Document:

<PAGE>
                                                                   Exhibit 10.25

                                OPTION AGREEMENT

                        (WITH ASSET PURCHASE SUPPLEMENT)

                                     BETWEEN

                     DIRECT GENERAL INSURANCE AGENCY, INC.,
                               A TEXAS CORPORATION
                       (REFERRED TO HEREIN AS "PURCHASER")

                                       AND

                        ALL AMERICAN GENERAL AGENCY, INC.
                              A TEXAS CORPORATION,

                        GUARANTEED INSURANCE AGENCY, INC.
                               A TEXAS CORPORATION

                 (COLLECTIVELY REFERRED TO HEREIN AS "SELLERS")

                                AMCO RETAIL, LLC,
                             A FLORIDA CORPORATION,

                           AMCORP GENERAL AGENCY, INC.
                              A TEXAS CORPORATION,

                             PC GENERAL AGENCY, INC.
                             A GEORGIA CORPORATION,

                           ALEX J. CAMPOS, INDIVIDUAL
                               A GEORGIA RESIDENT,

                             KEITH MAHAR, INDIVIDUAL
                                A TEXAS RESIDENT,

                            MICHAEL YORK, INDIVIDUAL
                               A GEORGIA RESIDENT,

                (COLLECTIVELY REFERRED TO HEREIN AS "GUARANTORS")

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

                                 JANUARY 1, 2003

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                                    CONTENTS

<TABLE>
<CAPTION>
  SECTION                      SECTION HEADINGS                        PAGE NO.
  -------                      ----------------                        --------
<S>           <C>                                                      <C>
              Recitals.....................................................1

     1.       Purchase Option..............................................2

     2.       Purchase Price...............................................2

     3.       Purchase Date and Exercise Date..............................3

     4.       Transferred Assets...........................................3

     5.       Obligation to Sell Transferred Assets........................4

     6.       Conduct of Sellers...........................................4

     7.       Prohibited Transactions......................................4

     8.       Access to Financial and Other Information....................5

     9.       Termination..................................................6

     10.      Schedule A...................................................7

     11.      Non-Compete..................................................7

     12.      Board Approvals..............................................7

     13.      Miscellaneous Provisions.....................................8

         a.   Modification.................................................8

         b.   Notices......................................................8

         c.   Assignment...................................................9

         d.   Governing Law................................................9

         e.   Severability................................................10

         f.   Counterparts................................................10

         g.   Headings....................................................10

         h.   Entire Agreement............................................10

         i.   Confidentiality.............................................10

              Signatures..................................................13

              Schedule A:      List of Names and Addresses of the Stores

              Supplement:      Asset Purchase Supplement, providing additional
                               terms and provisions and will govern the
                               consummation of the purchase and sale of assets
                               upon Purchaser's exercise of the Option (the
                               Supplement contains its own Contents page.)
</TABLE>

                                       ii
<PAGE>
                                OPTION AGREEMENT

         THIS OPTION AGREEMENT, including all schedules, supplements, and
exhibits (referred to herein collectively as this "Agreement") is dated as of
January 1, 2003 between Direct General Insurance Agency, Inc. ("Purchaser"), a
Texas domiciled Managing General Agent; and All American General Agency, Inc., a
Texas corporation; Guaranteed Insurance Agency, Inc., a Texas corporation
(referred to herein collectively as the "Sellers"); and AMCO Retail, LLC, a
Florida corporation; AMCORP General Agency, Inc., a Texas corporation; PC
General Agency, Inc., a Georgia corporation; Alex J. Campos, Individual, a
Georgia Resident; Keith Mahar, Individual, a Texas Resident; Michael York,
Individual, a Georgia Resident (referred to herein collectively as the
"Guarantors").

                                   WITNESSETH:

         WHEREAS, Purchaser has entered into a Managing General Agency
Agreement, Number Direct 03-001 dated January 1, 2003, between Purchaser and Old
American County Mutual Fire Insurance Company, for the purpose of offering a
non-standard personal automobile insurance program in the state of Texas,
hereinafter referred to as the "Program"; and,

         WHEREAS, Purchaser and All American General Agency, Inc., a Texas
corporation, (referred to herein as "Agent") have entered into a Sub-producer
agreement of even date herewith (the "Sub-producer Agreement"), pursuant to
which Agent, will sell automobile insurance policies and perform certain other
Sub-producer functions on behalf of Purchaser in accordance with the terms of
the Sub-producer Agreement under the Program; and,

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         WHEREAS, in connection with said Sub-producer Agreement Sellers desire
to grant to Purchaser an exclusive irrevocable option to purchase all of the
insurance agency related assets of the Sellers, including, all business on the
books of the Agent at the time of consummation of such purchase; and

         WHEREAS, Sellers and Purchaser desire to set forth in this Agreement
the terms of said option, including detailed provisions that will govern the
transfer of such assets upon the consummation of Purchaser's exercise of the
option granted under this Agreement; and

         WHEREAS, the Guarantors are willing to guarantee the performance of the
Sellers under this Agreement and the related Asset Purchase Supplement;

         NOW THEREFORE, in partial consideration of the commission rate and
other terms of the Sub-producer Agreement, and in further consideration of the
mutual promises set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties,
Purchaser and Sellers, intending to be legally bound, hereby agree as follows:

1.       Purchase Option. Sellers irrevocably grant to Purchaser the exclusive
         right to purchase (the "Option") the Transferred Assets (defined
         below), which Sellers use to conduct their automobile insurance sales
         and service business throughout the State of Texas, under the Program
         for the Purchase Price (defined below), said Option being exercisable
         by Purchaser in accordance with this Agreement.

2.       Purchase Price. If Purchaser elects to exercise the Option granted
         hereunder, the aggregate purchase price payable to Sellers (allocation
         among Sellers to be determined by Sellers) for

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         the Transferred Assets shall be an amount of cash equal to: 1) twelve
         percent (12%) of the aggregate net collected private passenger
         automobile written premium (net of cancellations) produced by Sellers
         under the Program, and 2) four percent (4%) of net collected
         non-standard private passenger automobile written premium (net of
         cancellations) produced by Sellers for other Texas programs. Net
         collected premium shall include one-half (1/2) of the collected policy
         fee, up to $15. Any policy fee above $15 shall be included in net
         collected premium in full. For the purpose of the Purchase Price
         calculation, the net collected non-standard automobile insurance
         premium shall be calculated by multiplying the net collected.
         non-standard private passenger automobile written premium (net of
         cancellations) from July 1, 2004 to December 31, 2004 by two (2).
         Additionally, for the purpose of the Purchase Price calculation, net
         collected non-standard automobile insurance premiums written under the
         Program and for other programs will only include premium produced by
         the Sellers.

3.       Purchase Date and Exercise Date. If the Option granted by this
         Agreement is exercised as provided hereunder, then the purchase of the
         Transferred Assets shall be effected on December 31, 2004 (the
         "Purchase Date"). Purchaser may exercise the Option by delivering
         written notice to Sellers (the "Notice") at any time on or before sixty
         (60) days prior to the Purchase Date (the "Exercise Date"), in
         accordance with the notice provision of this Agreement.

4.       Transferred Assets. The assets that Purchaser may acquire by exercising
         the Option shall consist of the "Transferred Assets" as such term is
         defined in Section 1.1 of the Asset Purchase Supplement (the
         "Supplement") attached hereto, and incorporated by reference herein and
         made an integral part of this Agreement.

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5.       Obligation to Sell Transferred Assets. The parties expressly intend
         that the obligation of Sellers to sell the Transferred Assets to
         Purchaser becomes final and enforceable upon the execution and delivery
         of this Agreement, subject only to (i) the exercise of the Option by
         Purchaser, (ii) the termination of this Agreement as provided herein,
         and (iii) such conditions or contingencies that are expressly provided
         in this Agreement or the Supplement.

6.       Conduct of Sellers. Before the expiration of the Option, except as
         permitted by the prior written consent of Purchaser, but without
         creating any liability, commitment, or obligation of Purchaser, Sellers
         shall comply with Section 5.2 "Conduct Before Closing Date" of the
         Supplement.

7.       Prohibited Transactions.

         a.       Exclusivity. Before the expiration of the Option, except as
                  permitted by the prior written consent of Purchaser, but
                  without creating any liability, commitment, or obligation of
                  Purchaser, Sellers shall not directly or indirectly, in any
                  way, contact, initiate, enter into, or conduct any discussions
                  or negotiations, or enter into any agreements, whether written
                  or oral, with any person or entity with respect to the sale of
                  any of the Transferred Assets or the capital stock of Sellers
                  or a merger or consolidation of Sellers with any other entity.
                  This paragraph shall not limit the Sellers' ability to sell
                  immaterial amounts of assets in the ordinary course of
                  business.

         b.       Long-Term Contracts. During the term of this Agreement,
                  without the written consent of Purchaser, Sellers will not
                  enter into or renew any facility or equipment lease agreement
                  for a term greater than two (2) years. During the second year
                  of this Agreement, Sellers will not enter into or renew any
                  form of advertising contract, or any

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                  other agreement that could materially affect the Transferred
                  Assets (other than facility or equipment leases), if such
                  contract or agreement has a term greater than one year.

         c.       Third Party Producer Agreements. During the term of this
                  Agreement, without the written consent of Purchaser, Sellers
                  will not enter into or renew any sales, producer, or agent
                  agreement with any agency, managing general agent, insurer,
                  broker, or other entity, pursuant to which Sellers would not
                  obtain exclusive rights to all renewals and the exclusive
                  control of renewal solicitations for all business written by
                  or through such Stores under such agreement, other than as
                  required by Texas statute.

         d.       Control of Sellers. Notwithstanding anything in this Agreement
                  to the contrary, the parties acknowledge that until Purchaser
                  exercises the Option and the closing for the asset purchase
                  transaction has been consummated on the Purchase Date, the
                  responsibility for conducting the business affairs of the
                  Sellers shall remain exclusively with the current management
                  of Sellers.

8.       Access to Financial and Other Information.

         a.       So long as the Option has not expired and this Agreement has
                  not been terminated, Sellers shall provide on a confidential
                  basis financial, premium volume and such other information
                  about the Stores, the Business (as defined in the Supplement),
                  and the Transferred Assets, as Purchaser may reasonably
                  request. Sellers will promptly advise Purchaser of and provide
                  detailed information with respect to, any formal or informal
                  audit or examination of and any administrative action taken
                  against, any of the Sellers, by the Texas Department of
                  Insurance or any other regulatory agency. Purchaser shall
                  maintain any such information in confidence and shall use it
                  only for the purposes contemplated within this Agreement.

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         b.       Within thirty (30) days from the Effective Date of this
                  Agreement, Sellers shall provide, or cause to be provided, to
                  Purchaser the following Schedules required by the Supplement,
                  completed as of the Effective Date: Schedules 1.1(a); 1.1(b);
                  1.1(e); 1.1(f); 1.1(g); 3.11; and 3.14. Thereafter, during the
                  term of this Agreement, Sellers shall update, or cause to be
                  updated, such Schedules to be complete and accurate as of
                  each December 31st and deliver to Purchaser by the following
                  February 1st. If Purchaser exercises the Option by delivering
                  the Notice, then Sellers shall update, or cause to be updated,
                  such Schedules to be complete and accurate as of the Purchase
                  Date and deliver the revised Schedules to Purchaser no fewer
                  than five (5) business days prior to the Purchase Date. Any
                  changes to the original Schedules shall be clearly indicated
                  on the revised Schedules.

9.       Termination. Purchaser may terminate this Agreement at any time and for
         any reason before Purchaser delivers the Notice. This Agreement shall
         terminate and the Option shall expire at 11:59 p.m., Nashville,
         Tennessee time, on the Exercise Date, unless prior to such date and
         time Purchaser has exercised the Option by delivering the Notice to
         Alex Campos with copy to Burnie Burner on behalf of Sellers.
         Termination of this Agreement shall have no effect on the Sub-producer
         Agreement, the termination of which shall be governed by its own terms;
         provided, however, that this Agreement shall terminate automatically
         and the Option shall simultaneously expire if Direct General Insurance
         Agency, Inc. terminates the Sub-producer Agreement in accordance with
         the terms of the Sub-producer Agreement; provided further that if the
         duration of the Sub-producer Agreement is extended thereunder, then the
         duration of this Agreement and the Option shall be likewise extended.

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10.      Schedule A. Sellers and Guarantors represent that Schedule A to this
         Agreement is a list of the names and addresses of all of the Stores
         through which Sellers conduct their automobile insurance sales and
         service business throughout the State of Texas. Sellers and Guarantors
         represent that the Company Stores identified on Schedule A are wholly
         owned by Guaranteed Insurance Agency, Inc., and that all of the
         Transferred Assets as defined in the Supplement are owned, leased, or
         otherwise under the control of Sellers.

11.      Non-Compete. If the Option is exercised, no Sellers or Guarantors shall
         open or acquire, directly or indirectly, any non-standard automobile
         insurance agency in the State of Texas for a period of eighteen (18)
         months after such Option is exercised in accordance with the
         Supplement.

12.      Board Approvals.

         a.       Within 30 days of execution of this Agreement, Purchaser shall
                  have delivered to Sellers a certified copy of resolutions of
                  the board of directors of Purchaser confirming authorization
                  for Purchaser to enter into this Agreement (including the
                  Supplement hereto) and to consummate the transactions
                  contemplated by this Agreement and said Supplement, subject
                  only to the conditions set forth herein and therein and to any
                  additional conditions, acceptable to Sellers, expressly set
                  forth in such resolutions.

         b.       Within 30 days of execution of this Agreement, Sellers shall
                  have delivered to Purchaser certified copies of resolutions of
                  the board of directors of each Seller individually, and to the
                  extent the Transferred Assets will represent all or
                  substantially all of the assets of any Seller, certified
                  copies of resolutions of the shareholder(s) of any such
                  Sellers, granting final authorization for the Sellers to enter
                  into this Agreement (including the Supplement hereto) and to
                  consummate the transactions contemplated by

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                  this Agreement and said Supplement, subject only to the
                  conditions set forth herein and therein and to any additional
                  conditions, acceptable to Purchaser, expressly set forth in
                  such resolutions.

13.      Miscellaneous Provisions.

         a.       Modification. This Agreement may not be amended or modified in
                  any way except by a written document signed by the parties who
                  are affected by such amendment or modification.

         b.       Notices. The Notice and all other notices, requests, demands,
                  and other communications required or permitted hereunder shall
                  be in writing and shall be deemed to have been given (i) when
                  sent by facsimile with confirmation; (ii) when received from
                  an overnight courier or by other method of hand delivery; or
                  (iii) on the third business day after being mailed certified
                  or registered U.S. mail with postage prepaid as follows:

                  (1)  If to Purchaser to:

                       Direct General Insurance Agency, Inc. (Texas)
                       Executive Offices
                       2813 Business Park Drive, Building I
                       Memphis, TN 38118

                       ATTENTION: Jacqueline C. Adair, President

                       Direct General Insurance Agency, Inc. (Texas)
                       Regional Administrative Office
                       1281 Murfreesboro Road, Suite 5-01
                       Nashville, TN 37217
                       FAX: (615)366-3722

                       ATTENTION: Ronald F. Wilson, Secretary

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                  (2) If to Sellers, to:

                      All American General Agency, Inc.
                      3039 Premiere Parkway, Suite 100
                      Duluth, GA 30097

                      ATTENTION: Alex J. Campos, President

                      Long, Burner, Parks & DeLargy, P.C.
                      515 Congress, Suite 1500
                      Austin, TX 78701

                      ATTENTION: Burnie Burner
                      ----------------------------------------------------------

         c.       Assignment. This Agreement shall be binding upon and inure to
                  the benefit of the parties hereto and their respective
                  successors, and permitted assigns, but neither this Agreement
                  nor any of the rights, interest, or obligations hereunder
                  shall be assigned by either of the parties hereto without the
                  prior written consent of the other party; provided, however,
                  that Purchaser may assign all or a portion of its rights,
                  interest, or obligations hereunder to any affiliate that now
                  or hereafter controls, is controlled by, or under common
                  control with, Direct General Corporation; provided, however,
                  that any such assignment by Purchaser shall not relieve
                  Purchaser of its liabilities to Sellers under this Agreement.
                  (For this paragraph, Sellers are deemed to be one "party.")

         d.       Governing Law. This Agreement and the legal relations between
                  the parties hereto shall be governed by, and construed in
                  accordance with, the laws of the State of Texas, without
                  reference to the conflict of laws principles thereof.

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         e.       Severability. In the event any part(s) of this Agreement
                  should be adjudged invalid or unenforceable, such adjudication
                  shall in no manner affect the other parts, which shall remain
                  in full force and effect as if the part(s) so declared or
                  adjudged invalid were not originally a part hereof.

         f.       Counterparts. This Agreement may be executed simultaneously in
                  two or more counterparts, each of which shall be deemed an
                  original, but all of which together shall constitute one and
                  the same instrument. This Agreement will be deemed binding and
                  in effect if counterparts are signed by the parties and
                  delivered by facsimile, provided that the parties exchange
                  originally signed counterparts by U.S. Mail or overnight
                  courier.

         g.       Headings. The headings contained in this Agreement are
                  inserted for convenience only and shall not constitute a part
                  hereof.

         h.       Entire Agreement. This Agreement, including any schedules,
                  supplements, exhibits and other documents referred to herein,
                  including, without limitation, the Sub-producer Agreement,
                  the, and the Supplement, embodies the entire agreement and
                  understanding of the parties hereto with respect to the
                  subject matter contained herein and supersedes all prior
                  agreements and understandings between the parties with respect
                  to such subject matter, including, by way of illustration and
                  not by limitation, any term sheet or letter of intent
                  previously agreed to by the parties.

         i.       Confidentiality. In connection with this Agreement, and until
                  the Option expires or is exercised hereunder, each party has
                  provided, and intends to provide to the other, information
                  about their respective business affairs, financial condition,
                  computer information systems, corporate and management
                  structure, and other confidential and proprietary information
                  ("Information"). The term "Information" shall include any

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                  form of communication between the parties, including without
                  limitation, written documents, software programs,
                  electronically stored data, and oral presentations and
                  discussions. The term "Information" includes this Agreement,
                  its contents, and the fact tat this Agreement has been entered
                  into between the parties.

                  Each party will keep the Information provided by the other
                  party in confidence and will not use such Information for any
                  purpose other than as contemplated by this Agreement. Each
                  party will not copy the Information provided by the other
                  party, or disclose or allow disclosure of such Information to
                  any other person, except that each party may disclose such
                  Information to its officers, directors, employees, independent
                  contractors, affiliates, or independent auditors
                  ("Representatives") and applicable regulatory authorities
                  (upon the request of such authorities), who have a need to
                  know the Information for the purpose of implementing this
                  Agreement or auditing or regulating the affected party.
                  Furthermore, Purchaser, or any affiliate of Purchaser, may
                  disclose in any prospectus or offering memorandum the
                  existence of this Agreement and its material terms in the
                  context of any offering of securities by Purchaser or its
                  affiliate, if Purchaser is advised by legal counsel that such
                  disclosure is required or prudent in connection with such
                  offering.

                  The term "Information" shall not include any information:

                  (i)      which at the time disclosed to or obtained by either
                           party is available generally to the public;

                  (ii)     which becomes available generally to the public
                           through no act or omission by either party in
                           violation of this provision;

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                  (iii)    which either party demonstrates was received by it
                           from a third party, who had no confidentiality
                           obligations to the other party with respect thereto;

                  (iv)     which is required, under advice of counsel, to be
                           disclosed by law or court order, or in connection
                           with litigation or arbitration brought by either
                           party to enforce this Agreement; or

                  (v)      following the lapse of one year from the Exercise
                           Date or from the date this Agreement is terminated as
                           provided hereunder; provided that the prohibition
                           against disclosing the Purchase Price shall not
                           lapse.

                  Upon the execution of this Agreement, at the request of
                  Sellers or Purchaser, the parties may, individually or
                  jointly, issue a press release describing the Option and any
                  related transactions. The language of any such press
                  release(s) shall be mutually agreed between the parties. After
                  such initial press release(s), except as and to the extent
                  required by law or regulation, as advised by counsel, without
                  the prior written consent of the other party, neither
                  Purchaser, nor Sellers will, and they will direct their
                  Representatives not to make, directly or indirectly, any
                  public comment, statement or communication with respect to, or
                  otherwise to disclose or to permit the disclosure of the
                  existence of the Option or any of the terms, conditions or
                  other provisions of this Agreement; other than to repeat the
                  information disclosed in the foregoing initial press
                  release(s).

                          REMAINDER OF PAGE LEFT BLANK

                         SEPARATE SIGNATURE PAGE FOLLOWS

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

                                               "PURCHASER"

                                               DIRECT GENERAL INSURANCE
                                               AGENCY, INC., a Texas corporation

                                        By:    /s/ Barry D. Elkins
                                               ---------------------------------

                                        Name:  Barry D. Elkins
                                               ---------------------------------

                                        Title: SVP & CFO
                                               ---------------------------------

"SELLERS":

All American General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: Vice President

Guaranteed Insurance Agency, Inc.

By: /s/ Keith A. Maher
-------------------------------
Name: Keith A. Maher
Title: President

"GUARANTORS":

AMCO Retail, LLC

By: /s/ Keith A. Maher
-------------------------------
Name: Keith A. Maher
Title: Director

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AMCORP General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: Vice President

PC General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: President

/s/ Alex J. Campos
-------------------------------
Alex J. Campos, Individually

/s/ Keith Maher
-------------------------------
Keith Maher, Individually

/s/ Michael York
-------------------------------
Michael York, Individually

                                       14<PAGE>
                                                                   Exhibit 10.26

                          TEXAS SUB-PRODUCER AGREEMENT

         This Sub-producer Agreement (this "Agreement") is effective this the
1st day of January, 2003 ("Effective Date"), by and between Direct General
Insurance Agency, Inc., a Texas domiciled corporation (the "Company") and All
American General Agency, Inc., a Texas domiciled corporation (the "Agency").

         WHEREAS, Company is a duly licensed managing general agent; and

         WHEREAS, Company is a party to that certain Managing General Agent
Agreement ("MGA Agreement") with Old American County Mutual Fire and Casualty
Insurance Company, a Texas domiciled insurer (the "Insurer") dated January 1,
2003, pursuant to which Company is authorized to solicit, develop, market,
produce and issue and bind contracts of private passenger automobile insurance
and perform other duties of a managing general agent in the State of Texas (the
'Program"); and

         WHEREAS, Company is permitted under its MGA Agreement with the Insurer
to appoint sub-agents to facilitate it in fulfilling its obligations under the
MGA Agreement in connection with the Program; and

         WHEREAS, Agency has substantial expertise in soliciting, marketing, and
binding contracts of insurance for certain coverages as described herein which
uniquely meet the insurance needs of certain persons and entities; and

         WHEREAS, Company desires to appoint Agency as its sub-agent for the
solicitation, marketing and binding of such insurance coverages in the State of
Texas through Agency's duly licensed sales locations known as "Company Stores"
listed on SCHEDULE A hereto (the "Company Stores" hereinafter defined and

         NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1. APPOINTMENT/AUTHORITY

1.01     Authority. Subject to the limitations described in this Agreement,
         Company hereby authorizes and appoints Agency as its subagent for the
         purpose of producing, issuing and delivering policies or contracts of
         insurance and endorsements (individually an "Insurance Policy" or
         collectively, the "Insurance Policies"), in accordance with the
         Program's written underwriting guidelines, procedures, instructions,
         and authority limits and any memoranda provided to Agency from time to
         time. Such authority shall be exclusive for the first twelve (12)
         months of this Agreement. UNDERWRITING GUIDELINES, as attached hereto
         and incorporated herein by reference as SCHEDULE D, may be modified by
         Company from time to time without the need to amend this Agreement and
         shall be effective upon two (2) business days written notice to Agency
         or such other time as the parties may agree. Agency agrees to comply
         with and be bound by such modifications without the need for amendment
         of this Agreement.

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         1.01.a.  Franchisee Authority. Such authority granted in Section 1.01
                  of this Agreement shall be extended to AMCORP General Agency,
                  Inc. ("Franchisor"), an affiliate of Agency, who may make the
                  Program available to valid existing franchisees ("Franchisee"
                  or "Franchisees") as indicated on SCHEDULE C. The authority
                  granted to Franchisor or provided hereunder to any one or more
                  Franchisees may be terminated at any time. In any event, the
                  Authority granted to Franchisor and Franchisees shall
                  terminate on June 30, 2003, unless a Franchisee is either
                  acquired by Agency (or one of its affiliates) by such date or
                  becomes a party to an option and purchase agreement with the
                  Agency by June 30, 2003. Such option and purchase agreement
                  shall be subject to approval of the Company. Such approval
                  shall not be unreasonably withheld. Any Franchisee purchase
                  will be subject to that certain asset purchase Option
                  Agreement, of even date herewith, entered into between Company
                  and one or more affiliates of Agency ("Option Agreement").

         1.01.b.  "Company Store" Defined. The term "Company Store" shall mean
                  any sales office location or point of distribution utilized by
                  the Program that is owned by Guaranteed Insurance Agency,
                  Inc., an affiliate of Agency and listed in SCHEDULE A.

         1.01.c.  "Store" or "Stores" Defined. The term "Store" or "Stores"
                  shall collectively include both Company Stores and Franchisees
                  as referenced in SCHEDULES A and C, respectively.

1.02     General Duties of Agency. Subject to the limitations described in this
         Agreement, Agency shall perform all acts necessary for the proper
         solicitation, placement, acceptance, and servicing of the Insurance
         Policies. The general duties of the Agency under this paragraph shall
         include, but are not limited to, the following:

         1.02.a.  To solicit, prepare, accept, and submit applications for
                  Insurance Policies or contracts of insurance and endorsements
                  as described herein;

         1.02.b.  To collect, receive, and forward premiums, policy fees and/or
                  applicable tax(es), including premium and surplus lines taxes;

         1.02.c.  to appoint agents on behalf of the Insurer; and

         1.02.d.  To bind insurance contracts on behalf of the Insurer in
                  accordance with the Program's underwriting guidelines as
                  modified from time to time.

         1.02.e.  To carry out its duties to the best of its ability, knowledge,
                  skill and judgment.

1.03     Administrative Services Provided by Agency. Agency shall manage the
         Stores and provide administrative services on behalf of Company in
         connection with the Program, including but not limited to the
         following:

         A.       Agency System. Provide and maintain an agency system to all
                  Stores in a form substantially similar to the FAST system
                  utilized by the Agency currently. This system shall include
                  but not be limited to, the following:

                  i)       Maintenance of Rates, Forms and Underwriting
                           Guidelines.

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                  ii)      Maintenance of cash control and receipt system
                           including transfer of funds to Company. With respect
                           to such funds, Agency will be responsible for any
                           lost, stolen or otherwise misappropriated funds.

                  iii)     Make available for inspection all records of Agency
                           and producing agents.

                  iv)      Maintain the ability to immediately suspend writing
                           of Texas agents due to:

                           A.       Inclement weather conditions;

                           B.       Exceeding monthly written premiums caps;

                           C.       Suspension of agents writing authority;

                           D.       Other conditions that may arise.

         B.       Claims Services Provided by Agency: Agency, or an affiliate of
                  Agency, shall adjust claims on the Program until such time as
                  the upload of necessary policy information to Company (or an
                  affiliate of Company), in a form acceptable to Company is
                  completed. Additionally, Agency shall:

                  i)       Make available to Company all claims records;

                  ii)      Notify Company immediately of any claims suits;

                  iii)     Not make claim payments for any claim in excess of
                           five thousand dollars ($5,000) without prior approval
                           from Company;

                  iv)      Comply with reasonable requests by Company to
                           facilitate the transition, if necessary, of claims
                           services to Company.

         C.       Agency Licensing and Agency Appointment. Agency shall be
                  responsible for the proper licensing of all agents of Stores
                  producing under the Program in accordance with laws in the
                  State of Texas. Agency shall also be responsible for the
                  timely termination of such appointments. In addition, Agency
                  shall provide the following:

                  i)       Provide Company with and maintain current an Agency
                           database to include but not be limited to Agencies
                           names and addresses and email addresses;

                  ii)      Provide Company with and maintain current an Agent
                           database that includes but is not limited to agent
                           name, address, license number, agency affiliation and
                           email address.

         D.       Other Cooperation: Agency shall cooperate and assist Company
                  in developing the necessary information systems required for
                  accurate and timely transmission of Program data between the
                  parties as well as the development of any other systems
                  necessary to implement the purposes of this Agreement.

1.04     Independent Contractor Status. Nothing contained herein shall create an
         employer/employee relationship between Company and Agency or between
         Agency and any affiliate of Company. Except as set forth herein,
         Company shall have no right of control over Agency as to the time,
         means, or manner of Agency's performance of its duties hereunder.
         Agency shall conduct itself and its business under the terms of this
         Agreement solely as an independent contractor.

                                       3
<PAGE>

ARTICLE 2. COMPENSATION PAYABLE TO THE AGENCY; COMMISSION STATEMENTS

2.01     Commissions. If all of the terms of this Agreement are adhered to by
         the Agency, the Agency shall be entitled to commissions, as described
         below and listed on SCHEDULE B hereto, on Insurance Policies produced
         by the Agency and through the Stores and written under the Program.
         The commission so paid shall be accepted by the Agency in full
         satisfaction of all claims by the Agency and Stores for services
         rendered and expenses incurred on behalf of the Company. Agency shall
         be solely responsible for the payment of commissions, if any, to
         individual Stores and/or insurance producers. Notwithstanding
         termination of this Agreement, in the event of cancellation or
         termination of any coverage or policy prior to expiration, regardless
         of whether such cancellation or termination was by policyholder or the
         Company the Agency shall refund any unearned commissions to the Company
         at the same rate paid to the Agency.

2.02     Commission Rate. Beginning on the Effective Date, the Agency will
         receive a commission on the net collected premiums of the automobile
         insurance business written by Stores under the Program. The rate of
         said commission is set forth on SCHEDULE B hereto.

2.03     Estimated Commission Settlement. An estimate of Commissions due to
         Agency, hereunder, will be paid to Agency on the first business day
         following the receipt of net collected premiums by the Company in
         accordance with Article 4.

2.04     Commission Statement. Following the end of each calendar month, the
         Company shall, by the 15th day of the next month, send to the Agency a
         statement of accounts setting forth, among other things, the premium
         written, commissions earned, estimated commissions paid and the net
         amount due to/from the Agency, together with payment of that amount, if
         any. If such statement reflects an amount due to the Company from the
         Agency, the Agency will pay that amount within 5 business days of the
         date of said statement.

2.05     Acceleration. Should Agency default in any payment of premiums or
         return of unearned commissions referred to herein, all unpaid premiums
         and unearned commissions on the Insurance Policies shall be due and
         payable immediately.

2.06     Equitable Relief. Notwithstanding Section 13.07 (Arbitration) of this
         Agreement, should Agency fail to pay Company any premiums, unearned
         commissions, or other monies when due, then Company shall be entitled
         to the issuance of an injunction to obtain such premiums or monies to
         prohibit Agency's use of such funds in violation of this Agreement, or
         to require Agency's deposit of such funds in accordance with this
         Agreement; and the cost and expense of the Company to obtain such
         injunction, including reasonable attorneys' fees, shall be borne by
         Agency. If the Company seeks, but is unsuccessful in obtaining such an
         injunction, then the cost and expense of the Agency to obtain a court
         order denying the injunction, including reasonable attorney's fees,
         shall be borne by the Company.

                                       4
<PAGE>

2.07     Full Compensation. The compensation to which Agency is entitled under
         this ARTICLE 2 shall constitute full compensation for services to be
         performed by Agency under this Agreement.

ARTICLE 3. LIMITATIONS OF AUTHORITY

3.01     Maximum Premium Volume. Absent prior written approval, the maximum
         monthly premium volume (direct written premium, net of cancellations
         and return premium, hereafter "Net Written Premium") that the Agency is
         authorized to produce for the Company's account is as follows:

<TABLE>
<CAPTION>
                                               Monthly       Year-to-Date
                                            -----------      ------------
<S>                                         <C>              <C>
                 January 2003               $ 3,000,000      $ 3,000,000
                 February 2003                5,000,000        8,000,000
                 March 2003                   5,000,000       13,000,000
                 April 2003                   3,000,000       16,000,000
                 May 2003                     3,000,000       19,000,000
                 June 2003                    3,000,000       22,000,000
                 July 2003                    3,000,000       25,000,000
                 August 2003                  3,000,000       28,000,000
                 September 2003               3,000,000       31,000,000
                 October 2003                 3,000,000       34,000,000
                 November 2003                3,000,000       37,000,000
                 December 2003                3,000,000       40,000,000
                                            -----------      -----------
                 Total 2003                 $40,000,000
                                            -----------

                 January 2004               $ 6,000,000      $ 6,000,000
                 February 2004               10,000,000       16,000,000
                 March 2004                  10,000,000       26,000,000
                 April 2004                   6,000,000       32,000,000
                 May 2004                     6,000,000       38,000,000
                 June 2004                    6,000,000       44,000,000
                 July 2004                    6,000,000       50,000,000
                 August 2004                  6,000,000       56,000,000
                 September 2004               6,000,000       62,000,000
                 October 2004                 6,000,000       68,000,000
                 November 2004                6,000,000       74,000,000
                 December 2004                6,000,000       80,000,000
                                            -----------      -----------
                 Total 2004                 $80,000,000
                                            -----------
</TABLE>

         Agency may request approval from the Company to exceed a specific
         monthly cap. Such required approval shall not be unreasonably withheld
         as long as the year-to-date aggregate total has not been exceeded.

3.02     Underwriting Guidelines and Forms under the Program. The rules and
         rates to be utilized by the Agency under the Program in underwriting
         the insurance are those which

                                       5
<PAGE>

         have been approved for use by the Insurer and the Company and filed
         with the insurance department of the State of Texas (see attached
         "Underwriting Guidelines" in SCHEDULE D. A copy of the rules and rates
         shall be maintained on file at the offices of the Agency. These rules
         and rates cannot be changed or deviated from without the prior written
         consent of the Company. Further, insurance coverage shall be evidenced
         pursuant to the policy form(s) which have been approved for use by the
         Insurer and the Company and which shall be maintained on file at the
         offices of the Agency.

3.03     Maximum Policy Limits and Policy Term. The maximum limits of insurance
         coverage and policy term that may be provided under any policy bound by
         the Agency shall be consistent with the Underwriting Guidelines
         established by the Company, from time to time.

3.04     Company's Right to Cancel/Nonrenew Insurance Policies. The Company
         reserves the right on behalf of Insurer to cancel or non-renew any
         Insurance Policy, subject to requirements imposed by law and any policy
         provision, without specifying the reason therefore and without
         liability to the Agency or the producing agents.

3.05     Company's Right to Suspend Binding Authority. Company may suspend the
         binding authority of the Agency or of any of the Stores at any time
         with notice.

3.06     Prohibited Expenses. The Agency shall not charge or commit Company to
         any expense, agreement, payment, debt, settlement, or obligation other
         than as expressly provided for herein.

3.07     Claims Settlement Authority. Except as specifically provided herein,
         Agency has no authority to adjust or settle any claims arising out of
         or in connection with the Insurance Policies. Agency shall not collect
         payment from any reinsurer or commit Company or Insurer to a claim
         settlement with a reinsurer.

ARTICLE 4. PREMIUM COLLECTION AND REMITTANCES

4.01     Payment of Premium Responsibility for. All applications and, where
         applicable, premium payments for new Insurance Policies submitted by
         the Agency will be forwarded to the Company in the manner prescribed in
         the Insurer's or Company's Underwriting Guidelines or as otherwise may
         be instructed by the Company from time to time. The Agency may not
         collect premiums on any Insurance Policies that have been cancelled,
         expired terminated, or non-renewed.

4.02     Premium Trust Account. All premiums and other funds collected by Agency
         for the Company's account are the property of Company and shall be held
         in trust on behalf of Company in fiduciary capacity ("Premium Trust
         Funds") and shall be deposited and maintained in an account separate
         and segregated from Agency's own funds or funds held by Agency on
         behalf of any other company or person (the "Premium Trust Account")
         until such time that the Agency has remitted premiums to the Company in
         accordance with 4.03 below. The Premium Trust Accounts shall be
         maintained in an amount at least

                                       6
<PAGE>

         equal to the premiums (unpaid to Company), and return premiums (unpaid
         to policyholders or insureds) received by Agency.

4.03     Premium Remittances. The Agency shall make available premiums collected
         or deemed to have been collected by the Agency or Stores by the third
         (3rd) business day following the receipt of premiums by the Agency or
         Stores. Company will by ACH or other means debit the Premium Trust
         Account for said premiums collected.

ARTICLE 5. REPORTS

5.01     Financial Information. Agency agrees to furnish Company with financial
         statements each calendar quarter, which accurately reflect the
         financial condition of the Agency and the Stores and other affiliates
         of Agency through which Agency performs its duties and obligations
         under this Agreement, and which financial statements, if annual, will
         include an auditor's statement and report if Agency obtains audited
         statements. If Agency does not obtain audited statements, the financial
         information furnished may be unaudited, unless the law of any state
         having jurisdiction over this Agreement requires submission of an
         audited statement Such financial information shall be furnished to
         Company within ninety (90) days (or sixty 60 days if unaudited)
         following the close of the calendar year or quarter of the Agency.

5.02     Reporting Requirements. With regard to the Insurance Policies written,
         Agency shall provide, at its expense and within a reasonable time after
         written request from the Company, sufficient information to satisfy
         reasonable reporting requirements imposed on Company by boards,
         bureaus, and associations, and to enable Company and reinsurers to file
         required financial statements and reports with insurance departments
         and regulatory bodies. Company shall provide Agency with such written
         reporting requirements.

ARTICLE 6. RECORDS

6.01     Records Retention. Agency shall keep true and complete records of all
         transactions and correspondence with policyholders, agents, brokers,
         insurance departments, and Company. The Company shall have access to,
         and the right to copy, all accounts and records related to such
         insurance, in a form usable by the Company, at any time during the
         Agency's business hours. All records and documents required to be
         maintained by Agency including, but not limited to, policyholder
         information and financial documents, shall be maintained during the
         Term, as defined in Section 10.01 and thereafter while providing any
         continuing services hereunder, in a manner and form as mutually agreed
         upon or as required by Company to be compatible with Company's internal
         systems and in accordance with generally acceptable accounting
         principles and insurance regulatory practices.

6.02     Document Production. On request, Agency will forward to Company, no
         later than five (5) days from such request (or such longer period as
         may be reasonably necessary to produce such information), exact copies
         of all Insurance Policies or other appropriate evidences of insurance
         written pursuant to this Agreement; financial documents or other
         reports; policyholder data; or any other information in Agency's
         possession requested by

                                       7
<PAGE>

         Company and not otherwise readily available to Company relating to the
         Insurance Policies.

ARTICLE 7. GENERAL OBLIGATIONS OF AGENCY

7.01     Licensing. Agency warrants that it is, and will continue to be during
         the Term and thereafter while providing any continuing services
         hereunder, authorized and licensed to perform all acts set out in this
         Agreement. On or before the signing of this Agreement, the Agency shall
         provide Company with a copy of its current Managing General Agent
         and/or Agency License, and thereafter shall provide copies of any
         renewal of such license to Company within 15 days of receipt of the
         renewed license from the Texas Department of Insurance.

7.02     Supervision of Agents/Producers. Agency shall maintain a listing and
         current copies of the insurance licenses of any agent or broker or
         Franchisee from which Agency accepts a submission. Agency shall
         supervise all agents, brokers and franchisees who place business
         through Agency. Further, Agency shall be responsible to Company for
         such agents, brokers and Franchisees and for all funds collected for
         business solicited by such agents ,brokers and Franchisees. At
         Company's request, the Agency shall provide to Company copies of the
         listing of and of any agreements with such agents and brokers, and
         Franchisees.

7.03     Compliance with Laws. Agency shall be responsible for full compliance
         with all applicable laws, regulations, rules and requirements relating
         to the performance of its obligations hereunder; and the general
         standards, rules, and regulations of the insurance industry; and all
         written instructions provided to Agency from time to time by Company.

7.04     Complaint Procedure. Agency, Company and Insurer shall notify the other
         within three (3) business days of notice or receipt (or such shorter
         period as necessary to adequately respond) of any complaint with any
         insurance department or other regulatory authority relating to the
         Insurance Policies, whether against Company, any affiliate of the
         Company, Insurer, Agency, its agents, or brokers or Franchisees. Agency
         shall provide Company with a proposed written response to a complaint
         including, but not limited to, a written summary of all facts relevant
         to such complaint. Company will then respond, or authorize Agency to
         respond, to such complaint in such form as Company determines, in
         Company's sole discretion, is necessary. The parties will work together
         to promptly and adequately respond to any such complaint.

7.05     No Authority to Delegate. Except as specifically provided herein,
         Agency shall not have the authority to delegate any authority contained
         herein to any other person or entity without prior written
         authorization from Company.

7.06     Agency Expense Responsibility. Since Agency, the Stores, and their
         employees are independent contractors and not employees of Company, all
         expenses including, but not limited to, Agency's office rent;
         transportation; salaries; utilities; furniture; fixtures; equipment;
         telephone; attorney and/or legal fees; postage; promotional advertising
         and public relations expenses; printing costs, records and reports;
         inspection fees; credit

                                       8
<PAGE>

         reports and any other documents required to fulfill Agency obligations
         hereunder; commissions, fees due to agents or brokers; and Agency
         license fees and occupational taxes, whether billed to Agency or
         Company, shall be the sole liability of Agency, unless assumption of
         such expense by Company is agreed to in writing by Company. Agency will
         remit promptly to Company the amount of any such item billed to Company
         upon notice by Company to Agency of the charge therefore.

7.07     Use of Company Logo, etc. Agency may not use the name, logo, or service
         mark of Company or any of its affiliates in any advertising,
         promotional material, or in any material disseminated by Agency without
         the prior written consent of Company. Agency shall maintain copies and
         provide an original to Company of any advertisement or other materials
         approved by Company along with full details concerning where, when, and
         how it was used. Agency shall be liable for any liability of or cost
         incurred by Company as a result of the use of any such advertisements
         or materials.

7.08     Ownership of Supplies. All forms and supplies provided to Agency or
         authorized to be used by Agency by Company shall remain the property of
         Company and shall be returned immediately upon request. Upon
         termination of this Agreement or Agency's authority hereunder, at the
         request of Company Agency shall return to the Company or to its
         designated representative all property owned or leased by Company.

7.09     RESERVED

7.10     RESERVED

7.11     Confidentiality. If either party provides to the other party access to
         information or networks through computer access, such other party shall
         be responsible for maintaining the confidentiality, security and
         integrity of such information and of the providing party's computer
         programs and systems. Additionally, each party that obtains such
         information shall be responsible to insure that its employees, agents,
         and representatives are aware of the sensitive and proprietary nature
         of the information obtained, of the importance of confidentiality, and
         of the conditions described in this Section 7.11. This Section 7.11
         shall survive termination of this Agreement.

7.12     Claims Reporting. At such time that the Company (or an affiliate of the
         Company) assumes responsibility for handling claims under the Program,
         Agency shall ask policyholders to promptly report all claims, suits, or
         losses to Company or an assigned adjuster or claim representative who
         has been designated by Company. Company will provide Agency appropriate
         telephone numbers and addresses for this purpose. Agency shall
         cooperate with Company or the assigned adjuster or claim representative
         in the investigation, adjustment, settlement, and payment of claims
         arising out of the Insurance Policies. All records, files,
         correspondence, or other materials pertaining to claims shall be the
         sole property of Company. Retention of a commission under the terms of
         this Agreement shall constitute a representation by Agency that all
         known claims have been accurately, promptly, and completely reported to
         Company.

                                       9
<PAGE>

ARTICLE 8. GENERAL OBLIGATIONS OF COMPANY

8.01     Insurance Department Complaints. Notwithstanding Section 7.04 hereof
         Company shall have the sole right to respond to any state insurance
         department complaint or inquiry, after consulting with Agency as
         provided herein.

8.02     Use of Agency's Logo, etc. Company agrees that it shall not use
         Agency's name, logo, or service mark in connection with any advertising
         without Agency's prior written approval.

8.03     Company's Right to Offset. Company may combine or offset any balances
         or funds owed by Agency to Company against any balances or funds owed
         to Agency by Company under this Agreement or any other agreement
         between the parties.

8.04     Representations.

         8.04.a.  During the Term of this Agreement, Company shall not solicit
                  Franchisees for the purpose of competing with Company Stores.

         8.04.b.  During the Term of this Agreement, Company shall not open any
                  sales location for the purpose of offering the Program within
                  a two (2) mile radius of any Company Store.

ARTICLE 9. INSURANCE AND INDEMNITY

9.01     Insurance. Agency and the Stores are required to maintain in fill force
         and effect the following existing insurance policies issued by an
         insurer acceptable to Company during the Term of this Agreement and
         thereafter while Agency has any obligations hereunder covering Agency
         and the Stores and their employees as follows:

         a.       Errors and omissions coverage in the minimum amount of $1
                  million, with a deductible not to exceed $100,000;

         b.       Commercial general liability insurance policy in the minimum
                  amount of $l million each occurrence and $l million general
                  aggregate, including:

                  i.       Personal injury liability of $l million; and

                  ii.      Non-owned automobile liability of $l million;

         c.       Fidelity bond coverage in the amount of $1 million; and

         d.       Workers compensation insurance in the amount of Texas'
                  required minimum.

         Such insurance shall be maintained by Agency and/or the Stores at their
         sole cost and expense, and shall be primary on contributing coverage
         over any other valid and collectible insurance available to Company.
         Agency shall request its insurers to provide thirty (30) days prior
         notification to Company, and Agency agrees to immediately notify
         Company when it receives notice of any lapse, increased deductibles, or
         upon receipt of a notice terminating coverage. Agency shall furnish
         proof of such insurance within fifteen (15)

                                       10
<PAGE>

         days of the Company's written request for the same. Agency further
         agrees to notify Company promptly of any claim brought under any such
         policy which arises out of or is connected with the Insurance Policies
         written hereunder.

9.02     Indemnification by Agency. At all times hereafter, Agency hereby agrees
         to defend, indemnify, and hold Company harmless from and against all
         claims, actions, causes of action, liability, or loss which result from
         any negligent or willful acts, errors, or omissions of Agency, or the
         Stores, their employees, representatives, agents, or sub-agents in the
         performance or breach of duties under this Agreement. Agency further
         agrees that in the event Company or any Store is in violation of any
         code, statute, regulation, or bulletin due to the negligent or willful
         acts, errors or omissions of Agency, or Store, its employees,
         representatives, agents, or sub-agents, then Agency shall assume the
         responsibility and liability for such act and shall indemnify and hold
         Company harmless for such liability and loss. Loss shall include, but
         not be limited to, all damages, costs, expenses, reasonable attorneys'
         fees, penalties, fines, direct damages, verdicts (including punitive
         damages to the extent permissible by law), and any other expense or
         expenditure incurred by Company. This Section shall survive termination
         of this Agreement.

9.03     Indemnification by Company. At all times hereafter, Company hereby
         agrees to defend, indemnify, and hold Agency harmless from and against
         all claims, actions, causes of actions, liability, or loss which result
         form any negligent or willful acts, errors, or omissions of Company,
         its employees, representatives, agents, or sub-agents in the
         performance or breach of duties under this Agreement. Company further
         agrees that in the event Agency is in violation of any code, statute,
         regulation, or bulletin due to the negligent or willful acts, errors,
         or omissions of Company, its employees, representatives, agents, or
         sub-agents, then Company shall assume the responsibility and liability
         for such act and shall indemnify and hold Agency harmless for such
         liability and loss. Loss shall include, but not be limited to, all
         damages, costs, expenses, reasonable attorney's fees, penalties, fines,
         direct damages, verdicts (including punitive damages to the extent
         permissible by law), and any other expenses or expenditures incurred by
         Agency. This Section shall survive termination of this Agreement.

9.04     Notice of Indemnifiable Claim. Upon receipt of a claim or demand for
         which a party is entitled to indemnification, the indemnified party
         shall as promptly as is reasonably possible:

         9.04.a.  Notify the indemnifying party in writing of the nature of the
                  indemnifiable claim, and the names and addresses of the
                  persons involved in or having an interest in such claim in the
                  manner provided in Section 1.01 of this Agreement; and

         9.04.b.  Furnish the indemnifying party with all documents and
                  information within the possession, custody or control of the
                  indemnified party and relating to such claim; and

                                       11
<PAGE>

         9.04.c.  Cooperate with the indemnifying party and its counsel,
                  including but not limited to, appearing as a witness as may be
                  reasonably required and responding to all reasonable request
                  for documents and answering interrogatories.

         Upon receipt of written notice of an indemnifiable claim and all other
         documents and instruments required by this Agreement to be furnished to
         the indemnifying party, the indemnifying party shall thereafter be
         given a reasonable opportunity to defend or settle such a claim at its
         own expense. Neither party shall settle any such claim that might have
         an adverse effect on the other party, without the prior written consent
         of the other party, which shall not be unreasonably withheld. Each
         party shall at all times have the full right to participate in any such
         defense at its own expense. If either party, within a reasonable time
         after receiving notice of a claim from the other party, fails to
         defend, such other party shall have the right, but not the obligation
         to undertake the defense, compromise, or settlement of such claim on
         behalf of, for the account of, and at the risk of the party failing to
         defend.

ARTICLE 10. TERM OF AGREEMENT

10.01    Term. The term of this Agreement shall commence on the Effective Date,
         and terminate on December 31, 2004, unless terminated earlier as set
         forth in Article 11 below (the "Term").

ARTICLE 11. TERMINATION OF THIS AGREEMENT

11.01    Termination by Company. The Company may terminate this Agreement at any
         time for any reason with written notice to Agency. In the event of such
         termination (unless the termination is for cause, as described below),
         Agency shall retain all rights to the renewal of all of the Company's
         business written by Stores under this Agreement. Thereafter, the
         Company will not solicit any of the customers of Stores for renewal of
         Insurance Policies. In no event, however, shall the term "solicit"
         include response to any general advertisement by Company or as required
         by law.

11.02    Termination by the Company for Cause. The Company may immediately
         terminate this Agreement in whole or in part, for cause if Agency
         materially breaches any provision of this Agreement after written
         notice of such breach has been given to Agency and Agency has failed to
         cure within a ten (10) day notice period. Breach shall include, but not
         be limited to, the following events:

         11.02.a. Insolvency. Agency or any of the Company Stores becomes
                  insolvent, institutes or acquiesces in the institution of any
                  bankruptcy, or liquidation proceeding or any such proceeding
                  is instituted against Agency or any of the Stores that remains
                  undismissed for thirty (30) days; or

         11.02.b. Sale of Stock or Assets to a Third Party. Other than as
                  related to the Option Agreement, Agency or the owner of a
                  controlling interest in Agency or the Company Stores, sells,
                  exchanges, transfers, assigns, consolidates, pledges or

                                       12
<PAGE>

                  causes to be sold, exchanged, transferred, assigned,
                  consolidated, or pledged, all or substantially all of the
                  stock of Agency, or all or substantially all of the stock or
                  assets of the Company Stores, to a third party without the
                  prior written consent of Company, which consent will not be
                  unreasonably withheld (Agency shall immediately notify Company
                  of same); or

         11.02.c. Inadequate Staff. Agency or Company Stores fails to maintain
                  a staff qualified to service the Insurance Policies or to
                  maintain the quality of services and obligations necessary to
                  operate within this Agreement, if such failure would have a
                  material adverse effect on the level of the quality of
                  services provided by Agency under this Agreement; or

         11.02.d. Remit Reports or Premiums. Agency fails to provide, or cause
                  to be provided, timely and proper reports or premium
                  accounting as required, or to remit premiums when due after
                  thirty (30) days written notice from Company; or

         11.02.e. Maintain Trust Funds. Agency fails to maintain Premium Trust
                  Funds in the amount and manner required in this Agreement
                  after ten (10) days notice from the Company that such funds
                  are not being maintained; or

         11.02.f. Misconduct, etc. Agency or any Company Store engages in acts
                  or omissions constituting abandonment, fraud, misappropriation
                  of funds, material misrepresentations, gross or willful
                  misconduct, or any other acts that are prohibited by law or
                  regulation of any applicable regulatory authority; or

         11.02.g. Agency License. Agency's or any Company Store's license or
                  certificate of authority is canceled, suspended, or is
                  declined renewal by any regulatory body within the State of
                  Texas if, after ninety (90) days, Agency fails to remedy such
                  loss of license (Agency shall immediately notify Company of
                  same); or

         11.02.h. Underwriting Guidelines; Policy Forms. Agency or any Company
                  Store binds or underwrites risks (i) that are unacceptable in
                  accordance with the underwriting guidelines, procedures,
                  instructions, or memoranda provided for herein, or (ii) with
                  limits in excess of those specified in the underwriting
                  authority limits provided for herein, or (iii) with policy
                  forms or filings in a jurisdiction where Agency has knowledge
                  that required regulatory approvals have not been met;
                  provided, however, that clauses (i) and (ii) of this
                  subparagraph shall not apply if any unacceptable risk is bound
                  or underwritten by an Agency as an occasional and isolated
                  event, and Agency takes immediate action to correct and avoid
                  recurrence of such event; or

         11.02.i. Access to Records. Agency or the Company Stores fail to permit
                  Company to inspect or audit any records or files relating to
                  the Insurance Policies.

11.03    Ownership of Business. If this Agreement is terminated by the Company
         pursuant to Section 11.01, the records and the use and control of
         expirations for the insurance serviced under this Agreement shall
         remain the property of the Agency and be left in the

                                       13
<PAGE>

         Agency's exclusive possession, provided Agency has then rendered and
         continues to render timely accounts and payments of all monies due the
         Company.

         However, if the Agency is in default of this Agreement and/or if this
         Agreement is terminated by the Company for Cause as described in
         Section 11.02, or if Agency fails to render timely accounts and
         payments within three (3) days after such failure is brought to the
         Agency's attention, then the records and the use and control of
         expirations, shall be the property of the Company and Agency shall
         immediately thereafter forward all such records to the Company.

11.04    Continued Servicing. Agency agrees that in the event this Agreement is
         terminated for any reason, Agency and the Stores shall continue to
         perform all customary and necessary services for all in-force Insurance
         Policies in accordance with the provisions of this Agreement until all
         such Insurance Policies have been completely cancelled, non-renewed, or
         otherwise terminated; provided, however, that Company may, in its sole
         discretion, immediately suspend or terminate Agency's continuing
         service obligation hereunder. Agency's continuing service obligations
         after termination of the Agreement shall include, but not be limited
         to:

         11.04.a. The issuance and countersignature, if applicable, of
                  appropriate endorsements to such in-force Insurance Policies
                  when so authorized in writing by Company, provided that such
                  endorsements shall not increase Company's liability or extend
                  the term of any Insurance Policy without prior written
                  approval of Company; and

         11.04.b. The collection and remittance of all premiums due on such
                  in-force Insurance Policies hereunder.

         If Agency fails in any respect to fulfill this continuing service
         obligation, then Agency shall reimburse Company any reasonable expense
         incurred by Company to service or arrange for the servicing of the
         Insurance Policies issued by or through Agency hereunder or such
         amounts may be offset by Company.

         Upon Company providing written notice of termination to Agency
         hereunder, Company is hereby authorized to deal directly with all other
         licensed persons and/or entities with respect to the Insurance Policies
         hereunder, including but not limited to, the right to collect from and
         return premiums directly to the Stores and all producers, brokers, or
         insureds.

ARTICLE 12. SOLICITATION AND RECRUITMENT

12.01    Non Solicitation. During the Term of this Agreement, and for a period
         of eighteen months (18) after Company exercises its Option, as defined
         in the Option Agreement, Agency and Stores shall not solicit any
         customer of Company, or divert or attempt to divert from Company any
         customer of Company, for automobile insurance sales or services to be
         provided by any person or entity that competes with Company in the
         business of selling, quoting or servicing automobile insurance
         policies. For the purposes hereof, a "customer

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<PAGE>

         of Company" shall mean any person or entity for whom or which Company
         has provided automobile insurance sales within two (2) years prior to
         the termination of this Agreement. This Section 12.01 shall not apply
         to solicitation of customers of the Company, following termination of
         this Agreement under Section 11.01.

12.02    Non-Recruitment. During the Term of this Agreement, and for a period of
         eighteen (18) months after Company exercises its Option, Agency shall
         not, directly or indirectly, recruit, solicit or encourage, or
         facilitate the recruitment, solicitation, or encouragement of any
         employee of Company to terminate said employee's employment with
         Company or otherwise interfere in anyway with said employee's
         employment with Company.

12.03    Injunctive Relief. Notwithstanding Section 13.07 (Arbitration) of this
         Agreement, should Agency violate the terms of Section 12.01 or 12.02,
         then the parties agree that Company would suffer irreparable harm and
         the Company shall be entitled to the issuance of an injunction to
         prohibit Agency from such solicitation, recruitment and/or interference
         with Company's employees. The cost and expense of the Company
         successfully obtaining said relief including reasonable attorneys'
         fees, shall be borne by Agency. If the Company seeks, but is
         unsuccessful in obtaining such injunction, then the cost and expense of
         the Agency to obtain a court order denying the injunction, including
         reasonable attorneys' fees, shall be borne by the Company.

ARTICLE 13. GENERAL PROVISIONS

13.01    Notice. Except as otherwise set forth herein, any notice required under
         this Agreement must be in writing and either sent by first class mail,
         facsimile, electronic mail, certified mail, or personally delivered.
         Notice shall be effective either upon receipt or five (5) days after
         mailing to the other party, whichever comes first. Unless changed by
         written notice to the other party, the U.S. mail addresses of the
         respective parties are:

                AGENCY:
                All American General Agency, Inc.
                3039 Premiere Parkway, Suite 100
                Duluth, Georgia 30097

                Attn: Alex J. Campos, President

                COMPANY:

                Direct General Insurance Agency, Inc. (Texas)
                2813 Business Park Drive, Building I
                Memphis, TN 38118
                Attn: Jacqueline C. Adair, President

                                       15
<PAGE>

                With copy to:
                Direct General Insurance Agency, Inc. (Texas)
                Regional Administrative Office
                1281 Murfreesboro Road
                Nashville, Tennessee 37217
                Attn: Ronald F. Wilson, Secretary

13.02    Integration, Waiver, and Amendment. This Agreement, together with its
         Schedules constitute the entire agreement between Company and Agency
         and supersedes any and all other agreements, either oral or written,
         between Company and Agency with respect to the sub-producer or agency
         relationship between the parties. No waiver by either party to enforce
         any provision of this Agreement will be effective unless made in
         writing and signed by an authorized officer of Company and Agency and
         shall be effective as to the specifically stated waiver. No amendment
         to this Agreement will be effective unless made in writing and signed
         by the parties hereto, and specifying the effective date of such
         amendment.

13.03    Remedies Not Exclusive. No right or remedy set forth in this Agreement
         is exclusive of any other right or remedy but shall be in addition to
         every other right and remedy given under this Agreement or existing now
         or hereafter at law or equity.

13.04    Severability. Wherever possible, each provision of this Agreement will
         be interpreted in such a manner and to such an extent as to be
         effective and valid under applicable law. If any provision is
         prohibited by or invalid under applicable law, such provision will be
         ineffective only to the extent of such prohibition or invalidity.

13.05    Applicable Law. This Agreement shall be governed by and construed in
         accordance with the laws of the State of Texas, without regard to its
         rules regarding conflict of laws.

13.06    Conformance to Law. This Agreement and the provisions relating to
         commissions shall, without prior notice, be automatically modified to
         conform to any law or governmental regulation having application to or
         jurisdiction over the subject matter of the parties hereto and the
         parties shall promptly amend the Agreement to comply with such
         modifications.

13.07    Arbitration. Except as provided in Section 2.05 (Equitable Relief) and
         Section 12.03 (Injunctive Relief), all unresolved differences of
         opinion or disputes between Company and Agency arising out of or in
         connection with this Agreement or any transaction hereunder shall be
         submitted to arbitration, in accordance with the rules relating to
         commercial arbitration of the American Arbitration Association except
         as modified herein.

         The Board of Arbitration ("Board") shall consist of one (1) arbitrator
         chosen by Company, one (1) arbitrator chosen by Agency, and an umpire
         chosen as promptly as possible by the two (2) arbitrators. The
         arbitrators and umpire shall be financially

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<PAGE>

         disinterested parties or former executives of property or casualty
         insurance or reinsurance companies.

         The party demanding arbitration shall communicate its demand therefore
         in writing, identifying the nature of the dispute and the name of its
         arbitrator, to the other The other party shall then be bound to name,
         in writing, its arbitrator within thirty (30) days after receipt of
         such demand. Failure or refusal of the other to name its arbitrator
         within the thirty (30) day time period shall empower the demanding
         party to name the second arbitrator as well.

         If the two (2) arbitrators are unable to agree upon an umpire within
         thirty (30) days after the second arbitrator is named, either party may
         petition a court of competent jurisdiction to make the appointment of
         an umpire from candidates submitted by both parties in conformity with
         the qualifications set out in this Agreement.

         The applicant for arbitration shall submit its position in writing
         within thirty (30) days after selection of the umpire. The respondent
         shall submit its written position within thirty (30) days after receipt
         of the applicant's position. The Board may extend any of the time
         periods set forth above.

         The Board shall have the power to make and determine all procedural
         rules for the holding of the arbitration including discretionary power
         to make orders as to any matter which they may consider proper in the
         light of circumstances of the case with regard to pleadings,
         depositions, discovery, inspection of documents, examination of
         witnesses, and any other matter whatsoever relating to the conduct of
         the arbitration and may receive and act upon such evidence, whether
         oral or written, strictly admissible or not as the Board shall find
         fit. The Board shall make its decision based on the terms of this
         Agreement, the intent of the parties and the custom and usage of the
         non-standard automobile insurance industry.

         All rules, orders, acts, and decisions of the Board shall be effective
         if done by a majority of the Board. The final determination of the
         Board shall be made in writing within sixty (60) days of the conclusion
         of the arbitration. Any decision shall be final and binding on the
         parties, and shall not be subject to appeal. If either party fails to
         comply with the Board's decision, the other party may apply for its
         enforcement to a court of competent jurisdiction.

         Each party shall bear the cost of its own arbitrator and shall jointly
         and equally bear with the other party the expenses of the umpire. The
         Board shall allocate the remaining costs of the arbitration proceeding.

         The arbitration proceedings shall convene and be held within Davidson
         County, Tennessee or such other location mutually agreed upon by the
         parties.

         Nothing contained in this Paragraph shall be construed as limiting the
         ability of Company to suspend the authority of Agency pursuant to this
         Agreement.

                                       17
<PAGE>

         This Section 13.07 shall survive termination of this Agreement.

13.08    Other Companies. Agency agrees to advise Company of existing and future
         agency agreements entered into with other insurance companies with
         respect to the classes of business covered by this Agreement.

13.09    Non-Assignability/Non-Delegation. Except as specifically provided
         herein, neither party may delegate its duties nor assign its rights
         under this Agreement, unless otherwise agreed upon and authorized in
         writing by an officer of the other party.

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

13.11    Headings. The headings and table of contents utilized in this Agreement
         are for convenience purposes only and are not part of the Agreement.

ARTICLE 14. PERFORMANCE GUARANTY

14.01    Performance Guaranty.  Agency shall guarantee and ensure the following:

         A.       General Duties. Agency shall guarantee and ensure that Stores
                  and their producers shall perform all acts necessary for the
                  proper solicitation, placement, acceptance, and servicing of
                  the Insurance Policies. The general duties of the Stores and
                  its producers shall include, but are not limited to, the
                  following:

                  i)       To solicit, prepare, accept, and submit applications
                           for Insurance Policies or contracts of insurance and
                           endorsements as described herein;

                  ii)      To collect, receive, and forward premiums, policy
                           fees and/or applicable tax(es), including premium and
                           surplus lines taxes;

                  iii)     to appoint agents on behalf of the Insurer;

                  iv)      To bind insurance contracts on behalf of the Insurer
                           in accordance with the Program's underwriting
                           guidelines as modified from time to time;

                  v)       To carry out its duties to the best of its ability,
                           knowledge, skill and judgment.

         B.       Records Retention. Stores and its producers shall keep true
                  and complete records of all transactions and correspondence
                  with policyholders, agents, brokers, insurance departments,
                  and Company. Such records shall be maintained during the Term
                  and thereafter while providing any continuing services
                  hereunder, in a manner and form as mutually agreed upon or as
                  required by Company to be compatible with Company's internal
                  systems and in accordance with generally acceptable accounting
                  principles and insurance regulatory practices.

         C.       Supervision of Agents/Producers. Stores shall maintain a
                  listing and current copies of the insurance licenses of any
                  agent or broker or Franchisee from which Agency accepts a
                  submission. Agency shall supervise all agents, brokers and
                  Franchisees who place business through Agency. Agency shall be
                  responsible to Company for such agents,

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<PAGE>

                  brokers and Stores and for all funds collected for business
                  solicited by such agents, brokers and Stores.

         D.       Indemnification. If failure of the Stores or their producers
                  to perform hereunder results in any claim, action, cause of
                  action, liability or loss to Company, Agency shall indemnify
                  Company in accordance with Sections 9.02 and 99.04 hereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the Effective Date.

ALL AMERICAN GENERAL AGENCY, INC.

By:  /s/ Alex J. Campos
     ----------------------------------
     Alex J. Campos
     President

DIRECT GENERAL INSURANCE AGENCY, INC., a Texas corporation

By:  /s/ Barry D. Elkins
     ----------------------------------
     Barry D. Elkins
     Senior Vice President and CFO

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