EXHIBIT 10.1.2
SECURITIES PURCHASE AGREEMENT
          This Securities Purchase Agreement (this “Agreement”) is made as of
the 11th day of May, 2005, by and among the purchaser listed on Schedule A
attached hereto (the “Purchaser”) and Specialty Underwriters’ Alliance, Inc., a
Delaware corporation (the “Company”).
          WHEREAS, the Company desires to sell to Purchaser certain shares of
the Company’s Class B Common Stock, par value $.01 per share (the “Shares”),
          NOW THEREFORE, in consideration of the foregoing recitals and the
mutual covenants, agreements and other consideration set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Sale and Purchase of Securities; Closing.
     (a) Authorization. The Company has authorized the issuance and sale of the
Shares, having the rights, preferences, privileges and restrictions set forth in
the Company’s Amended and Restated Certificate of Incorporation, a copy of which
is attached hereto as Schedule B (the “Certificate of Incorporation”).
     (b) Sale and Purchase. Subject to the terms, conditions, representations,
warranties, covenants and agreements contained in this Agreement, the Purchaser
agrees to purchase from the Company, and the Company agrees to sell, assign,
transfer and deliver to the Purchaser, from time to time, as set forth herein,
the applicable number of Shares for the consideration specified in Section 1(c).
     (c) Purchase Price. The Purchaser agrees to pay to the Company an aggregate
purchase price of $1,000,000 (the “Purchase Price”) to purchase Shares in
installment payments in the following manner: (i) $25,000 on August 1, 2005;
(ii) thereafter, on a monthly basis, 25% of the commissions owed to Purchaser by
the Company on the last day of each month, in accordance with the Partner Agent
Program Agreement, attached hereto as Schedule C; and (iii) on the second
anniversary of the effective date of this Agreement, a balloon payment for the
remaining unpaid balance of the $1,000,000 (each date individually, an
“Installment Date”). The number of Shares that Purchaser will receive in
consideration for such payments will be determined by dividing (i) the
applicable portion of the purchase price due on each Installment Date (each
individually, a “Payment”) by (ii) the Closing Price of the Company’s Common
Stock on each Installment Date, or if such day is not a Trading Day, the Trading
Day first preceding the scheduled Installment Date (with fractional Shares
rounded up to the next whole Share). If Purchaser fails to make full payment on
any Installment Date, the number of Shares that Purchaser shall be entitled to
receive, with respect to such Installment Date, will be equal to the Payment
divided by the Closing Price of the Common Stock on the Installment Date, or if
such day is not a Trading Day, the Trading Day first preceding the scheduled
Installment Date. Each Payment shall be made by wire transfer in immediately
available funds to an account designated by the Company.

 

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     (d) Delivery. With respect to each installment, the Company shall deliver,
or cause to be delivered, the applicable number of Shares to the Purchaser as
promptly as practical after full payment was made.
2. Representations and Warranties of the Purchaser.
     The Purchaser hereby represents and warrants to the Company as follows:
     (a) The Purchaser is purchasing the Shares for its own account, for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of the Shares.
     (b) The Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of its investment in the Company and of protecting its own interests in
connection therewith. The Purchaser is an “accredited investor” within the
meaning of Rule 501(a) promulgated under the Securities Act.
     (c) The Purchaser has had the opportunity to review all documents and
information that the Purchaser has requested concerning its investment in the
Company. The Purchaser has had the opportunity to ask questions of the Company’s
management, which questions were answered to its satisfaction.
     (d) The Purchaser acknowledges that an investment in the Company involves
substantial risks. The Purchaser is able to bear the economic risk of its
investment for an indefinite period of time.
     (e) The Purchaser has not paid or given any commission or other
remuneration in connection with the purchase of the Shares. The Purchaser has
not received any public media advertisements and has not been solicited by any
form of mass mailing solicitation.
     (f) This Agreement has been duly executed and delivered by the Purchaser
and has been duly authorized by the Purchaser by all necessary action. This
Agreement is a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors’
rights generally or by the principles governing the availability of equitable
remedies.
     (g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of, or be in conflict with or constitute a default under, or
require the consent of any person under any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Purchaser, except such that are obtained or waived. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
governmental authority is required on the part of the Purchaser in connection
with the execution and delivery of this Agreement or the performance by the
Purchaser of its obligations hereunder.

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3. Representations and Warranties of the Company.
     The Company hereby represents and warrants to the Purchaser as follows:
     (a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware.
     (b) The Company has full corporate power and authority to execute and
deliver this Agreement and to sell, transfer, assign and deliver the Shares to
the Purchaser.
     (c) This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors’
rights generally or by the principles governing the availability of equitable
remedies.
     (d) All of the Shares, when delivered in accordance with the terms of this
Agreement, will be validly issued and outstanding, fully paid and nonassessable.
     (e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of, or be in conflict with or constitute a default under, or
require the consent of any person under any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Company, except such that are obtained or waived. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required on the part of the Company in connection with the
execution and delivery of this Agreement or the performance by the Company of
its obligations hereunder.
     (f) The Company has delivered to the Purchaser true, correct and complete
copies of the Company’s Certificate of Incorporation and By-laws of the Company,
reflecting all amendments thereto. Such Certificate of Incorporation and By-laws
have not been amended, modified or waived since the date thereof.
4. Terms of the Class B Common Stock.
     (a) Voting Rights; Redemption Rights. Holders of Class B Stock are not
entitled to any voting rights in the Company. Holders of Class B Stock have no
redemption or preemptive rights, except as provided herein.
     (b) Dividends; Liquidation and Distribution. Subject to the terms of any
outstanding series of preferred stock of the Company, holders of Class B Stock
are entitled to dividends in amounts and at times as may be declared by the
board of directors of the Company out of funds legally available, in the same
proportion as holders of the Company’s common stock, par value $.01 per share
(the “Common Stock”). Upon liquidation or distribution, holders of Class B Stock
will be entitled to share ratably, pari passu with the holders of the Common
Stock, in all net assets available for distribution to stockholders, after
payment of any liquidation preferences to holders of preferred stock of the
Company.

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     (c) Exchange Right. (i) At any time and from time to time after the fifth
anniversary of the date of that certain Partner Agent Program Agreement between
the Company and the Purchaser (the “Partner Agent Agreement”), provided that the
Partner Agent Agreement is still in effect and has not been terminated by either
party thereto, the Purchaser shall have the right, but not the obligation, to
exchange its shares of Class B Stock for an equal number of shares of Common
Stock (subject to equitable adjustment in the event of any stock dividend, stock
split, combination, reorganization, recapitalization, reclassification or other
similar event involving a change in such security); provided, further, that
after the fifth anniversary of the date of the Partner Agent Agreement and for
so long as the Partner Agent Agreement is in effect, including any day or days
on which the Purchaser exercises such exchange right, the Purchaser must retain
legal and beneficial ownership for its own benefit of such number of shares of
Class B Stock as could be exchanged for the same number of shares of Common
Stock with a value on such date of $500,000, as determined pursuant to
Section 4(g).
          (ii) Upon the Purchaser’s exercise of the exchange right, the
Purchaser shall surrender the certificate or certificates for the shares of
Class B Stock to be so exchanged, accompanied by written notice of exchange duly
executed, to the Company at any time during regular business hours at the office
of the Company. If so required by the Company, the shares of Class B Stock so
exchanged shall be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the Purchaser.
     (d) Issuance of Shares on Exchange. (i) As promptly as practicable after
the surrender, as provided herein, of any shares of Class B Stock for exchange,
the Company shall deliver to the Purchaser certificates representing the number
of fully paid and nonassessable shares of Common Stock into which such shares of
Class B Stock have been exchanged in accordance with the provisions of
Section 4(c)(i). Such exchange shall be deemed to have been made as of the close
of business on the date that such shares of Class B Stock shall have been
surrendered for exchange by delivery thereof with a written notice of exchange
duly executed, so that the rights of the Purchaser as a holder of the shares of
Class B Stock so exchanged shall cease at such time and, subject to the
following provisions of this section, the Purchaser shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time; provided, however, that no such surrender on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the Purchaser as the record holder of such shares of Common Stock on such date,
but such surrender shall be effective to constitute the Purchaser as the record
holder thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open. The Company shall issue and
deliver to the Purchaser, at the expense of the Company, a new certificate
covering the number of shares of Class B Stock representing the unexchanged
portion of the certificate so surrendered, which new certificate shall entitle
in all respects the Purchaser to the rights of the Class B Stock represented
thereby to the same extent as if the certificate theretofore covering such
unexchanged shares had not been surrendered for exchange.
          (ii) All shares of Class B Stock that shall have been surrendered for
exchange as provided herein shall no longer be deemed to be outstanding and all
rights with respect to such shares shall immediately cease and terminate on the
surrender date, except only the right of the Purchaser to receive shares of
Common Stock in exchange therefor, and such shares shall not thereafter be
transferred on the books of the Company or be deemed to be outstanding for any
purpose whatsoever.

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     (e) Repurchase Right. (i) (A) At any time prior to the fifth anniversary of
the execution of the Partner Agent Agreement, if the Partner Agent Agreement is
terminated by either the Company or the Purchaser, for any reason, the Company
shall have the right, but not the obligation, to repurchase the Shares currently
held by the Purchaser for a price per Share equal to the lesser of (1) the
weighted average purchase price per Share as provided herein or (2) the Current
Market Price (as defined herein) of the Common Stock; and (B) at any time on or
after the fifth anniversary of the execution of the Partner Agent Agreement, if
the Partner Agent Agreement is terminated by either the Company or the
Purchaser, for any reason, the Company shall have the right, but not the
obligation, to repurchase the Shares currently held by the Purchaser for a price
per Share equal to the Current Market Price of the Common Stock. Such right of
the Company may be exercised by providing a notice of repurchase (the
“Repurchase Notice”) to the Purchaser not less than five business days prior to
the date repurchase is to be made pursuant to this Section 4(e), specifying the
date of such repurchase (the “Repurchase Date”) and the number of shares of
Class B Stock to be repurchased. The Repurchase Notice having been so given by
the Company, the aggregate repurchase price for the shares of Class B Stock to
be so repurchased shall become due and payable on the Repurchase Date.
          (ii) For purposes of this Agreement:
               (A) “Current Market Price” per share of a security at any date
herein shall mean the average daily Closing Price (as defined herein) of such
security for the 20 consecutive Trading Days (as defined herein) preceding such
date (subject to equitable adjustment in the event of any stock dividend, stock
split, combination, reorganization, recapitalization, reclassification or other
similar event involving a change in such security); provided, however, that in
the case of the Common Stock, where no public market exists for the Common Stock
at the time of exchange, the Current Market Price per share of the Common Stock
shall be as determined by an independent investment banking firm experienced in
the valuation of securities of property and casualty insurance companies and
selected by the Company (at the Company’s expense); provided that, after receipt
of the determination by such firm, the Purchaser shall have the right to select
(at the expense of the Purchaser) a second such investment banking firm to make
such determination, in which case the Current Market Price shall be the average
of the two determinations; and provided further that such determination need not
be made more frequently than once every six months and any determination shall
be superceded by a good faith determination by the Company’s board of directors
that shall be required if a material event reasonably likely to affect the value
of the Common Stock (such as a placement of equity securities) should occur
after the next preceding determination, whether by an investment banking firm or
firms, or by the Company’s board of directors.
               (B) “Closing Price” shall mean, with respect to any Trading Day:
(1) if the Common Stock is listed or admitted to trading on a national
securities exchange, the last reported sale price of the Common Stock, regular
way, or in case no sale takes place on such day, the average of the reported
closing bid and asked prices of the Common Stock, regular way, in either case as
reported on such exchange; or (2) if the Common Stock is not listed or admitted
to

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trading on any national securities exchange, but is listed on the Nasdaq
National Market, the closing sale price of the Common Stock on such day, or in
case no sale is publicly reported for such day, the average of the
representative closing bid and asked quotations for the Common Stock, as
reported on Nasdaq; or (3) if the Common Stock is not listed or admitted to
trading on the Nasdaq National Market, the average of the bid and asked prices
for the Common Stock as furnished for such day by Nasdaq, or, if not furnished
by Nasdaq, by any New York Stock Exchange, Inc. member firm regularly making a
market in the Common Stock and selected for such purpose by the Company’s board
of directors.
               (C) “Trading Day” shall mean, in the case of any security, any
day on which trading takes place (1) if such security is then listed or admitted
to trading on a national securities exchange, on the principal national
securities exchange on which such security is then listed or admitted to
trading, (2) if such security is then listed or admitted to trading on the
Nasdaq National Market, on the Nasdaq National Market, or (3) otherwise, in the
over-the-counter market.
          (iii) On or prior to the Repurchase Date, the Purchaser shall
surrender such shares of Class B Stock to the Company in the manner and at the
place designated by the Company. From and after the Repurchase Date, unless
there shall have been a default in the payment of the repurchase price, all
rights of the Purchaser with respect to the Shares shall cease, and such Shares
shall not thereafter be transferred on the books of the Company or be deemed to
be outstanding for any purpose whatsoever.
     (f) Provisions in Case of a Change of Control. In case of any “Change of
Control”; that is: (i) any sale, lease, exchange or other transfer of all or
substantially all of the property and assets of the Company to a non-affiliated
third party; (ii) any merger or consolidation with a non-affiliated third party
to which the Company is a party and as a result of which the holders of the
voting securities of the Company immediately prior thereto own less than a
majority of the outstanding voting securities of the surviving entity
immediately following such transaction; or (iii) any Person or group of Persons
(as such term is used in Section 13(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) shall beneficially own (as defined in
Rule 13d-3 under the Exchange Act) securities of the Company representing 50% or
more of the combined voting power of the voting securities of the Company then
outstanding, then the Purchaser shall thereafter have the right to convert its
shares of the Class B Stock into the kind and amount of securities, cash and
other property receivable upon such reorganization, reclassification,
consolidation, merger or disposition by the Purchaser of the number of shares of
Common Stock that the Purchaser would have received had it converted its shares
of Class B Stock immediately prior to such reorganization, reclassification,
consolidation, merger or disposition pursuant to Section 4(c)(i). For purposes
of this section, “voting securities” shall mean securities, the holders of which
are ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions). The foregoing provisions of
this section shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers or dispositions.
     (g) Purchase obligation. Following the five-year anniversary of the date of
this Agreement, on each six-month anniversary thereafter, the Company shall
determine the

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aggregate value of the shares of Class B Stock held by the Purchaser. The value
of each share of Class B Stock shall equal the fair market value of one share of
the Common Stock on such date, to be calculated as follows: (i) if the Common
Stock is listed or admitted to trading on a national securities exchange, the
last reported sale price of the Common Stock, regular way, on such day or in
case no sale takes place on such day, the average of the reported closing bid
and asked prices of the Common Stock, regular way, on such day, in either case
as reported on such exchange; or (ii) if the Common Stock is not listed or
admitted to trading on any national securities exchange, but is listed on the
Nasdaq National Market, the closing sale price of the Common Stock on such day,
or in case no sale is publicly reported for such day, the average of the
representative closing bid and asked quotations for the Common Stock, as
reported on Nasdaq; or (iii) if the Common Stock is not listed or admitted to
trading on the Nasdaq National Market, the average of the bid and asked prices
for the Common Stock as furnished for such day by Nasdaq, or, if not furnished
by Nasdaq, by any New York Stock Exchange, Inc. member firm regularly making a
market in the Common Stock and selected for such purpose by the Company’s board
of directors; or (iv) if no public market exists for the Common Stock, as
determined in good faith by the Company’s board of directors. If the aggregate
value of the Class B Stock held by the Purchaser is determined to be less than
$500,000, then the Purchaser shall purchase from the Company such number of
shares of Class B Stock as would equal the difference between the value of the
Class B Stock as determined herein and $500,000. The purchase price of such
shares of Class B Stock would be payable to the Company by wire transfer in
immediately available funds to an account designated by the Company no later
than one business day after the determination of the value as provided herein.
If such six-month anniversary falls on any day that is not a Trading Day, then
the determination of the value of the Class B Stock shall be made on the next
immediately following Trading Day.
5. Taxes on Exchange. The Company will pay any and all stamp or similar taxes
that may be payable in respect of the issuance and delivery of shares of Common
Stock upon exchange of shares of Class B Stock pursuant to Section 4(c)(i).
6. No Registration under Federal or State Securities Laws. (a) The Purchaser
acknowledges that the Shares have not been registered under the Securities Act
or the securities laws of any state by reason of a specific exemption or
exemptions from registration under the Securities Act and applicable state
securities laws, and that the Company’s reliance on such exemptions is
predicated on the accuracy and completeness of the Purchaser’s representations,
warranties, acknowledgements and agreements contained herein. Accordingly, the
Shares may not be offered, sold, transferred, pledged or otherwise disposed of
by the Purchaser without an effective registration statement under the
Securities Act and any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be exempt from
registration. The Purchaser acknowledges that the Company is not required to
register the Shares under the Securities Act or any applicable state securities
laws or to make any exemption from registration available. The Purchaser
understands that the Shares, and any shares of Common Stock issued in exchange
for Shares, will bear legends substantially to the effect of the following:
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE

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SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, RECEIPT OF A
NO-ACTION LETTER ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION (TOGETHER WITH
EITHER REGISTRATION OR AN EXEMPTION UNDER APPLICABLE STATE SECURITIES LAWS) OR
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSACTION
WILL BE EXEMPT FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS.”
and that the Company will place a stop order against the transfer of the
certificates representing the Shares and refuse to effect any transfers thereof
in the absence of satisfying the conditions contained in the foregoing legend.
     (b) The Purchaser acknowledges that no public market now exists for Class B
Common Stock and there is no assurance that a public market will ever exist for
such securities.
7. Transfers. The Purchaser shall not sell, assign, transfer, pledge,
hypothecate, mortgage or dispose of, by gift or otherwise, or in any way
encumber, any shares of Class B Stock owned by the Purchaser, except for
exchanges and repurchases in compliance with Section 4.
8. No Preemptive Rights. The Purchaser shall have no preemptive or preferential
right of subscription to any shares of stock of the Company, or to options,
warrants or other interests therein or therefor, or to any obligations
convertible or exchangeable into stock of the Company (except as provided
herein), issued or sold, or any right of subscription to any security thereof
other than such, if any, as the Company’s board of directors, in its discretion,
may determine from time to time and at such price or prices as the Company’s
board of directors may fix from time to time.
9. Miscellaneous.
     (a) Payment of Expenses. Each party shall pay its own expenses incurred in
connection with this Agreement.
     (b) Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the transactions contemplated hereby
and may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the party or parties
sought to be affected.
     (c) Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by, the Company and the Purchaser, and the
Company’s or the Purchaser’s respective heirs, beneficiaries, executors,
successors, representatives and assigns, as the case may be.

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     (d) Further Assurances. From time to time, at the other party’s request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
     (e) Notices. All notices, claims, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given at the time when hand delivered, when received if sent by facsimile
or by same day or overnight recognized commercial courier service, or three days
after being mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
If to the Purchaser:
Specialty Risk Solutions, LLC
150 S. Wacker Drive, Suite 1300
Chicago, IL 60606
Facsimile: 312-251-3170
Attention: Scott H. Keller, Managing Member
If to the Company:
Specialty Underwriters’ Alliance, Inc.
8585 Stemmons Freeway
Suite 200, South Tower
Dallas, Texas 75247
Facsimile: 214-889-8800
Attention: Courtney C. Smith
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Facsimile: 212-806-6006
Attention: William W. Rosenblatt, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the other party in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
     (f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law; however, if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or

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portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
     (g) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party. All representations, warranties, covenants
and agreements contained herein shall survive the execution and delivery of this
Agreement, the closing and any investigation made by any party hereto.
     (h) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
     (i) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
     (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.
     (k) Governing Law. This Agreement will be governed as to formation,
performance, interpretation and enforcement by the laws of the state of New
York, without regard to principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
     (l) Arbitration. (i) Any dispute arising out of the interpretation,
performance or breach of this Agreement, including the formation or validity
thereof, shall be submitted for decision to a panel of three arbitrators. Notice
requesting arbitration shall be in writing and sent certified or registered
mail, return receipt requested. One arbitrator shall be chosen by each of the
Company and the Purchaser and the two arbitrators shall, before instituting the
hearing, choose an impartial third arbitrator who shall preside at the hearing.
If either party fails to appoint its arbitrator within thirty (30) days after
being requested to do so by the other party, the latter, after ten (10) days’
notice by certified or registered mail of its intention to do so, shall request
the American Arbitration Association (“AAA”) to appoint the second arbitrator.
If the two arbitrators are unable to agree upon the third arbitrator within
thirty (30) days of their appointment, the arbitrators shall request the AAA to
select the third arbitrator.
          (ii) Within thirty (30) days after notice of appointment of all
arbitrators, the panel shall meet and determine timely periods for briefs,
discovery procedures and schedules for hearings. The panel shall be relieved of
all judicial formality and shall not be bound by the strict rules of procedure
and evidence. Unless the panel agrees otherwise, arbitration shall take place

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in New York, New York, and the panel shall apply the law of the state of New
York. The decision of any two arbitrators when rendered in writing shall be
final and binding. The panel is empowered to grant interim relief as it may deem
appropriate. In no event shall the panel award punitive or exemplary damages.
The panel shall make its decision considering the custom and practice of the
applicable insurance business within forty-five (45) days following the
termination of the hearings. Either party may apply to a United States District
Court or to a State Court of competent jurisdiction for an order confirming the
arbitration award; a judgment of such court shall thereupon be entered on the
award. If such an order is issued, the attorneys’ fees of the party so applying
and court costs will be paid by the party against whom confirmation is sought.
          (iii) The parties hereto shall share the expense of the arbitrators
equally. The remaining costs of the arbitration shall be allocated by the panel.
The panel may, at its discretion, award such further costs, interest and
expenses as it considers appropriate, including but not limited to attorneys’
fees, to the extent not prohibited by law.
          (iv) Any arbitration proceeding under this Agreement will not be
consolidated or joined with any arbitration proceeding under any other
agreement, or involving any other property or premises, and will not proceed as
a class action.
     (m) Jurisdiction. Subject to the provisions of Section 9(l), the Company
and the Purchaser each (i) hereby irrevocably submits to the jurisdiction of the
state and federal courts located in the city and state of New York for the
purpose of any suit, action or other proceeding arising out of or based upon
this Agreement or the transactions contemplated hereby and (ii) hereby waives to
the extent not prohibited by applicable law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceedings brought in one of the above-named courts is improper, or that this
Agreement, or the transactions contemplated hereby, may not be enforced in or by
such court. Nothing contained in this section shall affect the right of the
Company or the Purchaser to serve process in any other manner permitted by law
or commence legal proceedings or otherwise proceed against the Company or the
Purchaser in any other jurisdiction. In the event the Company or the Purchaser
should commence or maintain any action arising out of or related to this
Agreement in a forum other than the state and federal courts located in the city
and state of New York, the Purchaser or the Company, as the case may be, shall
be entitled to request the dismissal of such action, and the Company or the
Purchaser, as the case may be, stipulate that such action shall be dismissed.
     (n) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
     (o) Gender and Number. Any words used in the masculine, feminine or neuter
shall read and be construed in the masculine, feminine or neuter where they
would so apply. Words in the singular shall be read and construed as though used
in the plural in all cases where they would so apply.

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[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the Purchaser and the Company as of the day and year first above written.

            THE COMPANY:

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

      By:   /s/ COURTNEY C. SMITH         Name:   Courtney C. Smith       
Title:   President and CEO        THE PURCHASER:

SPECIALTY RISK SOLUTIONS, LLC

      By:   /s/ SCOTT H. KELLER         Name:   Scott H. Keller        Title:  
Managing Director     

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Schedule A
PURCHASER:
(Please provide company name, address, telephone, facsimile and contact person)
Specialty Risk Solutions, LLC
150 S. Wacker Drive, Suite 1300
Chicago, IL 60606
Facsimile: 312-251-3170
Attention: Scott H. Keller, Managing Member

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Schedule B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
_______________________
Pursuant to Sections 228 and 242 of the
Delaware General Corporation Law
_______________________
     The undersigned, being the Chief Executive Officer of Specialty
Underwriters’ Alliance, Inc. (the “Corporation”), a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
     1. The name of the Corporation is Specialty Underwriters’ Alliance, Inc.
The original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on April 3, 2003. The Amended and
Restated Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on May 14, 2004.
     2. This Amended and Restated Certificate of Incorporation was duly adopted
by the stockholders at the 2005 annual meeting in accordance with the applicable
provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law.
     3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Corporation’s Certificate of
Incorporation as heretofore restated and amended.
     4. The text of the Amended and Restated Certificate of Incorporation is
hereby amended and restated in its entirety to read as follows:
     FIRST: The name of the Corporation is Specialty Underwriters’ Alliance,
Inc.
     SECOND: The Corporation’s registered office in the State of Delaware is at
160 Greentree Drive, Suite 101, in the City of Dover, County of Kent. The name
of its registered agent at such address is National Registered Agents, Inc.
     THIRD: The nature of the business of the Corporation and its purpose is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
     FOURTH: The maximum number of shares that the Corporation shall be
authorized to issue and have outstanding at any one time shall be (i) thirty
million (30,000,000) shares of Common Stock, par value $0.01 per share (the
“Common Stock”), (ii) two million (2,000,000)

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shares of Class B Common Stock, par value $0.01 per share (the “Class B Stock”),
and (iii) one million (1,000,000) shares of Preferred Stock, par value $0.01 per
share (the “Preferred Stock”).
1. Common Stock
     The holders of the Common Stock shall be entitled to one vote per share.
The holders of the Class B Stock shall not be entitled to any voting rights
except as otherwise required by law but shall otherwise have the same rights as
the holders of Common Stock, including the right to share equally in any
dividends distributed to the holders of the Common Stock and in any distribution
to the holders of the Common Stock pursuant to a dissolution. Certain holders of
the Class B Stock may have a contractual right to exchange their shares into
shares of Common Stock. The Corporation may have a contractual right to
repurchase shares of the Class B Stock from certain holders thereof.
2. Preferred Stock
     The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Paragraph FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and to
establish from time to time the number of shares included in each such series,
but not below the number of shares then issued, and to fix the designation,
powers, preferences, and relative rights of the shares of each such series and
the qualifications, or restrictions thereof. The authority of the Board of
Directors with respect to each shall include, but not be limited to,
determination of the following:

  (a)   The number of shares constituting that series and the distinctive
designation of that series;     (b)   The dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payments of dividends on
shares of that series;     (c)   Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the terms of such
voting rights;     (d)   Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including provisions
for adjustment of the conversion rate in such events as the Board of Directors
shall determine;     (e)   Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different rates;     (f)   Whether that series shall have a
sinking fund for the redemption or purchase of shares of that series, and, if
so, the terms and amount of such sinking fund;

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  (g)   The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series; and  
  (h)   Any other relative rights, preferences and limitations of that series.

     FIFTH: The name and mailing address of the incorporator is as follows:
Purvi Shah
Debevoise & Plimpton
919 Third Avenue
New York, New York 10022
     SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for the
purpose of creating, defining, limiting and regulating the powers of the
Corporation and its directors and stockholders:

  (a)   The number of directors of the Corporation shall be fixed and may be
altered from time to time in the manner provided in the By-Laws, and vacancies
in the Board of Directors and newly created directorships resulting from any
increase in the authorized number of directors may be filled, and directors
maybe removed, as provided in the By-Laws.     (b)   The election of directors
may be conducted in any manner approved by the stockholders at the time when the
election is held and need not be by written ballot.     (c)   All corporate
powers and authority of the Corporation (except as at the time otherwise
provided by law, by this Certificate of Incorporation or by the By-Laws) shall
be vested in and exercised by the Board of Directors.     (d)   The Board of
Directors shall have the power without the assent or vote of the stockholders to
adopt, amend, alter or repeal the By-Laws of the Corporation, except to the
extent that the By-Laws or this Certificate of Incorporation otherwise provide.
    (e)   The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented. Neither the amendment or
repeal of this section nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this section shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
amendment, repeal or adoption.     (f)   The Corporation shall, to the fullest
extent permitted by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, or by any successor
thereto, indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the

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      expenses, liabilities or other matters referred to in or covered by said
section. The Corporation shall advance expenses to the fullest extent permitted
by said Section. Such right to indemnification and advancement of expenses shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. The indemnification and advancement of expenses provided for
herein shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise.

     SEVENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by the laws of the State of Delaware, and all rights herein
conferred upon stockholders or directors are granted subject to this
reservation.
     IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by Courtney C. Smith, its Chief
Executive Officer, this 19th day of May, 2005.

                  /s/ COURTNEY C. SMITH       Name:   Courtney C. Smith     
Title:   Chief Executive Officer   

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Schedule C
SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
PARTNER AGENT PROGRAM AGREEMENT
This Partner Agent Program Agreement (“Agreement”) is entered into as of the
11th day of May, 2005 (the “Effective Date”) by and between Specialty
Underwriters’ Alliance, Inc. and its property and casualty insurance
subsidiaries and affiliates (collectively the “Company”) and Specialty Risk
Solutions, LLC (the “Partner Agent”).
The parties hereto agree to develop and administer an insurance program known as
described in Exhibit A attached hereto. This Agreement pertains only to that
Program business, with the Company and the Partner Agent agreeing as follows:

I.   AUTHORITY

  A.   Partner Agent’s authority is subject to the terms of this Agreement and
Company’s Program description, underwriting guidelines, system templates,
service standards, form and rate and other filings, and authority limits
provided by Company to Partner Agent (“Company Guidelines”). Company appoints
Partner Agent as its exclusive Partner Agent for five (5) years for the Program
from the Effective Date within the territory specified in the Company Guidelines
solely for the following purposes:

  1.   To solicit, receive, and bind proposals for commercial lines insurance in
accordance with the Company Guidelines.     2.   To pre-screen applications and
estimate rates and/or premiums in accordance with the Company Guidelines.     3.
  To endorse in-force policies in accordance with Company Guidelines.     4.  
To collect, receive, account for, and pay to Company, premiums on policies
written by Company, and to refund to the policyholder or insured, as appropriate
(or to Company if requested by Company), return premiums as provided in the
applicable policy.     5.   To issue, countersign (where necessary), and deliver
policies executed by authorized officers of Company.     6.   To effect
conditional renewals, cancellation and non-renewal of policies in accordance
with Company Guidelines and applicable law.

  A.   Partner Agent may delegate its authority in writing to designated
employees.     B.   Partner Agent’s authority is subject to compliance with (and
Partner Agent shall not alter, modify, or change and shall not waive any
provision in) the applicable forms, rules, or rates of Company, according to
their exact terms and to all applicable laws and regulations.     C.   Company
shall have the right to reject any application or business submitted by Partner
Agent or to modify, cancel, or refuse to renew any policies written by Company
hereunder by giving Partner Agent written notice of effective date of changes
that would affect this business.     D.   Partner Agent shall, within twenty
(20) calendar days of the inception of coverage, provide to Company all data and
statistical information relating to the underwriting of accounts. Partner Agent
is authorized to issue binders, certificates or other evidence of insurance.

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  E.   The Company Guidelines may be amended or new Company Guidelines may be
adopted at the Company’s discretion without the need to amend this Agreement.
Such amendments or new Company Guidelines will be provided to the Partner Agent
in writing and must be implemented by Partner Agent in accordance with Company’s
instructions. Company will give Partner Agent reasonable notice in which to
enact such changes.     F.   Company retains the right to modify, cancel,
conditionally renew or non-renew any and all policies solely in Company’s
discretion.     G.   Partner Agent has no authority to solicit, negotiate or
place any reinsurance on behalf of Company.

II.     OBLIGATIONS OF AGENT

  A.   Partner Agent represents and warrants that (i) Partner Agent has any and
all ownership or other rights in the business contemplated herein necessary to
place such business with Company under this Agreement; (ii) Partner Agent
placing business under this Agreement is not in violation of any duty or
obligation owed to any other entity or person; and (iii) Partner Agent is, and
will continue to be, authorized and licensed to perform all acts set out in this
Agreement while providing services under this Agreement.     B.   The Program,
as more specifically described in the Company Guidelines and in Exhibit A of
this Agreement, will be mutually exclusive, unless otherwise stated in this
Agreement. Partner Agent will be allowed to complete existing obligations under
insurance policies with other insurance carriers for the Program. Unless
otherwise specifically stated in this Agreement, Company will not accept
business encompassed within the Program from any entity other than Partner Agent
during the term of this Agreement. Partner Agent shall exclusively represent
Company and shall not represent any other insurance company or similar entity in
relation to the Program. Partner Agent may be allowed to write business with
other insurance carriers for any portion of the Program not offered by Company
(“Other Business”) so long as Partner Agent notifies Company in writing of Other
Business and Company has a right of first refusal to write Other Business. In
the event that a conflict exists as to whether Partner Agent is authorized to
represent an existing or prospective policyholder, Company may honor the
policyholder’s written producer of record designation signed by the
policyholder. Notwithstanding the foregoing, Company shall be under no
obligation to honor a written producer of record designation from a policyholder
before accepting business from a designated Partner Agent, and Company’s
determination of which agent of Company represents Company with regard to a
particular policyholder shall be final and binding.     C.   Partner Agent shall
be responsible for compliance with all applicable state and federal laws,
regulations, rules, and requirements relating to the performance of Partner
Agent’s obligations and the general standards, rules, and regulations of the
insurance industry and all Company Guidelines as provided by Company in writing.
    D.   Partner Agent shall keep true, separate, accurate, and complete records
of all transactions related to the policies and all correspondence.     E.   All
records and documents applicable to the business relationship between Company
and Partner Agent shall be maintained by Partner Agent in a form and manner that
is (i) requested by Company, and (ii) secure and in accordance with Company’s
record retention guidelines and insurance regulatory practices. Such records and
documents shall continue to be maintained in a secure manner during the Term and
for a period of no less than five (5) years (or such longer period as Company
may request or is needed in order to preserve such records and documents under
state statutes of limitations) after termination of this Agreement. At the end
of such five (5)-year period or at any time Company requests, Partner Agent
shall provide Company with originals or copies of such records and documents. No
records or documents shall be destroyed at any time prior to five (5) years or
according to state regulation without Company’s prior written consent.

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  F.   All records and documents of Partner Agent may be audited, examined,
and/or copied by representatives of Company at any time during normal business
hours and shall be made available for examination to reinsurers, or to any state
insurance department or regulatory body which so requires. Additionally, Partner
Agent shall permit authorized employees and representatives of Company to review
the operations of Partner Agent, both at its place of business and at other
locations during business hours upon ten (10) days written notice by Company.  
  G.   Partner Agent shall notify Company within forty-eight (48) hours of
notice or receipt of any complaint filed with any state insurance department or
other regulatory authority relating to the policies, whether against Company or
Partner Agent. The parties will work together to promptly and adequately respond
to any such complaint. If requested by Company, Partner Agent shall prepare a
response to any such complaint or, at Company’s discretion, provide a complete
written account to Company such that Company can respond; however, no response
shall be sent by Partner Agent prior to consulting with Company regarding such
response. Company retains the final authority on all responses relating to
complaints against Company. Company may establish formal complaint handling
procedures for Partner Agent to follow which are consistent with the
requirements set forth herein.     H.   Partner Agent shall not contact any
state insurance department or other regulatory authority, directly or
indirectly, with regard to Company’s business without the prior written consent
of Company. Partner Agent shall notify Company immediately in the event that
Partner Agent receives any contact from any such department or authority with
regard to Company’s business.     I.   Partner Agent shall utilize automated
business processing through Company’s centralized technology system (“Company
System”). Partner Agent shall be responsible for any integration required for
Company System to operate with other third party systems of Partner Agent.    
J.   If Company provides access to Company information or networks through
computer access, Partner Agent shall be responsible for maintaining the security
and integrity of such information and of Company’s systems. Partner Agent shall
not introduce into Company’s systems any virus or other harmful agent. Partner
Agent shall be responsible for assuring the quality of policy, premium,
accounting and statistical data submitted to Company consistent with Company
standards. Partner Agent agrees to adhere to the terms and conditions governing
Partner Agent’s use of any existing Company website or any website Company may
own, make available, operate, acquire, use from time to time, create or sponsor
in the future, and related services available under any such website. These
terms and conditions regarding use of any website or the content of any website
may change without notice to Partner Agent. Partner Agent’s use of these
websites constitutes agreement to the terms and conditions that exist at each
point in time Partner Agent uses any such website. Partner Agent may not use the
name, logo, or service mark of Company or any of its affiliates in any
advertising, promotional material, internet site, or in any material
disseminated by Partner Agent without the prior written consent of Company.
Partner Agent 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. Use of any authorized item shall be
limited to the scope of the current request and approval, unless specifically
authorized for broader use by Company. Partner Agent must obtain
re-authorization of all items at least annually.     K.   All expenses
associated with Partner Agent’s performance hereunder shall be the
responsibility of Partner Agent, including but not limited to general office
expenses, automation expenses, systems integration expenses, marketing expenses,
broker, producer, or countersigning commissions, fees, and taxes.     L.  
Partner Agent agrees that the Company rates, rating manuals, forms, Company
Guidelines, program analysis, underwriting records, management reports, and any
information as may have been or shall be provided by Company to Partner Agent
(the “Company Confidential Information”) are confidential and proprietary to
Company, shall be considered trade secrets of Company, and shall not be
disclosed to any third parties. Partner Agent agrees to maintain the
confidentiality of the Company Confidential Information. Partner Agent shall be
responsible to ensure that Partner Agent’s employees, agents, and

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      representatives are aware of and sensitive to the proprietary nature of
the Company Confidential Information, of the importance of confidentiality, and
need to comply with the confidentiality requirements in this Agreement. All
Company Confidential Information shall be returned by Partner Agent to Company
immediately upon request.     M.   Partner Agent agrees that Partner Agent and
its employees, agents, and representatives are (i) aware of the sensitive and
proprietary nature of any and all information each may receive with regard to
applicants, policyholders, beneficiaries of policies, and claimants (the “3rd
Party Confidential Information”); and (ii) aware of and will comply with:
(a) any and all applicable laws, regulations, rules, and requirements relating
to the 3rd Party Confidential Information; (b) the general standards, rules, and
regulations of the insurance industry relating to the 3rd Party Confidential
Information; and (c) all written instructions provided to Partner Agent from
time to time by Company relating to the 3rd Party Confidential Information.
Partner Agent shall comply with Company’s privacy policies and shall hold all
3rd Party Confidential Information in trust and confidence in compliance with
Company’s privacy policy, and shall use the 3rd Party Confidential Information
only for the purpose contemplated in this Agreement. Partner Agent agrees that
it shall immediately refer any question concerning any aspect of Company’s
privacy policy to Company for resolution.     N.   If requested by Company,
Partner Agent agrees to become a member of Company’s Partner Agent committee
(“Partner Agent Advisory Committee”). Partner Agent or appropriate designee
shall attend all meetings of the Partner Agent Advisory Committee, provide input
at such meetings, and cooperate fully with the Partner Agent Advisory Committee
in all aspects.     O.   Partner Agent agrees to purchase a certain amount of
Class B exchangeable common stock (“Partner Agent Stock”) as more specifically
outlined in the Securities Purchase Agreement dated as of the date hereof by and
between the Company and the Partner Agent (“Securities Purchase Agreement”)
which is hereby incorporated by reference as an integral part of this Agreement.

III.     OBLIGATIONS OF COMPANY

  A.   Company shall act in accordance with the terms of this Agreement and will
pay Partner Agent a commission in accordance with Exhibit A (“Commission”) and a
share of profits in accordance with Exhibit B (“Profit Sharing” which, together
with “Commission”, is the “Compensation”) attached hereto and referenced herein.
Partner Agent shall be responsible for paying any compensation due to its sub
producers.     B.   Company shall provide for the payment of all excise taxes,
premium taxes (except surplus lines taxes) and assessments;     C.   Company
shall appoint Partner Agent as required by various state laws and regulations;  
  D.   Company will develop and maintain Company System.

IV.     CLAIMS AND COVERAGE

  A.   Partner Agent shall immediately notify and cooperate with Company if
Partner Agent receives notice of any claim or potential claim which could
involve Company, any of its affiliates or subsidiaries, or the business written
hereunder.     B.   Partner Agent has no authority to adjust or settle any
claims arising out of or in connection with policies, shall not make any
statements regarding the application of coverage to specific situations, whether
actual or hypothetical, and shall not commit Company to any liability in
connection with any actual or potential claim or loss.     C.   Partner Agent
shall immediately report all claims, or potential claims, suits, or losses
relating to the policies to Company or to an assigned adjuster or claim
representative who has been designated by Company.

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      Partner Agent shall cooperate fully with Company or the assigned adjuster
or claim representative in the investigation, adjustment, settlement, and
payment of claims and coverage matters. All records, files, correspondence, or
other materials pertaining to claims shall be the sole property of Company.    
D.   Company will consult with Partner Agent on the selection of vendors and
claims handling procedures (“Vendor Selection and Claims Procedures”). Company
retains sole discretion for Vendor Selection and Claims Procedures.

V.     COMPENSATION OF AGENT

  A.   Company shall pay Partner Agent the Commission and Profit Sharing as
respectively described in Exhibit A and Exhibit B.     B.   With one hundred
eighty (180) days advance written notice, for reasons related to regulatory
constraints or industry issues including but not limited to Program coverage
resulting in an insurance industry or market downturn, the Company reserves the
right to adjust Partner Agent’s Commission as described in Exhibit A.     C.  
Effective at any time after a minimum of one hundred eighty (180) days advance
written notice to Partner Agent, Company may adjust the current payout period of
Profit Sharing as described in Exhibit B.     D.   It is understood and agreed
that the Compensation paid hereunder shall be full compensation for all services
rendered by Partner Agent pursuant to this Agreement.     E.   Partner Agent
shall refund Commission, or other fees or amounts retained by Partner Agent, to
the policyholder or insured, as appropriate, or to Company if requested by
Company, from Partner Agent’s own funds on a pro-rata basis on return premiums
at the same rate as paid to Partner Agent.     F.   The Commission applicable to
multiple year policies (if Company has bound such policies through Partner
Agent) shall be the Commission that is in effect for such policy during the year
in which the policy is initially written, and such Commission shall apply
throughout the term of any such policy.     G.   Partner Agent shall have no
authority to, and shall not collect any fee(s) on, the policies unless
specifically authorized by Company and permitted by law.     H.   Partner Agent
shall calculate Commission based on premiums collected by Partner Agent for
policies reported to Company.

VI.     PREMIUMS AND ACCOUNTING

  A.   Partner Agent shall be responsible for collecting premiums, whether
advance, deposit, developed, installment, audit, renewal, additional, or
otherwise, on all policies other than direct-bill policies. Despite the
foregoing, however, Company reserves the right, in its sole discretion, to
communicate with, to directly collect premium from, and/or to cancel or
non-renew policies of, its insureds. Except as otherwise provided in this
Agreement, Partner Agent shall be liable for and pay all earned premium to
Company, even if Partner Agent does not collect such premium from the
policyholder. Uncollected premiums shall be remitted from Partner Agent’s own
funds and not the Premium Trust Fund. Partner Agent may deduct Commission from
the Premium Trust Fund.     B.   Within 10 days from the last day of each month,
Company shall provide Partner Agent with a monthly itemized statement (the
“Statement”) of money due to Company. Amounts due to Company pursuant to the
Statement shall be remitted to Company on or before the fifteenth day of the
following month the Statement was rendered. In the event of differences between
Partner Agent’s and Company’s records, Partner Agent shall provide all necessary
information to permit proper adjustment. Any dispute respecting such Statement
shall be resolved based on Company’s records.

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  C.   All premiums collected by Partner Agent are the property of Company,
shall not be commingled with any other funds, shall be held in trust on behalf
of Company in a fiduciary capacity, and shall be deposited and maintained in an
account separate and segregated from Partner Agent’s own funds or funds held by
Partner Agent on behalf of any other company or person (the “Premium Trust
Fund”). The Premium Trust Fund shall be placed in an interest bearing account in
a bank and account approved by Company in advance. Unless Partner Agent has
breached this Agreement, Partner Agent shall be authorized to retain the
interest on the Premium Trust Fund. Company may request at any time, and Partner
Agent shall provide, a reconciliation of the funds deposited in, and balance due
to Company from, the Premium Trust Fund.     D.   The omission of any item(s) by
the Company from the Statement does not affect Partner Agent’s responsibility to
properly account for policies and pay all amounts due, nor does it prejudice the
rights of Company to collect such amounts.     E.   Partner Agent shall be
liable for premiums on policies written through submissions to Partner Agent by
other brokers or producers, whether or not collected by Partner Agent or such
brokers or producers.     F.   No premium advances may be made by Partner Agent
from the Premium Trust Fund, and premium advanced on behalf of any insured by
the Partner Agent shall not be reversed. Partner Agent accepts full
responsibility for such premiums.     G.   After making a diligent effort to
collect such premiums and submitting documentation of that diligent effort to
Company which Company reasonably determines to be sufficient, Partner Agent may
request in writing that premiums due as a result of audit of a particular
insured be collected directly by Company. Company agrees to assume
responsibility for collecting such additional premiums. Company will have no
obligation to collect amounts hereunder unless Partner Agent’s written request
is made within 45 days of the billing date shown on the audit statement. Partner
Agent shall not be entitled to Compensation on premiums Partner Agent requests
Company to collect or Company undertakes to collect, regardless of the amounts
collected by Company.     H.   Should Partner Agent default in any payment of
premiums on any policy, Company shall have the right to require that all
premiums on all policies are due and payable immediately.     I.   Partner Agent
agrees to be responsible for the payment of any applicable surplus lines taxes
and the filing of all affidavits as required by the applicable entities, and
shall provide Company with written evidence of such payment and compliance on a
quarterly basis.     J.   Partner Agent shall not be entitled to any
Compensation on any premium which Company determines (i) to collect (whether or
not collected), (ii) in its sole discretion to write-off, or (iii) is overdue
and is collected by Company, regardless of the amounts collected. Nothing
contained herein shall alter Partner Agent’s obligation to remit all premium to
Company, whether or not collected.

VII.   INSURANCE AND INDEMNITY

  A.   Partner Agent shall maintain the following insurance amounts with an
insurer having a rating with A.M. Best of at least “A–”: (i) errors and
omissions insurance covering Partner Agent and its employees in the minimum
amount of $1,000,000 per claim, $2,000,000 aggregate, with a deductible not
exceeding an amount agreed by Company, (ii) fidelity insurance covering Partner
Agent and its employees in the minimum amount of $1,000,000 and (iii) general
liability insurance covering Partner Agent and its employees in the minimum
amount of $1,000,000. Partner Agent agrees to immediately notify Company when it
receives notice of lapse, increased deductibles, decreased coverage,
non-renewal, or termination of any such coverage. Partner Agent agrees to notify
Company of any claim brought under any errors and omissions or fidelity
insurance which arises out of or is connected with a policy or policies. At the
inception of this Agreement and on or before January 31 of each year thereafter,
Partner Agent shall furnish Company proof of this insurance.

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  B.   Company agrees to fully indemnify, defend, and hold harmless Partner
Agent from any and all liability, claims, demands, suits, fines and penalties,
expenses, costs and attorney fees, made or assessed against or incurred by
Partner Agent or the officers, directors, or affiliates of Partner Agent, that
may arise by reason of any act, error, or omission of or any misrepresentation
by Company or its officers or employees.     C.   Partner Agent agrees to fully
indemnify, defend, and hold harmless Company from any and all liability, claims,
demands, suits, fines and penalties, expenses, costs and attorney fees, made or
assessed against or incurred by Company or the officers, directors, or
affiliates of Company, that may arise by reason of any act, error, or omission
of or any misrepresentation by Partner Agent, its officers or employees, or
brokers or producers submitting business to the Partner Agent pursuant to this
Agreement.     D.   The indemnifying party shall have the right to direct the
investigation, settlement, and defense of any such claim, complaint or action.
If the indemnifying party assumes the defense of any such action, such party
shall not be liable to the indemnified party for any expenses incurred by such
indemnified party in connection with such action.

VIII.     TERM AND TERMINATION

  A.   This Agreement shall commence on the Effective Date and shall be
continuous until terminated (the “Term”).     B.   At any time during the Term
hereof, Partner Agent may terminate this Agreement without cause on one hundred
eighty (180) days written notice of termination to Company. Partner Agent’s
authority to place new business with Company shall cease immediately upon
receipt of such notice of termination. Partner Agent’s authority to renew
business with Company shall cease as of the effective date of termination.    
C.   At any time during the Term, Company may terminate this Agreement on one
hundred eighty (180) days (or such longer period as mandated by regulation)
written notice of termination to Partner Agent if Partner Agent has not met the
Company Guidelines pertaining to profitability and/or production. Partner
Agent’s authority to submit new business with Company will cease on ninety
(90) days after receipt of such notice of termination. Partner Agent’s authority
to submit renewals with Company shall cease as of the effective date of
termination. Any disputes regarding Company Guidelines shall be determined in
Company’s sole discretion.     D.   Upon written notice, Company may immediately
terminate this Agreement in whole or in part for cause, which shall include, but
not be limited to, the following:

  1.   Partner Agent, or its parent or any affiliated corporation becomes
insolvent, institutes or acquiesces in the institution of any bankruptcy,
financial reorganization, or liquidation proceeding or any such proceeding is
instituted against Partner Agent or its parent corporation (Partner Agent shall
immediately notify Company of same); or     2.   Partner Agent, or the owner of
a controlling interest in Partner Agent, sells, exchanges, transfers, assigns,
consolidates, pledges or causes to be sold, exchanged, transferred, assigned,
consolidated, or pledged: (i) all or substantially all of the assets of Partner
Agent, or any entity controlling Partner Agent, to a third party, or (ii) a
controlling interest in Partner Agent, or any entity controlling Partner Agent,
to a third party (Partner Agent shall immediately notify Company of same); or  
  3.   Partner Agent fails to correct material deficiencies as noted in any
agency audit or program review within the time frame set out in the audit; or  
  4.   Partner Agent fails to render timely and proper reports or premium
accounting as required, or remit premiums when due; or

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  5.   Partner Agent fails to maintain premium funds in trust as required in
this Agreement; or     6.   Partner Agent engages in acts or omissions
constituting abandonment, fraud, insolvency, misappropriation of funds, material
misrepresentation, or gross and willful misconduct; or     7.   Partner Agent’s
license or certificate of authority is cancelled, suspended, or is declined
renewal by any regulatory body within the Territory where Partner Agent
transacts or services policies (Partner Agent shall immediately notify Company
of same); for fraud or if for more than thirty (30) days for any other reason;
or     8.   Partner Agent otherwise materially breaches this Agreement.

  A.   In the event this Agreement is terminated or any authority of Partner
Agent is suspended, limited, or terminated (whether by Company, Partner Agent,
or agreement of the parties), Partner Agent shall, subject to all terms,
conditions, and restrictions contained in this Agreement, service all business
until all such business has been completely cancelled, non-renewed, or otherwise
terminated and all claims hereunder have been closed. Company may, in its sole
discretion, immediately suspend or terminate Partner Agent’s continuing service
obligation as outlined in Program Guidelines. Notwithstanding the foregoing,
Partner Agent shall not, without the prior written approval of Company, increase
or extend the Company’s liability under, extend the term(s) or condition(s) of,
or cancel and re-write, any policies.

If Partner Agent fails to fulfill any service obligation under this Agreement or
comply with this Agreement, then Partner Agent shall reimburse Company any
expense incurred by Company as a result of non-compliance, or in servicing or
arranging for the servicing of business, or such amounts may be offset by
Company.

  B.   Any notice of termination shall be in writing and sent by certified mail
or personally delivered. Such notice shall be deemed received three (3) days
from the date of mailing or, if personally delivered, the date delivered. Unless
changed by giving written notice to the other party, the addresses of the
respective parties are:

Partner Agent:
Specialty Risk Solutions, LLC
150 S. Wacker Drive, Suite 1300
Chicago, IL 60606
Facsimile: 312-251-3170
Attn: Scott H. Keller, Managing Member
Company:
SpecialtyUnderwriters’ Alliance, Inc.
222 South Riverside Plaza
Chicago, IL 60606
Facsimile: 1-312-277-1800
Attention: Scott Goodreau, General Counsel

IX.   GENERAL PROVISIONS

  A.   If Partner Agent breaches this Agreement for any reason whatsoever,
Company may, in lieu of terminating the Agreement, suspend some or all of the
authority of Partner Agent under this Agreement. Additionally, Company may
suspend the authority of Partner Agent during the pendency of any dispute
regarding termination or suspension.

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  B.   During the Term and following termination of the Agreement, if Partner
Agent has made full payments of all amounts due Company and continues to do so
in a timely manner, then the expirations and renewals shall be the property of
Partner Agent; provided, however, that Company shall have the absolute right to
write or renew such business as may be required by law, and to take any and all
actions with regard to the business as may be required in order to service the
business or as may be required by law or pursuant to the policy’s terms.

If, during the Term and following termination of this Agreement, Partner Agent
has not made full payment to Company, the expirations and renewals shall not be
the property of Partner Agent, and the Company shall be entitled to the
expirations and renewals, and the use and control of the expirations and
renewals shall be vested in Company for sale, use, or disposal as Company deems
fit.

  C.   Partner Agent will advise Company promptly if it, an employee of Partner
Agent, or any of Partner Agent’s brokers or producers have been or are in the
future convicted of a felony.     D.   This Agreement and the Securities
Purchase Agreement constitute the entire agreement between Company and Partner
Agent and supersedes any and all other agreements, either oral or written,
between Company and Partner Agent with respect to the business. No waiver by
either party to enforce any provisions of this Agreement will be effective
unless made in writing and signed by an authorized officer of Company and
Partner Agent and shall be effective as to the specifically stated waiver date.
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.     E.   Company may combine or offset any balances or funds owed by
Partner Agent to Company against any balances or funds owed to Partner Agent by
Company under this Agreement or any other agreement between the parties. Because
the funds held by Partner Agent are held in trust for Company, Partner Agent may
not offset any balance due from Company to Partner Agent under this Agreement or
under any other agreement with Company or any other party against the Premium
Trust Fund.     F.   This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its rules
regarding conflict of laws. Notwithstanding the foregoing, matters relating to
agency termination and Partner Agent’s right or Company’s obligations on
termination shall be governed solely by the applicable insurance laws, if any,
of the state in which Partner Agent is domiciled. The parties hereto consent to
the jurisdiction of the courts of the State of Illinois in any matters
pertaining to this Agreement which are not otherwise resolved in accordance with
subsection G. below.     G.   Except as provided herein, all unresolved
differences of opinion or disputes between Company and Partner Agent arising out
of or in connection with this Agreement or any transaction hereunder shall first
be attempted to be settled by a good faith meeting of a member of senior
management of each of Company and Partner Agent and/or by mediation. If any
unresolved differences of opinion or disputes still exist after such meeting,
then such matters shall be submitted to arbitration in accordance with the rules
relating to commercial arbitration of the American Arbitration Association.
Arbitration initiated by one party will allow the other party to select the
situs of the arbitration proceedings. Notwithstanding the foregoing, Company
shall be entitled to the issuance of an injunction or other legal or equitable
action to obtain premiums or monies due, to prohibit Partner Agent’s use of
funds, to prohibit Partner Agent’s writing business in violation of this
Agreement, or to require Partner Agent’s deposit of such funds in accordance
with this Agreement. If Company prevails in any such action, the cost and
expense thereof, including attorneys’ fees, shall be borne by Partner Agent.    
H.   Partner Agent may not assign this Agreement, delegate its duties, or assign
its rights under this Agreement, unless otherwise agreed upon and authorized in
writing in advance by Company.     I.   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.

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  J.   The parties hereby agree that all provisions of this Agreement shall
survive termination, except that Paragraph I (A) hereof shall only survive as
modified by Article VIII.

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

              Specialty Underwriters’ Alliance, Inc.
 
           
By:
                      Name Printed:   William Loder     Title:   Senior Vice
President, Chief Underwriting Officer    
 
           
 
            Specialty Risk Solutions, LLC    
 
           
By:
                      Name Printed:   Scott H. Keller     Title:   Managing
Member    

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EXHIBIT A
COMMISSION SCHEDULE

A.   Except as otherwise provided in this Commission Schedule, Partner Agent’s
Commission shall be as follows:

              Program Description   Line of Business   Maximum Rate of
Commission
 
           
Specialty Risk Solutions - Large Accounts for Schools, Municipalities and Pools
associated with this business requiring SIR’s and Special pricing and
structures.
  All Commercial Property & Casualty and lines of business including Workers’
Compensation     15 %

B.   The rates of Commission provided in this Schedule do not relate to the
following types of business:

  1.   Business which Company determines is specially rated, specially
classified, or specially reinsured;     2.   Business written subject to a
participating plan;     3.   Business placed through assigned risks, fair plans,
pools, or other risk-sharing associations.

Commission rates for all such business shall be negotiated on an individual
policy basis and agreed by Company in writing.

C.   Commissions different than provided herein may be agreed to in writing
between Partner Agent and Company, and such agreement shall supercede this
Commission Schedule.

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EXHIBIT B
PROFIT SHARING SCHEDULE
The Profit Sharing Due to Partner Agent will be calculated using the following
Tables:
Table I
Profit Sharing Year [ ]

                          Premium                
 
                       
 
    1.     Eligible Earned Premium for Profit Sharing Year       $ ___  
 
                       
 
    2.     Premium Written Off       $ ___  
 
                       
 
    3.     Ceded Facultative Reinsurance       $ ___  
 
                       
 
    4.     Net Eligible Earned Premium       $ ___  
 
          (Line 1 minus Line 2 minus Line 3)            
 
                        Expenses                
 
    5.     Commissions incurred for Profit Sharing Year       $ ___  
 
                       
 
    6.     Losses and ALAE Incurred for Profit Sharing Year   $___        
 
                       
 
    7.     TPA Claims Fee for Profit Sharing Year       $ ___  
 
                       
 
    8.     Claims Charge for Profit Sharing Year (% times line 4)       $ ___  
 
                       
 
    9.     IBNR Charge for Profit Sharing Year       $ ___  
 
                       
 
    10.     Taxes, Licenses and Fees for Profit Sharing Year   $___        
 
                       
 
    11.     Operating Charge (% times line 4)   $___        
 
                       
 
    12.     Dividends Incurred for Profit Sharing Year   $___        
 
                       
 
    13.     Expense Total (Sum of Lines 5, 6, 7, 8, 9, 10, 11 and 12)       $
___  
 
                        Profit Sharing Year Result            
 
                       
 
    14.     Profit Sharing Year Result   $___        
 
          (Line 4 minus line 13)            
 
          (Can be negative)            
 
                       
 
    15.     Profit Sharing Factor         50 %
 
                       
 
    16.     Profit to be Shared (Line 14 times Line 15)   $___        
 
          (Can be negative)            
 
                       
 
    17.     Payout Factor         ___ %
 
                       
 
    18.     Result (Line 16 times Line 17)            
 
          (Can be Negative)       $ ___  

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Based on this Table, the Partner Agent’s Combined Ratio is ___% (line 13 divided
by line 4 times 100). The maximum Profit Sharing due the Partner Agent will be
limited to 7% of Net Eligible Premium per Profit Sharing Year.

LEGEND
Table I

     
Line 1.
  Eligible Earned Premium shall mean direct premium earned for Profit Sharing
Year which relates to Eligible Business less premium ceded (less ceding
commission received) for treaty reinsurance specifically related to Eligible
Business purchased by the Company for the Profit Sharing Year.
 
   
Line 2.
  Premium Written Off shall include any premium due Company which Company has
charged off as uncollectible for the Profit Sharing Year.
 
   
Line 3.
  Ceded Facultative Reinsurance shall include earned premium ceded (less ceding
commissions received) for facultative reinsurance specifically related to
Eligible Business purchased by Company for Profit Sharing Year.
 
   
Line 5.
  Commissions shall include the direct commissions and policy fees (if included
in Eligible Earned Premium) incurred by Company for the Profit Sharing Year,
relating to Eligible Business. Additionally, Company shall add to such total any
amounts or expenses of Partner Agent which Company agrees to reimburse, assume,
or share.
 
   
Line 6.
  Losses and ALAE Incurred shall be direct losses and expenses incurred (paid
plus case reserves) by Company on claims reported for the Profit Sharing Year
relating to Eligible Business, excluding unallocated loss adjustment expense,
plus any extra contractual or bad faith payments relating to Eligible Business
less recoveries from Ceded Treaty and Facultative Reinsurance specifically
related to eligible business.
 
   
Line 7.
  TPA Claims Fee shall be actual fees incurred by the Company on behalf of the
Partner Agent for the current Profit Sharing Year.
 
   
Line 8.
  Claims Charge shall be a designated percentage determined by the Company based
on unallocated loss adjustment expense for the current Profit Sharing Year times
Net Eligible Earned Premium.
 
   
Line 9.
  IBNR Charge shall be determined solely by the Company and shall include a
provision for the reserve for Losses and ALAE Incurred but not reported during
the Profit Sharing Year, which reserve shall include development on losses and
ALAE already reported to Company. The IBNR calculation will take into
consideration the specific lines and classes of business written by the Program
Agent.
 
   
Line 10.
  Taxes and Assessments shall include any loss based or premium based
assessments and any expenses relating thereto, and premium taxes, boards,
bureaus, and any miscellaneous taxes including insurance department licenses and
fees, relating to Eligible Business allocated by Company to Eligible Earned
Premium including but not limited to residual market, fair plan or guaranty
association assessments.
 
   
Line 11.
  Operating Charge shall be a designated percentage for the current Profit
Sharing Year times Net Eligible Earned Premium. Operating Charge shall be
determined solely at Company’s discretion and shall be based on the operating
expenses of Company not included in any of the line items described herein.
 
   
Line 12.
  Dividends Incurred shall include all dividends incurred (paid plus an estimate
of accrued but not paid) for the Profit Sharing Year by Company under Eligible
Business.
 
   
Line 15.
  Profit Sharing Factor shall be 50%. A minimum Eligible Written Premium of
twenty million dollars ($20,000,000) must be achieved within twenty-four
(24) months after the Effective Date of the Agreement for continuation of any
Profit Sharing. Eligible Written Premium shall mean direct premium written for
Profit Sharing Year which relates to Eligible Business.
 
   
Line 17.
  Payout Factor shall be calculated according to the following chart:

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PROFIT SHARING AGREEMENT
PAYOUT FACTORS

          7 Years  
1st Valuation
  10%
2nd Valuation
  20%
3rd Valuation
  40%
4th Valuation
  60%
5th Valuation
  70%
6th Valuation
  80%
7th Valuation
  100%

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Timing of Calculation of Profit Sharing Due

A.   If Partner Agent meets the Minimum Eligible Written Premium requirements
for a Profit Sharing Year, Company shall calculate Profit Sharing Due to Partner
Agent for the Profit Sharing Period based on Company’s records. Such calculation
shall be provided to Partner Agent sixty (60) days after each Valuation Date.  
B.   Each Profit Sharing Year’s calculation will include a separate
re-calculation of each prior Profit Sharing Year. Re-calculations for each prior
Profit Sharing Year will be as of the current Valuation Date, and will be made
utilizing the formula set forth in Table I. A summary of calculations made for
each Profit Sharing Year will be entered on current Profit Sharing section of
Table II.   C.   Provided that all premium or other amounts due Company shall
have been received by Company, within sixty (60) days after completion of the
calculation of Profit Sharing Due, Company shall pay the amount of Profit
Sharing Due to Partner Agent for the Profit Sharing Period as shown in Table II.

LEGEND
Other Defined Terms used in this Agreement

A.   Eligible Business shall include policies written in the Program pursuant to
this Agreement. Determination of whether a policy is Eligible Business shall be
in the sole discretion of Company.   B.   The Initial Profit Sharing Year of
this Agreement shall be from the Effective Date to December 31st following the
Effective Date (“Initial December Date”). Notwithstanding the foregoing, the
Initial Profit Sharing Year of this Agreement shall be from the Effective Date
to December 31st following the Initial December Date if the Effective Date is
between April 1 and December 31st. Subsequent Profit Sharing Years, if any,
shall be January 1st to December 31st.   C.   Valuation Date shall mean
June 30th of each year. Except as otherwise set forth below, Company shall
continue providing calculations for each Profit Sharing Year through the
June 30th of each successive year following termination of this Agreement, the
Final Profit Sharing Year, or until the parties mutually agree in writing to
close the calculations for a particular Profit Sharing Year or Profit Sharing
Years.

Term and Termination
This profit sharing schedule will terminate upon the effective date of
termination of this Agreement. The Final Profit Sharing Year under this
Agreement will be the Profit Sharing Period ending as of the effective date of
termination.
In the event this Agreement is terminated prior to the fifth anniversary of the
Effective Date by the Partner Agent, Company shall provide no further Profit
Sharing calculations. In the event that this Agreement is terminated prior to
the fifth anniversary of the Effective Date by Company in accordance with
Section VIII (D), Company shall provide no further Profit Sharing calculations.
General
No charge, offset, credit, or deduction for any Profit Sharing which is or may
be due Partner Agent shall be made or claimed by Partner Agent in accounts
submitted to Company under this Agreement or any other agreement. Profit Sharing
Due shall be payable only by Company’s check. Company may combine or offset any
amount owed to Partner Agent by Company hereunder against any amount owed to
Company by Partner Agent under any other agreement between the parties.

33