall give written notice of any failure by
Landlord to perform any of Landlord's obligations under this Lease to Landlord
and to any ground lessor, mortgagee or beneficiary under any deed of trust
encumbering the Demised Premises whose name and address have been furnished to
Tenant in writing. Landlord shall not be in default under this Lease unless
Landlord (or such ground lessor, mortgagee or beneficiary) fails to cure the
nonperformance within thirty (30) days after receipt of Tenant's notice.
However, if the nonperformance reasonably requires more than thirty (30) days to
cure, Landlord shall not be in default if the cure is commenced within the
30-day period and is thereafter diligently pursued to completion.

11.04. LIMITATION OF LANDLORD'S LIABILITY. As used in this Lease, the term
"Landlord" means only the current owner or owners of the fee title to the
Demised Premises or the leasehold estate under a ground lease of the Demised
Premises at the time in question. Each Landlord is obligated to perform the
obligations of Landlord under this Lease only during the time such Landlord owns
such interest or title. Any Landlord who transfers its title or interest is
relieved of all liability with respect to the obligations of Landlord under this
Lease accruing on or after the date of transfer PROVIDED TRANSFEREE EXPRESSLY
ASSUMES SUCH OBLIGATIONS, and Tenant agrees to recognize the transferee as
Landlord under this Lease. However, each Landlord shall deliver to its
transferee the Security Deposit held by Landlord if such Security Deposit has
not then been applied under the terms of this Lease.

ARTICLE TWELVE: LANDLORD'S CONTRACTUAL LIEN

In addition to the statutory Landlord's lien, Tenant hereby grants to Landlord a
security interest to secure payment of all Rent and other sums of money becoming
due under this Lease from Tenant, upon all inventory, goods, wares, equipment,
fixtures, furniture and all other personal property of Tenant situated in or
upon the Demised Premises, together with the proceeds from the sale or lease
thereof. Tenant may not remove such property without the consent of Landlord
until all Rent in arrears and other sums of money then due to Landlord under
this Lease have first been paid and discharged. Upon the occurrence of an event
of default, Landlord may, in addition to any other remedies provided in this
Lease or by law enter upon the Demised Premises and take possession of any and
all goods, wares, equipment, fixtures, furniture and other personal property of
Tenant situated on the Demised Premises without liability for trespass or
conversion, and sell the property at public or private sale, with or without
having the property at the sale, after giving Tenant reasonable notice of the
time and place of any such sale. Unless otherwise required by law, notice to
Tenant of the sale shall be deemed

                                                                              11
<PAGE>

sufficient if given in the manner prescribed in this Lease at least ten (10)
days before the time of the sale. Any public sale made under this Article shall
be deemed to have been conducted in a commercially reasonable manner if held on
the Demised Premises or where the property is located, after the time, place and
method of sale and a general description of the types of property to be sold
have been advertised in a daily newspaper published in the county where the
Demised Premises is located for five (5) consecutive days before the date of the
sale. Landlord or its assigns may purchase at a public sale and, unless
prohibited by law, at a private sale. The proceeds from any disposition dealt
with in this Article, less any and all expenses connected with the taking of
possession, holding and selling of the property (including reasonable attorney's
fees and legal expenses), shall be applied as a credit against the indebtedness
secured by the security interest granted herein. Any surplus shall be paid to
Tenant or as otherwise required by law, and Tenant shall promptly pay any
deficiencies. Upon request by Landlord, Tenant agrees to execute and deliver to
Landlord a Financing Statement in a form sufficient to perfect the security
interest of Landlord in the aforementioned property and proceeds thereof under
the provisions of the Business and Commerce Code in force in the State of Texas.
The statutory lien for rent is expressly reserved, the security interest herein
granted is in addition and supplementary thereto. Provided Tenant is not in
default under any of the terms of this Lease, upon written request by Tenant
Landlord shall deliver a written subordination of Landlord's statutory and
contractual liens to any liens and security interests securing any institutional
third party financing of Tenant. Landlord shall not unreasonably withhold or
delay the delivery of Landlord's written subordination.

ARTICLE THIRTEEN: PROTECTION OF LENDERS

13.01. SUBORDINATION AND ATTORNMENT. Landlord shall have the right to
subordinate this Lease to any future ground Lease, deed of trust or mortgage
encumbering the Demised Premises, and advances made on the security thereof and
any renewals, modifications, consolidations, replacements or extensions thereof,
whenever made or recorded. Landlord's right to obtain such a subordination is
subject to Landlord's providing Tenant with a written Subordination,
Non-disturbance and Attornment Agreement from the ground lessor, beneficiary or
mortgagee IN A FORM REASONABLY ACCEPTABLE TO TENANT wherein Tenant's right to
peaceable possession of the Demised Premises during the Lease Term shall not be
disturbed if Tenant pays the Rent and performs all of Tenant's obligations under
this Lease and is not otherwise in default, in which case Tenant shall attorn to
the transferee of or successor to Landlord's interest in the Demised Premises
and recognize the transferee or successor as Landlord under this Lease. If any
ground lessor, beneficiary or mortgagee elects to have this Lease superior to
the lien of its ground lease, deed of trust or mortgage and gives Tenant written
notice thereof, this Lease shall be deemed superior to the ground lease, deed of
trust or mortgage whether this Lease is dated prior or subsequent to the date of
the ground lease, deed of trust or mortgage or the date of recording thereof.
Tenant's rights under this Lease, unless specifically modified at the time this
Lease is executed, are subordinated to any existing ground lease, deed of trust
or mortgage encumbering the Demised Premises.

13.02. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any instruments or
documents necessary or appropriate to evidence any attornment or subordination
or any agreement to attorn or subordinate. If Tenant fails to do so within ten
(10) days after written request, Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver the attornment or
subordination document or agreement.

13.03. ESTOPPEL CERTIFICATES.

         A. Upon Landlord's written request, Tenant shall execute and deliver to
Landlord a written statement certifying: (1) whether Tenant is an assignee or
subtenant; (2) the expiration date of the Lease; (3) the number of renewal
options under the lease and the total period of time covered by the renewal
option(s); (4) that none of the terms or provisions of the Lease have been
changed since the original execution of the Lease, except as shown on attached
amendments or modifications; (5) that no default by Landlord exists under the
terms of the Lease (or if Landlord is claimed to be in default, stating why);
(6) that the Tenant has no claim against the Landlord under the Lease and has no
defense or right of offset against collection of rent or other charges accruing
under the Lease, EXCEPT AS SHOWN ON ATTACHED EXHIBITS; (7) the amount and date
of the last payment of Rent; (8) the amount of any security deposits and other
deposits, if any; and (9) the identity and address of any guarantor of the
Lease. Tenant shall deliver the statement to Landlord within ten (10) days after
Landlord's request. Landlord may forward any such statement to any prospective
purchaser or lender of the Demised Premises. The purchaser or lender may rely
conclusively upon the statement as true and correct BUT TENANT SHALL NOT BE
LIABLE FOR DAMAGES IF ANY INFORMATION CONTAINED THEREIN IS FOUND TO BE
INACCURATE.

         B. If Tenant does not deliver the written statement to Landlord within
the ten (10) day period, Landlord, and any prospective purchaser or lender, may
conclusively presume and rely upon the following facts: (1) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (2) that this Lease has not been canceled or terminated except as
otherwise represented by Landlord; (3) that not more than one monthly
installment of Base Rent and other charges have been paid in advance; (4) there
are no claims against Landlord nor any defenses or rights of offset against
collection of Rent or other charges; and (5) that Landlord is not in default
under this Lease. In such event, Tenant shall be estopped from denying the truth
of the presumed facts.

                                                                              12
<PAGE>

13.04. TENANT'S FINANCIAL CONDITION. Within ten (10) days after written request
from Landlord, Tenant shall deliver to Landlord financial statements as are
reasonably required by Landlord to verify the net worth of Tenant, or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall deliver
to any lender designated by Landlord any financial statements required by the
lender to facilitate the financing or refinancing of the Demised Premises.
Tenant represents and warrants to Landlord that each financial statement is a
true, complete, and accurate statement as of the date of the statement. All
financial statements shall be confidential and shall be used only for the
purposes set forth in this Lease.

ARTICLE FOURTEEN: ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY

14.01. TENANT'S COMPLIANCE WITH ENVIRONMENTAL LAWS. Tenant, at Tenant's expense,
shall comply with all laws, rules, orders, ordinances, directions, regulations
and requirements of Federal, state, county and municipal authorities pertaining
to Tenant's use of the Property and with the recorded covenants, conditions and
restrictions, regardless of when they become effective, including, without
limitation, all applicable Federal, State and local laws, regulations or
ordinances pertaining to air and water quality, Hazardous Materials (as defined
in Section 14.05), waste disposal, air emissions and other environmental
matters, all zoning and other land use matters, and with any direction of any
public officer or officers, pursuant to law, which impose any duty upon Landlord
or Tenant with respect to the use or occupancy of the Property.

14.02. TENANT'S INDEMNIFICATION. Tenant shall not cause or permit any Hazardous
Materials EXCEPT FOR DE MINIMUS QUANTITIES OF HOUSEHOLD CLEANING PRODUCTS AND
OFFICE SUPPLIES IN THE ORDINARY COURSE OF TENANT'S BUSINESS AT THE DEMISED
PREMISES AND THAT ARE USED, KEPT AND DISPOSED OF IN COMPLIANCE WITH APPLICABLE
LAW) to be brought upon, kept or used in or about the Property by Tenant, its
agents, employees, contractors or invitees without the prior written consent of
Landlord. If Tenant breaches the obligations stated in the preceding Section or
sentence, or if the presence of Hazardous Materials on the Property caused or
permitted by Tenant results in contamination of the Property or any other
property, or if contamination of the Property or any other property by Hazardous
Materials otherwise occurs for which Tenant is legally liable to Landlord for
damage resulting therefrom, then Tenant shall indemnify, defend and hold
Landlord harmless from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses (including, without limitation, diminution in value
of the Property, damages for the loss or restriction on use of rentable or
unusable space or of any amenity or appurtenance of the Property, damages
arising from any adverse impact on marketing of building space or land area,
sums paid in settlement of claims, reasonable attorney's fees, court costs,
consultant fees and expert fees) which arise during or after the Lease Term as a
result of the contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any clean-up, remedial work, removal or
restoration work required by any Federal, State or local government agency
because of Hazardous Materials present in the soil or ground water on or under
the property. Without limiting the foregoing, if the presence of any Hazardous
Materials on the Property (or any other property) caused or permitted by Tenant
results in any contamination of the Property, Tenant shall promptly take all
actions at Tenant's sole expense as are necessary to return the Property to the
condition existing prior to the introduction of any such Hazardous Materials,
provided that Landlord's approval of such actions is first obtained. The
foregoing indemnity shall survive the expiration or termination of this Lease.

14.03. LANDLORD'S REPRESENTATIONS AND WARRANTIES. Landlord represents and
warrants, to the best of Landlord's actual knowledge, that: (i) any handling,
transportation, storage, treatment or usage of Hazardous Materials that has
occurred on the Property to date has been in compliance with all applicable
Federal, State and local laws, regulations and ordinances; and (ii) no leak,
spill, release, discharge, emission or disposal of Hazardous Materials has
occurred on the Property to date and that the soil or groundwater on or under
the Property is free of Hazardous Materials as of the Commencement Date, unless
expressly disclosed by Landlord to Tenant in writing.

14.04. LANDLORD'S INDEMNIFICATION. Landlord hereby indemnifies, defends and
holds harmless from any claims, judgments, damages, penalties, fines, costs,
liabilities, (including sums paid in settlements of claims) or loss, including,
without limitation, attorneys' fees, court costs, consultant fees, and expert
fees, which arise during or after the term of this Lease from or in connection
with the presence or suspected presence of Hazardous Materials in the soil or
groundwater on or under the Property, unless the Hazardous Material is released
by Tenant or is present solely as a result of the negligence or willful conduct
of Tenant. Without limiting the generality of the foregoing, the indemnification
provided by this Section 14.04 shall specifically cover costs incurred in
connection with any investigation of site conditions or any clean-up, remedial
work, removal or restoration work required by any Federal, State or local
governmental authority.

14.05. DEFINITIONS. For purposes of this Lease, the term "Hazardous Materials"
means any one or more pollutant, toxic substance, hazardous waste, hazardous
material, hazardous substance, solvent or oil as defined in or pursuant to the
Resource Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the Federal
Clean Water Act, as amended, or any other Federal, State or local environmental
law, regulation, ordinance, or rule, whether existing as of the date of this
Lease or subsequently enacted.

                                                                              13
<PAGE>

14.06. SURVIVAL. The representations and indemnities contained in this Article
14 shall survive the expiration or termination of this Lease.

ARTICLE FIFTEEN: PROFESSIONAL SERVICE FEES

15.01. AMOUNT AND MANNER OF PAYMENT. Professional service fees due to the
Principal Broker shall be calculated and paid as follows:

         A. Landlord agrees to pay to the Principal Broker a monthly
professional service fee (the "Fee") for negotiating this Lease, plus any
applicable sales taxes, equal to the percentage stated in Section 1.13.A of each
monthly Rent payment at the time the payment is due.

         B. Landlord agrees to pay to the Principal Broker a lump sum
professional service fee (the "Fee") for negotiating this Lease, plus any
applicable sales taxes, equal to the percentage stated in Section 1.13.A of the
total Rent to become due to Landlord during the Lease Term. The fee shall be
paid to the Principal Broker (i) one-half on the date of final execution of this
Lease, and (ii) the balance on the Commencement Date of this Lease.

15.02. OTHER BROKERS. Both Landlord and Tenant represent and warrant to the
other party that they have had no dealings with any person, firm or agent in the
negotiation of this Lease other than the Broker(s) named in this Lease, and no
other broker, agent, person, firm or entity other than the Broker(s) is entitled
to any commission or fee in connection with this Lease.

15.03. PAYMENTS ON RENEWAL, EXPANSION, EXTENSION OR NEW LEASE. If during the
Lease Term (as may be renewed or extended) or within ten (10) years from the
Commencement Date, whichever is the greater period of time, Tenant, Tenant's
successors or assigns: (a) exercises any right or option to renew or extend the
Lease Term (whether contained in this Lease or in any amendment, supplement or
other agreement pertaining to this Lease) or enters into a new lease or rental
agreement with Landlord covering the demised Premises; or (b) enters into any
lease, extension, renewal, expansion or other rental agreement with Landlord
demising to Tenant any premises located on or constituting all or part of any
tract or parcel of real property adjoining, adjacent to or contiguous to the
Demised Premises and owned by Landlord on the Commencement Date, Landlord shall
pay to the Principal Broker an additional Fee covering the full period of the
renewal, extension, lease, expansion or other rental agreement which shall be
due on the date of exercise of a renewal option, or the date of execution in the
case of an extension, new lease, expansion or other agreement. The additional
Fee shall be computed under Section 15.01.A or 15.01.B above (whichever has been
made applicable under Section 1.13), as if a new lease had been made for such
period of time.

15.04. PAYMENTS ON SALE. If Tenant, Tenant's successors or assigns, purchases
the Demised Premises at any time, pursuant to a purchase option contained in
this Lease (or any lease, extension, renewal, expansion or other rental
agreement) or, in the absence of any purchase option or exercise thereof,
purchases the Demised Premises within ten (10) years from the Commencement Date,
Landlord shall pay to the Principal Broker a Professional Service Fee in cash
equal to the percentage stated in Section 1.13.B of the purchase price, payable
at closing. Upon closing of a sale to Tenant, all monthly lease Fees shall
terminate upon payment of the Professional Service Fee on the sale.

15.05. LANDLORD'S LIABILITY. If this Lease is negotiated by Principal Broker in
cooperation with another broker, Landlord shall be liable for payment of all
Professional Service Fees to Principal Broker only, whereupon Landlord shall be
protected from any claims from a Cooperating Broker. The Principal Broker may
pay a portion of the Fee to any Cooperating Broker pursuant to a separate
agreement between the Brokers.

15.06. JOINT LIABILITY OF TENANT. If Tenant enters into any new lease,
extension, renewal, expansion, or other agreement to rent, occupy or purchase
any property described in Section 15.03 within the time specified in that
Section, the agreement must be handled by the Principal Broker. Otherwise,
Tenant shall be jointly and severally liable with Landlord for any payments due
or to become due to the Principal Broker.

15.07. ASSUMPTION ON SALE. In the event of a sale of the Demised Premises or the
assignment of this Lease by Landlord, Landlord shall obtain from the purchaser
or assignee agrees to pay the Principal Broker all Professional Service Fees
payable under this Lease and shall deliver a fully executed original counterpart
thereof to Principal Broker on the date of closing of the sale of the Demised
Premises or assignment of this Lease. Landlord shall be released from personal
liability for subsequent payments only upon the delivery to Principal Broker of
that counterpart of the Assumption Agreement.

15.08. TERMINATION. The termination of this Lease by the mutual agreement of
Landlord and Tenant shall not affect the right of the Principal Broker to
continue to receive the Fees agreed to be paid under this Lease, just as if
Tenant had

                                                                              14
<PAGE>

continued to occupy the Demised Premises and had paid the Rent during the entire
Lease Term. Termination of this Lease under Article Eight or Article Nine shall
not terminate the Principal Broker's right to collect the Fees.

15.09. INTERMEDIARY RELATIONSHIP.

         A. If either Principal Broker and/or Cooperating Broker (together, the
"Brokers") has indicated in Sections 1.11 and 1.12 that they are acting as an
intermediary, then Landlord and Tenant hereby authorize the applicable Broker(s)
to act as an intermediary between Landlord and Tenant in connection with this
Lease, and acknowledge that the source of any expected compensation to the
Brokers will be Landlord, and the Brokers may also be paid a fee by the Tenant.
A REAL ESTATE BROKER WHO ACTS AS AN INTERMEDIARY BETWEEN PARTIES IN A
TRANSACTION:

         (1) MAY NOT DISCLOSE TO TENANT THAT LANDLORD WILL ACCEPT A RENT LESS
THAN THE ASKING RENT UNLESS OTHERWISE INSTRUCTED IN A SEPARATE WRITING BY
LANDLORD;

         (2) MAY NOT DISCLOSE TO LANDLORD THAT TENANT WILL PAY A RENT GREATER
THAN THE RENTAL SUBMITTED IN A WRITTEN OFFER TO LANDLORD UNLESS OTHERWISE
INSTRUCTED IN A SEPARATE WRITING BY TENANT;

         (3) MAY NOT DISCLOSE ANY CONFIDENTIAL INFORMATION, OR ANY INFORMATION A
PARTY SPECIFICALLY INSTRUCTS THE REAL ESTATE BROKER IN WRITING NOT TO DISCLOSE,
UNLESS OTHERWISE INSTRUCTED IN A SEPARATE WRITING BY THE RESPECTIVE PARTY OR
REQUIRED TO DISCLOSE SUCH INFORMATION BY THE TEXAS REAL ESTATE LICENSE ACT OR A
COURT ORDER OR IF THE INFORMATION MATERIALLY RELATES TO THE CONDITION OF THE
PROPERTY;

         (4) SHALL TREAT ALL PARTIES TO THE TRANSACTION HONESTLY; AND

         (5) SHALL COMPLY WITH THE TEXAS REAL ESTATE LICENSE ACT.

         B. APPOINTMENTS. Broker is authorized to appoint, by providing written
notice to the parties, one or more licensees associated with Broker to
communicate with and carry out instructions of one party, and one or more
licensees associated with Broker to communicate with and carry out instructions
of the other party or parties. During negotiations, an appointed licensee may
provide opinions and advice to the party to whom the licensee is appointed.

ARTICLE SIXTEEN: MISCELLANEOUS

16.01. DISCLOSURE. Landlord and Tenant understand that a real estate broker is
qualified to advise on matters concerning real estate and is not expert in
matters of law, tax, financing, surveying, hazardous materials, engineering,
construction, safety, zoning, land planning, architecture or the ADA. The
Brokers hereby advise Tenant to seek expert assistance on such matters. Brokers
do not investigate a property's compliance with building codes, governmental
ordinances, statutes and laws that relate to the use or condition of a property
and its construction, or that relate to its acquisition. If Brokers provide
names of consultants or sources for advice or assistance, Tenant acknowledges
that the Brokers do not warrant the services of the advisors or their products
and cannot warrant the suitability of property to be acquired or leased.
Furthermore, the Brokers do not warrant that the Landlord will disclose any or
all property defects, although the Brokers will disclose to Tenant any actual
knowledge possessed by Brokers regarding defects of the Demised Premises and the
Property. In this regard, Tenant agrees to make all necessary and appropriate
inquiries and to use diligence in investigating the Demised Premises and the
Property before consummating this Lease. Landlord and Tenant hereby agree to
indemnify, defend, and hold the Brokers harmless of and from any and all
liabilities, claims, debts, damages, costs, or expenses, including but not
limited to reasonable attorney's fees and court costs, related to or arising out
of or in any way connected to representations concerning matters properly the
subject of advice by experts. In addition, to the extent permitted by applicable
law, the Brokers' liability for errors or omissions, negligence, or otherwise,
is limited to the return of the Fee, if any, paid to the Brokers pursuant to
this Lease.

16.02. FORCE MAJEURE. If performance by Landlord of any term, condition or
covenant of this Lease is delayed by any Act of God, strike, lockout, shortage
of material or labor, restriction by any governmental authority, civil riot,
flood, or any other cause not within the control of Landlord, the period for
performance of the term, condition or covenant shall be extended for a period
equal to the period Landlord is so delayed or prevented.

16.03. INTERPRETATION. The captions of the Articles or Sections of this Lease
are to assist the parties in reading this lease and are not a part of the terms
or provisions of this Lease. Tenant shall be responsible for the conduct, acts
and omission of Tenant's agents, employees, customers, contractors, invitees,
agents, successors or others using the Demised Premises with Tenant's expressed
or implied permission. Whenever required by the context of this Lease, the
singular shall include the plural and the plural shall include the singular, and
the masculine, feminine and neuter genders shall each include the other.

16.04. WAIVERS. All waivers to provisions of this Lease must be in writing and
signed by the waiving party. Landlord's delay or failure to enforce any
provisions of this Lease or its acceptance of late installments of Rent shall
not be a waiver and shall not prevent Landlord from enforcing that provision in
any other provision of this Lease in the future. No statement on a payment check
from Tenant or in a letter accompanying a payment check shall be binding on
Landlord. Landlord may, with or without notice to Tenant, negotiate, cash, or
endorse the check without being bound to the condition of any such statements.

                                                                              15
<PAGE>

16.05. SEVERABILITY. A determination by a court of competent jurisdiction that
any provision of this Lease is invalid or unenforceable shall not cancel or
invalidate the remainder of that provision of this Lease, which shall remain in
full force and effect.

16.06. JOINT AND SEVERAL LIABILITY. All parties signing this Lease as Tenant
shall be jointly and severally liable for all obligations of Tenant.

16.07. AMENDMENTS OR MODIFICATIONS. This Lease is the only agreement between the
parties pertaining to the lease of the Demised Premises and no other agreements
are effective unless made a part of this Lease. All amendments to this Lease
must be in writing and signed by all parties. Any other attempted amendment
shall be void.

16.08. NOTICES. All notices and other communications required or permitted under
this Lease must be in writing and shall be deemed delivered, whether actually
received or not, on the earlier of: (i) actual receipt if delivered in person or
by messenger with evidence of delivery; or (ii) receipt of an electronic
facsimile transmission ("Fax") with confirmation of delivery; or (iii) upon
deposit in the United States Mail as required below. Notices may be transmitted
by Fax to the Fax telephone numbers specified in Article One on the first page
of this Lease, if any. Notices delivered by mail must be deposited in the U.S.
Postal Service, first class postage prepaid, and properly addressed to the
intended recipient as set forth in Article One. After possession of the Demised
Premises by Tenant, Tenant's address for notice purposes will be the address of
the Demised Premises unless Tenant notifies Landlord in writing of a different
address to be used for that purpose. Any party may change its address for notice
by delivering written notice of its new address to all other parties in the
manner set forth above. Copies of all notices should also be delivered to the
Principal Broker, but failure to notify the Principal Broker will not cause an
otherwise properly delivered notice to be ineffective.

16.09. ATTORNEY'S FEES. If on account of any breach or default by any party to
this Lease in its obligations to any other party to this Lease (including but
not limited to the Principal Broker), it becomes necessary for a party to employ
an attorney to enforce or defend any of its rights or remedies under this Lease,
the non-prevailing party agrees to pay the prevailing party its reasonable
attorney's fees and court costs, if any.

16.10. VENUE. All obligations under this Lease, including but not limited to the
payment of Fees to the Principal Broker, shall be performed and payable in the
county in which the Property is located. The laws of the State of Texas shall
govern this Lease.

16.11. SURVIVAL. All obligations of any party to this Lease which are not
fulfilled at the expiration or the termination of this Lease shall survive such
expiration or termination as continuing obligations of the party.

16.12. BINDING EFFECT. This Lease shall inure to the benefit of, and be binding
upon, each of the parties to this Lease and their respective heirs,
representatives, successors and assigns. However, Landlord shall not have any
obligation to Tenant's successors or assigns unless the rights or interests of
the successors or assigns are acquired in accordance with the terms of this
Lease.

16.13. CONSULT AN ATTORNEY. THIS LEASE IS AN ENFORCEABLE, LEGALLY BINDING
AGREEMENT. READ IT CAREFULLY. The brokers involved in the negotiation of this
Lease cannot give you legal advice. The parties to this Lease acknowledge that
they have been advised by the Brokers to have this Lease reviewed by competent
legal counsel of their choice before signing this Lease. By executing this
Lease, Landlord and Tenant each agree to the provisions, terms, covenants and
conditions contained in this Lease.

16.14. OFFER. The execution of this Lease by the first party to do so
constitutes an offer to lease the Demised Premises. Unless within the number of
days stated in Section 1.14 above after the date of its execution by the first
party to do so, this Lease is signed by the other party and a fully executed
copy is delivered to the first party, such offer to lease shall be automatically
withdrawn and terminated.

ARTICLE SEVENTEEN: SPECIAL STIPULATIONS

17.1. TENANT IMPROVEMENTS. Demised Premise to be leased on an "As Is" basis with
the exception that Landlord will, AT LANDLORD'S SOLE EXPENSE, furnish labor and
materials to improve the Demised Premise as follows:

         (a) replace carpet w/ tile, add additional a/c vent and add one 220v
             outlet (specific outlet type) to office #114

         (b) ensure telephone DEMARC is in a secure area adjacent to the Demised
             Premises

                                                                              16
<PAGE>

         (c) change locks on all exterior doors

         (d) install 220v outlet on the "T" wall between office #116 and #118

         (e) add exit door to exterior of west side of Demised Premises

         (f) install copper water line to ice maker in break area

         (g) partition between Demised Premises and reconfigured CTC space

         THE ABOVE DESCRIBED WORK SHALL BE PERFORMED BY LANDLORD AS SOON AS
   POSSIBLE AFTER THE EXECUTION OF THIS LEASE. IF LANDLORD HAS FAILED TO PERFORM
   SUCH WORK WITHIN TWENTY (20) DAYS AFTER THE EXECUTION OF THIS LEASE, THEN
   TENANT SHALL HAVE THE RIGHT TO PERFORM SUCH WORK AND DEDUCT THE COST OF SUCH
   WORK FROM THE BASE RENT DUE TO LANDLORD. IF ANY PORTION OF THE WORK CAN NOT
   REASONABLY BE PERFORMED WITHIN 10 DAYS FROM THE DATE OF EXECUTION OF THIS
   LEASE, THEN PROVIDED LANDLORD HAS BEGUN TO PERFORM SUCH WORK AND IS
   PROCEEDING DILIGENTLY TO COMPLETE SUCH WORK, TENANT SHALL NOT HAVE THE RIGHT
   TO DEDUCT THE COST OF SUCH WORK FROM BASE RENT.

17.2. EARLY TERMINATION. Tenant shall have the option to terminate the Lease on
the third anniversary of the Commencement Date (the "Termination Date"),
provided Tenant gives Landlord not less than six (6) months prior written notice
to terminate and provided Tenant is not in default under the Lease at the time
of the giving of such notice nor on the Termination Date. As of the Termination
Date, (a) all Rent and other sums payable by Tenant under the Lease shall be
paid through and apportioned as of the Termination Date; (b) Tenant shall pay
Landlord an amount equal to three (3) months of the then current Base Rental to
cover unamortized improvements and real estate commissions; (c) neither party
shall have any rights, liabilities or obligations under the Lease for the period
accruing after the Termination Date, except those which, by the provisions of
the Lease, expressly survive the termination of the term of the Lease; and (d)
Tenant shall surrender the Leased Premises in the condition required under the
Lease.

17.3. PARKING. Tenant shall have the right to use on a non-exclusive basis up to
forty (40) parking spaces located on the Property.

<Table>
<S>                                                           <C>
LANDLORD                                                      TENANT
         JAGEE REAL PROPERTIES, L.P.                          GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC.

By (Signature):  /s/ DOUGLAS WAIDELICH                        By (Signature):   /s/ GLENN W. ANDERSON
                -------------------------------------                          ------------------------------------
Name:                                                         Name:
       ----------------------------------------------                ----------------------------------------------
Title:                                                        Title:
        ---------------------------------------------                 ---------------------------------------------
Date of Execution:                                            Date of Execution:
                    ---------------------------------                             ---------------------------------

PRINCIPAL BROKER                                              COOPERATING BROKER
Trammell Crow Company                                         NAI Stoneleigh Huff Brous McDowell, Inc.

By (Signature):                                               By (Signature):
                -------------------------------------                          ------------------------------------
Name:                                                         Name:
       ----------------------------------------------                ----------------------------------------------
Title:                                                        Title:
        ---------------------------------------------                 ---------------------------------------------
</Table>

(C) Copyright 1996 NTCAR form 02 (1/96)

                                                                              17
<PAGE>

                              TRAMMELL CROW COMPANY
                                    EXHIBIT B

                                     [MAP]

                                                                              18

<PAGE>

                              TRAMMELL CROW COMPANY
               NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS(R)

                               ADDENDUM A TO LEASE
                              EXPENSE REIMBURSEMENT

DEMISED PREMISES/ADDRESS:             5400 AIRPORT FREEWAY, SUITE A
                           ----------------------------------------------------
  (Check all boxes which apply. Boxes not checked do not apply to this Lease)

A.  EXPENSE REIMBURSEMENT. Tenant shall pay the Landlord as additional Rent a
    portion of the following expenses (collectively the "Reimbursement") which
    are incurred by or assessed against the Demised Premises [check all that are
    to apply]:

         [X]  Ad Valorem Taxes;
         [X]  Insurance Premiums;
         [X]  Common Area Maintenance (CAM) Expenses;
         [X]  Operating Expenses;
         [ ]  Roof and Structural Maintenance Expenses;

B.  EXPENSE REIMBURSEMENT Limitations. The amount of Tenant's Reimbursement
    shall be determined by one of the following methods as described in Section
    4 below [check only one]:

         [X]  Base Year/Expense Stop Adjustment;
         [ ]  Pro Rata Adjustment;
         [ ]  Fixed Amount Adjustment;
         [ ]  Net Lease Provisions.

C.  EXPENSE REIMBURSEMENT PAYMENTS. Tenant agrees to pay any end of year lump
    sum Reimbursement within thirty (30) days after receiving an invoice from
    Landlord. Any time during the Lease Term (or any renewals or extensions),
    Landlord may direct Tenant to pay monthly an estimated portion of the
    projected future Reimbursement amount. Any such payment directed by Landlord
    shall be due and payable monthly on the same day that the Base Rent is due.
    Landlord may, at Landlord's option and to the extent allowed by applicable
    law, impose a Late Charge on any Reimbursement payments which are not
    actually received by Landlord on or before the due date, in the amount and
    manner set forth in Section 3.03 of this Lease. Any Reimbursement relating
    to partial calendar years shall be prorated accordingly. Tenant's Pro Rata
    Share of such Reimbursements shall be based on the square footage of useable
    area contained in the Demised Premises in proportion to the square footage
    of useable building area of the Property. Tenant may audit or examine those
    items of expense in Landlord's records which relate to Tenant's obligations
    under this Lease. Landlord shall promptly refund to Tenant any overpayment
    which is established by an audit or examination. If the audit or examination
    reveals an error of more than five percent (5%) over the figures billed to
    Tenant, Landlord shall pay the reasonable cost of the audit or examination.

D.  DEFINITIONS

    1.  AD VALOREM TAXES. All general real estate taxes, general and special
        assessments, parking surcharges, rent taxes, and other similar
        governmental charges levied against the Property for each calendar year.

    2.  INSURANCE PREMIUMS. All Landlord's insurance premiums attributable to
        the Property, including but not limited to insurance for fire, casualty,
        general liability, property damage, medical expenses, and extended
        coverage, and loss of rents coverage for six months' Rent.

    3.  COMMON AREA MAINTENANCE EXPENSES. Common area maintenance expenses
        ("CAM") means all costs of maintenance, inspection and repairs of the
        common area of the Property, including but not limited to those costs
        for security, lighting, painting, cleaning, decorations and fixtures,
        utilities, ice and snow removal, trash disposal, project signs, minor
        roof defects, pest control, project promotional expenses, property
        owners' association dues, wages and salary costs of maintenance
        personnel, and other expenses benefiting all the Property which may be
        incurred by Landlord, in its discretion, including sales taxes and a
        reasonable service charge of the administration thereof. The "common
        area" is defined as that part of the Property intended for the
        collective use of all tenants including, but not limited to, the parking
        areas, driveways, loading areas, landscaping, gutters and downspouts,
        plumbing, electrical systems, roof, exterior walls, sidewalks, malls,
        promenades (enclosed or otherwise), meeting rooms, doors, windows,
        corridors and public rest rooms. CAM does not include depreciation on
        Landlord's

                                                                              19
<PAGE>

        original investment, cost of tenant improvements, real estate broker's
        fees, Landlord's management office and overhead expenses, or interest or
        depreciation on capital investments.

    4.  OPERATING EXPENSES. All REASONABLE costs of ownership, building
        management, maintenance, repairs and operation of the Property,
        including but not limited to AD VALOREM taxes, insurance PREMIUMS, CAM,
        reasonable management fees, wages and salary costs of building
        management personnel, janitorial, utilities, and professional services
        such as accounting and legal fees. Operating Expenses do not include the
        capital cost of management office equipment and furnishings;
        depreciation on Landlord's original investment; roof and structural
        maintenance; the cost of tenant improvements; real estate brokers' fees;
        advertising COSTS; or interest or depreciation on capital investments;
        SALARIES OF OFFICERS AND DIRECTORS OF LANDLORD; PENALTIES OR INTEREST
        LEVIED AGAINST LANDLORD FOR LATE PAYMENT OF TAXES; PROFESSIONAL FEES IN
        CONNECTION WITH FINANCING, REFINANCING OR SELLING THE PROPERTY; COSTS
        RELATING TO THE HANDLING, REMOVAL, TREATMENT OR DISPOSAL OF HAZARDOUS
        MATERIALS IN THE PROPERTY; FEES RELATING TO DISPUTES WITH OTHER TENANTS
        OF THE PROPERTY; OR THE COSTS OF CORRECTING LATENT DEFECTS IN THE
        BUILDING OR PROPERTY.

    5.  ROOF AND STRUCTURAL MAINTENANCE EXPENSES. All costs of maintenance,
        repair and replacement of the roof, roof deck, flashings, skylights,
        foundation, floor slabs, structural components and the structural
        soundness of the building in general.

    6.  BASE YEAR/EXPENSE STOP ADJUSTMENT. Tenant shall pay to Landlord as
        additional rent Tenant's Pro Rata Share of increases in Landlord's Ad
        Valorem Taxes, Insurance Premiums, CAM Expenses, Operating Expenses,
        and/or Roof and Structural Maintenance Expenses, whichever are
        applicable, for the Property for an calendar year during the Lease Term
        or during any Extension of this Lease, over [check only one]:

<Table>
<S>                                                                        <C>
             [X]  a.  Such amounts paid by Landlord for the Base Year      2002                      , or
                                                                      -------------------------------
             [ ]  b.  $                                     per square foot of floor area (as set forth in
                       -----------------------------------
                  Section 1.04.C) per year.
</Table>

    9.

E. [ ] GROSS-UP PROVISIONS. [Check this only if applicable.] If the Property is
a multi-tenant building and is not fully occupied during the Base Year or any
portion of this Lease Term, an adjustment shall be made in computing the
variable costs for each applicable calendar year. Variable costs shall include
only those items or expense that vary directly proportionately to the occupancy
of the Property. Variable costs which are included in the CAM and Operating
Expenses shall be increased proportionately to the amounts that, in Landlord's
reasonable judgment, would have been incurred had ninety percent (90%) of the
useable area of the Property been occupied during those years.

                                                                              20
<PAGE>

                              TRAMMELL CROW COMPANY
                NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS(R)

                               ADDENDUM G TO LEASE

                              RULES AND REGULATIONS

Demised Premises/Address:           5400 AIRPORT FREEWAY, SUITE A
                          -----------------------------------------------------

A. APPLICATION. The following standards shall affect and shall be observed by
Tenant, Tenant's employees and invitees, for the mutual safety, cleanliness,
care, protection, comfort and convenience of all tenants and occupants of the
Property, and shall be applicable to the building(s), to the parking garages, if
any, to the common areas, driveways, parking lots, and to the Demised Premises,
including the land situated beneath and any appurtenances thereto.

B. CONSENT REQUIRED. Any exception to these Rules and Regulations must first be
approved in writing by Landlord. For purposes of these Rules and Regulations,
the term "Landlord" includes the building manager, the building manager's
employees, and any other agent or designee authorized by Landlord to manage or
operate the Property.

C. RULES AND REGULATIONS:

    1.  Tenant may not conduct any auction, "flea market" or "garage sale" on
        the demised Premises nor store any goods or merchandise on the Property
        except for Tenant's own business use. Food may not be prepared in the
        Demised Premises except in small amounts for consumption by Tenant.
        Vending machines or dispensing machines may not be placed in the Demised
        Premises without Landlord's written approval. The Demised Premises may
        not be used or occupied as sleeping quarters or for lodging purposes.
        Animals may not be kept in or about the Property.

    2.  Tenant shall not obstruct sidewalks, driveways, loading areas, parking
        areas, corridors, hallways, vestibules, stairs and other similar areas
        designated for the collective use of tenants, or use such areas for
        Tenant's storage, temporary or otherwise, or for any purpose other than
        ingress and egress to and from the Demised Premises. Tenant shall comply
        with parking rules and guidelines as may be posted on the Property from
        time to time.

    3.  Tenant shall not make any loud noises, unusual vibrations, unpleasant
        odors, objectionable or illegal activities on the Property. Tenant shall
        not permit the operation of any equipment in the Demised Premises that
        could annoy other occupants of the Property. Tenant shall not interfere
        with the possession of other tenants of the Property.

    4.  Tenant may not bring any flammable, explosive, toxic, noxious, dangerous
        or hazardous materials onto the Property.

    5.  Installation of security systems, telephone, television and other
        communication cables, fixtures and equipment must comply with Section
        7.04 of the Lease, except that routine installation and construction of
        normal communication devices which do not require any holes in the roof
        or exterior walls of the Property do not require written approval of
        Landlord.

    6.  Movement into or out of the building through public entrances, lobbies
        or corridors which requires use of a hand truck, dolly or pallet jack to
        carry freight, furniture, office equipment, supplies and other large or
        heavy material, must be limited to the service entrances and freight
        elevators only and must be done at times and in a manner so as not to
        unduly inconvenience other occupants of the Property. All wheels for
        such use must have rubber tires and edge guards to prevent damage to the
        building. Tenant shall be responsible for and shall pay all costs to
        repair damages to the building caused by the movement of materials by
        Tenant.

    7.  Requests by Tenant for building services, maintenance and repair must be
        made in writing to the office of the building manager designated by
        Landlord and must be dated. Tenant shall give prompt written notice to
        Landlord of any significant damage to or defects in the Demised Premises
        or the Property, especially including plumbing, electrical and
        mechanical systems, heating, ventilating and air conditioning systems,
        roofs, windows, doors, foundation and structural components, regardless
        of whose responsibility it is to repair such damage.

    8.  Tenant shall not change locks or install additional locks on doors
        without the prior written consent of Landlord. If Tenant changes locks
        or installs additional locks on the Property, Tenant shall within five
        days thereafter provide Landlord with a copy of each separate key to
        each lock. Upon termination of Tenant's occupancy of the Demised
        Premises, Tenant must surrender all keys to the Demised Premises and to
        the Property to Landlord.

                                                                              21

<PAGE>

    9.  Harmful liquids, toxic wastes, bulky objects, insoluble substances and
        other materials which may cause clogging, stains or damage to plumbing
        fixtures or systems must not be placed in the lavatories, water closets,
        sinks or drains. Tenant must pay the costs to repair and replace drains,
        plumbing fixtures and piping which is required because of damage caused
        by Tenant.

    10. Tenant shall cooperate with Landlord and other occupants of the Property
        in keeping the Property and the Demised Premises neat and clean. Nothing
        may be swept, thrown or left in the corridors, stairways, elevator
        shafts, lobbies, loading areas, parking lots or any other common areas
        on the Property. All trash and debris must be properly placed in
        receptacles provided therefor.

    11. Landlord has the power and authority to regulate the weight and position
        of heavy furnishings and equipment on the floor of the Demised Premises,
        including safes, groups of filing cabinets, machines, and any other item
        which may overload the floor. Tenant shall notify the Landlord when
        heavy items are to be taken into or out of the building, and the
        placement and transportation of heavy items may be done only with the
        prior written approval of Landlord.

    12. No window screens, blinds, draperies, awnings, solar screen films,
        window ventilators or other materials visible from the exterior of the
        Demised Premises may be placed in the Demised Premises without
        Landlord's approval. Landlord is entitled to control all lighting that
        may be visible from the exterior of the building.

    13. No advertisement, sign, notice, handbill, poster or banner may be
        exhibited, distributed, painted or affixed upon the Property. No
        directory of tenants is allowed on the Property other than that provided
        by Landlord.

    14. Tenant agrees to cooperate with and assist Landlord in the prevention of
        peddling, canvassing, and soliciting on the Property.

    15. Tenant accepts any and all liability for damages and injuries to persons
        and property resulting from the serving and sales of alcoholic beverages
        on or from the Property.

    16. Any person entering and leaving the building before and after normal
        working hours, or building hours if posted by Landlord, whichever
        applies, may be required to identify himself to security personnel by
        signing a list and giving the time of day and destination or location of
        the applicable Demised Premises. Normal building business hours are
        established by Landlord from time to time.

D. REVISIONS. Landlord reserves the right to revise and/or rescind any of these
Rules and Regulations and to make additional rules which Landlord may determine
are necessary from time to time for the safety, care, cleanliness, protection,
comfort and convenience of the tenants and occupants of the Property and for the
care, protection and cleanliness of the building. Revisions and additions will
be binding upon the Tenant as if they had been originally prescribed herein when
furnished in writing by Landlord to Tenant, provided the additions and revisions
apply equally to all tenants occupying the Property.

E. ENFORCEMENT. Any failure or delay by Landlord in enforcing these Rules and
Regulations will not prevent Landlord from enforcing these Rules and Regulations
in the future. If any of these Rules and Regulations is determined to be
unenforceable, it shall be severed from this Lease without affecting the
remainder of these Rules and Regulations.

                                                                              22

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