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                                                                   EXHIBIT 10.16

                              EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of
_____________ __, 2004 by and between First Acceptance Corporation (f/k/a
Liberte Investors Inc.), a Delaware corporation (the "COMPANY"), and Thomas M.
Harrison, Jr. ("EXECUTIVE").

          In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive, intending to be legally bound, hereby
agree as follows:

          1.    EMPLOYMENT. The Company agrees to employ Executive, and
Executive accepts such employment, upon the terms and conditions set forth in
this Agreement, for the period beginning as of the date hereof and ending upon
his separation pursuant to SECTION 4 hereof (the "EMPLOYMENT PERIOD").

          2.    POSITION AND DUTIES.

          (a)   During the Employment Period, Executive shall serve as the
Executive Vice President of the Company and shall have the normal duties,
responsibilities, functions and authority of such position, subject to the
oversight of the Company's board of directors (the "BOARD").

          (b)   During the Employment Period, Executive shall report to the
Board and shall devote his best efforts and his full business time and attention
(except for time devoted to charitable and non-profit activities in a manner
that does not interfere with the performance of his duties to the Company,
vacation periods in accordance with the Company's policies for the Company's
senior management, and periods of illness) to the business and affairs of the
Company. Executive shall perform his duties, responsibilities and functions to
the Company hereunder to the best of his abilities in a diligent, trustworthy
and businesslike manner.

          (c)   During the Employment Period, the Company shall include
Executive in any slate nominated by the Company for election to the Board.

          3.    COMPENSATION AND BENEFITS.

          (a)   Commencing on the date hereof and continuing throughout the
Employment Period, Executive's initial base salary shall be $300,000 per annum.
The Board shall review Executive's compensation for an increase not less often
than annually. Such base salary, as in effect from time to time, is referred to
herein as the "BASE SALARY." Executive's Base Salary shall be payable by the
Company in regular installments consistent with the Company's general payroll
practices. Executive's Base Salary for any partial year shall be pro rated based
upon the number of days elapsed in such year within the Employment Period.

          (b)   During the Employment Period, Executive shall be eligible for an
annual bonus of up to 50% of the Base Salary payable to Executive for such year,
which shall be prorated for any partial year based on the number of days elapsed
in such year within the Employment Period (the "ANNUAL BONUS"). In each year,
the amount of the Annual Bonus shall

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be determined based upon the Company's achievement of targets established by the
Board and in accordance with the formulas set forth on EXHIBIT A hereto. Such
targets shall be set annually by the Board taking into account the prior year's
results of operations and the Company's budget for the year with respect to
which the targets are being established; provided, however, that such targets
for the year ending December 31, 2004 shall be as set forth on EXHIBIT A hereto.

          (c)   During the Employment Period, Executive shall be entitled to
medical, life, and disability insurance and to such other benefits (including
participation in any 401(k) plan and profit sharing plan, and consideration for
participation in any stock option plan) as are made available to the Company's
senior management. Executive shall be entitled to vacation in accordance with
the Company's vacation policies applicable to senior management.

          (d)   During the Employment Period, the Company shall pay or reimburse
Executive for all reasonable expenses incurred by him in the course of
performing his duties and responsibilities under this Agreement which are
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company's
normal requirements with respect to reporting and documentation of such
expenses.

          (e)   All amounts payable to Executive hereunder shall be subject to
all withholding of the Company by law.

          (f)   In its charter and by-laws, the Company shall exculpate officers
and directors from liability to the Company, provide for mandatory
indemnification of officers and directors, and provide for the advancement of
expenses to officers and directors subject to pending or threatened litigation
for which indemnification may be available, in each case to the maximum extent
permitted by law. The Company shall use commercially reasonable efforts to
maintain in effect a director and officer insurance policy with a reputable
insurer in an amount of not less than $10 million, naming Executive as a named
insured. Such exculpation, indemnification, advancement of expenses and
commercially reasonable efforts to maintain insurance shall remain in effect
with respect to Executive for the periods during which Executive serves as an
officer or director of the Company notwithstanding any termination of employment
of Executive for any reason.

          4.    TERM; SEVERANCE.

          (a)   The Employment Period will continue until Executive's
resignation, death or Disability or the Board's termination of the Employment
Period at any time with or without Cause, in each case a "SEPARATION" hereunder.
Except as otherwise provided herein, any termination of the Employment Period by
the Board shall be effective as specified in a written notice from the Board to
Executive, but not sooner than the date on which the notice is delivered.

          (b)   In the event that the Company terminates Executive's employment
without Cause or Executive resigns with Good Reason, Executive shall be entitled
to (i) receive his Base Salary through the effective date of the Separation,
(ii) receive compensation, in accordance with Company policy, for any accrued
and unused vacation as of the date of the Separation, (iii) reimbursement for
expenses in accordance with SECTION 3(d), (iv) any accrued and unpaid bonus owed
to Executive as of the date of the Separation, (v) receive Executive's then
current Base

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Salary, payable in regular installments in accordance with the Company's general
payroll practices, for the period commencing on the day immediately following
the Separation and continuing through the later to occur of the second
anniversary of the Separation and the fifth anniversary of the date hereof (the
"SEVERANCE PERIOD"), (vi) receive a lump sum payment for each 12-month period
that falls within the Severance Period, payable on the last business day of each
such 12-month period, equal to the Annual Bonus paid to Executive for the fiscal
year immediately preceding the fiscal year in which the Separation occurs or, if
the Separation occurs prior to the end of 2004, equal to the maximum target
bonus payable for 2004, and (vii) continue to participate during the Severance
Period (at the Company's expense to the same extent as participation for other
members of the Company's senior management is at the Company's expense) in all
employee benefit programs made generally available to the Company's senior
management (other than bonus and incentive compensation plans) to the extent
permitted under the terms of such programs and under applicable law (it being
understood that if Executive is unable to participate in any such plan by reason
of prohibitions under the terms of such programs or under applicable law, the
Company shall, in lieu of such participation, pay to Executive an amount in cash
equivalent to the value of such participation); PROVIDED that Executive will be
entitled to the amounts payable pursuant to clauses (v), (vi) and (vii) of this
SECTION 4(b) if and only if Executive has executed and delivered to the Company
a General Release in form and substance substantially similar to EXHIBIT B
attached hereto. Notwithstanding the foregoing, in the event that the Company
determines that Executive has breached any provision of SECTION 5, SECTION 6 or
SECTION 7 hereof, without limiting any other remedies that may be available to
it, the Company may withhold from payment of amounts otherwise due under clauses
(v), (vi) and (vii) of this SECTION 4(b) an amount equal to the Company's
estimated damages as result of any such breach (the "ESTIMATED DAMAGES"), which
amount may be held by the Company pending settlement of the alleged breach or
final determination by a court of competent jurisdiction of the actual damages
to the Company resulting from any such breach (the "ACTUAL DAMAGES"). If the
Actual Damages are greater than the Estimated Damages, then, without limiting
any other remedies that may be available to it, the Company shall be entitled to
withhold from any future payment of amounts otherwise due under clauses (v),
(vi) and (vii) of this SECTION 4(b) an amount equal to the Actual Damages minus
the Estimated Damages; conversely, if the Estimated Damages are greater than the
Actual Damages, then the Company shall pay to Executive an amount equal to the
Estimated Damages minus the Actual Damages.

          (c)   In the event that the Company terminates Executive's employment
due to Disability, Executive shall be entitled to: (i) receive his Base Salary
through the effective date of the Separation, (ii) receive compensation, in
accordance with Company policy, for any accrued and unused vacation as of the
date of the Separation, (iii) reimbursement for expenses in accordance with
SECTION 3(d), (iv) any accrued and unpaid bonus owed to Executive as of the date
of the Separation, (v) receive payments during the Severance Period in an amount
equal to 60% of Executive's initial Base Salary, payable in regular installments
in accordance with the Company's general payroll practices, which payments shall
be net of any benefits Executive receives from any disability insurance, and
(vi) continue to participate during the Severance Period (at the Company's
expense to the same extent as participation for other members of the Company's
senior management is at the Company's expense) in all employee benefit programs
made generally available to the Company's senior management (other than bonus
and incentive compensation plans) to the extent permitted under the terms of
such programs and under applicable law (it being understood that if Executive is
unable to participate in any such plan

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by reason of prohibitions under the terms of such programs or under applicable
law, the Company shall, in lieu of such participation, pay to Executive an
amount in cash equivalent to the value of such participation). Notwithstanding
the foregoing, in the event that the Company determines that Executive has
breached any provision of SECTION 5, SECTION 6 or SECTION 7 hereof, without
limiting any other remedies that may be available to it, the Company may
withhold from payment of amounts otherwise due under clauses (v) and (vi) of
this SECTION 4(c) an amount equal to the Company's Estimated Damages, which
amount may be held by the Company pending settlement of the alleged breach or
final determination by a court of competent jurisdiction of the Actual Damages.
If the Actual Damages are greater than the Estimated Damages, then, without
limiting any other remedies that may be available to it, the Company shall be
entitled to withhold from any future payment of amounts otherwise due under
clauses (v) and (vi) of this SECTION 4(c) an amount equal to the Actual Damages
minus the Estimated Damages; conversely, if the Estimated Damages are greater
than the Actual Damages, then the Company shall pay to Executive an amount equal
to the Estimated Damages minus the Actual Damages.

          (d)   In the event Executive ceases to be employed by the Company for
any reason other than a termination by the Company without Cause or due to
Disability or Executive's resignation for Good Reason, Executive shall be
entitled to receive only his Base Salary through the effective date of the
Separation, compensation, in accordance with Company policy, for any accrued and
unused vacation, reimbursement for expenses in accordance with SECTION 3(d), and
any accrued and unpaid bonus, and Executive shall not be entitled to any other
salary, compensation or benefits from the Company or its Subsidiaries
thereafter; provided, however, that if such termination is as a result of the
death of Executive, then Executive's estate shall also be entitled to receive,
at the time that the Annual Bonus for the year in which the death occurs would
have been payable, a bonus in amount equal to the Annual Bonus to which the
Executive would have been entitled had he remained an employee for the entire
year, multiplied by the number of the days in such year prior to the date of
death, divided by 365.

          (e)   Except as otherwise expressly provided herein, all of
Executive's rights to salary, bonuses, fringe benefits and other compensation
hereunder which would otherwise accrue or become payable after the Separation
shall cease upon such termination (other than those expressly required under
applicable law, such as COBRA).

          (f)   For purposes of this Agreement, "CAUSE" shall mean (i)
Executive's conviction of a felony or a crime involving moral turpitude, (ii)
any act of dishonesty or fraud on the part of Executive that has caused material
harm to the Company, and/or (iii) the willful and continued failure by Executive
to substantially perform his duties and obligations under this Agreement (other
than any such failure resulting from incapacity due to physical or mental
illness), or the gross negligence or willful misconduct by Executive with
respect to the Company or any of its Subsidiaries, after a demand by the Board
which specifically identifies the manner in which the Board believes that he has
not substantially performed his duties or has committed gross negligence or
willful misconduct and the failure by Executive to cure such failure within 30
days after delivery of such demand. Any determination of "Cause" must be made by
the Board and may be made only after Executive has had an opportunity to address
the Board with respect to an assertion of "Cause."

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          (g)   For purposes of this Agreement, "GOOD REASON" shall mean one or
more of the following reasons: (i) the Company reduces the amount of Executive's
compensation in a manner that constitutes a breach of this Agreement, or
otherwise fails to perform in any material respect or breaches in any material
respect its other obligations under this Agreement, if such failure or breach is
not cured within 30 days after notice by Executive to the Board of such failure
or breach; (ii) the Company assigns to Executive any duties inconsistent with
his position, duties, responsibilities and status with the Company, reduces his
authority, changes his reporting responsibilities, titles or offices, or removes
Executive from any such positions (except in connection the termination of his
employment by the Company for Cause, by Executive other than for Good Reason, or
as a result of Executive's death or Disability); (iii) the Company changes
Executive's place of work to a location more than 25 miles from his present
place of work, (iv) there is a Change of Control (other than one that the
Executive approved or voted in favor of in his capacity as a director and/or
stockholder of the Company); (v) Executive is removed from the Board other than
for Cause, or is not reelected to the Board at the end of any term of service
thereon; or (v) the Company terminates the employment of Stephen J. Harrison
without "Cause," or Stephen J. Harrison terminates his employment for "Good
Reason," as such terms are defined in the Employment Agreement of even date
herewith between the Company and Stephen J. Harrison (other than in the case
where the Executive approved or voted in favor of the termination Stephen J.
Harrison without "Cause" or the events that constituted "Good Reason", in his
capacity as a director and/or stockholder of the Company).

          (h)   For purposes of this Agreement, "DISABILITY" shall mean
Executive's incapacitation or other absence from his full-time duties hereunder
for six consecutive months or for at least 180 days during any 12-month period,
in either case as a result of a mental or physical illness or injury.

          (i)   For purposes of this Agreement, "CHANGE OF CONTROL" shall mean
(i) any sale, transfer or issuance or series of sales, transfers and/or
issuances of capital stock of the Company by the Company or any holders thereof
(including without limitation, any merger, consolidation or other transaction or
series of related transactions having the same effect) which results in any
person or entity (a "PERSON") or group of Persons (as the term "group" is used
under the Securities Exchange Act of 1934, as amended), other than Persons who
hold more than 10% of Company's Common Stock as of immediately giving effect to
the transactions occurring concurrent with the execution of this Agreement (the
"CURRENT SIGNIFICANT STOCKHOLDERS"), owning capital stock of the Company
possessing the voting power (under ordinary circumstances) to elect a majority
of the Board, and (ii) any sale or transfer of all or substantially all of the
assets of the Company and its subsidiaries in any transaction or series of
transactions (other than sales in the ordinary course of business) to any Person
or group of Persons (as the term "group" is used under the Securities Exchange
Act), other than Current Significant Stockholders.

          (j)   Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for herein be reduced by any
compensation earned by Executive as a result of employment by another employer
or by retirement benefits after the date of Separation or otherwise.

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          (k)   EXCISE TAX GROSS-UP.

                (i)    In the event that it shall be determined at any time (as
     hereafter provided) that any payment by the Company to the Executive
     pursuant to this Agreement or otherwise (the "SUBJECT PAYMENTS") in
     connection with the Executive's termination by the Company without Cause or
     resignation for Good Reason, in each case, prior to the third anniversary
     of the date hereof, but only if such termination without Cause or
     resignation for Good Reason is in connection with a change in the ownership
     or effective control of the Company or in the ownership of a substantial
     portion of the assets of the Company within the meaning of Code Section
     280G (other than one that the Executive approved or voted in favor of in
     his capacity as a director and/or stockholder of the Company), would be
     subject to the excise tax imposed by Section 4999 of the Internal Revenue
     Code of 1986, as amended (the "CODE") (or any successor provision thereto)
     by reason of being considered a "parachute payment," within the meaning of
     Section 280G of the Code (or any successor provision thereto) or to any
     similar tax imposed by state or local law (such tax or taxes being
     hereafter collectively referred to as the "EXCISE TAX"), then the Executive
     shall be entitled to receive an additional payment or payments
     (collectively, the "GROSS-UP PAYMENT"). The Gross-Up Payment shall be in an
     amount such that, after reducing the amount of the Gross-Up Payment by all
     applicable U.S. federal, state and local taxes (computed at the maximum
     marginal rates and including any interest or penalties imposed with respect
     to such taxes), including any Excise Tax imposed on the Gross-Up Payment,
     there remains an amount of Gross-Up Payment equal to the Excise Tax imposed
     on the Subject Payments.

                (ii)   Subject to the provisions of SECTION 4(k)(v), all
     determinations required to be made under this SECTION 4(k), including
     whether an Excise Tax is payable by the Executive and the amount of such
     Excise Tax and the amount of any associated Gross-Up Payment, shall be made
     by a nationally recognized accounting firm (the "ACCOUNTING FIRM") selected
     by the Company and reasonably acceptable to the Executive. The Accounting
     Firm shall submit its determination and detailed supporting calculations to
     both the Company and the Executive within 30 calendar days of the request
     for such determination by the Company or the Executive, but in no event
     later than 10 days before the date when such tax is required by the
     applicable taxing authority to be paid, and at such other time or times as
     may be requested by the Company. All fees and expenses of the Accounting
     Firm shall be borne solely by the Company. Any Gross-Up Payment shall be
     paid by the Company to the Executive within 5 days of the receipt of the
     Accounting Firm's determination. Any determination by the Accounting Firm
     shall be binding upon the Company and the Executive. If the Executive after
     consultation with his tax counsel determines that any legal position
     adopted by the Accounting Firm with respect to the calculation is subject
     to uncertainty, at the written request of the Executive, the Accounting
     Firm will deliver a written opinion to the Executive that there is
     "substantial authority", within the meaning of the Treas. Reg. Section
     1.6662-4(d), for the positions adopted. If the Accounting Firm's
     determination of the amount of the Excise Tax payable by the Executive is
     determined to be erroneous by the applicable taxing authority or court
     after any contest of such determination as described in SECTION 4(k)(v)
     and, as a result of such erroneous determination the Executive fails to
     report the full amount to the Excise Tax determined to be due on his

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     applicable federal income tax return, then the Company shall indemnify,
     without duplication for any amounts required to be paid under SECTION
     4(k)(v), the Executive on an after tax basis for the amount of any tax
     deficiency and negligence penalty or other penalty imposed on the Executive
     by the Internal Revenue Service or other taxing authority in connection
     therewith. Any such indemnity payment shall be made by the Company to the
     Executive no later than the earlier of 10 days after the resolution of any
     contest of such determination as described in SECTION 4(k)(v) or 2 days
     before the date when such tax is required by the applicable taxing
     authority or court to be paid.

                (iii)  The Company and the Executive shall each provide the
     Accounting Firm access to and copies of any books, records and documents in
     the possession of the Company or the Executive, as the case may be,
     reasonably requested by the Accounting Firm, and otherwise cooperate with
     the Accounting Firm in connection with the preparation and issuance of the
     determinations and calculations contemplated by SECTION 4(k)(ii).

                (iv)   The federal, state and local income or other tax returns
     filed by the Executive shall be prepared and filed on a consistent basis
     with the determination of the Accounting Firm with respect to the Excise
     Tax payable by the Executive. The Executive shall make proper payment of
     the amount of any Excise Payment. If prior to the filing of the Executive's
     federal income tax return, or corresponding state or local tax return, if
     relevant, the Accounting Firm determines that the amount of the Gross-Up
     Payment should be reduced, the Executive shall within 10 business days pay
     to the Company the amount of such reduction.

                (v)    The Executive shall notify the Company in writing of any
     claim by the Internal Revenue Service or any other taxing authority that,
     if successful, would require the payment by the Company of a Gross-Up
     Payment or increasing the amount of any Gross-Up Payment previously made.
     Such notification shall be given as promptly as practicable but no later
     than 10 business days after the Executive actually receives notice of such
     claim and the Executive shall further inform the Company of the nature of
     such claim and the date on which such claim is requested to be paid. The
     Executive shall not pay such claim prior to the earlier of (x) the
     expiration of the 30-calendar-day period following the date on which he
     gives such notice to the Company and (y) the date that any payment of
     amount with respect to such claim is due. If the Company notifies the
     Executive in writing prior to the expiration of such period that it desires
     to contest such claim in a legally permissible manner, the Executive shall:
     (A) provide the Company with any written records or documents in his
     possession relating to such claim reasonably requested by the Company; (B)
     take such action in connection with contesting such claim as the Company
     shall reasonably request in writing from time to time including, without
     limitation, accepting legal representation with respect to such claim by an
     attorney competent in respect of the subject matter and reasonably selected
     by the Company and reasonably acceptable to the Executive; (C) cooperate
     with the Company in good faith in order effectively to contest such claim;
     and (D) permit the Company to participate in any proceedings relating to
     such claim; provided, however, that the Company shall bear and pay directly
     all costs and expenses incurred in connection with such contest and shall
     indemnify and hold harmless the Executive, on an after-tax basis, for and
     against any

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     Excise Tax or income tax (including interest and penalties with respect
     thereto), imposed as a result of the resolution of such claim and such
     representation and payment of all costs and expenses (including with
     respect to any imputed income amounts). The Company shall control all
     proceedings taken in connection with the contest of any claim contemplated
     by this SECTION 4(k)(v) and, at its sole option, may pursue or forego any
     and all administrative appeals, proceedings, hearings and conferences with
     the taxing authority in respect of such claim (provided, however, that the
     Executive may participate therein at his own cost and expense) and may, at
     its option, either direct the Executive to pay the tax claimed and sue for
     a refund or contest the claim in any permissible manner, and the Executive
     agrees to prosecute such contest to a determination before any
     administrative tribunal, in a court of initial jurisdiction and in one or
     more appellate courts, as the Company shall determine; provided, however,
     that if the Company directs the Executive to pay the tax claimed and sue
     for a refund, the Company shall advance the amount of such payment to the
     Executive on an interest-free basis and shall indemnify and hold the
     Executive harmless, on an after-tax basis, from any Excise Tax or income or
     other tax, including interest or penalties with respect thereto, imposed
     with respect to the resolution of such claim and such advance (including
     with respect to any imputed income amounts); and provided further, however,
     that any extension of the statute of limitations relating to payment of
     taxes for the taxable year of the Executive with respect to which the
     contested amount is claimed to be due is limited solely to such contested
     amount. Furthermore, the Company's control of any such contested claim
     shall be limited to issues with respect to which a Gross-Up Payment would
     be payable hereunder and the Executive shall be entitled to settle or
     contest, as the case may be, any other issue raised by the Internal Revenue
     Service or any other taxing authority.

                (vi)   If, after the receipt by the Executive of an amount
     advanced by the Company pursuant to SECTION 4(k)(v), the Executive receives
     any refund with respect to such claim, the Executive shall (subject to the
     Company's complying with the requirements of SECTION 4(k)(v)) promptly pay
     to the Company the amount of such refund (together with any interest paid
     or credited thereon after any taxes applicable thereto). If, after the
     receipt by the Executive of an amount advanced by the Company pursuant to
     SECTION 4(k)(v), a determination is made that the Executive shall not be
     entitled to any refund with respect to such claim and the Company does not
     notify the Executive in writing of its intent to contest such denial or
     refund prior to the expiration of 30 calendar days after such
     determination, then such advance shall be forgiven and shall not be
     required to be repaid and the amount of any such advance shall be credited
     against, to the extent thereof, the amount of Gross-Up Payment or indemnity
     required to be paid by the Company to the Executive pursuant to this
     SECTION 4(k).

          5.    CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data (including trade secrets) obtained by him
while employed by the Company, USAuto Holdings, Inc. ("USAUTO") and/or any of
their respective Subsidiaries (as defined below) (including those obtained by
him while employed by USAuto prior to the date of this Agreement) concerning the
business or affairs of the Company, USAuto and/or their respective Subsidiaries
("CONFIDENTIAL INFORMATION") are the property of the Company and its
Subsidiaries. Therefore, Executive agrees that he shall not disclose to any
person, other than in the course of the performance of his duties to the
Company, or use for his own purposes any

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Confidential Information, unless and to the extent that (i) the Confidential
Information becomes generally known to and available for use by the public other
than as a result of Executive's acts or omissions or (ii) such disclosure or use
is authorized by the Board. Executive shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
embodying or relating to the Confidential Information, Work Product (as defined
below) or the business of the Company or any of its Subsidiaries which Executive
may then possess or have under his control. For purposes of this Agreement,
"SUBSIDIARY" shall mean any corporation or other entity of which the securities
or other ownership interests having the voting power to elect a majority of the
board of directors or other governing body are, at the time of determination,
owned by the Company directly or through one of more Subsidiaries.

          6.    INVENTIONS, PATENTS AND OTHER INTELLECTUAL PROPERTY. Executive
acknowledges that all discoveries, concepts, ideas, inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports,
patent applications, copyrightable work and mask work (whether or not including
any Confidential Information) and all registrations or applications related
thereto, and all other proprietary information and all similar or related
information (whether or not patentable) which relate to the Company's or any of
its Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive (whether alone or jointly with others) while employed by the
Company, USAuto and/or their respective Subsidiaries, whether before or after
the date of this Agreement ("WORK PRODUCT"), belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and, at the Company's expense, perform all actions reasonably requested by the
Board (whether during or after the Employment Period) to establish and confirm
such ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).

          7.    NON-COMPETE, NON-SOLICITATION. In further consideration of the
compensation to be paid to Executive hereunder, Executive acknowledges that in
the course of his employment with USAuto and the Company he has and will become
familiar with the trade secrets of the Company, USAuto and their respective
Subsidiaries and with other Confidential Information concerning the Company,
USAuto and their respective Subsidiaries and that his services have been and
will be of special, unique and extraordinary value to the Company and its
Subsidiaries. Therefore, Executive agrees that:

          (a)   during the Employment Period and for the period commencing with
the Separation and continuing until the later to occur of the second anniversary
of the Separation and the fifth anniversary of the date hereof (the "NONCOMPETE
PERIOD"), Executive shall not, within the United States, directly or indirectly
own any interest in, manage, control, participate in, consult with, render
services for, or in any manner engage in any business that is involved in the
development, marketing, retail sale, administration or underwriting of
non-standard automobile insurance programs anywhere in the United States;
PROVIDED that nothing herein shall prohibit Executive from being a passive owner
of not more than 5% of the outstanding equity interests of any class of a
corporation, partnership, limited liability company, or other entity, so long as
Executive has no active participation in the business of such entity;

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          (b)   during the Noncompete Period, Executive shall not, other than in
the course of performing his duties on behalf of the Company while an officer
thereof, directly or indirectly through another person or entity (i) induce or
attempt to induce any employee of the Company or any of its Subsidiaries, other
than a member of Executive's family, to leave the employ of the Company or any
of its Subsidiaries, or in any way interfere with the relationship between the
Company or any of its Subsidiaries and any employee thereof, (ii) hire any
person, other than a member of Executive's family, who was an employee of the
Company or any of its Subsidiaries at any time during the one-year period
immediately preceding the Separation, (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the Company or any of
its Subsidiaries to cease doing business with the Company or any of its
Subsidiaries, or (iv) directly or indirectly acquire or attempt to acquire an
interest in any business relating to the business of the Company or any of its
Subsidiaries and with which the Company or any of its Subsidiaries has
entertained discussions, or has requested and received information, relating to
the acquisition of such business by the Company or any Subsidiary in the
two-year period immediately preceding the Separation;

          (c)   if, at the time of enforcement of this SECTION 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law;

          (d)   in the event of the breach or a threatened breach by Executive
of any of the provisions of this SECTION 7, the Company and its Subsidiaries, in
addition and supplementary to other rights and remedies existing in their favor,
shall be entitled to specific performance and/or injunctive or other equitable
relief from a court of competent jurisdiction in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other security).
In addition, Executive agrees that, in the event of a breach or violation by
Executive of this SECTION 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured; and

          (e)   the provisions of this SECTION 7 are in consideration of: (i)
employment with the Company and (ii) additional good and valuable consideration
as set forth in this Agreement. In addition, Executive agrees and acknowledges
that the restrictions contained in SECTION 5, SECTION 6 and this SECTION 7 do
not preclude Executive from earning a livelihood, nor do they unreasonably
impose limitations on Executive's ability to earn a living. In addition,
Executive agrees and acknowledges that the potential harm to the Company of the
non-enforcement of SECTION 5, SECTION 6 and/or this SECTION 7 outweighs any
potential harm to Executive of its enforcement by injunction or otherwise. In
addition, Executive acknowledges that he has carefully read this Agreement and
has given careful consideration to the restraints imposed upon Executive by this
Agreement and is in full accord as to their necessity for the reasonable and
proper protection of confidential and proprietary information of the Company now
existing or to be developed in the future. Executive expressly acknowledges and
agrees that each and every restraint imposed by this Agreement is reasonable
with respect to subject matter, time period and geographical area.

                                     - 10 -
<Page>

          8.    EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement, confidentiality agreement or any similar agreement with any other
person or entity and (iii) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Executive hereby acknowledges
and represents that he has consulted with independent legal counsel regarding
his rights and obligations under this Agreement.

          9.    SURVIVAL. SECTIONS 3(f) and 4 through 18 (inclusive), and all
rights of Executive to compensation and benefits relating to periods prior to
the termination of the Employment Period, shall survive and continue in full
force in accordance with their terms notwithstanding the termination of the
Employment Period.

          10.   NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or upon confirmation of receipt if delivered by telecopy
or facsimile (but only if a copy of such telecopy or facsimile is delivered to
the recipient by a recognized next-day courier service), (b) on the first
business day following the date of dispatch if delivered by a recognized
next-day courier service or (c) on the fifth business day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as have been previously designated in
writing to the party sending such notice by the party to receive such notice:

          NOTICES TO EXECUTIVE:

          Thomas M. Harrison, Jr.
          3813 Green Hills Village Drive
          Nashville, Tennessee 37215
          Fax:  (615) 327-2266


          WITH A COPY TO:

          Covington & Burling
          1201 Pennsylvania Ave., NW
          Washington, DC   20004
          Fax: (202) 662-6291
          Attention:  Ralph C. Voltmer, Jr.

          NOTICES TO THE COMPANY:

          First Acceptance Corporation

                                     - 11 -
<Page>

          676 North Michigan Avenue, Suite 3300
          Chicago, Illinois 60611
          Fax: (312) 327-4525
          Attention:  President

          WITH A COPY TO:

          Kirkland & Ellis LLP
          200 East Randolph Drive
          Chicago, Illinois 60602
          Fax: (312) 861-2200
          Attention: Sanford E. Perl

or such other address or facsimile number or to the attention of such other
person as the recipient party shall have specified by prior written notice to
the sending party. Any notice under this Agreement shall be deemed to have been
given when so delivered, sent or mailed.

          11.   SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

          12.   COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
All employment agreements between Executive and USAuto dated prior to the date
hereof and currently in effect are hereby terminated; provided, however, that
Executive shall continue to be entitled to receive base salary and expense
reimbursement payments under those agreements for periods prior to the date
hereof to the extent not duplicative with compensation and benefits payable
hereunder.

          13.   NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.

          14.   COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

          15.   SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company and
their respective heirs, successors and assigns, provided that neither party may
assign his or its rights or delegate his or its duties or obligations hereunder
without the prior written consent of the other.

                                     - 12 -
<Page>

          16.   CHOICE OF LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Tennessee.

          17.   AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company (as
approved by the Board), its successors and assignees, and Executive, and no
course of conduct or course of dealing or failure or delay by any party hereto
in enforcing or exercising any of the provisions of this Agreement shall be
deemed to be an implied waiver of any provision of this Agreement.

          18.   ARBITRATION.

          (a)   Except with respect to any dispute or claim under SECTION 5,
SECTION 6 or SECTION 7 hereof in which Executive's right to payments under
SECTION 4(b) is not at issue (which dispute or claim may be pursued in any court
of competent jurisdiction as specified below and with respect to which each
party shall bear the cost of its own attorneys' fees and expenses except as
otherwise required by applicable law), each party hereto agrees that
arbitration, conducted in Nashville, Tennessee, in accordance with the rules of
the American Arbitration Association, shall be the sole and exclusive method for
resolving any claim or dispute ("CLAIM") arising out of or relating to the
rights and obligations acknowledged and agreed to in this Agreement and the
employment of Executive by the Company and its Subsidiaries (including, without
limitation, disputes and claims regarding employment discrimination, sexual
harassment, termination and discharge). The arbitrator shall be directed to
issue a written decision to be delivered to both parties, addressing each issue
disputed by the parties, stating the arbitrator's findings and reasons therefor,
and stating the nature and amount of any damages, compensation or other relief
awarded (the "FINAL DETERMINATION"). The parties agree that the result of any
arbitration hereunder shall be final, conclusive and binding on all of the
parties hereto.

          (b)   Any party hereto may institute litigation to enforce any Final
Determination. Each party hereto hereby irrevocably submits to the jurisdiction
of any United States District Court or state court of competent jurisdiction
sitting in Nashville, Tennessee, and agrees that such court shall be the
exclusive forum with respect to any dispute or claim under SECTION 5, SECTION 6
or SECTION 7 hereof and for the enforcement of any Final Determination. Each
party hereto irrevocably consents to service of process by registered mail or
personal service and waives any objection on the grounds of personal
jurisdiction, venue or inconvenience of the forum. Each party hereto further
agrees that each other party hereto may initiate litigation in any court of
competent jurisdiction to execute any judicial judgment enforcing a Final
Determination.

          19.   INSURANCE. Each of the Company and its Subsidiaries, at its
discretion, may apply for and procure in its own name and for its own benefit
life and/or disability insurance on Executive in any amount or amounts
considered available. In addition, Executive agrees to cooperate in any medical
or other examination, supply any information, and to execute and deliver any
applications or other instruments in writing as may be reasonably necessary to
obtain and maintain such insurance.

                                 *  *  *  *  *

                                     - 13 -
<Page>

          IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.


                                            FIRST ACCEPTANCE CORPORATION


                                            -----------------------------------
                                            By:
                                            Its:


                                            ------------------------------------
                                            Thomas M. Harrison, Jr.

                                     - 14 -
<Page>

                                                                       EXHIBIT A

     This is EXHIBIT A to the Employment Agreement, dated as of _______, 2004
(the "AGREEMENT"), by and between First Acceptance Corporation (f/k/a Liberte
Investors Inc.), a Delaware corporation (the "COMPANY"), and Thomas M. Harrison,
Jr. ("EXECUTIVE"). Unless otherwise defined in this EXHIBIT A, capitalized terms
have the meaning set forth in the Agreement.

         ANNUAL BONUS CALCULATION FOR THE YEAR ENDING DECEMBER 31, 2004

     If Adjusted EBITDA (as defined below) is less than or equal to $20,392,000,
Executive shall not be entitled to an Annual Bonus for the year ending December
31, 2004. If Adjusted EBITDA is greater than $20,392,000, Executive shall be
entitled to an Annual Bonus for such year ending in an amount equal to (i)
Adjusted EBITDA minus $20,392,000 DIVIDED BY (ii) $4,000,000, MULTIPLIED BY 50%
of Executive's Base Salary; provided, however, that in no event shall Executive
be entitled to an Annual Bonus in excess of an amount equal to 50% of his Base
Salary.

     The term "ADJUSTED EBITDA" shall have the meaning set forth in the SCHEDULE
OF CONSIDERATION attached to the Agreement and Plan of Merger, dated as of
December __, 2003, by and among the Company, USAH Merger Sub, Inc., a Delaware
corporation, USAuto Holdings, Inc., a Delaware corporation ("USAUTO"), and the
stockholders of USAuto.

                                     - 15 -
<Page>

                                                           Exhibit B

                                 GENERAL RELEASE

     I, Thomas M. Harrison, Jr., in consideration of and subject to the
performance by First Acceptance Corporation, a Delaware corporation (together
with its Subsidiaries, the "COMPANY"), of its material obligations under the
Employment Agreement, dated as of __________ __, 2004 (the "AGREEMENT"), do
hereby release and forever discharge as of the date hereof the Company and all
present and former directors, officers, agents, representatives, employees,
successors and assigns of the Company and its direct or indirect owners
(collectively, the "RELEASED PARTIES") to the extent provided below.

1.   I understand that any payments or benefits paid or granted to me under
     clauses (v), (vi) and (vii) of Section 4(b) of the Agreement or clauses (v)
     and (vi) of Section 4(c) of the Agreement represent, in part, consideration
     for signing this General Release and are not salary, wages or benefits to
     which I was already entitled. I understand and agree that I will not
     receive the payments and benefits specified in clauses (v), (vi) and (vii)
     of Section 4(b) of the Agreement or clauses (v) and (vi) of Section 4(c) of
     the Agreement unless I execute this General Release and do not revoke this
     General Release within the time period permitted hereafter or breach this
     General Release.

2.   Except as provided in paragraph 4 below, I knowingly and voluntarily
     release and forever discharge the Company and the other Released Parties
     from any and all claims, controversies, actions, causes of action,
     cross-claims, counter-claims, demands, debts, compensatory damages,
     liquidated damages, punitive or exemplary damages, other damages, claims
     for costs and attorneys' fees, or liabilities of any nature whatsoever in
     law and in equity, both past and present (through the date of this General
     Release) and whether known or unknown, suspected, or claimed against the
     Company or any of the Released Parties which I, my spouse, or any of my
     heirs, executors, administrators or assigns, may have, which arise out of
     or are connected with my employment with, or my separation from, the
     Company (including, but not limited to, any allegation, claim or violation,
     arising under: Title VII of the Civil Rights Act of 1964, as amended; the
     Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967,
     as amended (including the Older Workers Benefit Protection Act); the Equal
     Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990;
     the Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as
     amended; the Worker Adjustment Retraining and Notification Act; the
     Employee Retirement Income Security Act of 1974; any applicable Executive
     Order Programs; the Fair Labor Standards Act; or their state or local
     counterparts; or under any other federal, state or local civil or human
     rights law, or under any other local, state, or federal law, regulation or
     ordinance; or under any public policy, contract or tort, or under common
     law; or arising under any policies, practices or procedures of the Company;
     or any claim for wrongful discharge, breach of contract, infliction of
     emotional distress, defamation; or any claim for costs, fees, or other
     expenses, including attorneys' fees incurred in these matters) (all of the
     foregoing collectively referred to herein as the "CLAIMS").

                                     - 16 -
<Page>

3.   I represent that I have made no assignment or transfer of any right, claim,
     demand, cause of action or other matter covered by paragraph 2 above.

4.   I agree that this General Release does not waive or release any rights or
     claims that I may have under the Age Discrimination in Employment Act of
     1967 which arise after the date I execute this General Release. I
     acknowledge and agree that my separation from employment with the Company
     in compliance with the terms of the Agreement shall not serve as the basis
     for any claim or action (including, without limitation, any claim under the
     Age Discrimination in Employment Act of 1967).

5.   In signing this General Release, I acknowledge and intend that it shall be
     effective as a bar to each and every one of the Claims hereinabove
     mentioned or implied. I expressly consent that this General Release shall
     be given full force and effect according to each and all of its express
     terms and provisions, including those relating to unknown and unsuspected
     Claims (notwithstanding any state statute that expressly limits the
     effectiveness of a general release of unknown, unsuspected and
     unanticipated Claims), if any, as well as those relating to any other
     Claims hereinabove mentioned or implied. I acknowledge and agree that this
     waiver is an essential and material term of this General Release and that
     without such waiver the Company would not have agreed to the terms of the
     Agreement. I further agree that in the event I should bring a Claim seeking
     damages against the Company, or in the event I should seek to recover
     against the Company in any Claim brought by a governmental agency on my
     behalf, this General Release shall serve as a complete defense to such
     Claims. I further agree that I am not aware of any pending charge or
     complaint of the type described in paragraph 2 hereof as of the execution
     of this General Release.

6.   I agree that neither this General Release, nor the furnishing of the
     consideration for this General Release, shall be deemed or construed at any
     time to be an admission by the Company, any Released Party or myself of any
     improper or unlawful conduct.

7.   I agree that I will forfeit all amounts payable by the Company pursuant to
     the Agreement if I challenge the validity of this General Release. I also
     agree that if I violate this General Release by suing the Company or the
     other Released Parties, I will pay all costs and expenses of defending
     against the suit incurred by the Released Parties, including reasonable
     attorneys' fees, and return all payments received by me pursuant to the
     Agreement.

8.   I agree that this General Release is confidential and agree not to disclose
     any information regarding the terms of this General Release, except to my
     immediate family and any tax, legal or other counsel I have consulted
     regarding the meaning or effect hereof or as required by law, and I will
     instruct each of the foregoing not to disclose the same to anyone.

9.   Any non-disclosure provision in this General Release does not prohibit or
     restrict me (or my attorney) from responding to any inquiry about this
     General Release or its underlying facts and circumstances by the Securities
     and Exchange Commission (SEC), the National Association of Securities
     Dealers, Inc. (NASD), any other self-regulatory organization or
     governmental entity.

                                     - 17 -
<Page>

10.  I agree to reasonably cooperate with the Company in any internal
     investigation or administrative, regulatory or judicial proceeding. I
     understand and agree that my cooperation may include, but not be limited
     to, making myself available to the Company upon reasonable notice for
     interviews and factual investigations; appearing at the Company's request
     to give testimony without requiring service of a subpoena or other legal
     process; volunteering to the Company pertinent information; and turning
     over to the Company all relevant documents which are or may come into my
     possession all at times and on schedules that are reasonably consistent
     with my other permitted activities and commitments. I understand that in
     the event the Company asks for my cooperation in accordance with this
     provision, the Company will reimburse me solely for reasonable travel
     expenses, including lodging and meals, upon my submission of receipts.

11.  Notwithstanding anything in this General Release to the contrary, this
     General Release shall not relinquish, diminish, or in any way affect any
     rights or claims arising out of any breach by the Company or by any
     Released Party of the Agreement.

12.  In the event the Company breaches its obligation to make payments to me
     pursuant to Section 4(b) of the Agreement in accordance with the terms and
     subject to the conditions set forth in the Agreement, and such breach is
     not cured within 15 days after written notice by me to the Company in
     accordance with the notice provisions set forth in the Agreement, then this
     General Release shall terminate and be of no further force or effect.

13.  Whenever possible, each provision of this General Release shall be
     interpreted in, such manner as to be effective and valid under applicable
     law, but if any provision of this General Release is held to be invalid,
     illegal or unenforceable in any respect under any applicable law or rule in
     any jurisdiction, such invalidity, illegality or unenforceability shall not
     affect any other provision or any other jurisdiction, but this General
     Release shall be reformed, construed and enforced in such jurisdiction as
     if such invalid, illegal or unenforceable provision had never been
     contained herein.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

     1.   I HAVE READ IT CAREFULLY;

     2.   I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT
          RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE
          DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED; TITLE VII OF THE
          CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963; THE
          AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT
          INCOME SECURITY ACT OF 1974, AS AMENDED;

     3.   I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

     4.   I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT
          AND HAVE DONE SO, OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE
          CHOSEN NOT TO DO SO OF MY OWN VOLITION;

                                     - 18 -
<Page>

     5.   I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS
          RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____
          TO CONSIDER IT AND THE CHANGES MADE SINCE THE _______________ __,
          _____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART
          THE REQUIRED 21-DAY PERIOD;

     6.   I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS
          RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE
          OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

     7.   I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH
          THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT;
          AND

     8.   I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE
          AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN
          WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY
          ME.


DATE: ___________ __, ______                    --------------------------------
                                                Thomas M. Harrison, Jr.

                                     - 19 -