Document:

exv10w1w3

 

Exhibit 10.1.3

March 15, 2004

Confidential

Courtney C. Smith

Chief Executive Officer

Specialty Underwriters’ Alliance, Inc.

8585 Stemmons Fwy.

Dallas, TX 75247

	 	 	 
	Re:

	 	Engagement Letter

Dear Courtney,

Specialty Underwriters’ Alliance and its affiliates (collectively, “you,”
“your” or the “Company”) has stated to us its intention of acquiring a
specialty insurance company (“NewCo”) which will write business produced by
selected managing general agencies (individually referred to herein as an “MGA”
and collectively referred to as “MGAs”) (the “Strategy”). For the purposes of
this document, we have understood that the Company intends to (i) purchase
NewCo to use as a platform from which it will commence operations; and (ii)
implement the Strategy by making one or more strategic alliances with selected
MGAs (each a “Proposed Transaction”).

By your acceptance of this letter (this “Agreement”), you appoint Guy Carpenter
& Company, Inc. (Guy Carpenter, “we,” “us” or “our”) and we agree to act as
exclusive reinsurance adviser for the Company and NewCo to (i) serve as the
exclusive reinsurance intermediary for all business written by the Company
and/or NewCo, as applicable (the “Subject Business”); and (ii) identify and
assist the Company in vetting potential MGA strategic partners (“the Potential
MGA Partners”) in order to facilitate a Proposed Transaction, on the following
terms and conditions.

	1.	 	Responsibilities.
	 
	A.	 	Guy Carpenter’s responsibilities are as follows:

	a)	 	assisting you, in the capacity of reinsurance advisor, in
connection with the implementation of the Strategy;
	 
	b)	 	identifying Potential MGA Partners for your consideration;
	 
	c)	 	assisting you in the evaluation of all Potential MGA Partners
for compatibility with the Strategy;

 

 

	d)	 	serving as the exclusive reinsurance intermediary for all
Subject Business of the Company and/or NewCo, as applicable; and
	 
	e)	 	providing such other reinsurance advisory services as you and
we agree are appropriate under the circumstances.

	B.	 	The Company’s responsibilities will include the following:

	a)	 	the timely and substantive response to all requests for
additional information from Potential MGA Partners, which requests
and information shall flow through Guy Carpenter;
	 
	b)	 	the commitment of the Company to cause its principals to use
their best efforts to attend and participate at key meetings with
Guy Carpenter and Potential MGA Partners, as requested by Guy
Carpenter; and
	 
	c)	 	the commitment of the Company to cause the principals of
NewCo to appoint Guy Carpenter as its exclusive reinsurance
intermediary with respect to any reinsurance which needs to be
purchased by the Company and/or NewCo, as applicable, during the
Term of this Agreement.

The Company acknowledges that it is also entering into an engagement letter
with Guy Carpenter’s affiliate, MMC Securities Corp. (“MMCSC”), pursuant to
which MMCSC will undertake responsibilities separate and distinct from those
referenced herein, in conjunction with providing certain consulting and
advisory services to the Company and MMCSC will be compensated by the Company
in accordance with the terms of such engagement letter.

	2.	 	Disclosure. You agree to make available all corporate, actuarial,
financial and operating information that is reasonably necessary and
sufficient to allow Potential MGA Partners to evaluate the Company and to
provide Guy Carpenter with access to both the Company’s and NewCo’s
officers, actuaries, accountants, counsel and other professionals. You
agree to make all such information available to us and hereby authorize us
to provide such information to Potential MGA Partners, as applicable. You
represent and warrant to Guy Carpenter that, to the best of Company’s
knowledge, all such information concerning the Company and NewCo will be
true and accurate in all material respects and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. You acknowledge and agree that Guy
Carpenter or Potential MGA Partners, as applicable, will be using and
relying upon such information supplied by the Company and/or NewCo, as
applicable, without independent investigation or verification thereof or
independent appraisal by Guy Carpenter or Potential MGA Partners, as
applicable. To the extent that Guy Carpenter assists you with the
organization or presentation of any such information, your concurrence
will constitute your adoption of such information, and the organization
and presentation thereof, as your own and Guy Carpenter assumes no
obligation or responsibility relating thereto.

Page 2 of 9

 

 

	3.	 	Material Change. You agree to advise us within a reasonable timeframe of
any material change in the affairs of the Company or NewCo, as applicable,
or in any information provided to us from the date at which such
information is given, and, if not so advised, Guy Carpenter will be
entitled to assume that there has been no material change in such
information and will be entitled to rely on such information as if it had
been provided to us on the dates on which we may be asked by the Company
or NewCo, as applicable, to provide it to Potential MGA Partners. You
will notify us within a reasonable timeframe of any notice by any
regulatory authority requiring any information, meeting or hearing
relating to the Company or NewCo, as applicable, and their affairs or a
Proposed Transaction or any other event or state of affairs that may call
into question the accuracy or completeness of any such information
provided to us.

	4.	 	Compliance. You will materially comply with all laws, whether U.S.
federal, state or other, applicable to any Proposed Transaction. In
addition, you hereby confirm your intention that if a Proposed Transaction
will be by may of a private sale or sales and, to the extent that U.S.
federal, state or other securities laws may be applicable, such sale will
not be made in violation of such securities laws. You acknowledge that
such laws may prevent certain potential investors from participating in a
Proposed Transaction and may require that certain limitations be placed on
the ability of investors of any securities of the Company or NewCo, as
applicable, to resell such securities.

	5.	 	Authorization. You hereby authorize Guy Carpenter to serve as the
exclusive intermediary in the reinsurance market for the Company and/or
NewCo, as applicable. We will present prospective reinsurance placement
opportunities to you for your approval; however, we do not make any
representations or warranties, express or implied, concerning the solvency
of any reinsures or its ability to pay claims.

	 	 	We will provide reinsurance brokering services to you and/or NewCo, as
applicable, in accordance with all relevant laws and regulations, as
respects all reinsurance which is to be placed in connection with the
Subject Business. In connection therewith, Guy Carpenter will serve as
the exclusive reinsurance intermediary for the Company and/or NewCo, as
applicable, for an initial term of three (3) years, commencing with the
date upon which the Company and/or NewCo begins writing Subject Business
(the “Term”). In the event of cancellation of this Agreement, Guy
Carpenter’s obligation to provide such services shall terminate.
Notwithstanding the foregoing, in the event of cancellation of this
Agreement prior to the conclusion of the Term Guy Carpenter will (i)
maintain statutory experience and other records as required by law and
(ii) be entitled to the Advisory Fee and the Fee (as defined in Section 6
hereof) for the full three (3) year initial Term of this Agreement.

	6.	 	Compensation. In consideration for introducing the Company to at least
ten (10) Potential MGA Partners which meet the basic eligibility
qualifications that have been agreed upon by the parties hereto, the
Company shall pay Guy Carpenter a fee equal to one percent (1%) of gross
written premium in connection with business written by the Company or
NewCo during the first twelve (12) months of its operation (the “Advisory
Fee”). The parties hereby agree that Guy Carpenter shall be entitled to
the Advisory Fee regardless of whether any of the Potential MGA Partners
introduced by Guy Carpenter

Page 3 of 9

 

 

	 	 	ultimately consummate a Proposed Transaction with the Company or NewCo.
The Advisory Fee shall be payable to Guy Carpenter on a quarterly basis
commencing upon the conclusion of its third month of operation and shall
not exceed One Million Dollars ($1,000.000) in the aggregate for such
twelve (12) month period.

	 	 	In addition, all reinsurance on the business written by the Company
and/or NewCo, as applicable, shall be placed at current market rates and
Guy Carpenter shall be entitled to all reinsurance brokerage earned in
connection with such placements.
	 
	 	 	In the event that the Company or NewCo obtains reinsurance for any
Subject Business from any source other than through Guy Carpenter
including, without limitation, direct writers or other intermediaries, at
any time, Guy Carpenter shall be entitled to a fee from the Company or
NewCo, as applicable, (the “Fee”) in accordance with the following:

	(i)	 	if such reinsurance is obtained through, or
arranged by, an intermediary other than Guy Carpenter, the Fee
to be paid to Guy Carpenter shall be equal to one hundred
percent (100%) of the standard brokerage rate that Guy
Carpenter would have earned in connection with placing such
reinsurance; and
	 
	(ii)	 	if such reinsurance is obtained from one or more
direct writer(s) of reinsurance who collectively participate
on more than twenty percent (20%) of such reinsurance (the
“Threshold Participation”), the Fee to be paid to Guy
Carpenter shall be equal to fifty percent (50% ) of the
standard brokerage rate that Guy Carpenter would have earned
in connection with placing that portion of reinsurance in
excess of the Threshold Participation.

	7.	 	Expenses. You will reimburse Guy Carpenter for all reasonable
out-of-pocket expenses incurred by us, including, without limitation,
printing, courier, postage, travel, telephone, and any fees and
disbursements of tax, legal, accounting or other professionals retained by
Guy Carpenter in relation to a Proposed Transaction (but only if Guy
Carpenter has received prior approval from the Company with respect to
such retention). All airfare shall be coach class. Living expenses shall
be reimbursed in accordance with invoices submitted, but in no event shall
reimbursement exceed two hundred and fifty dollars ($250) per diem unless
otherwise approved by Company. Guy Carpenter’s expenses shall be payable
no later than thirty (30) days after request by Guy Carpenter regardless
of whether a Proposed Transaction, or any portion thereof, has been
completed.
	 
	8.	 	Term; Termination. The Term of this Agreement is for a period of three
(3) years from the date of execution of this Agreement, unless extended by
mutual agreement.
	 
	 	 	Notwithstanding the foregoing, either party may terminate this Agreement
upon thirty (30) days prior written notice at any time after the three
(3) year anniversary of execution hereof, provided, however, your
obligations pursuant to paragraphs 10 and 11 and the provisions of 2, 3,
4. 8, 9, 12, 13, 14, 15, 16, 17 and 20 hereof will survive any such
expiration or termination, including, without limitation, any

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	 	 	withdrawal or termination of a Proposed Transaction or decision not to
proceed with a Proposed Transaction and, PROVIDED FURTHER, the survival
of your and our obligations pursuant to this paragraph shall not exceed
the duration of the applicable statute of limitations relating to those
obligations under the governing law of this Agreement.
	 
	9.	 	Confidentiality, Non-competition and Non-solicitation. Both parties
acknowledge and agree that all written and oral opinions, advice and
materials provided by the disclosing party in connection with our
engagement hereunder are intended solely for the receiving party’s benefit
and for the internal use only in considering a Proposed Transaction and
each party covenants and agrees that no such opinion, advice or material
shall be used for any other purpose whatsoever or reproduced,
disseminated, quoted from or referred to in whole or in part at any time,
in any manner or for any purpose, nor shall any public references of
either party or disclosure of either party’s role in a Proposed
Transaction be made by the other party without the prior written consent
of` the non-disclosing party in each specific instance. Notwithstanding
the foregoing, effective from the date of commencement of discussions
concerning a Proposed Transaction, both parties and their employees,
representatives, and other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of
such Proposed Transaction and all materials of any kind relating thereto.
	 
	 	 	Both parties expressly disclaim any liability or responsibility by reason
of the other party’s unauthorized use, publication, distribution of or
reference to any oral or written opinions or advice or materials provided
by the other party or any unauthorized reference to the other party or to
this engagement.
	 
	10.	 	Indemnification. You agree to indemnify and hold Guy Carpenter, its
affiliates and their respective directors, officers, employees and agents
(collectively, the “Indemnified Parties” and individually, an “Indemnified
Party”) harmless from and against any and all losses, claims, actions,
suits, proceedings, damages, judgments, assessments, demands, costs,
expenses and other liabilities of whatsoever nature or kind, and you will
reimburse each such Indemnified Party for all reasonable fees and expenses
(including, without limitation, attorneys’ fees and expenses and court
costs) as they are incurred in investigating, preparing, pursuing or
defending any claim, action, suit, proceeding or investigation, whether or
not in connection with pending or threatened litigation and whether or not
any Indemnified Party is a party, relating to or arising out of or in
connection with:

	(i)	 	advice or services rendered or to be rendered by
any Indemnified Party pursuant to this Agreement, the Proposed
Transaction or any Indemnified Party’s actions or inaction in
connection with any such advice, services or transactions,
	 
	(ii)	 	actions taken or omitted to be taken by you or
any affiliates, employees, directors, officers, partners,
representatives, or agents of you in connection with a
Proposed Transaction or this Agreement, and

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	(iii)	 	any untrue statement or alleged untrue statement
of u material fact contained in any document furnished by you
to Guy Carpenter, any Potential Investor, or any Potential
Acquiree and any omission or alleged omission to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading provided that, solely with respect to clauses (i)
and (ii) above, you will not be responsible for any
liabilities or expenses of any Indemnified Party that are
determined by a judgment of a court competent jurisdiction
which is no longer subject to appeal or further review to have
resulted solely from such Indemnified Party’s gross negligence
or willful misconduct in connection with any of the advice,
actions, inaction or services referred to above.

You also agree to reimburse each Indemnified Party for all expenses as they are
incurred in connection with enforcing such Indemnified Party’s rights under
this Agreement.

You agree to waive any right you might have of first requiring the Indemnified
Party to proceed against or enforce any other right, power, remedy, security or
claim payment from any other person before claiming this indemnity.

In case any action is brought against an Indemnified Party in respect of which
indemnity may be sought against you, the Indemnified Party will give you prompt
written notice of any such action of which the Indemnified Party has knowledge
and you will undertake the investigation and defense thereof on behalf of the
Indemnified Party, including the prompt employment of counsel acceptable to the
Indemnified Parties affected and the payment of all expenses. Failure by the
Indemnified Party to so notify shall not relieve you of your obligation of
indemnification hereunder unless (and only to the extent that) such failure
results in forfeiture by you of substantive rights or defenses.

No admission of liability and no settlement of any action shall be made without
your consent and the consent of the Indemnified Parties affected, such consent
not to be unreasonably withheld.

Notwithstanding that you will undertake the investigation and defense of any
action, an Indemnified Party will have the right to separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel will be at the expense of the Indemnified Party unless:

	(i)	 	employment of such counsel has been authorized by
you; or
	 
	(ii)	 	you have not assumed the defense of the action
within five (5) days after receiving notice of the action; or
	 
	(iii)	 	the named parties to any such action include
both you and the Indemnified Party or two or more Indemnified
Parties and at least one Indemnified Party shall have been
advised by counsel that there may be a conflict of interest
between you and the Indemnified Party or at least two such
Indemnified Parties; or

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	(iv)	 	there are one or more legal defenses available to
an Indemnified Party which are different from or in addition
to those available to you or to another Indemnified Party.

You constitute Guy Carpenter as trustee for each of the other Indemnified
Parties of your covenants under this paragraph with respect to such persons and
Guy Carpenter agrees to accept such trust and to hold and enforce such
covenants on behalf of such persons.

If for any reason other than the gross negligence or willful misconduct (as
determined by final judgment of a court of competent jurisdiction which is no
longer subject to appeal or further review) of the Indemnified Parties (or any
of them) being the primary cause of the loss, claim, damage, liability, cost or
expense, the foregoing indemnification is unavailable to be Indemnified Parties
(or any of them) or insufficient to hold them harmless, you shall contribute to
the amount paid or payable by the Indemnified Parties as a result of any and
all such losses, claims, damages, liabilities, costs or expense in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company and its shareholders on the one hand and the Indemnified Parties
on the other, but also the relative fault of the parties and other equitable
considerations which may be relevant. Notwithstanding the foregoing, you shall
in any event contribute to the amount paid or payable by the Indemnified
Parties, as result of the loss, claim, damage, liability, cost or expense
(other than a loss, claim, damage, liability, cost or expense, the sole cause
of which is the gross negligence or willful misconduct of the Indemnified
Parties or any of them, as determined by final judgment of a court of competent
jurisdiction which is no longer subject to appeal or further review), in excess
of the amount of the fees actually received by the Indemnified Parties
hereunder.

The Company agrees that the Indemnified Parties shall not have any liability,
whether direct or indirect, in contract, tort or otherwise, to the Company
incurred in connection with advice or services rendered or to be rendered under
this Agreement or for the Proposed Transaction, or any of the Indemnified
Parties actions or inactions in connection with any such advice or services,
except far liability resulting solely from any Indemnified Party’s gross
negligence or willful misconduct (as determined by final judgment of a court of
competent jurisdiction which is no longer subject to appeal or further review),
in connection with such advice, actions, inactions or services.
Notwithstanding the foregoing, in no event will any Indemnified Party be liable
to the Company for loss of profits or any other special, incidental, and/or
consequential damage of any kind howsoever incurred or designated arising in
connection with such advice, actions, inactions or services.

	11.	 	Hold Harmless. The Company agrees that the Indemnified Parties shall not
have any liability, whether direct or indirect, in contract, tort or
otherwise, to the Company incurred in connection with advice or services
rendered or to be rendered under this Agreement or for a Proposed
Transaction, or any of the Indemnified Parties actions or inactions in
connection with any such advice or services, except for liability
resulting solely from any Indemnified Party’s gross negligence or willful
misconduct (as determined by final judgment of a court of competent
jurisdiction which is no longer subject to appeal or further review or in
a settlement tantamount thereto), in connection with such advice, actions,
inactions or services. Notwithstanding the foregoing, in no event will
any Indemnified Party be liable to the Company or any Principal for loss
of

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	 	 	profits or any other special, incidental, and/or consequential damage of
any kind howsoever incurred or designated arising in connection with such
advice, actions, inactions or services.
	 
	12.	 	Publication. If a Proposed Transaction is successfully completed, and
provided Guy Carpenter is not in breach of any material provision hereof,
Guy Carpenter shall be permitted to publish, at its own expense, such
advertisements or announcements relating to the services provided
hereunder in such newspaper or other publications as Guy Carpenter
considers appropriate with Company’s consent (which shall not be
unreasonably withheld).
	 
	 	 	Similarly, the Company or NewCo, as applicable, shall, in the event a
Proposed Transaction is successfully completed, and provided that Company
or NewCo is not in breach of any material provision hereof, be permitted
to publish, at its own expense, such advertisements or announcements
relating to the services provided by Guy Carpenter hereunder in such
newspaper or other publications as may be required by law or which the
Company or NewCo considers appropriate with Guy Carpenter’s consent
(which consent shall not be unreasonably withheld).
	 
	13.	 	Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to
principles of conflict of laws. The parties hereby submit to the State and
Federal Courts sitting in the Borough of Manhattan in New York City for
the resolution of any disputes hereunder and waive any objection to the
laying of venue of any proceedings brought in any such court, that such
proceedings have been brought in an inconvenient forum, or that such court
does not have jurisdiction over it, and agree not to plead the same.
	 
	14.	 	Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter contained herein,
superseding all prior agreements, understandings and negotiations with
respect to such matters.
	 
	15.	 	Performance. Guy Carpenter may perform its obligations hereunder either
alone or in conjunction with its affiliates and in such event the
provisions of this Agreement shall apply equally to Guy Carpenter and each
such affiliate.
	 
	16.	 	Severability. If any provision of this Agreement is found to be invalid
or unenforceable, this Agreement shall be read and construed as if such
provision was never a part hereof and its invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement.
	 
	17.	 	Amendment. This Agreement may be modified or otherwise amended, and the
observance of any term of this Agreement may be waived, if such
modification, amendment or waiver is in writing and signed by the parties
hereto.
	 
	18.	 	Successors. This Agreement and all rights, liabilities and obligations
hereunder shall be binding upon and inure to the benefit of each party’s
successors but may not be assigned without the prior written approval of
the other party.

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	19.	 	Headings. The descriptive headings of the paragraphs of this Agreement
are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
	 
	20.	 	Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
	 
	21.	 	Notices. Except as otherwise expressly provided in this Agreement,
whenever notice is required by the provisions of this Agreement to be
given (i) to the Company, such notice shall be in writing to the Company,
at its offices at the address above, facsimile number: (817) 421-7619
attention: Courtney C. Smith, and (ii) to Guy Carpenter, such notice
shall be in writing addressed to Guy Carpenter & Company, Inc. at its
office at 114 West 47th Street, 24th Floor, New York, New York 10036,
facsimile number (917) 937-3696, attention: Gregory B. Sandvik, with a
copy to the Secretary.

If the foregoing is in accordance with above
terms and conditions by signing same to us.

Yours very truly,

GUY CARPENTER & COMPANY, INC.

	 	 	 
	By:	 	
/s/ Robert Reinarz, Jr.

Name: Robert Reinarz, Jr.

Title: Senior Vice President

The foregoing is in accordance with day of March,

2004.

SPECIALTY UNDERWRITERS’

ALLIANCE, INC.

	 	 	 
	By:	 	
/s/  Courtney C. Smith

Name: Courtney C. Smith

Title: Chief Executive Officer

Page 9 of 9exv10w1w4

 

EXHIBIT 10.1.4

ADDENDUM I

This Addendum modifies Appendices I and II of the Management and Administrative
Services Agreement by and between Company and Manager, dated November 1, 2003,
as follows:

Section F. of Appendix I is deleted in its entirety and is replaced by the following:

F. INFORMATION SYSTEMS

	1.	 	Company will select systems solutions to address its business needs,
including but not limited to policy rating, issuance and administration,
statistical reporting, regulatory reporting, accounting, reinsurance,
claims and such other solutions or products as may be required.
	 
	 	 	Manager will participate in the process by assisting in the due diligence
and evaluation of such products, and providing its views and / or
recommendations to Company for its consideration.
	 
	2.	 	Company will license and pay for products required to support its
business, and will be responsible for: managing and controlling the build
out (i.e. screen design, forms and system mapping, algorithm development,
state and bureau coding assignments), integrations, workflow development,
and all testing and maintenance of the various system components as
necessary. Company will control and manage all aspects of the project
plan.
	 
	 	 	Manager will assist with the installation, implementation and integration of
the chosen vendor rating, policy issuance, policy management systems and the
necessary communication / transmission of data to Partner Agents to insure
policy issuance can take place at Partner Agent’s office. Manager will work
at Company’s direction and in accordance with Company’s priorities.
	 
	 	 	Manager will provide as information, all non-bureau rates, rules and forms
in standard bureau formats via electronic directories in Microsoft Word, and
will respond on rule interpretation and related questions. Manager will
work in accordance with Company’s priorities.
	 
	3.	 	Manager will install, set up and maintain the vendor rating / issuance
system at its expense at Manager’s site or an agreed to hosting site
(contracted by Company) and provide remote access to all systems
applications necessary for Company and its Partner Agents.
	 
	4.	 	Company will, if necessary, develop a “work around” strategy in order to
enable its Partner Agents to begin writing business at a point in time
when the system is not yet in production mode. Company and / or its
Partner Agents will be responsible for assuring that the Partner Agent
will meet defined data requirements in terms of content and quality.
	 
	 	 	Manager will make recommendations and assist in the development of agreed
“work around” strategies, and will dedicate agreed resources to its
development. The parties recognize that

 

 

	 	 	Manager’s capabilities to
administer manual processes will be dependent upon transaction volume and
complexity.

 

 

Appendix II is hereby deleted in its entirety and is revised to read as
follows:

APPENDIX II

COMPENSATION OF MANAGER

	A.	 	Fees
	 
	 	 	Initial fee payable by Company to the Manager is $500,000 payable $200,000
at December 31, 2003 and $300,000 at June 30, 2004. Initial fees are due
and payable irrespective of the Company’s success in raising capital.
	 
	 	 	For the calendar year January 1 — December 31, 2004, the Company will pay
the Manager $4,266,664 payable in eight (8) equal installments of $533,333
each commencing in May 1, 2004; each such installment will be due to the
Manager within thirty (30) days following the end of each month with the
last installment being due and payable no later than January 31, 2005.
	 
	 	 	For the calendar year January 1, 2005 — December 31, 2005, the Company will
pay the Manager $8,733,328 payable in twelve (12) equal installments of
$727,777 each commencing on January 1, 2005; each installment will be due to
the Manager within thirty (30) days following the end of each month with the
last installment being due and payable no later than January 31, 2006.
	 
	 	 	Company and Manager agree to review Manager’s costs as of December 31, 2004
and to increase the monthly payment for 2005 if needed, but in no event will
the payment be reduced below the minimum of $727,777.
	 
	B.	 	Expenses
	 
	 	 	Certain expenses may be incurred and reimbursable to Manager with the prior
approval of Company. Such expenses are payable within ten (10) days of
invoice date. These expenses are in addition to the Fees described above:

	 	1.	 	Air fare, travel, hotel and meals expenses.
	 
	 	2.	 	Actual filing costs imposed by state regulators for form, rate and
rule filings.
	 
	 	3.	 	Actuarial fees in support of rate filings.
	 
	 	4.	 	Attorney or consultant fees incurred to expedite filings or to deal
with specific legal or regulatory issues.
	 
	 	5.	 	Agent licensing and/or appointment fees.

 

 

Signed this 26th Day of April   , 2004.

COMPANY: Specialty Underwriters’ Alliance, Inc., for and on behalf of itself and its subsidiaries existing now or hereafter

BY: /s/ Courtney Smith

NAME: Courtney Smith

TITLE: President & CEO

Witnessed by: /s/ Tricia Horn

	 	 	 
	Tricia Horn
	 	 
	

	 	 
	Print or Type Name
	 	 

MANAGER: Syndicated Services Company, Inc.

BY: /s/ George P. Lagos    4/30/04

NAME: George P. Lagos

TITLE: President & CEO

Witnessed by: /s/ Cathy O’ Neil

	 	 	 
	Cathy O’ Neil
	 	 
	

	 	 
	Print or Type Name

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