EIGHTH AMENDMENT
TO
EIGHTH AMENDED AND RESTATED LOAN AGREEMENT
     THIS EIGHTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT (the
“Amendment”) made and entered into as of the 30th day of June, 2006, by and
among DIRECT GENERAL FINANCIAL SERVICES, INC., a Tennessee corporation whose
address is 1281 Murfreesboro Road, Nashville, Tennessee 37217 (f/k/a Direct
Financial Services, Inc.) (“DGFS”), DIRECT GENERAL PREMIUM FINANCE COMPANY, a
Tennessee corporation whose address is 1281 Murfreesboro Road, Nashville,
Tennessee 37217 (“DGPFC”; DGFS and DGPFC may be referred to hereinafter either
individually or collectively as “Borrower”), DIRECT GENERAL CORPORATION, a
Tennessee corporation (formerly known as Direct Corporation) (“DGC”), DIRECT
GENERAL INSURANCE AGENCY, INC., a Tennessee corporation, DIRECT GENERAL
INSURANCE AGENCY, INC., an Arkansas corporation, DIRECT GENERAL INSURANCE
AGENCY, INC., a Mississippi corporation, DIRECT GENERAL INSURANCE AGENCY OF
LOUISIANA, INC., a Louisiana corporation, DIRECT GENERAL AGENCY OF KENTUCKY,
INC., a Kentucky corporation, DIRECT ADJUSTING COMPANY, INC., a Tennessee
corporation, DIRECT ADMINISTRATION, INC., a Tennessee corporation, DIRECT
GENERAL INSURANCE AGENCY, INC., a Texas corporation, DIRECT GENERAL CONSUMER
PRODUCTS, INC., a Tennessee corporation, FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the
statutes of the United States of America, with offices at 165 Madison Avenue,
Memphis, Tennessee 38103 (in its agency capacity being herein referred to as
“Agent,” and in its individual capacity as “FTBNA”), for itself and as agent for
the other Banks hereinafter named, CAPITAL ONE BANK, N.A. (successor by merger
to Hibernia National Bank), a national banking association organized and
existing under the laws of the United States of America, with offices at 440
Third Street, Baton Rouge, Louisiana 70801 (“Capital One”), U.S. BANK NATIONAL
ASSOCIATION, a national banking association (f/k/a U.S. Bank, N. A., which was
f/k/a Mercantile Bank National Association) with offices located at 150 4th
Avenue N., Nashville, Tennessee 37219 (“U.S. Bank”), CAROLINA FIRST BANK, a
state bank formed under the laws of the State of South Carolina with offices
located at 104 S. Main, Greenville, South Carolina 29601 (“Carolina First”),
JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office
Chicago) a national banking association with offices located at 451 Florida
Street, Mail Code LA2-2714, Baton Rouge, Louisiana 70801 (“JPMorgan”), REGIONS
BANK, an Alabama state banking association with offices located at 417 N. 20th
Street, Birmingham, Alabama 35203 (“Regions”), NATIONAL CITY BANK OF KENTUCKY, a
national banking association with offices located at 101 S. Fifth Street, 37th
Floor, Louisville, Kentucky 40202 (“National City Bank”), FIFTH THIRD BANK, N.A.
(Tennessee), a national banking association organized and existing under the
laws of the United States of America, with offices located at 810 Crescent
Centre Drive, Suite 160, Franklin, Tennessee 37067 (“Fifth Third”), and MIDFIRST
BANK, a national banking association with offices located at 501 N.W. Grand
Boulevard, Oklahoma City, Oklahoma 73118 (“MidFirst”) (FTBNA, Capital One, U.S.
Bank, Carolina First, JPMorgan, and Regions collectively, the “Original Banks”)
(the Original Banks, National City Bank, Fifth Third and MidFirst collectively
the “Banks,” and each individually, a “Bank”).

 

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Recitals of Fact
     Pursuant to that certain Eighth Amended and Restated Loan Agreement dated
as of October 31, 2002 (the “Original Loan Agreement”) among the Original Banks,
DGFS and the other parties named therein, the Original Banks agreed to make
loans and advances to DGFS on a revolving credit basis in an aggregate amount
not to exceed One Hundred Fifteen Million Dollars ($115,000,000.00), evidenced
by individual revolving credit notes to each Bank for the respective Facility
Commitments set out in the Original Loan Agreement, each with a termination date
of June 30, 2004 (collectively, the “October 2002 Notes”).
     Pursuant to that certain First Amendment to Eighth Amended and Restated
Loan Agreement dated as of March 31, 2003 (the “First Amendment”) among the
Original Banks, DGFS and the other parties named therein, the Facility
Commitment for Regions was increased to a maximum principal amount of
Twenty-Five Million Dollars ($25,000,000.00), and the total Commitment of the
Original Banks was increased to a maximum aggregate principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000.00).
     Pursuant to that certain Second Amendment to Eighth Amended and Restated
Loan Agreement dated as of May 28, 2003 (the “Second Amendment”) among the
Original Banks, National City Bank, DGFS and the other parties named therein,
the Facility Commitment for Carolina First was increased to a maximum principal
amount of Fifteen Million Dollars ($15,000,000.00); the Facility Commitment for
Bank One was increased to a maximum principal amount of Thirty-Five Million
Dollars ($35,000,000.00); National City Bank was added as a Bank with a Facility
Commitment of a maximum principal amount of Fifteen Million Dollars
($15,000,000.00); and the total Commitment of the Banks was increased to a
maximum aggregate principal amount of One Hundred Sixty Million Dollars
($160,000,000.00).
     Pursuant to that certain Third Amendment to Eighth Amended and Restated
Loan Agreement dated as of June 30, 2003 (the “Third Amendment”) among the
Banks, DGFS and the other parties named therein, the Facility Commitment for
Hibernia (now known as Capital One) was increased to a maximum principal amount
of Twenty Million Dollars ($20,000,000.00); the Facility Commitment for U.S.
Bank was increased to a maximum principal amount of Thirty Million Dollars
($30,000,000.00); Fifth Third was added as a Bank with a Facility Commitment of
a maximum principal amount of Ten Million Dollars ($10,000,000.00); and the
total Commitment of the Banks was increased to a maximum aggregate principal
amount of One Hundred Eighty Million Dollars ($180,000,000.00).
     Pursuant to that certain Fourth Amendment to Eighth Amended and Restated
Loan Agreement, dated on or about July 17, 2003 (the “Fourth Amendment”) among
the Banks, DGFS and the other parties named therein, the Loan Agreement was
modified to allow DGC to pay dividends after the closing of its initial public
offering of stock.
     Pursuant to that certain Fifth Amendment to Eighth Amended and Restated
Loan Agreement, dated as of November 26, 2003 (the “Fifth Amendment”) among the
Banks, DGFS and the other parties named therein, the Facility Commitment for
FTBNA was increased to a maximum principal amount of Forty Million Dollars
($40,000,000.00), the total Commitment of

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the Banks was increased to a maximum aggregate principal amount of One Hundred
Ninety Million Dollars ($190,000,000.00), and other modifications were made to
the Loan Agreement.
     Pursuant to that certain Sixth Amendment to Eighth Amended and Restated
Loan Agreement, dated as of June 30, 2004 (the “Sixth Amendment”), among the
Banks, DGFS, DGPFC and other parties named therein, DGPFC was added as a
Borrower under the Banks’ respective Facility Commitments, DGPFC was added as a
party to the Loan Agreement, the Seventh Amended and Restated Security Agreement
as defined therein, and to other documents evidencing or securing the Loan (the
Loan Agreement and all security documents collectively referred to as the
“Security Documents”), the Banks extended the maturity date of the Loan to
June 30, 2007, and other modifications were made to the Loan Agreement, the
Seventh Amended and Restated Security Agreement defined therein and certain
other loan and security documents.
     Pursuant to that certain Seventh Amendment to Eighth Amended and Restated
Loan Agreement dated as of December 3, 2004 (the “Seventh Amendment”; the
Original Loan Agreement, as amended hereby, and by the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, and the Seventh Amendment, referred to
hereinafter as the “Loan Agreement”), DGFS and DGPFC obtained a Swing Line Loan
up to an amount of Thirty Million Dollars ($30,000,000.00) from FTBNA as part of
the credit facilities governed by the Loan Agreement.
     DGFS and DGPFC have now requested that the Banks extend the Loan
Termination Date for their Facility Commitments, provide for future increases in
certain of the Facility Commitments, admit MidFirst Bank as a Bank hereunder,
and make other modifications of the Loan Agreement, all as hereinafter set
forth.
     NOW, THEREFORE, in consideration of the premises as set forth in the
Recitals of Fact, the mutual covenants and agreements hereinafter set out, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed by the parties as follows:
Agreements
     1. All capitalized terms used and not defined herein shall have the meaning
ascribed to them in the Loan Agreement.
     2. To induce the Banks to enter into this Amendment, the Borrower does
hereby absolutely and unconditionally, certify, represent and warrant to the
Banks, and covenant and agree with the Banks, that:
     (a) All representations and warranties made by the Borrower in the Loan
Agreement, as amended hereby; in the Seventh Amended and Restated Security
Agreement dated as of October 31, 2002, as thereafter amended from time to time,
between the Borrower and Agent (the “Security Agreement”); and in all other loan

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documents (all of which are herein sometimes called the “Loan Documents”), are
true, correct and complete in all material respects as of the date of this
Amendment.
     (b) As of the date hereof and with the execution of this Amendment, there
are no existing events, circumstances or conditions which constitute, or would,
with the giving of notice, lapse of time, or both, constitute Events of Default.
     (c) There are no existing offsets, defenses or counterclaims to the
obligations of the Borrowers as set forth in the New Notes, the Security
Agreement, the Loan Agreement, or in any other Loan Document executed by the
Borrower, in connection with the Loan.
     (d) Neither Borrower has any existing claim for damages against the Banks
arising out of or related to the Loan; and, if and to the extent (if any) that
the Borrowers or any of them have or may have any such existing claim (whether
known or unknown), the Borrower do each hereby forever release and discharge, in
all respects, the Banks with respect to such claim.
     (e) The Loan Documents, as amended by this Amendment, are valid, genuine,
enforceable in accordance with their respective terms, and in full force and
effect.
     3. The definition of “Revolving Loan Commitment” in Section 1.1 of the Loan
Agreement shall be deleted and the following inserted in lieu thereof:
     “Revolving Loan Commitment” means (a) as to any Bank, the commitment of
such Bank to make Revolving Credit Advances as set forth on Exhibit “B,” and
(b) as to all Banks, the aggregate commitment of all Banks to make Revolving
Credit Advances, which aggregate commitment shall be (i) as of the Effective
Date, One Hundred Ninety Million Dollars ($190,000,000.00), and (ii) as of
January 1, 2007, Two Hundred Twenty-Five Million Dollars ($225,000,000.00), as
such Commitments may be reduced, amortized or adjusted from time to time in
accordance with this Agreement.
     4. The definition of “Effective Date,” in Section 1.1 of the Loan
Agreement, as set forth in the Sixth Amendment, is hereby deleted in its
entirety and the following is inserted in lieu thereof:
     “Effective Date” shall mean June 30, 2006.
     5. The definition of “Banks,” in Section 1.1 of the Loan Agreement, as set
forth in the Seventh Amendment, is hereby deleted in its entirety and the
following is inserted in lieu thereof:
     “Banks” means, collectively, FTBNA (acting for itself and not as Agent),
Capital One, U.S. Bank, Regions, Carolina First, National City Bank, Fifth
Third, JPMorgan, and MidFirst Bank, and any successor or assignee which at any
time is a holder of a Note.

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     6. The definition of “Facility Commitment,” in Section 1.1 of the Loan
Agreement, as set forth in the Original Loan Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:
     “Facility Commitment” shall mean (a) as to any Bank, the aggregate of such
Bank’s Revolving Loan Commitment (including, without duplication, the Swing Line
Lender’s Swing Line Commitment as a subset of its Revolving Loan Commitment)
from time to time as set forth on Exhibit “B” hereto; and (b) as to all Banks,
the aggregate of all Banks’ Revolving Loan Commitments (including, without
duplication, the Swing Line Lender’s Swing Line Commitment as a subset of its
Revolving Loan Commitment), which aggregate commitment shall be (i) as of the
Effective Date, One Hundred Ninety Million Dollars ($190,000,000.00), and
(ii) as of January 1, 2007, Two Hundred Twenty-Five Million Dollars
($225,000,000.00), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with this Agreement.
     7. The definition of “Fourteenth Amended and Restated Guaranty Agreement,”
in Section 1.1 of the Loan Agreement, as set forth in the Seventh Amendment, is
hereby deleted in its entirety and the following is inserted where appropriate
in correct alphabetical order in lieu thereof:
     “Fifteenth Amended and Restated Guaranty Agreement” shall mean the guaranty
agreement executed by each of the Guarantors, dated as of the Effective Date,
guaranteeing the payment of indebtednesses of Borrower to the Banks not to
exceed (i) as of the Effective Date, One Hundred Ninety Million Dollars
($190,000,000.00), and (ii) as of January 1, 2007, Two Hundred Twenty-Five
Million Dollars ($225,000,000.00), plus interest and the costs of collection.
All references in the Loan Agreement to any prior Amended and Restated Guaranty
Agreement shall, except as the context may otherwise require, be deemed to
constitute references to the Fifteenth Amended and Restated Guaranty Agreement.
     8. The definition of “Notes,” in Section 1.1 of the Loan Agreement, as set
forth in the Third Amendment, is hereby deleted in its entirety and the
following is inserted in lieu thereof:
     “Notes” means the FTBNA Note, the Capital One Note, the U.S. Bank Note, the
Regions Note, the Carolina First Note, the National City Bank Note, the Fifth
Third Note, the JPMorgan Note, the Swing Line Note and the MidFirst Bank Note.
   All references in the Loan Agreement to the “Hibernia Note” shall be deemed
references to the “Capital One Note.” All references in the Loan Agreement to
the “Bank One Note” shall be deemed references to the “JPMorgan Note.”
     9. The definition of “Seventh Amended and Restated Pledge and Security
Agreement,” in Section 1.1 of the Loan Agreement, as set forth in the Seventh
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:
     “Seventh Amended and Restated Pledge and Security Agreement” means the
Seventh Amended and Restated Pledge and Security Agreement dated October 31,
2002, as amended by that First Amendment to Seventh Amended and Restated Pledge
and Security Agreement dated as of March 31, 2003, as amended by that Second
Amendment to Seventh Amended and Restated Pledge and Security Agreement dated as
of May 28, 2003, as amended by that Third Amendment

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to Seventh Amended and Restated Pledge and Security Agreement dated as of
June 30, 2003, as amended by that Fourth Amendment to Seventh Amended and
Restated Pledge and Security Agreement dated as of November 26, 2003, as amended
by that Fifth Amendment to Seventh Amended and Restated Pledge and Security
Agreement dated as of June 30, 2004, as amended by that Sixth Amendment to
Seventh Amended and Restated Pledge and Security Agreement dated as of
December 3, 2004, as amended by that Seventh Amendment to Seventh Amended and
Restated Pledge and Security Agreement dated as of June 30, 2006, and as the
same may be further modified or amended, pursuant to which DGC has granted to
Agent for the benefit of the Banks a second lien security interest in all of the
stock in the Agency Subsidiaries and Affiliated Insurers, as security for its
obligations under the Fifteenth Amended and Restated Guaranty Agreement.
     10. The definition of “Seventh Amended and Restated Security Agreement,” in
Section 1.1 of the Loan Agreement, as set forth in the Sixth Amendment, is
hereby deleted in its entirety and the following is inserted in lieu thereof:
     “Seventh Amended and Restated Security Agreement” means the Seventh Amended
and Restated Security Agreement dated October 31, 2002, as amended by that First
Amendment to Seventh Amended and Restated Security Agreement dated as of March
31, 2003, as amended by that Second Amendment to Seventh Amended and Restated
Security Agreement dated as of May 28, 2003, as amended by that Third Amendment
to Seventh Amended and Restated Security Agreement dated as of June 30, 2003, as
amended by that Fourth Amendment to Seventh Amended and Restated Security
Agreement, dated as of November 26, 2003, as amended by that Fifth Amendment to
Seventh Amended and Restated Security agreement, dated as of June 30, 2004, as
amended by that Sixth Amendment to Seventh Amended and Restated Security
Agreement, dated as of December 3, 2004, as amended by that Seventh Amendment to
Seventh Amended and Restated Security Agreement dated as of June 30, 2006, and
as the same may be further modified or amended, pursuant to which the Borrower
has assigned and pledged Receivables and other contractual rights to the Agent
for the benefit of the Banks.
     11. The following definitions shall be added to Section 1.1 of the Loan
Agreement and shall be inserted where appropriate in correct alphabetical order:
     “Applicable Rate” shall mean either the Adjusted LIBOR Rate or the Base
Rate as elected by Borrower in accordance with the terms hereof.
     “Adjusted LIBOR Rate” shall mean the LIBOR Rate plus (i) for so long as the
Loan Amount to Net Worth ratio (as defined in Section 6.12 hereof) shall be
greater than 2.0 to 1.0, two percent (2%), and (ii) for so long as the Loan
Amount to Net Worth ratio is equal to or less than 2.0 to 1.0, one and one-half
percent (1.5%).
     “LIBOR Rate” shall be determined by the Agent and shall mean the London
Interbank Offered Rate of Interest for an Interest Period elected by the
Borrower, appearing on Telerate Page 3750, as of 11:00 a.m. London time on the
Business Day immediately following the date of election by Borrower; provided,
however, that, if the LIBOR Rate is not reported on the Business Day immediately
following the date of election by Borrower, then the LIBOR Rate for such
election shall be the LIBOR Rate reported on the immediately preceding Business
Day (unless failure of the LIBOR Rate to be reported is due to a disruption in
the London interbank market, in which case the parties hereto shall agree to an
alternative method of establishing the LIBOR Rate). The applicable Interest
Period shall be as elected by Borrower, which election must be made at the time
of election of the Adjusted LIBOR Rate.
     “Interest Period” means, relative to the Loan while bearing interest at the
Adjusted LIBOR Rate, the period beginning on (and including) the date on which
the election of Interest

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Period is effective and ending on (but excluding) the day which numerically
corresponds to such date one (1) month, two (2) months, three (3) months or six
(6) months thereafter, as elected by Borrower [or, if such month has no
numerically corresponding day, on the last Business Day of such month];
provided, however, that
     (a) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day
(unless such next following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the Business Day next
preceding such numerically corresponding day); and
     (b) no Interest Period may end later than the stated maturity date of the
indebtedness evidenced by the Notes, which is June 30, 2009.
     “Change in Law” shall mean the adoption of any law, rule, regulation,
policy, guideline or directive (whether or not having the force of law) or any
change therein or in the interpretation or application thereof, in all cases by
any Governmental Authority having jurisdiction over the Bank, in each case after
the date hereof.
     “Governmental Authority” shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising regulatory
functions of or pertaining to government.
     “Loan Termination Date” shall mean the earlier of (a) June 30, 2009, or in
the event that the Banks and Borrower shall hereafter mutually agree in writing
that the Loan and the Banks’ commitments hereunder shall be extended to another
date, and the Notes shall be modified or amended to reflect such extension, such
other date mutually agreed upon between the Agent, the Banks and Borrower to
which the Banks’ commitments shall have been extended, or (b) the date as of
which Borrower shall have terminated the Banks’ commitment under the provisions
of Section 2.5 hereof.
     “MidFirst Bank Note” means the promissory note of even date herewith,
executed by the Borrower to MidFirst Bank which evidences MidFirst Bank’s
Facility Commitment of Ten Million Dollars ($10,000,000.00), as such note may be
modified, renewed or extended from time to time; and any other note or notes
executed at any time to evidence the indebtedness of Borrower to MidFirst Bank
under this Loan Agreement, in whole or in part, and any renewals, modifications
and extensions thereof, in whole or in part.
     12. Section 2.1 of the Loan Agreement, as set forth in the Seventh
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:
     2.1 The Revolving Credit Facility. Subject to the terms and conditions
herein set out, the Banks severally agree and commit to make loan advances
(reach, a “Revolving Credit Advance”) to the Borrower from time to time, from
the Effective Date until the Loan Termination Date, ratably in proportion to
their respective Facility Commitments and in such amount that, the aggregate
principal amount of the Loan at any one time outstanding shall not exceed the
lesser of (i) (A) through and including December 31, 2006, One Hundred Ninety
Million Dollars ($190,000,000.00), or (B) on or after January 1, 2007, Two
Hundred Twenty-Five Million Dollars ($225,000,000.00); or (ii) the Borrowing
Base; provided, that after giving effect to any such Revolving Credit Advance,
(i) the sum of the outstanding amount of such Bank’s Revolving Credit Advances
and its proportionate share of the outstanding Swing Line Loan shall not exceed
its respective Facility Commitments, and (ii) the aggregate outstanding amount
of the Revolving Loan and the Swing Line Loan shall not exceed the aggregate of
the Facility Commitments. On January 1, 2007, the Banks will make adjustments
among themselves so that the outstanding

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     principal balances of the Loan indebtedness shall be held by them in
proportion to their respective Facility Commitments.
     In the event that any Bank fails to fund its Facility Commitment, the
remaining Banks are not obligated to fund any amount to make up the shortfall,
nor shall the remaining Banks incur any liability to the Borrower as a result of
any non-funding Bank’s failure to fund.
     13. Section 2.4(a) of the Loan Agreement is hereby deleted in its entirety
and the following is inserted in lieu thereof:
     (a) Subject to the last sentence hereof, on October 31, 2006, and on the
last day of each January, April, July and October thereafter to and including
the Loan Termination Date, the Borrower agrees to pay to the Agent for the
benefit of the Banks a facility fee equal to two-tenths percent (0.2%) per annum
of the average unused amount of the Facility Commitments (payable quarterly) for
the immediately preceding quarter (the “Facility Fee”) in consideration of the
Banks’ agreement to make funds available to Borrower under the terms and
provisions hereof from the Effective Date until the Loan Termination Date. Agent
and Banks acknowledge that the Loan Termination Date may occur on a date other
than the last day of a quarter, in which case the Facility Fee payment due on
the Loan Termination Date will be prorated for that portion of a quarter for
which the Facility Fee is due. Borrower and Guarantors agree that the Facility
Fee is fair and reasonable considering the condition of the money market, the
creditworthiness of Borrower, the interest rate to be paid, and the nature of
the security for the Loan. The average unused amount of the Facility Commitments
for the immediately preceding quarter shall equal (i) the sum of the unused
amount of the Facility Commitments for each day of the immediately preceding
quarter, divided by (ii) the number of days in the immediately preceding
quarter. Notwithstanding the foregoing, Borrower shall not be charged the
Facility Fee for failing to use more than One Hundred Ninety Million Dollars
($190,000,000.00) of the Facility Commitments from the Effective Date to
December 31, 2006, or for failing to use more than Two Hundred Million Dollars
($200,000,000.00) of the Facility Commitments from January 1, 2007 to
December 31, 2007.
     14. Section 2.4(b) of the Loan Agreement is hereby deleted in its entirety
and the following is inserted in lieu thereof:
     (b) On the Effective Date, the Borrower agrees to pay to the Agent a
commitment fee in the amount of Eight Hundred Forty-Three Thousand Seven Hundred
and Fifty Dollars ($843,750.00) [three hundred seventy-five-thousandth’s percent
(0.375%) of total Facility Commitments (the “Commitment Fee”)], in consideration
of the Banks’ agreement to make funds available to Borrower under the terms and
provisions hereof from the Effective Date until the Loan Termination Date
specified in Section 1.1 hereof. Borrower agrees that the Commitment Fee is fair
and reasonable considering the condition of the money market, the
creditworthiness of Borrower, the interest rate to be paid, and the nature of
the security for the Loan. In the event that Borrower and Banks shall hereafter
mutually agree to extend the term of the Banks’ commitments hereunder, they may
also agree at that time as to an additional commitment fee to be paid for such
further commitment by the Banks, but not to exceed the maximum permitted by
applicable law.
     15. Exhibit “B” to the Loan Agreement, as set forth in the Seventh
Amendment, is hereby deleted in its entirety, and the schedule attached hereto
marked Revised Exhibit “B” shall be inserted in lieu thereof.

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     16. Exhibits “E” and “H” to the Loan Agreement, as set forth in the Sixth
Amendment, are hereby deleted in their entirety, and the schedules attached
hereto marked Revised Exhibit “E” and Revised Exhibit “H” shall be inserted in
lieu thereof.
     17. All terms and provisions of the Loan Agreement, as heretofore amended,
which are inconsistent with the provisions of this Amendment are hereby modified
and amended to conform hereto; and, as so modified and amended, the Loan
Agreement is hereby ratified, approved and confirmed. Except as otherwise may be
expressly provided herein, this Amendment shall become effective as of the date
set forth in the initial paragraph hereof.
     18. All references in all Loan Documents (including, but not limited to,
the New Notes, the Security Agreement, and the Loan Agreement) to the “Loan
Agreement” shall, except as the context may otherwise require, be deemed to
constitute references to the Loan Agreement as amended hereby. All references in
the Loan Documents (including, but not limited to, the Security Agreement and
the Loan Agreement) to the “Notes” shall, except as the context may otherwise
require, be deemed to constitute references to the Notes as such term is defined
herein.
[SEPARATE SIGNATURE PAGES FOLLOW]

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SIGNATURE PAGE
TO
EIGHTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT
 
 
     IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Banks and the Agent
have caused this Agreement to be executed by their duly authorized officers, all
as of the day and year first above written.

            BORROWERS:

DIRECT GENERAL FINANCIAL SERVICES, INC.,
a Tennessee corporation
      By:   /s/ Brian G. Moore       Brian G. Moore, President             

            DIRECT GENERAL PREMIUM FINANCE COMPANY,
a Tennessee corporation
      By:   /s/ Brian G. Moore       Brian G. Moore, President             

            GUARANTORS:

DIRECT GENERAL CORPORATION,
a Tennessee corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT GENERAL INSURANCE AGENCY, INC.,
a Tennessee corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

[SIGNATURE PAGE CONTINUED]

S-1

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            DIRECT GENERAL INSURANCE AGENCY, INC.,
an Arkansas corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT GENERAL INSURANCE AGENCY, INC.,
a Mississippi corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT GENERAL INSURANCE AGENCY OF LOUISIANA,
INC., a Louisiana corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT GENERAL AGENCY OF KENTUCKY, INC.,
a Kentucky corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT ADJUSTING COMPANY, INC.,
a Tennessee corporation
      By:   /s/ J. Todd Hagely       J. Todd Hagely,        Senior
Vice-President and Chief Financial Officer     

            DIRECT ADMINISTRATION, INC.,
a Tennessee corporation
      By:   /s/ J. Todd Hagely       J. Todd Hagely,        Senior
Vice-President and Chief Financial Officer     

[SIGNATURE PAGE CONTINUED]

S-2

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            DIRECT GENERAL INSURANCE AGENCY, INC.,
a Texas corporation
      By:   /s/ William J. Harter       William J. Harter,        Senior
Vice-President     

            DIRECT GENERAL CONSUMER PRODUCTS, INC.,
a Tennessee corporation
      By:   /s/ J. Todd Hagely       J. Todd Hagely, President             

            BANKS:

FIRST TENNESSEE BANK NATIONAL ASSOCIATION
      By:   /s/ Sam Jenkins                 Title:   Senior Vice President    

            CAPITAL ONE BANK, N.A.
      By:   /s/ Janet O. Rack                 Title:   Senior Vice President    

            U.S. BANK NATIONAL ASSOCIATION
      By:   /s/ Eric Cosgrove                 Title:   Assistant Vice President
   

            CAROLINA FIRST BANK
      By:   /s/ Charles D. Chamberlain                 Title:   Executive Vice
President    

            JPMORGAN CHASE BANK, N.A.
      By:   /s/ Robert D. Bond                 Title:   Senior Vice President  
 

[SIGNATURE PAGE CONTINUED]

S-3

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            REGIONS BANK
      By:   /s/ Nathan Raines                 Title:   Senior Vice President    

            NATIONAL CITY BANK OF KENTUCKY
      By:   /s/ Kevin L. Anderson                 Title:   Senior Vice President
   

            FIFTH THIRD BANK, N.A. (Tennessee)
      By:   /s/ Justin P. Fontenot                 Title:   Corporate Officer  
 

            MIDFIRST BANK
      By:   /s/ Shawn D. Brewer                 Title:   Vice President    

            AGENT:

FIRST TENNESSEE BANK NATIONAL ASSOCIATION
      By:   /s/ Sam Jenkins                 Title:   Senior Vice President    

S-4

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REVISED EXHIBIT “B”
FACILITY COMMITMENTS OF THE BANKS
AS OF THE EFFECTIVE DATE
Revolving Facility Commitments

         
First Tennessee Bank National Association
  $ 40,000,000.00 *
Capital One
    20,000,000.00  
U. S. Bank National Association
    30,000,000.00  
Regions Bank
    25,000,000.00  
Carolina First Bank
    15,000,000.00  
National City Bank
    15,000,000.00  
Fifth Third Bank
    10,000,000.00  
JPMorgan Chase Bank, N.A.
    35,000,000.00  
MidWest Bank
    -0-  
 
     
TOTAL:
  $ 190,000,000.00  

  *   Includes $30,000,000.00 Swing Line Commitment of First Tennessee Bank
National Association.

AS OF JANUARY 1, 2007
Revolving Facility Commitments

         
First Tennessee Bank National Association
  $ 40,000,000.00 *
Capital One
    25,000,000.00  
U. S. Bank National Association
    30,000,000.00  
Regions Bank
    30,000,000.00  
Carolina First Bank
    20,000,000.00  
National City Bank
    20,000,000.00  
Fifth Third Bank
    15,000,000.00  
JPMorgan Chase Bank, N.A.
    35,000,000.00  
MidFirst Bank
    10,000,000.00  
 
     
TOTAL:
  $ 225,000,000.00  

  *   Includes $30,000,000.00 Swing Line Commitment of First Tennessee Bank
National Association.

Revised Exhibits “B”—1

 

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REVISED EXHIBIT “E”
BORROWING BASE CERTIFICATE
AS OF ____ DAY OF _______________, 20___

         
TOTAL RECEIVABLES FROM POLICYHOLDERS FOR PRIOR REPORT
  $ —  
ADD:
       
New Contracts
  $ —  
LESS:
       
Cash Payments
    ($________________ )
 
     
TOTAL RECEIVABLES
       
FROM POLICYHOLDERS FOR THIS REPORT:
  $ —  
LESS INELIGIBLE RECEIVABLES:
       
Amounts Insured with Insurance Companies with an A.M. Best Rating not in
compliance with Section 8.13 of the Loan Agreement
    ($_______________ )
Past Due Receivables (See clause (a)(iv) of definition of Eligible Receivables.)
    ($_______________ )
Receivables in Ineligible States
    ($_______________ )
Unearned Interest, Finance Charges or Service Charges
    ($_______________ )
PLUS RECEIVABLES FROM INSURERS QUALIFYING UNDER CLAUSE (b) OF DEFINITION OF
“ELIGIBLE RECEIVABLES”
  $ —  
 
     
SUBTOTAL: Eligible Receivables (See Section 1.1)
  $ —  
TIMES ADVANCE RATE
    x 85 %
 
     
TOTAL AVAILABILITY
  $ —  
LESS LOAN OUTSTANDING (not to exceed $225,000,000.00)
    ($_______________ )
 
     
NET LOAN AVAILABILITY
  $ _______________  

     The undersigned each certifies and warrants that the foregoing Borrowing
Base Certificate is true and accurate, based upon the definitions set out in
Sections 1.1 and 1.2 of the Loan Agreement.
     DATED this ________________day of _________________, 20__________.

            DIRECT GENERAL FINANCIAL SERVICES INC.
      By:   __________________________________                 Title:  
_______________________________     

            DIRECT GENERAL PREMIUM FINANCE COMPANY
      By:   __________________________________                 Title:  
_______________________________     

Revised Exhibit “E” — 1

 

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REVISED EXHIBIT “H”
COMPLIANCE CERTIFICATE
     The undersigned, the duly authorized officers of DIRECT GENERAL FINANCIAL
SERVICES INC., a Tennessee corporation, DIRECT GENERAL PREMIUM FINANCE COMPANY,
a Tennessee corporation (together, the “Borrower”), and DIRECT GENERAL
CORPORATION, a Tennessee corporation (“DGC”), pursuant to that certain Eighth
Amended and Restated Loan Agreement dated as of September 30, 2002, as
subsequently amended (the “Loan Agreement”), among Borrower, DGC, other
guarantors therein named, First Tennessee Bank National Association, Memphis,
Tennessee, as agent and as bank (“Agent”), and the Banks named therein
(“Banks”), certifies to said Agent and Banks, in accordance with the terms and
provisions of said Loan Agreement, as follows:
     1. All of the representations and warranties set forth in Section 5 of the
Loan Agreement are and remain true and correct on and as of the date of this
Certificate with the same effect as though such representations and warranties
had been made on and as of this date.
     2. As of the date hereof, the Borrower and DGC are in full compliance with
all of the terms and provisions set forth in the Loan Agreement and all of the
instruments and documents executed in connection therewith, and no Event of
Default, as specified in Section 8 of the Loan Agreement, nor any event which,
upon notice, lapse of time or both, would constitute an Event of Default, has
occurred or is continuing.
     3. As used herein, the term “Affiliated Insurers” shall have the meaning
ascribed thereto in the Loan Agreement.
     4. As of _________________, 20__________(the date of the most recent
financial statement furnished by Borrower and Affiliated Insurers to Agent), the
ratios listed in the Loan Agreement are as follows:

                                      ACTUAL     COVENANT   AFFIRMATIVE
COVENANTS (AS TO BORROWER):                
Section 6.13
  Tangible Net Worth     —       >$9,500,000  
Section 6.14
  Ratio of Eligible Receivables to Debt     —       >1.05:1.00  
Section 6.15
  Ratio of Unearned Premiums to Loan Amount     —       >1.1:1.0  
 
                        AFFIRMATIVE COVENANTS (AS TO DGC):                
Section 6.12
  Loan Amount to Net Worth     —       <1.75:1.00  
Section 6.13
  Tangible Net Worth     —       >$200,000,000 **
Section 6.16
  Debt Service Coverage     —       >1.50:1.00  

Exhibit “H” — 1

 

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EVENTS OF DEFAULT AS MEASURED ON AFFILIATED INSURERS:

             
Section 8.4
  Capital Adequacy Ratio   ___   Event of Default if
 
          =4.00 to 1.00
Section 8.5
  Liquidity Ratio   ___   Event of Default if
 
          <1.0:1.0
Section 8.6
  Minimum Capital Surplus   ___   Event of Default if
 
          <$150,000,000.00
Section 8.8
  Risk Based Capital*   ___   Event of Default if
 
          <250%

FUNDED DEBT / EBITDA CALCULATION:
— Funded Debt / EBITDA Ratio: (Choose one)

                 
_______
  Greater than 2.0 to 1.0   (Actual Ratio:_________________)
_______
  Less than 2.0 to 1.0   (Actual Ratio:_________________)

 

*   Measured Annually   **   Adjusted as provided in Section 6.13.

     The undersigned certify and warrant that the foregoing ratios have been
computed from the figures contained in Borrower’s, DGC’s and Affiliated
Insurers’ financial statement of the date hereinabove indicated, based upon the
definitions set out in Sections 1.1, 1.2 and 1.3 of the Loan Agreement.
     DATED this _________________________ day of _________________, 20_______.

            DIRECT GENERAL FINANCIAL SERVICES INC.
      By:   ____________________________________                 Title:  
_________________________________     

            DIRECT GENERAL PREMIUM FINANCE COMPANY
      By:   __________________________________                 Title:  
________________________________     

            DIRECT GENERAL CORPORATION
      By:   ___________________________________                 Title:  
________________________________     

Exhibit “H”-2