exv10w1w15



 





EXHIBIT 10.1.15





SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

PARTNER AGENT PROGRAM AGREEMENT



This Partner Agent Program Agreement (“Agreement”) is entered into as of the
18th day of May, 2004 (the “Effective Date”) by and between Specialty
Underwriters’ Alliance, Inc. and its property and casualty insurance
subsidiaries and affiliates (collectively the “Company”) and AEON Insurance
Group, Inc. (the “Partner Agent”).



The parties hereto agree to develop and administer an insurance program known
as the “AEON Program” (the “Program”) 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.






	B.	 	Partner Agent may delegate its authority in writing to designated
employees.
	 
	C.	 	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.
	 
	D.	 	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.
	 
	E.	 	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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	F.	 	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.
	 
	G.	 	Company retains the right to modify, cancel, conditionally renew or
non-renew any and all policies solely in Company’s discretion.
	 
	H.	 	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
may be allowed to write business with other insurance carriers for the
Program for any portion of the Program not offered by Company (“Other
Business”) so long as Partner Agent notifies Company in writing of
Other Business contemplated and Company has a right of first refusal to
write Other Business. Company 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. 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




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	 	 	the Company Confidential Information. Partner Agent shall be responsible
to ensure that Partner Agent’s employees, agents, and 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. Partner Agent shall cooperate fully with Company or the
assigned




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	 	 	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
	 
	5.	 	Partner Agent fails to maintain premium funds in trust as
required in this Agreement; or




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	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.






	E.	 	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.
	 
	F.	 	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:
   AEON
Insurance Group, Inc.
   18525
Sutter Blvd., Suite 140
   Morgan,
Hill, CA 95037
   ATTN:     Mr. Lee
Wendleton, President
	 
	 	 	 
	 
	 	 	Company:

   Specialty
Underwriters’ Alliance, Inc.
   8585
Stemmons Freeway, Suite 200 South
   Dallas,
TX 75247
   Attn:     Courtney
Smith, President & CEO
   cc:         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.
	 
	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.




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	 	 	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.
	 
	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.




9









 








	 	 	 
	By:

	 	/s/ Courtney Smith
	

	 	

	Name Printed:

	 	Courtney Smith
	Title:

	 	President & CEO







AEON Insurance Group, Inc.




	 	 	 
	By:

	 	/s/ Lee Wendleton
	

	 	

	Name Printed:

	 	Lee Wendleton
	Title:

	 	President







10









 






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

	AEON — Towing, Recovery
	 	All Commercial Property	 	15%
	and Repossession.
	 	& Casualty Lines of	 	 	 	 
	States to be determined.
	 	Business Excluding	 	 	 	 
	 
	 	Workers’ Compensation	 	 	 	 










	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 written subject to a retrospective plan, SIR,
or large deductible; or
	 
	4.	 	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.




11









 








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)
	$	
	 

	 	 
	 	

	
	17.

	 	(Can be negative)

Payout Factor
	$	%
	 

	 	 
	 	

	
	18.

	 	Result (Line 16 times Line 17)	$
	
	 

	 	(Can be Negative)
	 	 	


	 

	 	 
	 	

	







12









 





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 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 from 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.







13









 






	 	 	 
	Line 17.

	 	Payout Factor shall be calculated according to the following chart:







PROFIT SHARING AGREEMENT




PAYOUT FACTORS




	 	 	 	 	 
	 	 	3 Years

	1st Valuation
	 	 	40	%
	2nd Valuation
	 	 	70	%
	3rd Valuation
	 	 	100	%







14









 






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




15









 







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.





16