Exhibit 10.38
WAIVER AND SIXTH AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
     THIS WAIVER AND SIXTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
(this “Waiver and Amendment”) is dated the 10th day of September, 2008 by and
among FIRST ACCEPTANCE CORPORATION (the “Borrower”), SUNTRUST BANK as
Administrative Agent and as a Lender and FIRST BANK as a Lender.
RECITALS:
     A. The Borrower, Administrative Agent and Lenders are parties to a
Revolving Credit and Term Loan Agreement dated as of January 12, 2006 (as
previously amended by the Waiver and First Amendment to Revolving Credit and
Term Loan Agreement, as previously amended by the Waiver and Second Amendment to
Revolving Credit and Term Loan Agreement, as previously amended by the Waiver
and Third Amendment to Revolving Credit and Term Loan Agreement, as previously
amended by the Waiver and Fourth Amendment to Revolving Credit and Term Loan
Agreement, as previously amended by the Waiver and Fifth Amendment to Revolving
Credit and Term Loan Agreement, and as amended from time to time, collectively,
the “Credit Agreement”).
     B. Borrower has requested a waiver of compliance by the Borrower with
certain provisions of the Credit Agreement, wishes to permanently prepay
principal amounts owed under the Credit Agreement and has requested that certain
provisions of the Credit Agreement be amended.
     C. Subject to the terms of this Sixth Amendment to Revolving Credit and
Term Credit Agreement, the Lenders have agreed to such waivers and amendments as
set forth herein.
     D. Terms not defined herein shall have the meanings ascribed to such terms
in the Credit Agreement.
     NOW, THEREFORE, in consideration of the foregoing, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
     Section 1. Waiver of Compliance with Section 6.1 for Certain Period.
Compliance by the Borrower with the terms of Section 6.1 of the Credit Agreement
for the quarter ending June 30, 2008 is hereby waived.
     Section 2. Waiver of Compliance with Section 6.2 for Certain Period.
Compliance by the Borrower with the terms of Section 6.2 of the Credit Agreement
for the quarter ending June 30, 2008 is hereby waived.
     Section 3. Waiver of Compliance with Section 6.6 for Certain Period.
Compliance by the Borrower with the terms of Section 6.6 of the Credit Agreement
for the quarter ending June 30, 2008 is hereby waived.

 

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

 

     Section 4. Financial Covenant Waiver. Compliance with the terms of
Section 6.1, 6.2, 6.3, 6.5 and 6.6 of the Credit Agreement for the quarter
ending September 30, 2008 is hereby waived.
     Section 5. Cancellation of Revolving Loan Commitment. Effective as of the
date hereof, the Borrower shall not be entitled to request, and the Lenders
shall not be required to make, any Revolving Loans. The Revolving Commitments
are hereby cancelled.
     Section 6. Mandatory Principal Prepayment. The parties acknowledge that the
Borrower made a principal prepayment of $1,000,000 with respect to the Term
Loans on August 8, 2008.
     Section 7. Full Payment of Outstanding Term Loan. The outstanding principal
balance of the Term Loans, together with accrued interest, shall be paid in full
by the Borrower on or before October 31, 2008. In addition, the Borrower shall
pay any and all other amounts due under the Credit Agreement on or before
October 31, 2008.
     Section 8. Representations and Warranties. To induce the Administrative
Agent, the Issuing Bank, the Swingline Lender and the Lenders to enter into this
Waiver and Amendment, the Borrower hereby represents and warrants to the Lenders
that:
     (a) Reaffirmation. As of the date of this Waiver and Amendment and after
giving effect to this Waiver and Amendment, the representations and warranties
set forth in Article IV of the Credit Agreement are true and correct in all
material respects (except to the extent that any such representation or warranty
expressly relates to a specified earlier date, in which case such representation
or warranty shall be true and correct as of such earlier date, and except for
changes in facts and circumstances which are not prohibited by the terms of the
Credit Agreement); and
     (b) No Default. As of the date hereof and after giving effect to this
Waiver and Amendment, no Default or Event of Default shall have occurred and be
continuing.
     Section 9. Payment of Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of this Waiver and
Amendment.
     Section 10. Conditions. The effectiveness of this Waiver and Amendment is
subject to the satisfaction of the following conditions precedent:
     (a) The Lenders shall have received this Waiver and Amendment (and any
other documents necessary to evidence the transactions relating thereto) duly
executed by the Borrower and the Guarantors, as applicable;
     (b) No Default or Event of Default shall exist; and
     (c) The Administrative Agent shall have received an incumbency certificate
with respect to the officer(s) of Borrower executing this Waiver and Amendment,
a

2

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

 

certificate of existence for the Borrower and resolutions of the Board of
Directors of the Borrower.
     Section 11. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
     Section 12. Severability; Headings. Any provision of this Waiver and
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The section and
subsection headings used in this Amendment are for convenience of reference only
and are not to affect the construction hereof or to be taken into consideration
in the interpretation hereof.
     Section 13. Continuing Effect of Other Documents. This Waiver and Amendment
shall not constitute an amendment or waiver of any other provision of the Credit
Agreement not expressly referred to herein and, except to the extent that the
Credit Agreement expressly has been amended hereby, shall not be construed as a
waiver or consent to any further or future action on the part of the Borrower
that would require a waiver or consent of the Required Lenders or the
Administrative Agent. Except as expressly amended, modified or supplemented
hereby, the provisions of the Credit Agreement are and shall remain in full
force and effect.
     Section 14. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

3

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

 

     IN WITNESS WHEREOF, the parties hereto have executed this Waiver and Sixth
Amendment to Revolving Credit and Term Loan Agreement as of the date first set
forth above.

                  FIRST ACCEPTANCE CORPORATION
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
           
 
  Title:   Treasurer    
 
         
 
           
 
                SUNTRUST BANK, as Administrative Agent and as a Lender
 
           
 
           
 
  By:   /s/ William Christensen    
 
         
 
           
 
  Title:   Director    
 
         
 
           
 
                FIRST BANK, as a Lender
 
           
 
           
 
  By:   /s/ Doug Remke    
 
         
 
           
 
  Title:   Vice President    
 
         

4

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

 

CONSENT OF GUARANTORS
The undersigned, each a Guarantor, as defined in the Subsidiary Guarantee
Agreement, hereby execute this Waiver and Sixth Amendment to Revolving Credit
and Term Loan Agreement to evidence their consent thereto, as well as the
transactions contemplated thereby, and agree that the Subsidiary Guarantee
Agreement dated January 12, 2006, remains in full force and effect.

                  USAUTO HOLDINGS, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                TRANSIT AUTOMOBILE CLUB, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                ALABAMA ACCEPTANCE INSURANCE AGENCY, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                ACCEPTANCE INSURANCE AGENCY OF TENNESSEE, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    

5

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

 

                  ACCEPTANCE INSURANCE AGENCY, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                FIRST ACCEPTANCE SERVICES, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                ACCEPTANCE INSURANCE AGENCY OF ILLINOIS, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                LNC HOLDINGS, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    
 
           
 
                ACCEPTANCE INSURANCE AGENCY OF TEXAS, INC., as a Guarantor
 
           
 
           
 
  By:   /s/ Michael Bodayle    
 
         
 
      Name: Michael Bodayle    
 
      Title: Treasurer    

6