Document:

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                                                                   Exhibit 10.5

                      THIRD AMENDMENT TO CREDIT AGREEMENT

      THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as
of October 1, 2005, by and between RENAISSANCE LEARNING, INC., a Wisconsin
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

      WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of December 1, 2003, as amended from time to time ("Credit Agreement").

      WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:

      1. Section 4.9 (a) is hereby deleted in its entirety, and the following
substituted therefor:

      "(a) Total Liabilities divided by Tangible Net Worth not greater than 0.85
to 1.0, measured as of the end of each fiscal quarter, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current liabilities less
subordinated debt, and with "Tangible Net Worth" defined as the aggregate of
total stockholders' equity plus subordinated debt less any intangible assets."

      2. Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.

      3. Borrower hereby remakes all representations and warranties contained in
the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

                                                  WELLS FARGO BANK,
RENAISSANCE LEARNING, INC.                        NATIONAL ASSOCIATION

By:    /s/ Mary Minch                             By:    /s/ Daniel Frazier
       --------------                                    ------------------
Title: Vice President of Finance/CFO/Secretary    Title: Vice President

                                       2<PAGE>

                                                                   EXHIBIT 10.13
                   NON-EMPLOYEE DIRECTOR COMPENSATION SUMMARY

      Directors who are not employees of Renaissance Learning, Inc. (the
"Company") receive a $6,000 annual cash retainer, paid quarterly. In addition to
this retainer, non-employee directors receive a fee of $1,000 for each board
meeting attended, plus out-of-pocket expenses incurred in connection with
attendance at each such meeting. For each committee meeting attended, these
directors receive the following fees, plus out-of-pocket expenses: (a) the
chairman of the Audit Committee receives $1,000 for each Audit Committee meeting
attended, while the other Audit Committee members receive $750 for each such
meeting, (b) the chairman of the Compensation Committee receives $750 for each
Compensation Committee meeting attended, while other Compensation Committee
members receive $500 for each such meeting and (c) the chairman of the
Nominating Committee receives $750 for each Nominating Committee meeting
attended, while other Nominating Committee members receive $500 for each such
meeting.

      In addition, each non-employee director received two stock option grants
under the Company's 1997 Stock Incentive Plan during 2005. The grants were made
on March 1 and July 20 for, respectively, 4,601 and 6,279 shares. Options are
granted with an exercise price equal to the fair market value of the Company's
common stock on the date of grant, vest immediately and expire ten years from
the date of grant. In addition, such options are exercisable by the directors
for up to two years after termination of service on the board.exv10w1w48

 

Exhibit 10.1.48

AMENDMENT NO. 1

TO THE

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

PARTNER AGENT PROGRAM AGREEMENT

This amendment modifies the Specialty Underwriters’ Alliance, Inc. Partner Agent Program Agreement
by and between Company and Partner Agent, dated October 11, 2005 (the “Agreement”). Any
capitalized terms defined in the Agreement and used herein shall have the same meaning in this
Addendum as in the Agreement. Except as amended hereby, the Agreement remains in full force and
effect after the date hereof and each of the parties by its execution hereof ratifies and confirms
the provisions of said Agreement.

Now, therefore, in accordance with Section IX, D of the Agreement and in consideration of the
mutual agreements and covenants hereinafter set forth, the parties wish to amend the Agreement as
follows:

	 	1.	 	Section VI, PREMIUMS AND ACCOUNTING, paragraph C. is deleted in its entirety and
replaced with the following:
	 
	 	 	 	“All premiums collected by Partner Agent are the property of Company and shall be held in
trust on behalf of Company in a fiduciary capacity. Partner Agent may commingle Company premium
funds held by Partner Agent with premium funds held by Partner Agent on behalf of another
company or person for a period not to exceed seven (7) calendar days, at which time any and all
premium funds held by the Partner Agent on behalf of the Company shall then 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.”

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

This Amendment shall be deemed to be made in and in all respects shall be interpreted, construed
and governed by and in accordance with the law of the State of Delaware without regard to
principles of conflicts of laws that would require application of the law of a jurisdiction other
than the State of Delaware.

Signed this 13th day of December, 2005.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

	 	 	 
	BY: /s/ WILLIAM LODER
 

	 	  
	NAME: William Loder
	 	 
	TITLE: Senior Vice President, Chief Underwriting Officer

PARTNER AGENT

	 	 	 
	BY: /s/ ROBERT J. AROWOOD
 

	 	  
	NAME: Robert J. Arowood
	 	 
	TITLE: President
	 	 

1exv10w1w49

 

Exhibit 10.1.49

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

PARTNER AGENT PROGRAM AGREEMENT

This Partner Agent Program Agreement (“Agreement”) is entered into as of the 24th day of
January, 2006 (the “Effective Date”) by and between Specialty Underwriters’ Alliance, Inc. and its
property and casualty insurance subsidiaries and affiliates (collectively the “Company”) and
American Patriot Insurance Agency, Inc. (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.

	 	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.
	 
	 	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.

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	 	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 in all material respects
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.
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.
	 
	 	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.	 	Except as required by law, Partner Agent shall not contact any state insurance
department or other regulatory authority, directly or indirectly, with regard to Company’s
business without prior written notice to Company. Partner Agent shall notify

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	 	 	 	Company promptly 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 endeavor to maintain the security and integrity of such information and of
Company’s systems. Partner Agent shall not knowingly 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.
	 
	 	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 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 promptly 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 reasonable 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 reasonable 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
promptly refer any question concerning any aspect of Company’s privacy policy to Company
for resolution.
	 
	 	N.	 	Notwithstanding anything set forth to contrary in this Agreement, the terms Company
Confidential Information and 3rd Party Confidential Information (together,
“Confidential Information”) do not include information which (a) is or becomes available to
the public through no breach of this Agreement; (b) was previously known by Partner Agent
without any obligation to hold it in confidence; (c) is rightfully obtained from a person
or entity not a party to this Agreement without any obligation of confidentiality; or (d)
is independently developed by employees, agents, or representatives of Partner Agent
without use of or reference to Confidential Information.
	 
	 	O.	 	In the event that Partner Agent is required (in connection with any third-party legal
proceedings, whether by motion, interrogatory, request for information or documents,
subpoena, civil investigation, demand or similar process) to disclose any Confidential
Information, Partner Agent shall provide Company with prompt notice of such request so that
an appropriate

3

 

	 	 	 	protective order can be sought, if deemed necessary by Company. It is agreed that, if in the
absence of a protective order or the receipt of a waiver hereunder, Partner Agent is
nonetheless compelled to disclose any of such information or else stand liable for contempt
or suffer other censure or penalty, Partner Agent may make the required disclosure without
liability under or breach of this Agreement.
	 
	 	P.	 	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.
	 
	 	Q.	 	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.
	 
	 	E.	 	Company shall comply with all applicable state and federal laws, regulations, rules,
and requirements relating to the performance of Company and the general standards, rules,
and regulations of the insurance industry and the Company’s internal guidelines.

	IV.	 	CLAIMS AND COVERAGE

	 	A.	 	Partner Agent shall promptly 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 promptly 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 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.

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	 	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. Company’s records shall be presumed to
be correct.
	 
	 	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 and Partner Agent will have no further obligation with
respect thereto. 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.

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	 	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 promptly 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.
	 
	 	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:

6

 

	 	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 promptly 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 promptly 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
	 
	 	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 promptly 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 and such breach is not
cured, if capable of cure, within thirty (30) days of written notice from Company to
Partner Agent of such breach.

	 	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:

American Patriot Insurance Agency, Inc.

2 Westbrook Corporate Center, Suite 1000

Westchester, IL 60154

Facsimile: 630-990-9098

Attn: Lysa Saran, President

With a copy to

Leo & Brooks, LLC

Attn: Karl Leo

7

 

200 Randolph Avenue, Suite 200

Huntsville, AL 35801

Company:

Specialty Underwriters’ 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 materially 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.
	 
	 	 	 	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 after learning that it, a key 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

8

 

	 	 	 	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. 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.
	 
	 	H.	 	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.
	 
	 	I.	 	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.
	 
	 	J.	 	Notwithstanding anything to the contrary set forth herein, neither party to this
Agreement shall be liable for any losses or damages of any nature whatsoever incurred or
suffered as a result of any failures, interruptions, or delays in performance due to any
cause of circumstances beyond its reasonable control, including but not by way of
limitation, any failures, interruption, or delays in performance caused by strikes,
lockouts, or labor disputes, fires, acts of God or the public enemy, riots, incendiaries,
terrorism, interference by civil or military authorities, compliance with the laws of the
United States of America or with the orders or policies of any governmental authority,
equipment failure or malfunction, delay in transit or delivery on the part of
transportation companies or communication facilities, or failures of sources of raw
materials. General economic conditions shall not constitute a force majeure condition.

     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: /s/ WILLIAM S. LODER
 

	 	 
	Name Printed: William S. Loder
	 	 
	Title: Senior Vice President, Chief Underwriting Officer

American Patriot Insurance Agency, Inc.

	 	 	 
	By: /s/ LYSA SARAN
 

	 	 
	Name Printed: Lysa Saran
	 	 
	Title: President
	 	 

9

 

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
	Roofing Contractors in
Arizona, Florida, Georgia
Illinois, Iowa, Kentucky,
Louisiana, Maryland,
Mississippi, Missouri,
New Jersey, Tennessee,
Texas, Virginia, Wisconsin,
and any other states specifically
agreed to by Company and
Partner Agent

	 	General Liability and
Commercial Automobile
	 	15% for business written
through retail brokerage

12% for business written direct
or through American Builders &
Contractors Supply Co., Inc.
also d/b/a ABC Supply Co., Inc.

	 	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.

A-1

 

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)	 	$	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 

B-1

 

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.

B-2

 

	 	 	 
	Line 17.

	 	Payout Factor shall be calculated according to the following chart:

PROFIT SHARING AGREEMENT

PAYOUT FACTORS

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

B-3

 

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.

B-4

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