Document:

Employment Agreement - J. Todd Hagely

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”) is dated as of December 4, 2006, and is
      entered into by and between J. Todd Hagely (“Executive”), Direct General
      Corporation, a Tennessee corporation (the “Company”), and Elara Holdings, Inc.,
      a Delaware corporation (“Holdco” or "Parent"). Except where otherwise noted, all
      capitalized terms not defined herein shall have the meaning set forth in the
      “Merger Agreement,” as defined below.

     

    RECITALS

     

    WHEREAS,
      pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”)
      by and among the Company, Holdco, and Elara
      Merger Corporation, a Tennessee corporation, and a wholly-owned subsidiary
      of
      Holdco ("Merger
      Sub"),
      Merger
      Sub will be merged with and into the Company, with the Company surviving as
      a
wholly-owned
      subsidiary of Holdco
      (the
      "Merger");

     

    WHEREAS,
      the
      Company and Holdco desire to secure the exclusive services and employment of
      Executive on behalf of the Company, and Executive desires to be employed
      exclusively by the Company, upon the terms and conditions set forth in this
      Agreement, which shall become effective as of and contingent upon the occurrence
      of the Effective Time, as defined in the Merger Agreement;

     

    WHEREAS,
      the
      Merger Agreement requires the execution and delivery of this Agreement by
      Executive as a condition precedent to Holdco’s obligation to enter into the
      Merger Agreement;

     

    WHEREAS,
      the
      Company and Executive have entered into that certain Employment Agreement,
      dated
      August 15, 2005 (the “Employment Agreement”); and 

     

    WHEREAS,
      the
      Company and Executive desire to terminate the Employment Agreement effective
      as
      of and contingent upon the occurrence of the Effective Time and to enter into
      this Agreement in lieu of the Employment Agreement, also effective as of and
      contingent upon the occurrence of the Effective Time.

     

    AGREEMENT

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and promises contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto, each intending to be legally bound
      hereby, agree as follows:

     

    1.  Effective
      Date of Agreement

     

    This
      Agreement shall be executed and delivered by Executive prior to Holdco’s
      execution of the Merger Agreement, and shall become effective only as of the
      Effective Time and conditioned on the consummation of the Merger. In the event
      that the Merger is not consummated, the parties hereto agree that this Agreement
      shall have no effect and shall be null and void.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  The
      Position

     

    The
      Company hereby employs Executive as Executive Vice President and Chief Financial
      Officer of the Company, and Executive accepts such exclusive
      employment.

     

    3.  Duties

     

    During
      his employment with the Company, Executive will serve the Company and its
      affiliates faithfully, diligently and to the best of his ability and will devote
      all or substantially all of his time, energy, experience and talents during
      regular business hours and as otherwise reasonably necessary to such employment,
      to the exclusion of all other business activities. During his employment with
      the Company, Executive shall perform all duties and accept all responsibilities
      incident to such position as may be reasonably assigned to him from time to
      time
      by the Board of Directors of the Company (the “Board”), the Chief Executive
      Officer (the "CEO") of the Company and/or the designee of the CEO. Executive
      shall also be subject to and shall abide by all policies and procedures of
      the
      Company, except to the extent that such policies and procedures conflict with
      the other provisions of this Agreement, in which case this Agreement shall
      control.

     

    4.  Compensation

     

    Executive
      shall be paid the following as compensation for all services to be rendered
      by
      Executive pursuant to this Agreement:

    

    (a)  Base
      salary. During
      the Term (as defined in Section 6 hereof), Executive shall be entitled to a
      base
      salary (the “Base Salary”), payable in equal biweekly installments, according to
      the Company’s normal payroll practices, at an annual rate of two hundred fifteen
      thousand dollars ($215,000), less all applicable federal, state and/or local
      taxes and all other authorized payroll deductions. Executive’s Base Salary will
      be subject to an approximately annual review, and increases (but not reductions)
      may be made to Executive’s Base Salary at any time based upon the Board’s and/or
      CEO's review of Executive’s performance and the performance of the Company.

     

     

    (b)  Bonus
      eligibility.
       During
      the Term, Executive shall be entitled to participate in a Company bonus plan
      or
      program to be adopted by the Board, pursuant to which he shall be eligible
      to
      receive annual bonuses up to a specified percentage of Executive's Base Salary
      and subject to a combination of the Executive's achievement of pre-established
      performance goals and the Company's achievement of pre-determined financial
      objectives, in each case, as determined in the sole and absolute discretion
      of
      the Board, and further subject to the terms and conditions of such plan or
      program.

     

     

    (c)
       Holdco
      stock option plan.
      During
      the Term, Executive shall be eligible to participate in, and receive an award
      or
      awards of stock options under, a Holdco stock option plan to be adopted by
      the
      Board, effective as of or following the Effective Time, as determined in the
      sole and absolute discretion of the Board (or any committee designated by the
      Board for this purpose) and subject to such other terms and conditions,
      including the terms of the applicable award agreements, as are determined from
      time to time by the Board or such committee.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    5.  Treatment
      of Company Stock Options 

     

    Executive
      acknowledges that all outstanding options to purchase shares of the Company's
      common stock that Executive has or that are attributable to the Executive as
      of
      the Effective Time (the "Company Options") shall be treated solely pursuant
      to
      the applicable terms of the Merger Agreement and that Executive shall have
      no
      further or greater rights other than those specified therein; provided, however,
      that in the event that Executive exercises any options to purchase shares of
      Holdco stock, following the Effective Time, Executive agrees that at the time
      of
      each such exercise, he shall execute and become a party to that certain
      Management Stockholders' Agreement dated as of December __, 2006, between
      Holdco, Fremont and Management Stockholders (as each such entity or person
      is
      defined in such agreement). 

     

    6.  Term;
      Employment At Will

     

    Subject
      to the terms of this Agreement (including, without limitation, Section 10
      hereof), the term of this Agreement (the “Term”) shall commence on the Effective
      Time and shall be and continue on an at-will basis, until such time as
      Executive’s employment is terminated by the Company or Executive. Executive’s
      employment shall not be for a fixed term, and may be terminated at any time,
      with or without cause, by either the Company or Executive.

     

    7.  Perquisites/Expenses

     

    Executive
      shall be entitled to reimbursement of reasonable expenses incurred by Executive
      in the course of Executive’s duties, to the extent allowed under applicable
      policies of the Company.

     

    8.  Benefits

     

    (a)  During
      the Term, Executive and, to the extent applicable, Executive’s eligible
      dependents, shall be entitled to compensation and benefits that are in the
      aggregate not materially less favorable than such benefits that the Company
      provides to similarly-situated executives of the Company as of the Effective
      Time.

     

    (b)  Nothing
      in this Agreement shall preclude the Company from amending or terminating any
      employee benefit plan or practice.

     

    9.  Effect
      of Death or Disability

     

    In
      the
      event of Executive’s termination of employment by reason of death or
“disability” (as defined from time to time in any applicable disability plan or
      program of the Company) during the Term, this Agreement shall terminate
      effective as of the date of Executive’s death or, subject to any applicable
      disability plan or program of the Company or federal or state disability or
      leave laws, disability, and Executive shall receive such compensation and
      benefits (if any) in connection with such termination consistent with Section
      8
      of this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.  Termination
      of Employment and Severance

     

    
      	(a)  	
              General

            

    

     

    (i)  Termination
      by the Company for Cause or by Executive other than for Good
      Reason.
      At any
      time during the Term, the Company may terminate Executive’s employment under
      this Agreement for “Cause” (as hereinafter defined), or Executive may terminate
      his employment with the Company other than for “Good Reason” (as hereinafter
      defined), after which Executive shall be entitled to the payment of any amount
      of unpaid Base Salary and any unreimbursed reasonable expenses incurred in
      the
      performance of Executives' duties in accordance with the Company's policies,
      in
      each case accrued through such termination date. Except as set forth in the
      preceding sentence, the Company shall have no further obligation hereunder
      to
      Executive.

     

    (ii)  Termination
      by Executive for Good Reason or by the Company other than for Death, Disability
      or Cause.
      At any
      time during the Term, if Executive’s employment is terminated by Executive for
      Good Reason, or by the Company for any reason other than Executive’s death,
      disability or for Cause, Executive shall be entitled to the following payments
      (less all applicable federal, state and/or local taxes and all other authorized
      payroll deductions): (A) payment of any amount of unpaid Base Salary and
      unreimbursed reasonable expenses incurred in the performance of Executives'
      duties in accordance with the Company's policies, in each case accrued through
      the termination date and (B) provided that Executive complies with the
      notice requirements of this Section and this Agreement and signs and returns
      to
      the Company a Severance Agreement and General Release of All Claims (“Release”)
      that is acceptable (in form and substance) to the Company and such Release
      has
      become irrevocable by Executive, severance compensation equal to (I) one hundred
      fifty percent (150%) of Executive’s annual Base Salary at the rate in effect at
      the time of termination, payable in equal biweekly installments over a eighteen
      (18) calendar-month period, in accordance with the Company’s normal payroll
      practices; plus (II) if Executive’s annual bonus has not been paid and is
      payable for the applicable plan or program year commencing immediately prior
      to
      his termination of employment because Executive is not a participant for the
      full plan or program year by reason of his termination of employment, a lump-sum
      payment equal to the annual bonus award that he would have received from the
      Company had he remained employed through the remainder of the plan or program
      year (or any longer period required under the terms of such annual bonus award),
      prorated to reflect the number of days in the plan or program year ending as
      of
      his date of termination, calculated based on such other assumptions as the
      Company shall reasonably determine, and payable no later than at such time
      as
      the Company pays such annual bonuses to other eligible participants and (III)
      continued health benefits for eighteen (18) months, during which time Executive
      will be required to pay the same portion of the cost of such health benefits
      as
      he was required to pay during employment; provided, however, that to the extent
      the applicable health plan does not permit Executive to continue to participate
      in the plan during all or a part of the 18-month period, the Company shall
      pay
      the premiums relating to such continued coverage under the Consolidated Omnibus
      Budget Reconciliation Act of 1985 ("COBRA"), less any portion of the premium
      that Executive would otherwise have been required to pay had the plan permitted
      continued coverage following termination of employment. Except as set forth
      in
      the preceding sentence, the Company shall have no further obligation hereunder
      to Executive.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)  Executive
      may terminate his employment with the Company, whether for Good Reason or not,
      only by giving the Company thirty (30) days’ advance notice in writing, in
      accordance with the notice provisions of this Agreement.

     

    (b)  Definitions.
      For
      purposes of this Agreement, the following definitions shall apply:

     

    (i)  “Cause”
      shall mean any of the following: (A) Executive’s engaging in and/or failure
      to take all appropriate action in response to any acts of fraud, theft,
      embezzlement, or any other acts or omissions that are harmful or injurious
      to
      the Company and/or any of its affiliates; (B) Executive’s unreasonable
      neglect or refusal to perform any of the duties or responsibilities: (I)
      assigned to Executive by the Board, the CEO and/or the designee of the CEO,
      (II)
      assigned to Executive pursuant to any employment agreement or other agreement
      that Executive now has or later has with the Company and/or any of its
      affiliates, and/or (III) otherwise appropriate to Executive’s position after
      Executive's failure to cure such conduct within thirty (30) days following
      his
      receipt of written notice from the Board, the CEO, and/or the designee of the
      CEO; (C) Executive’s failure to timely carry out any reasonable directive of the
      Board, the CEO and/or the designee of the CEO or concerning the operations
      of
      the Company, provided, however, that Executive shall be subject to termination
      under this subsection (C) only upon Executive’s failure to carry out the
      directive for thirty (30) days following written notice from the Board of such
      failure; (D) Executive’s engaging in any act of dishonesty, disloyalty, or moral
      turpitude in connection with Executive’s responsibilities to the Company and/or
      any of its affiliates as an employee, officer, director, or otherwise;
      (E) Executive’s commission of, or conviction for, any felony, including any
      plea of guilty or nolo contendere or placement in a pretrial diversion program;
      (F)  Executive’s material violation of any policies or procedures of the
      Company and/or any of its affiliates; and/or (G) Executive’s breach of any
      of the material terms of this Agreement or any other agreement that Executive
      now has or later has with the Company and/or any of its affiliates and failure
      to cure such breach within thirty (30) days following Executive's receipt of
      written notice of such breach from the Board, the CEO, and/or the designee
      of
      the CEO; provided, however, that the notice required with respect to subparts
      (B), (C) and (G) of this Section 11(b)(1) shall not be required if the conduct
      of Executive involves intentional misconduct.

     

    (ii)  “Good
      Reason” shall mean Executive's termination of his employment following the
      Executive's giving notice of his voluntary resignation within thirty (30) days
      after the occurrence of any of the following, without Executive’s written
      consent: (A) a material reduction in Executive's base salary or aggregate
      benefits, (B) a material demotion in position accompanied by a material
      reduction in job duties and responsibilities, (C) a required relocation greater
      then 50 miles from the location of employment as of the date hereof, or (D)
      a
      material breach by the Company of any of its obligations under this Agreement
      and failure by the Company to cure such breach within thirty (30) days following
      receipt of written notice from Executive of such breach. (Good Reason does
      not
      include a change in reporting lines or a change in the individual or position
      to
      whom Executive reports or voluntary employment or career change unaccompanied
      by
      the Company’s imposition of a significant negative change in Executive’s
      employment terms or conditions.)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.  Exclusive
      Services, Non-Solicitation and Non-Disclosure of Confidential
      Information

     

    (a)  Executive
      agrees that, during the Term and for a period of eighteen (18) months
      immediately following the termination of Executive’s employment with the
      Company, Executive shall not, either directly or indirectly, make known to
      any
      person, firm, corporation or other legal entity the names or addresses of any
      of
      the prospective (to Executive’s knowledge) or current customers, clients,
      insureds, insurers, reinsurers, brokers, lenders, suppliers, service providers,
      employees, agents, representatives, and/or shareholders of the Company or any
      of
      its affiliates (hereinafter collectively referred to as “Business Contacts”) or
      any other information pertaining to them. Executive further agrees that, for
      a
      period of eighteen (18) months immediately following the end of Executive’s
      employment with the Company, Executive shall not, either directly or indirectly,
      on Executive's own account or on account of any other person, firm, corporation
      or other legal entity, solicit (to the extent that such solicitation in any
      way
      relates to or arises out of the provision — whether proposed (to Executive's
      knowledge) or actual or otherwise — of products and/or services similar in kind
      or purpose to those provided or, to Executive's knowledge, expected to be
      provided, by the Company and/or any of its affiliates), divert, take away,
      or
      attempt to solicit, divert, or take away any prospective (to Executive’s
      knowledge) or current Business Contacts or any persons or legal entities that
      were prospective (to Executive’s knowledge) or current Business Contacts at any
      point during Executive’s term of employment with the Company. Nor shall
      Executive during the same period contact or attempt to contact any prospective
      (to Executive’s knowledge) or current Business Contacts for any reason in any
      way relating to or arising out of the provision (whether proposed (to
      Executive's knowledge) or actual or otherwise) of products and/or services
      similar in kind or purpose to those provided or, to Executive's knowledge
      expected to be provided, by the Company and/or any of its
      affiliates.

     

    (b)  Executive
      agrees that, during the Term and for a period of eighteen (18) months
      immediately following the termination of Executive’s employment with the
      Company, Executive shall not disrupt, damage, impair or interfere with the
      business of the Company and/or any of its affiliates, whether by way of
      interfering with or raiding their employees, disrupting their relationships
      with
      any prospective (to Executive’s knowledge) or current Business Contacts, or
      otherwise. Nor shall Executive during the same period either
      directly or indirectly solicit, induce, recruit, or encourage to leave the
      employment of the Company and/or any of its affiliates for any reason and/or
      to
      perform work for a competitor of the Company and/or any of its affiliates (as
      an
      employee, independent contractor, or otherwise) (such conduct is collectively
      referred to as “solicitation”) any person who is then employed by the Company
      and/or any of its affiliates or who left the employ of the Company and/or any
      of
      its affiliates less than one (1) year prior to the solicitation.

     

    (c)  During
      the Term and for a period of eighteen (18) months immediately following the
      termination of Executive’s employment with the Company, Executive shall not,
      either directly or indirectly, without written consent of the Company, in any
      state in the United States in which the Company is doing business (as defined
      below) at the time Executive's employment with the Company terminates: (i)
      engage in the business of providing private passenger automobile insurance
      services or products or financing of private passenger automobile insurance
      premiums or providing any other services or products that the Company offers
      as
      of the time Executive's employment terminates (the "Business"); (ii) enter
      the
      employ of, or render any consulting or any other services to, any entity that
      is
      principally engaged in the Business; or (iii) become interested in any such
      entity in any capacity, including, without limitation, as an individual,
      partner, shareholder, officer, director, principal, agent, trustee or
      consultant; provided, however, Executive may own, directly or indirectly, solely
      as a passive investment, securities of any entity traded on any national
      securities exchange if Executive is not a controlling person of, or a member
      of
      a group which controls, such entity and does not, directly or indirectly, own
      5%
      or more of any class of securities of such entity, and provided, further that
      it
      shall not be a violation of this Section 11 for Executive to become employed
      by
      an entity that competes in the Business if such employment is solely in a line
      of the entity's business that is wholly unrelated to the Business.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  Executive
      acknowledges that, in his employment hereunder, he will occupy a position of
      trust and confidence with the Company and/or its affiliates and will receive
      training which will enhance Executive's skill and experience. Executive agrees
      that Executive shall not, except as may be required to perform his duties
      hereunder, with the written consent of the Company or as required by applicable
      law, without limitation in time or until such information shall have become
      public other than by Executive’s unauthorized disclosure, use, disclose or
      disseminate any trade secrets, confidential information or any other information
      of a secret, proprietary, confidential or generally undisclosed nature
      (hereinafter collectively referred to as “Confidential Information”) relating to
      the Company and/or any of its affiliates, or their respective businesses,
      contracts, projects, proposed projects, revenues, costs, operations, methods
      or
      procedures. Executive acknowledges that said information is specialized, unique
      in nature and of great value to the Company and/or its affiliates, and that
      such
      information gives the Company and/or its affiliates a competitive advantage
      in
      their businesses.

     

    (e)  For
      purposes of this Section 11, Confidential Information shall not include
      information that: (i) is or becomes generally available to the public other
      than
      as a result of an unauthorized disclosure by Executive; (ii) becomes available
      to Executive in a manner that is not in contravention of applicable law from
      a
      source (other than the Company) that is not known by Executive, after reasonable
      investigation, to be bound by a confidential relationship with the Company;
      or
      (iii) is required to be disclosed by law, court order or other legal
      process.

     

    (f)  Executive
      acknowledges and agrees that (a) the trade secrets and confidential and related
      information referred to in this Agreement and (b) the relationships with the
      Business Contacts referenced in this Agreement each are of substantial value
      to
      the Company and/or its affiliates and that a breach of any of the terms and
      conditions of this Agreement relating to those subjects would cause irreparable
      harm to the Company and/or its affiliates, for which the Company and/or its
      affiliates would have no adequate remedy at law. Therefore, in addition to
      any
      other remedies that may be available to the Company and/or any of its affiliates
      under this Agreement or otherwise, the Company and/or its affiliates shall
      be
      entitled to obtain temporary restraining orders, preliminary and permanent
      injunctions and/or other equitable relief to specifically enforce Executive’s
      duties and obligations under this Agreement, or to enjoin any breach of this
      Agreement, without the need to post a bond or other security and without the
      need to demonstrate special damages. Furthermore, Executive agrees that any
      damages suffered by the Company and/or its affiliates as a result of Executive’s
      breach of Executive’s duties and obligations under this Agreement shall entitle
      the Company and/or its affiliates to offset such damages against any payments
      to
      be made pursuant to this Agreement, to the extent permitted by applicable
      law.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)  Executive
      and the Company intend that: (i) this Section 11 concerning (among
      other things) the exclusive services of Executive to the Company and/or its
      affiliates shall be construed as a series of separate covenants; (ii) if
      any portion of the restrictions set forth in this Section 11 should, for
      any reason whatsoever, be declared invalid by an arbitrator or a court of
      competent jurisdiction, the validity or enforceability of the remainder of
      such
      restrictions shall not thereby be adversely affected; and (iii) Executive
      declares that the territorial and time limitations set forth in this
      Section 11 are reasonable and properly required for the adequate protection
      of the business of the Company and/or its affiliates. In the event that any
      such
      territorial or time limitation is deemed to be unreasonable by an arbitrator
      or
      a court of competent jurisdiction, Executive agrees to the reduction of the
      subject territorial or time limitation to the area or period which such
      arbitrator or court shall have deemed reasonable.

     

    (h)  All
      of
      the provisions of this Section 11 are in addition to any other written
      agreements on the subjects covered herein that Executive may have with the
      Company and/or any of its affiliates, and are not meant to and do not excuse
      any
      additional obligations that Executive may have under such
      agreements.

     

    12.  Representations
      and Covenants Relating to Confidential Information of Third
      Parties

     

    Executive
      understands and acknowledges that it is the policy of the Company to respect
      the
      Confidential Information belonging to third parties. Therefore, in addition
      to
      agreeing not to disclose or use Confidential Information belonging to the
      Company in violation of any applicable confidentiality agreement or Company
      policies as may be in effect or amended from time to time, as a condition of
      employment with the Company, Executive also hereby represents, covenants and
      agrees as follows:

     

    (a)  Executive
      is not subject to any agreement of any kind with any prior employer or other
      person or entity relating in any way to Executive’s right or Executive’s ability
      to be employed by and/or to perform services for the Company;

     

    (b)  The
      Company has instructed Executive not to bring to, disclose to or use in
      connection with Executive’s employment or potential employment with the Company
      any Confidential Information from any prior employer or other person or
      entity;

     

    (c)  Executive
      has not brought to, disclosed to or used in connection with Executive’s
      employment or potential employment with the Company any Confidential Information
      from any prior employer or other person or entity;

     

    (d)  Executive
      will not bring to, disclose to or use in connection with Executive’s employment
      with the Company any Confidential Information from any prior employer or other
      person or entity; and

     

    (e)  During
      Executive’s employment with the Company and thereafter, Executive will not take,
      disclose or use any Confidential Information acquired as a result of Executive’s
      employment with the Company, except as authorized by the Company.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.  Return
      of Company Property

     

    Executive
      agrees, upon the termination of his employment with the Company, to return
      all
      physical, computerized, electronic or other types of records, documents,
      proposals, notes, lists, files and any and all other materials including,
      without limitation, computerized and/or electronic information that refers,
      relates or otherwise pertains to the Company and/or its affiliates, and any
      and
      all business dealings of said persons and entities. In addition, Executive
      shall
      return to the Company all property or equipment that Executive has been issued
      during the course of Executive’s employment or which Executive otherwise
      currently possesses, including, but not limited to, any computers, cellular
      phones, BlackBerries, PDAs, and/or pagers. Executive shall immediately deliver
      to the Company any such physical, computerized, electronic or other types of
      records, documents, proposals, notes, lists, files, materials, property and
      equipment that are in Executive’s possession. Executive acknowledges that
      Executive is not authorized to retain any physical, computerized, electronic
      or
      other types of copies of any such physical, computerized, electronic or other
      types of records, documents, proposals, notes, lists, files or materials, and
      is
      not authorized to retain any other property or equipment of the Company and/or
      its affiliates. Executive further agrees that Executive will immediately forward
      to the Company any business information regarding the Company and/or any of
      its
      affiliates that has been or is inadvertently directed to Executive following
      Executive’s last day of employment with the Company. The provisions of this
      Section are in addition to any other written agreements on this subject that
      Executive may have with the Company and/or any of its affiliates, and are not
      meant to and do not excuse any additional obligations that Executive may have
      under such agreements. 

     

    14.  All
      Developments the Property of the Company

     

    All
      confidential, proprietary or other trade secret information, all work performed,
      and all other ideas, discoveries, inventions, designs, processes, methods and
      improvements, conceived, developed, or otherwise made by Executive, during
      his
      employment with the Company, alone or with others, and in any way relating
      to
      the Company’s and/or any of its affiliates’ present or planned businesses or
      products, whether or not patentable or subject to copyright protection and
      whether or not reduced to tangible form or reduced to practice during the period
      of Executive’s employment with the Company (“Developments”) shall be the sole
      property of the Company, provided, however, that the foregoing shall not apply
      to any invention made by Executive that was developed entirely on Executive’s
      own time during the period of his employment with the Company, without using
      the
      Company’s equipment, supplies, facilities, or trade secret information except
      for those inventions that either: (i) relate at the time of conception or
      reduction to practice of the invention to the Company’s and/or any of its
      affiliates’ businesses, or actual or demonstrably anticipated research or
      development of the Company and/or its affiliates; or (ii) result from any work
      performed by Executive for the Company. Executive agrees to advise the Company
      promptly in writing of any inventions that Executive believes meet the preceding
      criteria that are not otherwise disclosed pursuant to Section 15 below.
      Executive further agrees to disclose all Developments promptly, fully and in
      writing to the Company promptly after development of the same, and at any time
      upon request. Executive understands that Company will keep in confidence and
      will not disclose to third parties without Executive’s consent any confidential
      information disclosed in writing to Company relating to inventions that meet
      the
      criteria set forth herein. Executive agrees to, and hereby does assign to the
      Company all of Executive’s right, title and interest throughout the world in and
      to all Developments. Executive agrees that each of the Developments shall
      constitute a “work made for hire,” as defined in 17 U.S.C. § 101, and hereby
      irrevocably assigns to the Company all copyrights, patents and any other
      proprietary rights Executive may have in any Developments without any obligation
      on the part of the Company to pay royalties or any other consideration to
      Executive in respect of such Developments. Executive hereby grants to the
      Company an irrevocable power of attorney to perform any and all acts and execute
      any and all documents and instruments on behalf of Executive as the Company
      may
      deem appropriate in order to perfect or enforce the rights defined in this
      Section. Executive agrees to assist the Company (without charge, but at no
      cost
      to Executive) to obtain and maintain for itself such rights, and agrees that
      such obligation to assist the Company shall continue after the termination
      of
      this Agreement. The provisions of this Section are in addition to any other
      written agreements on this subject that Executive may have with the Company
      and/or any of its affiliates, and are not meant to and do not excuse any
      additional obligations that Executive may have under such agreements.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15.  Inventions
      Retained and Licensed

     

    Executive
      has attached hereto, as
      Exhibit 1,
      a list
      describing any and all inventions, original works of authorship, developments,
      improvements, and trade secrets which were made by Executive prior to his
      employment with Company (collectively referred to as “Prior Inventions”), which
      belong to Executive, which relate to the Company’s and/or any of its affiliates’
actual or future businesses, products or research and development, and which
      are
      not assigned to the Company hereunder; or, if no such list is attached hereto
      upon delivery of the signed Agreement to the Company, Executive represents
      that
      there are no such Prior Inventions. Executive agrees that Executive will not
      incorporate, or permit to be incorporated, any Prior Invention owned by
      Executive or in which Executive has an interest into a Company product, process
      or machine without the Company’s prior written consent. Notwithstanding the
      foregoing sentence, if, in the course of Executive’s employment with the
      Company, Executive incorporates into a Company product, process or machine
      a
      Prior Invention owned by Executive or in which Executive has an interest, the
      Company is hereby granted and shall have a nonexclusive, royalty-free,
      irrevocable, perpetual, worldwide license to make, have made, modify, use and
      sell such Prior Invention as part of or in connection with such product, process
      or machine.

     

    16.  Indemnification

     

    With
      respect to any claim, loss, damage or expense (including attorneys’ fees)
      arising from the performance by Executive of his duties as an officer or
      director of the Company (but excluding any breach or alleged breach of the
      terms
      of this Agreement), Executive shall be entitled to indemnification by the
      Company to the fullest extent permitted by law, as set forth in the Company's
      Bylaws, and to reimbursement under any directors’ and officers’ liability
      insurance policy of the Company that may be in effect from time to
      time.

     

    17.  Survival
      of Provisions

     

    The
      rights and obligations contained in Sections 8 through 30, inclusive, of
      this Agreement shall survive the termination or expiration of this Agreement
      or
      of Executive’s employment with the Company, and shall be fully enforceable
      thereafter. Further, all other rights
      and obligations of the parties hereto, other than those applicable by their
      express terms only during the Term, shall survive any termination or
      expiration
      of this
      Agreement
      or of
      Executive’s employment with the Company, and shall be fully enforceable
      thereafter.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    18.  Cooperation
      in Third-Party Disputes

     

    At
      all
      times during and after Executive's employment with the Company, Executive shall
      cooperate with the Company and/or its affiliates and each of their respective
      attorneys or other legal representatives (collectively referred to as
“Attorneys”) in connection with any claim, litigation, or judicial or arbitral
      proceeding which is now pending or may hereinafter be brought against the
      Company and/or any of its affiliates by any third party. Executive’s duty of
      cooperation shall include, but shall not be limited to, (a) meeting with the
      Company’s and/or its affiliates’ Attorneys by telephone or in person at mutually
      convenient times and places in order to state truthfully Executive’s knowledge
      of the matters at issue and recollection of events; (b) appearing at the
      Company’s and/or its affiliates’ and/or their Attorneys’ request (and, to the
      extent possible, at a time convenient to Executive that does not conflict with
      the needs or requirements of Executive’s then-current employer) as a witness at
      depositions, trials or other proceedings, without the necessity of a subpoena,
      in order to state truthfully Executive’s knowledge of the matters at issue; and
      (c) signing at the Company’s and/or its affiliates’ and/or their Attorneys’
request declarations or affidavits that truthfully state the matters of which
      Executive has knowledge. The Company shall promptly reimburse Executive for
      Executive’s actual and reasonable travel or other out-of-pocket expenses that
      Executive may incur in cooperating with the Company and/or its affiliates and/or
      their Attorneys pursuant to this Section 18, and shall compensate Executive
      at a
      reasonable hourly or per diem rate to be agreed upon by the parties to the
      extent such cooperation is required on more than an occasional and limited
      basis. The provisions of this Section are in addition to any other written
      agreements on this subject that Executive may have with the Company and/or
      its
      affiliates, and are not meant to and do not excuse any additional obligations
      that Executive may have under such agreements.

     

    19.  Non-Disparagement
      of the Company

     

    During
      Executive’s employment with the Company and at all times thereafter, Executive
      agrees, to the fullest extent permissible by law, not to make, directly or
      indirectly, any public or private statements, gestures, signs, signals or other
      verbal or nonverbal, direct or indirect communications that are or could be
      harmful to or reflect negatively on the Company and/or any of its affiliates
      and/or their businesses, or that are otherwise disparaging of the Company and/or
      any of its affiliates and/or their businesses, or any of their past, present
      or
      future officers, directors, employees, advisors, agents, policies, procedures,
      practices, decision-making, conduct, professionalism or compliance with
      standards. The provisions of this Section are in addition to any other written
      agreements on this subject that Executive may have with the Company and/or
      any
      of its affiliates, and are not meant to and do not excuse any additional
      obligations that Executive may have under such agreements.

     

    20.  Withholding
      Obligations; Internal Revenue Code Section 409A

     

    The
      Company shall make such deductions and withhold such amounts from each payment
      made to Executive hereunder as may be required from time to time by law,
      governmental regulation and/or order. It is the intention of the Company and
      Executive that this Agreement not result in unfavorable tax consequences to
      Executive under section 409A of the Internal Revenue Code of 1986, as amended
      (the "Code"). The Company and Executive agree to work together in good faith
      in
      an effort to comply with section 409A of the Code including, if necessary,
      amending this Agreement based on further guidance issued by the Internal Revenue
      Service from time to time, provided that the Company shall not be required
      to
      assume any increased economic burden.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    21.  Successor
      in Interest

     

    This
      Agreement and the rights and obligations hereunder shall be binding upon and
      inure to the benefit of the parties hereto and their respective legal
      representatives, and shall also bind and inure to the benefit of any successor
      of the Company by merger or consolidation or any purchaser or assignee of all
      or
      substantially all of its assets. Neither this Agreement nor any of the rights
      or
      benefits hereunder may be assigned by either party hereto, except to any such
      aforementioned successor, purchaser, or assignee of the Company. Executive
      may
      not assign any of his obligations or duties under this Agreement.

     

    22.  Invalid
      Provision

     

    The
      parties understand and agree that if any provision of this Agreement shall,
      for
      any reason, be adjudged by any court or arbitrator of competent jurisdiction
      to
      be invalid or unenforceable, such judgment shall not affect, impair, or
      invalidate the remainder of this Agreement, but shall be confined in its
      operation to the provision of this Agreement directly involved in the
      controversy in which such judgment shall have been rendered.

     

    23.  Arbitration
      of Disputes

     

    Except
      as
      is necessary for Executive and the Company to preserve their respective rights
      under this Agreement by seeking necessary equitable relief (including, but
      not
      limited to, the Company’s rights under Section 11 of this Agreement) from a
      court of competent jurisdiction, the Company and Executive agree that any and
      all disputes based upon, relating to or arising out of this Agreement,
      Executive’s employment relationship with the Company and/or the termination of
      that relationship, and/or any other dispute by and between the Company and
      Executive, including any and all claims Executive may at any time attempt to
      assert against the Company, shall be submitted to binding arbitration in
      Davidson County, Tennessee, pursuant
      to the American Arbitration Association’s (“AAA”) National Rules for the
      Resolution of Employment Disputes (the “Rules”),
      provided
      that the Rules shall be modified by the arbitrator to the extent necessary
      to be
      consistent with applicable law. Executive
      acknowledges and agrees that by agreeing to arbitrate claims pursuant to this
      Section 23, he is irrevocably waiving his right to a jury trial of any and
      all
      claims relating to or arising out of this Agreement, Executive’s employment
      relationship with the Company and/or the termination of that relationship,
      and/or any other dispute by and between the Company and Executive.
 

     

    The
      arbitrator shall be mutually agreed upon by the parties. If, however, the
      parties are unable to agree upon an arbitrator, then an arbitrator shall be
      selected by AAA in accordance with the Rules. The
      Company and Executive further agree that each party shall pay its own costs
      and
      attorneys’ fees, if any; provided, however, that if either party prevails on a
      claim which affords the prevailing party an award of attorneys’ fees, then the
      arbitrator may award reasonable attorneys’ fees to the prevailing party,
      consistent with applicable law. The Company and Executive further agree that
      any
      hearing must be transcribed by a certified shorthand reporter, and that the
      arbitrator shall issue a written decision and award supported by essential
      findings of fact and conclusions of law in order to facilitate judicial
      review.
      Said
      award and decision shall be issued within thirty (30) days of the completion
      of
      the arbitration. Judgment in a court of competent jurisdiction may be had on
      said decision and award of the arbitrator. For these purposes, the parties
      agree
      to submit to the jurisdiction of the state and federal courts located in
      Nashville, Tennessee.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    24.  Governing
      Laws

     

    This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the State of Tennessee, without regard to its conflict of laws
      rules.

     

    25.  Headings

     

    Titles
      or
      captions of Sections contained in this Agreement are inserted only as a matter
      of convenience and for reference, and in no way define, limit, extend or
      describe the scope of this Agreement or the intent of any provisions
      hereof.

     

    26.  Interpretation

     

    Executive
      understands that this Agreement is deemed to have been drafted jointly by the
      parties. Any uncertainty or ambiguity shall not be construed for or against
      any
      party based on attribution of drafting to any party.

     

    27.  Notice

     

    Any
      and
      all notice given hereunder shall be in writing and shall be deemed to have
      been
      duly given when received, if personally delivered; when transmitted, if
      transmitted by telecopy, or electronic or digital transmission method, upon
      receipt of telephonic or electronic confirmation; the day after the notice
      is
      sent, if sent for next day delivery to a domestic address using a generally
      recognized overnight delivery service (e.g.,
      FedEx);
      and upon receipt, if sent by certified or registered mail, return receipt
      requested. In each case notice will be sent as follows:

     

    If
      to the
      Company: Direct
      General Corporation

    1281
      Murfreesboro Road

    Nashville,
      Tennessee 37217

    Attention:
      [•]

    Fax
      Number: [•]

    

     

    with
      copies to: Elara
      Holdings, Inc.

    c/o
      Fremont Partners III, L.P.

    199
      Fremont Street

    San
      Francisco, CA 94105

    Attention:
      Kevin Baker, Esq.

    Fax
      Number: (415) 284-8191

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    and

    

    Skadden,
      Arps, Slate, Meagher & Flom LLP

    525
      University Avenue

    Palo
      Alto, CA 94301

    Attn:
      Kenton J. King, Esq.

    Fax:
      (888)-329-2950

    

     

    If
      to
      Executive: J.
      Todd
      Hagely

     

    [Address]

     

    [City/State/Zip
      code]

     

    Telephone:
      [•]

     

    Facsimile:
      [•]

     

    

     

    Any
      party
      may change its address and/or facsimile number for notice purposes by duly
      giving notice to the other party pursuant to this Section.

     

    28.  Entire
      Agreement; Amendment

     

    This
      Agreement represents the entire agreement and understanding between the parties
      and, except as expressly stated in this Agreement, supersedes any prior
      agreement, understanding or negotiations respecting such subject, including,
      without limitation, the Employment Agreement and any and all stock option or
      other equity related agreements between Executive and the Company. No change
      to
      or modification of this Agreement shall be valid or binding unless it is in
      writing and signed by Executive, a duly authorized director of the Company,
      and
      a duly authorized director of Holdco.

     

    29.  Waiver

     

    Failure
      to insist upon strict compliance with any of the terms, covenants, or conditions
      hereof shall not be deemed a waiver of such term, covenant, or condition, nor
      shall any waiver or relinquishment of, or failure to insist upon strict
      compliance with, any right or power hereunder at any one or more times be deemed
      a waiver or relinquishment of such right or power at any other time or times.
      No
      waiver of any breach of any term or provision of this Agreement shall be
      construed to be, nor shall be, a waiver of any other breach of this Agreement.
      No waiver shall be binding unless in writing and signed by the party waiving
      the
      breach.

     

    30.  Counterparts

     

    This
      Agreement may be executed in counterparts, which together shall constitute
      one
      and the same Agreement. The parties may execute more than one copy of this
      Agreement, each of which copies shall constitute an original. A facsimile
      signature shall be deemed to be the same as an original signature. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto, intending to be legally bound, have hereunto executed this
      Agreement on the day and year first written above.

     

    J.
      TODD
      HAGELY

     

    /s/
      J.
      Todd
      Hagely                                                         

                                    J.
      Todd
      Hagely

     

    DIRECT
      GENERAL CORPORATION

     

    By:
      /s/ William C. Adair,
      Jr.                                           

     

    Its:
      Chairman and Chief Executive Officer

    

     

    ELARA
      HOLDINGS, INC.

     

    By:
      /s/ David
      Lorsch                                                      

     

                                    Its:
      Vice President,
      Secretary and Treasurer

     

    

     

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    EXHIBIT
      1

     

    List
      of Inventions

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    J.
      TODD
      HAGELY

     

    ____________________________________

    J.
      Todd
      Hagely

     

    ____________________________________

    DateForm of Director Indemnification Agreement

    DIRECTOR
      INDEMNIFICATION AGREEMENT

     

    DIRECTOR
      INDEMNIFICATION AGREEMENT
      (this
      "Agreement")
      dated
      as of December 4, 2006, by and between Direct General Corporation (the
      "Company"),
      a
      Tennessee corporation, and ____________________ ("Indemnitee"):

     

    WHEREAS,
      the
      Indemnitee is provided indemnification pursuant to the Tennessee Business
      Corporation Act and the Charter and Bylaws of the Company;

     

    WHEREAS,
      the
      Board of Directors of the Company (the "Board")
      has
      authorized entering into a Director Indemnification Agreement with each of
      the
      members of the Board; and

     

    WHEREAS,
      it is
      reasonable and prudent for the Company contractually to obligate itself to
      indemnify each member of the Board;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises, the mutual agreements herein set forth below
      and
      other good and valuable consideration, the receipt and adequacy of which are
      hereby acknowledged, the parties agree as follows:

     

    1.  Services
      by Indemnitee; Notice of Proceeding.

     

    (a)  Services. 
      Indemnitee may at any time and for any reason resign from the Board or any
      permanent or temporary committee thereof.

     

    (b)  Notice
      of Proceeding.  Indemnitee
      shall promptly notify the Company in writing upon being served with any summons,
      citation, subpoena, complaint, indictment, information or other document
      relating to any Proceeding or matter that may be subject to indemnification
      or
      advancement of Expenses (as defined below) covered by this
      Agreement.

     

    2.  Indemnification.

     

    (a)  General. 
      The Company shall indemnify and advance Expenses to Indemnitee in connection
      with any action, suit, arbitration, alternate dispute resolution mechanism,
      investigation, administrative hearing or any other actual, threatened or
      completed proceeding whether civil, criminal, administrative or investigative,
      direct or derivative, other than one initiated directly by Indemnitee, and
      which
      arises out of or is related to service by Indemnitee as a member of the Board
      or
      any permanent or temporary committee thereof and to which Indemnitee is or
      is
      threatened to be made a party (a "Proceeding").
      "Expenses"
      shall
      mean all reasonable attorneys' fees, retainers, court costs, transcript costs,
      fees of experts, witness fees, reasonable and necessary travel expenses,
      duplicating costs, printing and binding costs, telephone charges, postage,
      delivery service fees, and all other disbursements or expenses of the types
      customarily incurred in connection with prosecuting, defending, preparing to
      prosecute or defend, investigating, being or preparing to be a witness in a
      Proceeding, for which reasonable and appropriate documentation is presented
      to
      the Company in accordance with the Company's standard policies and procedures
      for submission and reimbursement of business expenses.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  Proceedings. 
      Subject to the terms and conditions of this Agreement, the Company shall
      indemnify Indemnitee against Expenses, judgments, penalties, fines and amounts
      paid in settlements actually and reasonably incurred by Indemnitee or on
      Indemnitee's behalf in connection with such Proceeding or any claim, issue
      or
      matter therein. The Company may through counsel of its choosing participate
      with
      Indemnitee in the defense in a claim in any Proceeding. If the Company elects
      to
      participate with Indemnitee in the defense a claim, the Company shall be
      responsible for the costs of its legal counsel. Indemnitee shall not agree
      to or
      enter into any settlement or consent decree with respect to any claim without
      providing the Company with prior written notice. 

     

    (c)  Indemnification
      for Expenses As a Witness.
       To the extent that Indemnitee is a witness in any Proceeding, Indemnitee
      shall be indemnified against all Expenses actually and reasonably incurred
      by
      Indemnitee or on Indemnitee's behalf in connection therewith.

     

    3.  Advancement
      of Expenses. 
      The Company shall advance all reasonable Expenses which were incurred by or
      on
      behalf of Indemnitee in connection with any Proceeding within 30 days after
      the
      receipt by the Company of a statement from Indemnitee requesting such advance,
      provided the statement is accompanied by appropriate documentation of such
      Expenses in accordance with the Company's usual policies for reimbursement
      of
      business expenses. An advance may be requested at any time prior to, during
      or
      after final disposition of such Proceeding. 

     

    4.  Entitlement
      to Indemnification.

     

    (a)  Request. 
      To obtain indemnification under this Agreement, Indemnitee shall submit to
      the
      Company a written request for indemnification, including such information as
      is
      reasonably available to Indemnitee to demonstrate that Indemnitee is entitled
      to
      indemnification, and including invoices or other appropriate support for the
      amount claimed in accordance with the Company's standard policies for of
      reimbursement of business expenses. 

     

    (b)  Payment. 
      Unless the procedures set forth in Section 6
      of this
      Agreement are invoked by the Company or unless Indemnitee shall permit the
      Company to defer payment, payment to Indemnitee shall be made within 30 days
      after receipt of such written request and invoices or other support as provided
      in Section 4(a), above.

     

    5.  Presumptions
      and Effect of Certain Proceedings.

     

    (a)  Burden
      of Proof. 
      In making a determination with respect to entitlement to Indemnification
      hereunder, the person or persons or entity making such determination shall
      presume that Indemnitee is entitled to indemnification under this Agreement
      if
      Indemnitee has submitted a request for indemnification in accordance with
      Section 4(a)
      of this
      Agreement, and the Company shall have the burden of proof to overcome that
      presumption in connection with the making by any person, persons or entity
      of
      any determination contrary to that presumption.

     

    (b)  Effect
      of Other Proceedings. 
      The termination of any Proceeding or of any claim, issue or matter therein,
      by
      judgment, order, settlement or conviction, or upon a plea of nolo
      contendere
      or its
      equivalent, shall not (except as otherwise expressly provided in this Agreement,
      the Tennessee Business Corporation Act, as such may be amended from time to
      time, or by the Charter or Bylaws of the Company in effect on the date of this
      Agreement) of itself adversely affect the right of Indemnitee to indemnification
      or create a presumption that Indemnitee did not act in good faith or violated
      the duty of loyalty.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)  Reliance
      as Safe Harbor. 
      For purposes of any determination of good faith by the Company under the
      Tennessee Business Corporation Act, Indemnitee shall be deemed to have acted
      in
      good faith if Indemnitee's action is based on the records or books of account
      of
      the Company, including financial statements, or on information supplied to
      Indemnitee by the officers of the Company in the course of their duties, or
      on
      the advice of legal counsel for the Company, the Board or any permanent or
      temporary committee thereof or on information or records given or reports made
      to the Company, the Board or any permanent or temporary committee thereof by
      an
      independent certified public accountant, investment banker or other expert
      selected with reasonable care by the Company, the Board or any permanent or
      temporary committee thereof. The provisions of this Section 5(c)
      shall
      not be deemed to be exclusive or to limit in any way the other circumstances
      in
      which the Indemnitee may be deemed to have met the applicable standard of
      conduct set forth under applicable law. 

     

    (d)
      Actions
      of Others.  
      The knowledge and/or actions, or failure to act, of any director, officer,
      agent
      or employee of the Company shall not be imputed to Indemnitee for purposes
      of
      determining the right to indemnification under this Agreement.

    

    6.  Remedies
      of Indemnitee.

     

    (a)  Method
      of Determination.  If the Company determines not to honor a written
      request for indemnification, it shall notify Indemnitee within 30 days of
      receipt of such request (a "Denial Notice"). Within 30 days of delivery of
      a
      Denial Notice to Indemnitee, Indemnitee may appeal the denial of indemnity
      by
      delivery of written notice (a "Denial Appeal") to the Company invoking its
      right
      to have an Independent Counsel consider its right to the indemnification
      requested. "Independent
      Counsel" shall mean a law firm, or a member of a law firm, that is experienced
      in matters of Tennessee corporation law and neither presently is, nor in the
      past five years has been, retained to represent: (i) the Company or Indemnitee
      in any matter material to either such party or (ii) any other party to the
      Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
      the foregoing, the term "Independent Counsel" shall not include any person
      who,
      under the applicable standards of professional conduct then prevailing, would
      have a conflict of interest in representing either the Company or Indemnitee
      in
      an action to determine Indemnitee's rights under this Agreement. The Independent
      Counsel shall represent the Board of Directors of the Company and shall be
      engaged to make a fair, disinterested evaluation of the Indemnitee's right,
      or
      lack thereof, to indemnification under the facts being considered by the Board,
      and shall not be bound by any duty to advocate the position of the Company
      (notwithstanding that the Company is paying the fees of the Independent Counsel,
      as provided below). The Independent Counsel shall consider the merits of
      Indemnitee's written request for indemnification and shall deliver a written
      opinion to the Board on the matter (with a copy to Indemnitee). 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)  Selection,
      Payment, Discharge, of Independent Counsel. 
      The Independent Counsel shall be selected, paid and discharged in the following
      manner:

     

    (1)  The
      Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall
      request that such selection be made by the Board, in which event
      clause (2)
      of this
      Section 6(b)
      shall
      apply), and Indemnitee shall give written notice to the Company advising it
      of
      the identity of the Independent Counsel so selected.

     

    (2)  If
      Indemnitee requests that such selection be made by the Board, the Independent
      Counsel shall be selected by the Board, and the Company shall give written
      notice to Indemnitee advising Indemnitee of the identity of the Independent
      Counsel so selected.

     

    (3)  Following
      the initial selection described in clauses (1)
      and
(2)
      of this
      Section 6(b),
      Indemnitee or the Company, as the case may be, may, within 15 days after such
      written notice of selection has been given, deliver to the other party a written
      objection to such selection. Such objection may be asserted only on the ground
      that the Independent Counsel so selected does not meet the requirements of
      an
      "Independent Counsel" as defined in this Agreement, and the objection shall
      set
      forth with particularity the factual basis of such assertion. Absent a proper
      and timely objection, the person so selected shall act as Independent Counsel.
      If such written objection is made, the Independent Counsel so selected may
      not
      serve as Independent Counsel unless and until (1) a court has determined that
      such objection is without merit or (2) Indemnitee and the Company later agree
      in
      writing that such person may serve as Independent Counsel.

     

    (4)  Either
      the Company or Indemnitee may petition any court of competent jurisdiction
      if
      the parties have been unable to agree on the selection of Independent Counsel
      within 20 days after submission by Indemnitee of a written request for
      appointment of an Independent Counsel, pursuant to Section 6 (a) of this
      Agreement. Such petition may request a determination whether an objection to
      the
      party's selection is without merit and/or seek the appointment as Independent
      Counsel of a person selected by the Court or by such other person as the Court
      shall designate. A person so appointed shall act as Independent Counsel under
      Section 6(a)
      of this
      Agreement.

     

    (5)  The
      Company shall pay any and all reasonable fees and expenses of Independent
      Counsel incurred by such Independent Counsel in connection with acting pursuant
      to this Agreement, and the Company shall pay all reasonable fees and expenses
      incident to the procedures of this Section 6(b),
      regardless of the manner in which such Independent Counsel was selected or
      appointed.

     

    (c)  Cooperation. 
      Indemnitee shall cooperate with the person, persons or entity making the
      determination with respect to Indemnitee's entitlement to indemnification under
      this Agreement, including providing to such person, persons or entity upon
      reasonable advance request any documentation or information which is not
      privileged or otherwise protected from disclosure and which is reasonably
      available to Indemnitee and reasonably necessary to such determination. Any
      costs or expenses (including attorneys' fees and disbursements) incurred by
      Indemnitee in so cooperating with the person, persons or entity making such
      determination shall be borne by the Company (irrespective of the determination
      as to Indemnitee's entitlement to indemnification) and the Company hereby
      indemnifies and agrees to hold Indemnitee harmless therefrom.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d)  Adjudication. 
      In the event of a Dispute, Indemnitee shall be entitled to an adjudication
      in a
      court of competent jurisdiction of Indemnitee's entitlement to such
      indemnification or advancement of Expenses. "Dispute"
      shall
      mean that any of the following have occurred, and Indemnitee has not agreed
      in
      writing to permit the Company to do the following:

     

    (1)  payment
      of indemnification is not made pursuant to Section 4(a)
      of this
      Agreement within 30 days after receipt by the Company of a written request
      therefor;

     

    (2)  advancement
      of Expenses is not timely made pursuant to Section 2(b)
      of this
      Agreement;

     

    (3)  payment
      of indemnification is not made within 30 days after a determination has been
      made that Indemnitee is entitled to indemnification pursuant to
      Section 6(a)
      of this
      Agreement; or

     

    (4)  if
      the
      determination of entitlement to be made pursuant to Section 6(a)
      of this
      Agreement has not been made within 60 days after receipt by the Company of
      a
      Denial Appeal. 

     

    (e)  De
      Novo Review.
       In the event that there is a Dispute involving disagreement between
      Indemnitee and the Company with a determination made by an Independent Counsel
      pursuant to Section 6(a)
      of this
      Agreement concerning Indemnitee's entitlement, or lack thereof, to
      indemnification, any judicial proceeding commenced pursuant to this
      Section 6
      shall be
      conducted in all respects as a
      de
      novo
      trial on
      the merits, and neither party shall be prejudiced by reason of the Independent
      Counsel's determination. In any such proceeding, the Company shall have the
      burden of proving that Indemnitee is not entitled to indemnification or
      advancement of Expenses, as the case may be.

     

    (f)  Procedures
      Valid. 
      The Company and Indemnitee shall be precluded from asserting in any judicial
      proceeding or arbitration commenced pursuant to this Section 6
      that the
      procedures and presumptions of this Agreement are not valid, binding and
      enforceable and shall stipulate in any such court that they are bound by all
      of
      the provisions of this Agreement.

     

    (g)  Expenses
      of Adjudication. 
      In the event that it is Indemnitee who, pursuant to this
      Section 6,
      seeks a
      judicial adjudication of Indemnitee's rights under, or to recover damages for
      breach of, this Agreement, and the final ruling in such adjudication is in
      favor
      of Indemnitee's claims, then Indemnitee shall be entitled to recover from the
      Company, and shall be indemnified by the Company against, any and all expenses
      (of the types described in the definition of Expenses in this Agreement)
      actually and reasonably incurred by Indemnitee in such adjudication.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    7.  Non-exclusivity,
      Insurance, Subrogation.

     

    (a)  Non-Exclusivity. 
      The rights of indemnification and to receive advancement of Expenses as provided
      by this Agreement shall not be deemed exclusive of any other rights to which
      Indemnitee may at any time be entitled under applicable law, the Charter, the
      Bylaws, any agreement, a vote of stockholders or a resolution of directors,
      or
      otherwise. No amendment, alteration, rescission or replacement of this Agreement
      or any provision hereof shall be effective as to Indemnitee with respect to
      any
      action taken or omitted by such Indemnitee prior to such amendment, alteration,
      rescission or replacement.

     

    (b)  Insurance.
       The Company may maintain an insurance policy or policies against liability
      arising out of this Agreement or otherwise.

     

    (c)  No
      Duplicative Payment. 
      The Company shall not be liable under this Agreement to make any payment of
      amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee
      has otherwise actually received such payment under any insurance policy,
      contract, agreement or otherwise.

     

    8.  Miscellaneous
      Provisions.

     

    (a)  Term
      of Agreement. 
      This Agreement shall continue until and terminate upon the later of: (a) 10
      years after the date that Indemnitee has ceased to serve as a director, officer,
      employee, agent or fiduciary of the Company or (b) the final termination of
      all
      pending Proceedings in respect of which Indemnitee is granted rights of
      indemnification or advancement of expenses hereunder and of any proceeding
      commenced by Indemnitee pursuant to Section 6
      of this
      Agreement relating thereto.

     

    (b)  Counterparts. 
      This Agreement may be executed in separate counterparts, each of which will
      be
      an original and all of which taken together shall constitute one and the same
      agreement, and any party hereto may execute this Agreement by signing any such
      counterpart.

     

    (c)  Severability. 
      Whenever possible, each provision of this Agreement shall be interpreted in
      such
      a manner as to be effective and valid under applicable law but if any provision
      of this Agreement is held to be invalid, illegal or unenforceable under any
      applicable law or rule, then such provision shall be deemed modified to the
      extent required to carry out the intent of this Agreement, and the validity,
      legality and enforceability of the other provisions of this Agreement will
      not
      be affected or impaired thereby.

     

    (d)  Successors
      and Assigns. 
      This Agreement shall be binding upon and inure to the benefit of the parties
      hereto and their respective heirs, personal representatives and successors
      and
      assigns.

     

    (e)  Modification,
      Amendment, Waiver or Termination. 
      No provision of this Agreement may be modified, amended, waived or terminated
      except by an instrument in writing signed by the parties to this Agreement.
      No
      course of dealing between the parties will modify, amend, waive or terminate
      any
      provision of this Agreement or any rights or obligations of any party under
      or
      by reason of this Agreement.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (f)  Notices. 
      All notices, consents, requests, instructions, approvals or other communications
      provided for herein shall be in writing and delivered by personal delivery,
      overnight courier, mail or electronic facsimile addressed to the receiving
      party
      at the address set forth herein. All such communications shall be effective
      when
      received at the address or facsimile number for notice, except for notices
      sent
      by U.S. mail, which shall be effective on the third day after deposit in the
      mail, properly addressed and postage prepaid. 

     

    
      	
              If
                to the Company:

               

              1281
                Murfreesboro Road

              Nashville,
                Tennessee 37217

              Attention:
                Ronald F. Wilson

            	
              If
                to the Indemnitee:

               

              _______________________

              _______________________

            
	 	 

    

    Any
      party
      may change the address set forth above by notice to each other party given
      as
      provided herein.

     

    (g)  Headings. 
      The headings and any table of contents contained in this Agreement are for
      reference purposes only and shall not in any way affect the meaning or
      interpretation of this Agreement.

     

    (h)  Governing
      Law. 
      ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND
      ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
      STATE OF TENNESSEE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS
      THEREOF.

     

    (i)  Third-Party
      Benefit. 
      Nothing in this Agreement, express or implied, is intended to confer upon any
      other person any rights, remedies, obligations or liabilities of any nature
      whatsoever.

     

    (j)  Jurisdiction
      and Venue. 
      THIS
      AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN
      TENNESSEE, AND EACH PARTY CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
      COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF
      ANY
      PARTY COMMENCES ANY ACTION UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY
      OR
      INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT IN ANOTHER
      JURISDICTION OR VENUE, ANY OTHER PARTY TO THIS AGREEMENT SHALL HAVE THE OPTION
      OF TRANSFERRING THE CASE TO THE ABOVE-DESCRIBED VENUE OR JURISDICTION OR, IF
      SUCH TRANSFER CANNOT BE ACCOMPLISHED, TO HAVE SUCH CASE DISMISSED WITHOUT
      PREJUDICE.

     

    (k)  Tennessee
      Code. 
      The parties agree that notwithstanding any provision of this Agreement, no
      indemnification authorized by this Agreement shall be made if the Company proves
      that such payment is expressly prohibited by the provisions of the Tennessee
      Business Corporation Act, as such may be amended from time to time, or by the
      Charter or Bylaws of the Company in effect on the date of this Agreement. This
      Agreement shall not be deemed to deny Indemnitee the benefit of any future
      amendment to the Charter or Bylaws of the Company that expands the scope of
      Indemnitee's rights to indemnification or advancement of Expenses. Any amendment
      to the Charter or Bylaws of the Company that diminishes the scope of
      Indemnitee's rights to indemnification or advancement of Expenses shall not
      diminish Indemnitee's rights under this Agreement. 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (l)  Remedies.
      The
      parties agree that money damages may not be an adequate remedy for any breach
      of
      the provisions of this Agreement and that any party may, in its discretion,
      apply to any court of law or equity of competent jurisdiction for specific
      performance and injunctive relief in order to enforce or prevent any violations
      this Agreement, and any party against whom such proceeding is brought hereby
      waives the claim or defense that such party has an adequate remedy at law and
      agrees not to raise the defense that the other party has an adequate remedy
      at
      law.

     

    

     

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    [signature
      page follows]

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Director Indemnification Agreement as of
      the
      date set forth in the first paragraph.

     

    DIRECT
      GENERAL CORPORATION
       

                                                  ______________________________________________

                                                  Tammy
        R.
        Adair, President

       

       

                                                  INDEMNITEE

       

                                                  ______________________________________________

                                                  

       

       

                                       

                                                 

       

       

        
          9

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