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EXHIBIT 4.9




WARRANT




NEITHER THIS WARRANT (NOR THE SHARES OF COMMON STOCK TO BE ISSUED UPON EXERCISE
HEREOF, EXCEPT AS PROVIDED FOR HEREIN) HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT (AS DEFINED BELOW) OR ANY STATE SECURITIES OR “BLUE SKY” LAWS,
AND THE HOLDER OF THIS WARRANT REPRESENTS AND WARRANTS THAT THIS WARRANT HAS
BEEN, AND THE SHARES OF COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE,
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RELEASE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF. NO SALE, ASSIGNMENT, TRANSFER, GIFT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF SUCH WARRANT OR SHARES MAY BE MADE (i)
EXCEPT IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND
(ii) UNLESS (A) SUCH WARRANT OR SHARES ARE COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (B) AN EXEMPTION FROM SUCH A REGISTRATION
IS AVAILABLE.



Warrant No. W-2B




WARRANT

to Purchase

Common Stock

of

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.




     THIS IS TO CERTIFY THAT COURTNEY SMITH is entitled, at any time and from
time to time from (and including) the Start Date (as defined in § 2.A. below)
until 5:00 P.M., New York City time, on the closing date for the first
Qualified Equity Offering (as defined below) to occur after the date hereof (or
the first Equity Offering of a series of Equity Offerings that together
comprise a Qualified Equity Offering, as approved by the Senior Lender), to
purchase from Specialty Underwriters’ Alliance, Inc., a Delaware
corporation, and any successor thereto, such number of shares of Common Stock
of the Company that would be purchasable in the Qualified Equity Offering for
$630,000.00, assuming no underwriting commissions, placement agent fees or
similar fees are payable in connection with such purchase, in whole or in part,
for the Purchase Price per share (as defined below), all on the terms and
conditions and pursuant to the provisions hereinafter provided.



     § 1. DEFINITIONS. The terms defined in this § 1, whenever used in this
Warrant, shall, unless the context otherwise requires, have the respective
meanings hereinafter specified. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Senior Loan
Agreement (as defined below).



     This Warrant No. W-2B, together with Warrant No. W-2C, supplants and
replaces that certain Warrant No. W-2A, dated July 23, 2004, that was
previously issued by the Company to Courtney Smith.



 









 





     “Affiliate” means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with such Person; (b)
which directly or indirectly beneficially owns or holds five percent (5%) or
more of the voting stock of such Person; or (c) five percent (5%) or more of
the voting stock of which is directly or indirectly beneficially owned or held
by such Person. The term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.



     “Business Day” means a day other than a Saturday, a Sunday or a day
on which commercial banks in the State of New York, the Commonwealth of
Virginia, the State of Delaware or the State of Texas are permitted or required
by law to close.



     “Commission” means the Securities and Exchange Commission or any
other governmental body then administering the Securities Act.



     “Common Stock” means the Company’s authorized voting Common Stock
as constituted on the date of original issuance of this Warrant, and any shares
of stock into which such Common Stock may thereafter be changed, or that may be
issued in respect of, in exchange for, or in substitution for, such Common
Stock by reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events and shall also include stock of the Company
of any other class issued to the holders of shares of Common Stock upon any
reclassification thereof.



     “Company” means Specialty Underwriters’ Alliance, Inc., a Delaware
corporation, and any successor corporation whether by merger or otherwise.



     “date hereof”, “date of original issuance of this Warrant”
and similar references mean the date identified on the signature page of this
Warrant beside the name of the Company.



     “Equity Offering” means any sale of equity securities by the
Company, whether pursuant to an effective registration statement under the
Securities Act or a private placement.



     “Fair Market Value” shall equal the price per share at which the
Common Stock is offered to the public in a Qualified Equity Offering.



     “Holder” means a holder of this Warrant.



     “Purchase Price” means, per Warrant Share, the price per share at
which the Common Stock is sold in the Qualified Equity Offering, minus any
underwriting discounts and commissions..



     “Qualified Equity Offering” means an Equity Offering in which the
proceeds to the Company are not less than $10,000,000 before deduction of
underwriting commissions, placement agent fees or similar charges, and other
offering expenses.



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     “Securities Act” means the Securities Act of 1933 (including any
rules and regulations promulgated thereunder), as the same shall be amended and
in effect from time to time.



     “Senior Lenders” means Friedman, Billings, Ramsey Group, Inc. and
Standard American Insurance Limited, and their respective successors and
assigns, as lenders under the Senior Loan Agreement.



     “Senior Loan Agreement” means that certain Amended and Restated
Senior Loan and Security Agreement, amended and restated as of July 23, 2004,
among Specialty Underwriters’ Alliance, Inc., as borrower, the Senior Lenders,
as lenders, and acknowledged by Courtney Smith, Peter Jokiel, William Loder and
Gary Ferguson.



     “Subordinated Loan Agreement” means that certain Subordinated Loan
and Security Agreement, amended and restated as of July 23, 2004, among
Specialty Underwriters’ Alliance, Inc., as borrower, Courtney Smith, Peter
Jokiel, William Loder and Gary Ferguson, as subordinated lenders, and the
Senior Lenders, as senior lenders to the Company, for the purpose of receiving
the rights and benefits created by Sections 2.02(d) and 2.09 thereof.



     “Warrant” means this warrant and each warrant issued in replacement
of or substitution therefor or therefor in accordance herewith or therewith,
whether as a result of transfer, division or combination.



     “Warrant
Expiration Date” means December 30, 2008.



     “Warrant Shares” means the shares of Common Stock issuable upon
exercise of this Warrant, including, at any time, any shares that have already
been issued as a result of the exercise of this Warrant.



     § 2. EXERCISE OF WARRANT.



     
A. Manner of Exercise. This Warrant shall be exercisable
for all of the Warrant Shares on any date on and after the date of closing of the first Qualified Equity Offering to
occur after the date hereof (the “Start Date”), so long as that date occurs on
or before the Warrant Expiration Date, until the Warrant Expiration Date. At the
time of exercise of this Warrant, the Holder shall deliver to the Company at
its office or agency maintained for this purpose pursuant to § 10, a certified
or official bank check or checks payable to the order of the Company in an
amount equal to the aggregate Purchase Price for the Warrant Shares as to which
this Warrant is exercised. In the alternative, the Holder may, in the exercise
of its sole and absolute discretion, exercise its right to receive Warrant
Shares on a net basis, such that without the exchange of any funds, the Holder
receives that number of Warrant Shares otherwise issuable upon exercise of its
Warrants less that number of Warrant Shares having a Fair Market Value equal to
the Purchase Price that would otherwise have been paid by the Holder for the
Warrant Shares being issued pursuant to such exercise. Upon receipt
of notice from the Holder hereof that such Holder wishes to exercise
that Warrant, the Company shall, as promptly as practicable, and
in any event within five (5) Business Days thereafter, execute or cause to be
executed, and



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deliver to the Holder a certificate or certificates representing
the aggregate number of Warrant Shares issuable upon such exercise. The stock
certificate or certificates so delivered shall be registered in the name of the
Holder or such other name as shall be designated in the related notice of
exercise. Unless otherwise specified in such notice, one certificate
representing the aggregate number of Warrant Shares issued upon such exercise
shall be so delivered. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and the
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
of and upon the Company’s receipt of such check or checks or other form of payment following notice of exercise on or after the Start Date and on or before the Warrant Expiration Date.



     B. Payment of Taxes, etc. All Warrant Shares shall be validly
issued, fully paid and non-assessable, and the Company shall pay all expenses
in connection with, and governmental charges that may be imposed in respect of,
the issue or delivery thereof. The Holder shall pay all income, franchise and
transfer taxes (other than any issuance taxes, which shall be paid by the
Company) in connection with such issue and delivery. The Company shall not be
required to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Warrant Shares in any name other
than that of the registered Holder of this Warrant (or any Affiliate thereof),
and in such case the Company shall not be required to issue or deliver any
stock certificate until such tax or other charge has been paid or it has been
established to the Company’s reasonable satisfaction that no such tax or other
charge is due.



     § 3. TRANSFER, DIVISION AND COMBINATION. Subject to the transfer
restrictions set forth on the cover of this Warrant, this Warrant and all
rights hereunder are transferable, in whole or in part (but not in
denominations such that a replacement Warrant is exercisable for a non-integral
number of Warrant Shares), on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the office or agency of the
Company maintained for that purpose pursuant to § 10, together with a written
assignment (in whole or in part) of this Warrant duly executed by the Holder or
its agent or attorney. Upon such surrender the Company shall execute and
deliver a new warrant or warrants in the name of the assignee or assignees
(including, if such assignment is only a partial assignment by the Holder,
in the name of the Holder), and each such warrant shall be identical in
form and substance (including its date) to this Warrant except for the warrant
number (which shall be as determined by the Company), the name of the named
holder of the warrant (if an assignee of the Holder), and the actual number of
Warrant Shares (each of which shall be as specified by the Holder), and this
Warrant shall promptly be canceled.



     This Warrant may be divided or combined with other Warrants upon
presentation hereof (and thereof, in the case of combination) at the aforesaid
office or agency of the Company, together with a written notice specifying the
names and denominations in which new warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with the preceding
paragraph as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new warrant or warrants in
exchange for the warrant or warrants to be divided or combined in accordance
with such notice. Each such new warrant issued shall be issued in a
denomination representing an integral number of Warrant



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Shares as of the date
of issuance of the new warrant (except if this Warrant represents a
non-integral number of Warrant Shares then one new warrant may be issued for a
non-integral number of Warrant Shares).



          The Company shall pay all expenses and other charges payable in connection
with the preparation, issuance and delivery of Warrants under this § 3. The
holder of a Warrant shall pay all taxes (other than any issuance taxes, which
shall be paid by the Company) in connection with such issuance and delivery.



          The Company agrees to maintain, at the office or agency of the Company
maintained for the purpose pursuant to § 10, books for the registration and
transfer of the Warrant.



          Any Warrant issued in replacement of this Warrant, or as a result of
combination, division, transfer or partial exercise, shall bear the following
legend:




NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK TO BE ISSUED
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR “BLUE SKY” LAWS,
AND THE HOLDER OF THIS WARRANT REPRESENTS AND WARRANTS THAT THIS
WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK TO BE ISSUED UPON
EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR FOR RELEASE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF. NO SALE, ASSIGNMENT, TRANSFER, GIFT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF SUCH WARRANT OR SHARES MAY
BE MADE (i) EXCEPT IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND
STATE SECURITIES LAWS AND (ii) UNLESS (A) SUCH WARRANT OR SHARES
ARE COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (B) AN EXEMPTION FROM SUCH A REGISTRATION IS
AVAILABLE.



          The Holder shall not sell, convey or assign any Warrant Shares for a
period of one year following exercise of this Warrant.



          § 4. [RESERVED]



          § 5. [RESERVED]



          § 6. RESERVATION, AUTHORIZATION AND LISTING OF COMMON STOCK. The Company
shall at all times reserve and keep available for issuance upon the exercise of
the Warrant such number of its authorized but unissued shares of Common Stock
as will be sufficient to permit the exercise in full of the Warrant. All
shares of Common Stock which shall be so issuable, when issued upon exercise of
this Warrant, shall be duly authorized, validly issued, fully-paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions (other than encumbrances or restrictions
imposed



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by this Warrant or Warrants issued in connection with divisions,
combinations, transfers or replacements of this Warrant, and not including any
liens granted by the Holder of this Warrant) and requirements of federal and
state securities laws respecting restrictions on the subsequent transfer
thereof. The Company shall cause all of the Warrant Shares to be registered in
any offering of its Common Stock which is registered with the Commission other
than any offerings made pursuant to Forms S-4 and S-8 under the Securities Act
(or any successor forms to those forms). If and so long as the Common Stock is
listed on any national securities exchange, the Company will, at its expense,
obtain promptly and maintain the approval for listing on each such exchange
upon official notice of issuance, of shares of Common Stock issuable upon the
exercise of the then outstanding Warrants and maintain the listing of such
shares after their issuance.



     § 7. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In case of all
dividends or other distributions by the Company to the holders of its Common
Stock, the Company will in each such case take such a record and will take such
record as of the close of business on a Business Day. The Company will not at
any time, except upon dissolution, liquidation or winding up of the Company,
close its stock transfer books or warrant transfer books so as to result in
preventing or delaying the exercise or transfer of this Warrant.



     § 8. LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of this Warrant and (in case
of loss, theft or destruction) of indemnity satisfactory to it, and in case of
mutilation, upon surrender and cancellation hereof, the Company will execute
and deliver in lieu hereof a new warrant of like tenor and date.



     § 9. OFFICE OF THE COMPANY. As long as this Warrant remains outstanding
and subject to the following sentence, the Company shall maintain an office or
agent at a location notice of which shall have been furnished to the Holder in
writing where this Warrant may be presented for exercise, registration,
transfer, division or combination as in this Warrant provided. Such office or
agent shall be maintained at said address unless and until the Company shall
designate and maintain another office or agent for such purposes and give
written notice thereof to the Holder.



     § 10. NOTICES GENERALLY. No notice or other communication shall be
deemed given hereunder unless sent in any of the manners, and to the persons,
specified in this § 10. All notices and other communications hereunder will be
in writing and will be deemed given (a) upon receipt if delivered personally,
mailed by registered or certified mail, or sent by overnight courier or (b)
upon dispatch if transmitted by telex, telegraph, telecopy or other means of
facsimile, in any case to the Holder at the Holder’s last known address
appearing on the books of the Company or to the Company at the address
specified in the Senior Loan Agreement (or at such other address for a party as
specified in such a notice).



     § 11. [RESERVED].



     § 12. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of the Holder



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for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company or by anyone else.



     § 13. SURVIVAL. All covenants and agreements of the Company, and all
rights and duties of the Holder from time to time of this Warrant or any Common
Stock issued pursuant to exercise of this Warrant (other than the right to
receive Common Stock in exchange for this Warrant), shall be deemed to survive
any surrender hereof to the Company upon exercise hereof by the Holder as
contemplated by § 2 or expiration of the right of the Holder to exercise any
unexercised balance hereof on the Warrant Expiration Date.



     § 14. CERTAIN WARRANTS DEEMED NOT OUTSTANDING; WARRANT STOCK IN CALLS.
For the purposes of determining whether the Holder entitled to purchase a
requisite number of Warrant Shares at any time has taken any action, any
Warrants owned by the Company shall be deemed not to be outstanding.



     § 15. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the law of the state under the laws of which the Company is
organized.



     § 16. NO VOTING RIGHTS. Prior to the exercise of this Warrant, this
Warrant shall not entitle the Holder hereof to any voting rights or other
rights as a stockholder of the Company.



[Signatures Commence on Next Page]




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     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its duly authorized officer.



	 	 	 	 	 	 	 
	Dated as of August 31, 2004	 	SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	/s/ William S. Loder	 	 
	

	 	 	 	
	 	 
	 
	 	 	 	 	 	 
	

	 	Name:	 	William S. Loder	 	 
	

	 	 	 	
	 	 
	 
	 	 	 	 	 	 
	

	 	Title:	 	Secretary