Document:

exv10w1w17

 

  EXHIBIT 10.1.17

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED PURSUANT TO
RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED, IS OMITTED AND IS NOTED
WITH **. A COPY OF THIS AGREEMENT, INCLUDING ALL INFORMATION FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

PARTNER AGENT PROGRAM AGREEMENT

This Partner Agent Program Agreement (“Agreement”) is entered into as of the
1st 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 American Team
Managers (ATM) (the “Partner Agent”).

The parties hereto agree to develop and administer an insurance program known
as the “ATM 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 underwriting information.
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. 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 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

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	 	 	business and at other locations during business hours upon ten (10) days
written notice by Company.
	 
	G.	 	Partner Agent shall notify Company within twenty-four (24) 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 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
immediately upon request.

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	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 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.

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	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.	 	Effective at any time after a minimum of one hundred and eighty
(180) days advance written notice to Partner Agent, Company may adjust
Partner Agent’s Commission as described in Exhibit A.
	 
	C.	 	Effective at any time after a minimum of one hundred and 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.
	 
	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

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	 	 	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 $3,000,000 per claim, $5,000,000 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.
	 
	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

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	 	 	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 and 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 and eighty (180) days 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
	 
	6.	 	Partner Agent engages in acts or omissions constituting
abandonment, fraud, insolvency, misappropriation of funds, material
misrepresentation, or gross and willful misconduct; or

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	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:
	 
	 	 	  American Team Managers (ATM)
  1030
N. Armando Street
  Anaheim,
CA 92806
  ATTN:
 Mr. Chris Michaels, CEO
	 
	 	 	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.

9

 

Specialty Underwriters’ Alliance, Inc.

	 	 	 	 	 
	By:

	 	  /s/ Courtney C. Smith    	 	 
	Name Printed:

	 	Courtney Smith
	 	Date
	Title:

	 	President & CEO	 	 

American Team Managers (ATM)

	 	 	 	 	 
	By:

	 	  /s/ Chris Michaels    	 	 
	Name Printed:

	 	Chris Michaels
	 	Date
	Title:

	 	Chief Executive Officer	 	 

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

	ATM — Artisan/General Contractors
	 	 	G.L.	 	 	 	*	*%
	& Lessor’s Risk in California
	 	Property/G.L./Package	 	 	 	 

	**	 	This information is confidential and has been omitted and
separately filed with the Securities and Exchange Commission.

	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.

13

 

	 	 	 
	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 $20 Million shall be required before any
profit will be shared. Eligible Written Premium shall mean direct premium written for Profit Sharing Year which
relates to Eligible Business.
	 
	 	 
	Line 17.

	 	Payout Factor shall be calculated according to the following chart:

PROFIT SHARING AGREEMENT

PAYOUT FACTORS

	 	 	 	 	 
	 	 	5 Years

	1st Valuation
	 	 	20	%
	2nd Valuation
	 	 	40	%
	3rd Valuation
	 	 	60	%
	4th Valuation
	 	 	80	%
	5th 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 July 1st,
2004 to December 31st, 2004. 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.

15exv10w1w18

 

  EXHIBIT 10.1.18

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED PURSUANT TO
RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED, IS OMITTED AND IS NOTED
WITH **. A COPY OF THIS AGREEMENT, INCLUDING ALL INFORMATION FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

     This Amended and Restated Securities Purchase Agreement (this “Agreement”)
is made as of the 16th day of August, 2004, by and among the purchaser listed
on Schedule A attached hereto (the “Purchaser”) and Specialty Underwriters’
Alliance, Inc., a Delaware corporation (the “Company”).

     WHEREAS, the Company and the Purchaser are parties to a Securities
Purchase Agreement dated as of May 1, 2004 (the “Old Securities Purchase
Agreement”); and

     WHEREAS, in connection with the sale by the Company to the Purchaser of
shares (the “Shares”) of the Company’s Class B Common Stock, par value $.01 per
share (the “Class B Stock”), the parties to the Old Securities Purchase
Agreement desire to amend and restate the Old Securities Purchase Agreement,
pursuant to Section 9(b) thereof, as set forth herein, effective upon the
execution of this Agreement;

     NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the parties hereto, intending to be
legally bound hereby, agree as follows:

1. Sale and Purchase of Securities; Closing.

     (a) Authorization. The Company has authorized the issuance and
sale of the Shares, having the rights, preferences, privileges and restrictions
set forth in the Company’s Amended and Restated Certificate of Incorporation, a
copy of which is attached hereto as Schedule B (the “Certificate of
Incorporation”).

     (b) Sale and Purchase. Subject to the terms, conditions,
representations, warranties, covenants and agreements contained in this
Agreement, the Purchaser agrees to purchase from the Company, and the Company
agrees to sell, assign, transfer and deliver to the Purchaser, on the Closing
Date (as defined in Section 1(d)), the Shares for the consideration specified
in Section 1(c).

     (c) Purchase Price. The Purchaser agrees to pay to the Company an
aggregate purchase price of $** (the “Purchase Price”) to purchase such
number of Shares equal to the Purchase Price divided by the initial public
offering price per share of the Company’s initial

 

 

public offering of equity securities (the “IPO”) pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”). The Purchaser agrees to pay to the Company, and the Company
agrees to accept from the Purchaser, as consideration for the Shares, the
Purchase Price. Payment shall be made by wire transfer in immediately
available funds to an account designated by the Company.

	**	 	This information is confidential and has been omitted and separately filed
with the Securities and Exchange Commission.

     (d) Closing. (i) The closing date of the purchase and sale of the
Shares (the “Closing Date”) shall occur upon payment in full of the Purchase
Price by the Purchaser, subject to satisfaction or waiver of the terms and
conditions set forth herein.

     (ii) The Closing of the transactions contemplated by this Agreement is
contingent on the closing by the Company of its IPO.

2. Representations and Warranties of the Purchaser.

     The Purchaser hereby represents and warrants to the Company as follows:

     (a) The Purchaser is purchasing the Shares for its own account, for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of the Shares.

     (b) The Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of its investment in the Company and of protecting its own interests in
connection therewith. The Purchaser is an “accredited investor” within the
meaning of Rule 501(a) promulgated under the Securities Act.

     (c) The Purchaser has had the opportunity to review all documents and
information that the Purchaser has requested concerning its investment in the
Company. The Purchaser has had the opportunity to ask questions of the
Company’s management, which questions were answered to its satisfaction.

     (d) The Purchaser acknowledges that an investment in the Company involves
substantial risks. The Purchaser is able to bear the economic risk of its
investment for an indefinite period of time.

     (e) The Purchaser has not paid or given any commission or other
remuneration in connection with the purchase of the Shares. The Purchaser has
not received any public media advertisements and has not been solicited by any
form of mass mailing solicitation.

     (f) This Agreement has been duly executed and delivered by the Purchaser
and has been duly authorized by the Purchaser by all necessary action. This
Agreement is a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, except as such

2

 

enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors’ rights generally or by the principles
governing the availability of equitable remedies.

     (g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of, or be in conflict with or constitute a default under, or
require the consent of any person under any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Purchaser, except such that are obtained or waived. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental authority is required on the part of the Purchaser in connection
with the execution and delivery of this Agreement or the performance by the
Purchaser of its obligations hereunder.

3. Representations and Warranties of the Company.

     The Company hereby represents and warrants to the Purchaser as follows:

     (a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware.

     (b) The Company has full corporate power and authority to execute and
deliver this Agreement and to sell, transfer, assign and deliver the Shares to
the Purchaser.

     (c) This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors’
rights generally or by the principles governing the availability of equitable
remedies.

     (d) On the date hereof, the Company has full record and beneficial
ownership of, and good, valid and marketable title to, the Shares, free and
clear of all liens, encumbrances, security interests, rights, claims or
equities of any nature whatsoever (including, without limitation, any voting
rights granted to any third party with respect to the Shares). All of the
Shares, when delivered in accordance with the terms of this Agreement, will be
validly issued and outstanding, fully paid and nonassessable.

     (e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of, or be in conflict with or constitute a default under, or
require the consent of any person under any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to the
Company, except such that are obtained or waived. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
governmental authority is required on the part of the Company in connection
with the execution and delivery of this Agreement or the performance by the
Company of its obligations hereunder.

3

 

     (f) The Company has delivered to the Purchaser true, correct and complete
copies of the Company’s Certificate of Incorporation and By-laws of the
Company, reflecting all amendments thereto. Such Certificate of Incorporation
and By-laws have not been amended, modified or waived since the date thereof.

4. Terms of the Class B Common Stock.

     (a) Voting Rights; Redemption Rights. Holders of Class B Stock are
not entitled to any voting rights in the Company. Holders of Class B Stock
have no redemption or preemptive rights, except as provided herein.

     (b) Dividends; Liquidation and Distribution. Subject to the terms
of any outstanding series of preferred stock of the Company, holders of Class B
Stock are entitled to dividends in amounts and at times as may be declared by
the board of directors of the Company out of funds legally available, in the
same proportion as holders of the Company’s common stock, par value $.01 per
share (the “Common Stock”). Upon liquidation or distribution, holders of Class
B Stock will be entitled to share ratably, pari passu with the holders of the
Common Stock, in all net assets available for distribution to stockholders,
after payment of any liquidation preferences to holders of preferred stock of
the Company.

     (c) Exchange Right. (i) At any time and from time to time after
the fifth anniversary of the date of that certain Partner Agent Program
Agreement between the Company and the Purchaser (the “Partner Agent
Agreement”), provided that the Partner Agent Agreement is still in effect and
has not been terminated by either party thereto, the Purchaser shall have the
right, but not the obligation, to exchange its shares of Class B Stock for an
equal number of shares of Common Stock (subject to equitable adjustment in the
event of any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving a change in
such security); provided, further, that after the fifth anniversary of the date
of the Partner Agent Agreement and for so long as the Partner Agent Agreement
is in effect, including any day or days on which the Purchaser exercises such
exchange right, the Purchaser must retain legal and beneficial ownership for
its own benefit of such number of shares of Class B Stock as could be exchanged
for the same number of shares of Common Stock with a value on such date of
$500,000, as determined pursuant to Section 4(g).

     (ii) Upon the Purchaser’s exercise of the exchange right, the Purchaser
shall surrender the certificate or certificates for the shares of Class B Stock
to be so exchanged, accompanied by written notice of exchange duly executed, to
the Company at any time during regular business hours at the office of the
Company. If so required by the Company, the shares of Class B Stock so
exchanged shall be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the Purchaser.

     (d) Issuance of Shares on Exchange. (i) As promptly as practicable
after the surrender, as provided herein, of any shares of Class B Stock for
exchange, the Company shall deliver to the Purchaser certificates representing
the number of fully paid and nonassessable shares of Common Stock into which
such shares of Class B Stock have been exchanged in accordance with the
provisions of Section 4(c)(i). Such exchange shall be deemed to have been

4

 

made as of the close of business on the date that such shares of Class B
Stock shall have been surrendered for exchange by delivery thereof with a
written notice of exchange duly executed, so that the rights of the Purchaser
as a holder of the shares of Class B Stock so exchanged shall cease at such
time and, subject to the following provisions of this section, the Purchaser
shall be treated for all purposes as having become the record holder of such
shares of Common Stock at such time; provided, however, that no such surrender
on any date when the stock transfer books of the Company shall be closed shall
be effective to constitute the Purchaser as the record holder of such shares of
Common Stock on such date, but such surrender shall be effective to constitute
the Purchaser as the record holder thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are
open. The Company shall issue and deliver to the Purchaser, at the expense of
the Company, a new certificate covering the number of shares of Class B Stock
representing the unexchanged portion of the certificate so surrendered, which
new certificate shall entitle in all respects the Purchaser to the rights of
the Class B Stock represented thereby to the same extent as if the certificate
theretofore covering such unexchanged shares had not been surrendered for
exchange.

     (ii) All shares of Class B Stock that shall have been surrendered for
exchange as provided herein shall no longer be deemed to be outstanding and all
rights with respect to such shares shall immediately cease and terminate on the
surrender date, except only the right of the Purchaser to receive shares of
Common Stock in exchange therefor, and such shares shall not thereafter be
transferred on the books of the Company or be deemed to be outstanding for any
purpose whatsoever.

     (e) Repurchase Right. (i) (A) At any time prior to the fifth
anniversary of the execution of the Partner Agent Agreement, if the Partner
Agent Agreement is terminated by either the Company or the Purchaser, for any
reason, the Company shall have the right, but not the obligation, to repurchase
the Shares currently held by the Purchaser for a price per Share equal to the
lesser of (1) the purchase price per Share as provided herein or (2) the
Current Market Price (as defined herein) of the Common Stock; and (B) at any
time on or after the fifth anniversary of the execution of the Partner Agent
Agreement, if the Partner Agent Agreement is terminated by either the Company
or the Purchaser, for any reason, the Company shall have the right, but not the
obligation, to repurchase the Shares currently held by the Purchaser for a
price per Share equal to the Current Market Price of the Common Stock. Such
right of the Company may be exercised by providing a notice of repurchase (the
“Repurchase Notice”) to the Purchaser not less than five business days prior to
the date repurchase is to be made pursuant to this Section 4(e), specifying the
date of such repurchase (the “Repurchase Date”) and the number of shares of
Class B Stock to be repurchased. The Repurchase Notice having been so given by
the Company, the aggregate repurchase price for the shares of Class B Stock to
be so repurchased shall become due and payable on the Repurchase Date.

     (ii) For purposes of this Agreement:

        (A) “Current Market Price” per share of a security at any date herein
shall mean the average daily Closing Price (as defined herein) of such security
for the 20 consecutive Trading Days (as defined herein) preceding such date
(subject to equitable

5

 

adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event
involving a change in such security); provided, however, that in the case of
the Common Stock, where no public market exists for the Common Stock at the
time of exchange, the Current Market Price per share of the Common Stock shall
be as determined by an independent investment banking firm experienced in the
valuation of securities of property and casualty insurance companies and
selected by the Company (at the Company’s expense); provided that, after
receipt of the determination by such firm, the Purchaser shall have the right
to select (at the expense of the Purchaser) a second such investment banking
firm to make such determination, in which case the Current Market Price shall
be the average of the two determinations; and provided further that such
determination need not be made more frequently than once every six months and
any determination shall be superceded by a good faith determination by the
Company’s board of directors that shall be required if a material event
reasonably likely to affect the value of the Common Stock (such as a placement
of equity securities) should occur after the next preceding determination,
whether by an investment banking firm or firms, or by the Company’s board of
directors.

        (B) “Closing Price” shall mean, with respect to any Trading Day: (1) if
the Common Stock is listed or admitted to trading on a national securities
exchange, the last reported sale price of the Common Stock, regular way, or in
case no sale takes place on such day, the average of the reported closing bid
and asked prices of the Common Stock, regular way, in either case as reported
on such exchange; or (2) if the Common Stock is not listed or admitted to
trading on any national securities exchange, but is listed on the Nasdaq
National Market, the closing sale price of the Common Stock on such day, or in
case no sale is publicly reported for such day, the average of the
representative closing bid and asked quotations for the Common Stock, as
reported on Nasdaq; or (3) if the Common Stock is not listed or admitted to
trading on the Nasdaq National Market, the average of the bid and asked prices
for the Common Stock as furnished for such day by Nasdaq, or, if not furnished
by Nasdaq, by any New York Stock Exchange, Inc. member firm regularly making a
market in the Common Stock and selected for such purpose by the Company’s board
of directors.

        (C) “Trading Day” shall mean, in the case of any security, any day on
which trading takes place (1) if such security is then listed or admitted to
trading on a national securities exchange, on the principal national securities
exchange on which such security is then listed or admitted to trading, (2) if
such security is then listed or admitted to trading on the Nasdaq National
Market, on the Nasdaq National Market, or (3) otherwise, in the
over-the-counter market.

     (iii) On or prior to the Repurchase Date, the Purchaser shall surrender
such shares of Class B Stock to the Company in the manner and at the place
designated by the Company. From and after the Repurchase Date, unless there
shall have been a default in the payment of the repurchase price, all rights of
the Purchaser with respect to the Shares shall cease, and such Shares shall not
thereafter be transferred on the books of the Company or be deemed to be
outstanding for any purpose whatsoever.

6

 

     (f) Provisions in Case of a Change of Control. In case of any
“Change of Control”; that is: (i) any sale, lease, exchange or other transfer
of all or substantially all of the property and assets of the Company to a
non-affiliated third party; (ii) any merger or consolidation with a
non-affiliated third party to which the Company is a party and as a result of
which the holders of the voting securities of the Company immediately prior
thereto own less than a majority of the outstanding voting securities of the
surviving entity immediately following such transaction; or (iii) any Person or
group of Persons (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) shall beneficially own
(as defined in Rule 13d-3 under the Exchange Act) securities of the Company
representing 50% or more of the combined voting power of the voting securities
of the Company then outstanding, then the Purchaser shall thereafter have the
right to convert its shares of the Class B Stock into the kind and amount of
securities, cash and other property receivable upon such reorganization,
reclassification, consolidation, merger or disposition by the Purchaser of the
number of shares of Common Stock that the Purchaser would have received had it
converted its shares of Class B Stock immediately prior to such reorganization,
reclassification, consolidation, merger or disposition pursuant to Section
4(c)(i). For purposes of this section, “voting securities” shall mean
securities, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or Persons performing
similar functions). The foregoing provisions of this section shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers
or dispositions.

     (g) Purchase obligation. Following the five-year anniversary of
the date of this Agreement, on each six-month anniversary thereafter, the
Company shall determine the aggregate value of the shares of Class B Stock held
by the Purchaser. The value of each share of Class B Stock shall equal the
fair market value of one share of the Common Stock on such date, to be
calculated as follows: (i) if the Common Stock is listed or admitted to
trading on a national securities exchange, the last reported sale price of the
Common Stock, regular way, on such day or in case no sale takes place on such
day, the average of the reported closing bid and asked prices of the Common
Stock, regular way, on such day, in either case as reported on such exchange;
or (ii) if the Common Stock is not listed or admitted to trading on any
national securities exchange, but is listed on the Nasdaq National Market, the
closing sale price of the Common Stock on such day, or in case no sale is
publicly reported for such day, the average of the representative closing bid
and asked quotations for the Common Stock, as reported on Nasdaq; or (iii) if
the Common Stock is not listed or admitted to trading on the Nasdaq National
Market, the average of the bid and asked prices for the Common Stock as
furnished for such day by Nasdaq, or, if not furnished by Nasdaq, by any New
York Stock Exchange, Inc. member firm regularly making a market in the Common
Stock and selected for such purpose by the Company’s board of directors; or
(iv) if no public market exists for the Common Stock, as determined in good
faith by the Company’s board of directors. If the aggregate value of the Class
B Stock held by the Purchaser is determined to be less than $500,000, then the
Purchaser shall purchase from the Company such number of shares of Class B
Stock as would equal the difference between the value of the Class B Stock as
determined herein and $500,000. The purchase price of such shares of Class B
Stock would be payable to the Company by wire transfer in immediately available
funds to an account designated by the Company no later than one business day
after the determination of the value as provided herein. If such six-month

7

 

anniversary falls on any day that is not a business day, then the determination of the value of the
Class B Stock shall be made on the next immediately following business day.

	5.	 	Taxes on Exchange. The Company will pay any and all stamp or similar
taxes that may be payable in respect of the issuance and delivery of shares of
Common Stock upon exchange of shares of Class B Stock pursuant to Section
4(c)(i).

	6.	 	No Registration under Federal or State Securities Laws. (a) The
Purchaser acknowledges that the Shares have not been registered under the
Securities Act or the securities laws of any state by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state securities laws, and that the Company’s reliance on such
exemptions is predicated on the accuracy and completeness of the Purchaser’s
representations, warranties, acknowledgements and agreements contained herein.
Accordingly, the Shares may not be offered, sold, transferred, pledged or
otherwise disposed of by the Purchaser without an effective registration
statement under the Securities Act and any applicable state securities laws or
an opinion of counsel acceptable to the Company that the proposed transaction
will be exempt from registration. The Purchaser acknowledges that the Company
is not required to register the Shares under the Securities Act or any
applicable state securities laws or to make any exemption from registration
available. The Purchaser understands that the Shares, and any shares of Common
Stock issued in exchange for Shares, will bear legends substantially to the
effect of the following:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE. THE SHARES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, RECEIPT OF
A NO-ACTION LETTER ISSUED BY THE SECURITIES AND
EXCHANGE COMMISSION (TOGETHER WITH EITHER REGISTRATION
OR AN EXEMPTION UNDER APPLICABLE STATE SECURITIES
LAWS) OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT THE PROPOSED TRANSACTION WILL BE EXEMPT
FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS.”

and that the Company will place a stop order against the transfer of the
certificates representing the Shares and refuse to effect any transfers thereof
in the absence of satisfying the conditions contained in the foregoing legend.

     (b) The Purchaser acknowledges that no public market now exists for any of
the securities issued by the Company and there is no assurance that a public
market will ever exist for the Common Stock.

8

 

7. Transfers. The Purchaser shall not sell, assign, transfer, pledge,
hypothecate, mortgage or dispose of, by gift or otherwise, or in any way
encumber, any shares of Class B Stock owned by the Purchaser, except for
exchanges and repurchases in compliance with Section 4.

8. No Preemptive Rights. The Purchaser shall have no preemptive or
preferential right of subscription to any shares of stock of the Company, or to
options, warrants or other interests therein or therefor, or to any obligations
convertible or exchangeable into stock of the Company (except as provided
herein), issued or sold, or any right of subscription to any security thereof
other than such, if any, as the Company’s board of directors, in its
discretion, may determine from time to time and at such price or prices as the
Company’s board of directors may fix from time to time.

9. Miscellaneous.

     (a) Payment of Expenses. Each party shall pay its own expenses
incurred in connection with this Agreement.

     (b) Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties with respect to the transactions contemplated
hereby and may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the party or
parties sought to be affected.

     (c) Binding Effect. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by, the Company and the Purchaser, and the
Company’s or the Purchaser’s respective heirs, beneficiaries, executors,
successors, representatives and assigns, as the case may be.

     (d) Further Assurances. From time to time, at the other party’s
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.

     (e) Notices. All notices, claims, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given at the time when hand delivered, when received if sent by facsimile
or by same day or overnight recognized commercial courier service, or three
days after being mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:

	 	 	 
	

	 	If to the Purchaser:
	 
	 	 
	

	 	American Team Managers Insurance Services, Inc.
	

	 	1030 N. Armando Street
	

	 	Anaheim, CA 92806
	

	 	Facsimile: 714-414-1290
	

	 	Attention: Chris Michaels, CEO

9

 

	 	 	 
	

	 	If to the Company:
	 
	 	 
	

	 	Specialty Underwriters’ Alliance, Inc.
	

	 	8585 Stemmons Freeway
	

	 	Suite 200, South Tower
	

	 	Dallas, Texas 75247
	

	 	Facsimile: 214-889-8800
	

	 	Attention: Courtney C. Smith
	 
	 	 
	

	 	with a copy to:
	 
	 	 
	

	 	Stroock & Stroock & Lavan LLP
	

	 	180 Maiden Lane
	

	 	New York, New York 10038
	

	 	Facsimile: 212-806-6006
	

	 	Attention: William W. Rosenblatt, Esq.

or to such other address as the person to whom notice is to be given may have
previously furnished to the other party in writing in the manner set forth
above (provided that notice of any change of address shall be effective only
upon receipt thereof).

     (f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law; however, if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.

     (g) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party. All representations, warranties,
covenants and agreements contained herein shall survive the execution and
delivery of this Agreement, the closing and any investigation made by any party
hereto.

     (h) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.

10

 

     (i) No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.

     (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.

     (k) Governing Law. This Agreement will be governed as to
formation, performance, interpretation and enforcement by the laws of the state
of New York, without regard to principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.

     (l) Arbitration. (i) Any dispute arising out of the
interpretation, performance or breach of this Agreement, including the
formation or validity thereof, shall be submitted for decision to a panel of
three arbitrators. Notice requesting arbitration shall be in writing and sent
certified or registered mail, return receipt requested. One arbitrator shall
be chosen by each of the Company and the Purchaser and the two arbitrators
shall, before instituting the hearing, choose an impartial third arbitrator who
shall preside at the hearing. If either party fails to appoint its arbitrator
within thirty (30) days after being requested to do so by the other party, the
latter, after ten (10) days’ notice by certified or registered mail of its
intention to do so, shall request the American Arbitration Association (“AAA”)
to appoint the second arbitrator. If the two arbitrators are unable to agree
upon the third arbitrator within thirty (30) days of their appointment, the
arbitrators shall request the AAA to select the third arbitrator.

     (ii) Within thirty (30) days after notice of appointment of all
arbitrators, the panel shall meet and determine timely periods for briefs,
discovery procedures and schedules for hearings. The panel shall be relieved
of all judicial formality and shall not be bound by the strict rules of
procedure and evidence. Unless the panel agrees otherwise, arbitration shall
take place in New York, New York, and the panel shall apply the law of the
state of New York. The decision of any two arbitrators when rendered in
writing shall be final and binding. The panel is empowered to grant interim
relief as it may deem appropriate. In no event shall the panel award punitive
or exemplary damages. The panel shall make its decision considering the custom
and practice of the applicable insurance business within forty-five (45) days
following the termination of the hearings. Either party may apply to a United
States District Court or to a State Court of competent jurisdiction for an
order confirming the arbitration award; a judgment of such court shall
thereupon be entered on the award. If such an order is issued, the attorneys’
fees of the party so applying and court costs will be paid by the party against
whom confirmation is sought.

     (iii) The parties hereto shall share the expense of the arbitrators
equally. The remaining costs of the arbitration shall be allocated by the
panel. The panel may, at its discretion, award such further costs, interest
and expenses as it considers appropriate, including but not limited to
attorneys’ fees, to the extent not prohibited by law.

11

 

     (iv) Any arbitration proceeding under this Agreement will not be
consolidated or joined with any arbitration proceeding under any other
agreement, or involving any other property or premises, and will not proceed as
a class action.

     (m) Jurisdiction. Subject to the provisions of Section 10(l), the
Company and the Purchaser each (i) hereby irrevocably submits to the
jurisdiction of the state and federal courts located in the city and state of
New York for the purpose of any suit, action or other proceeding arising out of
or based upon this Agreement or the transactions contemplated hereby and (ii)
hereby waives to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such proceeding,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceedings brought in one of the above-named courts
is improper, or that this Agreement, or the transactions contemplated hereby,
may not be enforced in or by such court. Nothing contained in this section
shall affect the right of the Company or the Purchaser to serve process in any
other manner permitted by law or commence legal proceedings or otherwise
proceed against the Company or the Purchaser in any other jurisdiction. In the
event the Company or the Purchaser should commence or maintain any action
arising out of or related to this Agreement in a forum other than the state and
federal courts located in the city and state of New York, the Purchaser or the
Company, as the case may be, shall be entitled to request the dismissal of such
action, and the Company or the Purchaser, as the case may be, stipulate that
such action shall be dismissed.

     (n) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.

     (o) Gender and Number. Any words used in the masculine, feminine
or neuter shall read and be construed in the masculine, feminine or neuter
where they would so apply. Words in the singular shall be read and construed
as though used in the plural in all cases where they would so apply.

[Remainder of Page Intentionally Left Blank]

12

 

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

	 	 	 	 	 
	 	THE COMPANY:

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

 	 
	 	By:  	/s/ Courtney C. Smith
 	 
	 	 	Name:  	Courtney C. Smith 	 
	 	 	Title:  	President and CEO 	 
	 

	 	 	 	 	 
	 	THE PURCHASER:

AMERICAN TEAM MANAGERS INSURANCE SERVICES, INC.

 	 
	 	By:  	/s/ Chris Michaels
 	 
	 	 	Name:  	Chris Michaels 	 
	 	 	Title:  	Chief Executive Officer 	 

13

 

	 	 	 	 	 

Schedule A

PURCHASER:

(Please provide company name, address, telephone, facsimile and contact person)

American Team Managers Insurance Services, Inc.

1030 N. Armando Street

Anaheim, CA 92806

Facsimile: 714-414-1290

Attention: Chris Michaels, CEO

 

 

Schedule B

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

15

 

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

Pursuant to Sections 228 and 242 of the

Delaware General Corporation Law

          The undersigned, being the Chief Executive Officer of Specialty
Underwriters’ Alliance, Inc. (the “Corporation”), a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:

     1. The name of the Corporation is Specialty Underwriters’ Alliance, Inc.
The original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on April 3, 2003. The Certificate
of Amendment of the Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on November 10, 2003.

     2. This Amended and Restated Certificate of Incorporation was duly adopted
by written consent of the stockholders in accordance with the applicable
provisions of Sections 228, 242 and 245 of the Delaware General Corporation
Law.

     3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Corporation’s Certificate
of Incorporation as heretofore restated and amended.

     4. The text of the Amended and Restated Certificate of Incorporation is
hereby amended and restated in its entirety to read as follows:

     FIRST: The name of the Corporation is Specialty Underwriters’ Alliance,
Inc.

     SECOND: The Corporation’s registered office in the State of Delaware is
at 9 East Loockerman Street, Suite 1B, in the City of Dover, County of Kent.
The name of its registered agent at such address is National Registered Agents,
Inc.

     THIRD: The nature of the business of the Corporation and its purpose is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.

     FOURTH: The maximum number of shares that the Corporation shall be
authorized to issue and have outstanding at any one time shall be (i)
seventy-five million (75,000,000) shares of Common Stock, par value $0.01 per
share (the “Common Stock”), (ii)

 

 

two million (2,000,000) shares of Class B Common Stock, par value $0.01 per
share (the “Class B Stock”), and (iii) one million (1,000,000) shares of
Preferred Stock, par value $0.01 per share (the “Preferred Stock”).

	1.	 	Common Stock

          The holders of the Common Stock shall be entitled to one vote per share.
The holders of the Class B Stock shall not be entitled to any voting rights
except as otherwise required by law but shall otherwise have the same rights as
the holders of Common Stock, including the right to share equally in any
dividends distributed to the holders of the Common Stock and in any
distribution to the holders of the Common Stock pursuant to a dissolution.
Certain holders of the Class B Stock may have a contractual right to exchange
their shares into shares of Common Stock. The Corporation may have a
contractual right to repurchase shares of the Class B Stock from certain
holders thereof.

	2.	 	Preferred Stock

          The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Paragraph FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and to
establish from time to time the number of shares included in each such series,
but not below the number of shares then issued, and to fix the designation,
powers, preferences, and relative rights of the shares of each such series and
the qualifications, or restrictions thereof. The authority of the Board of
Directors with respect to each shall include, but not be limited to,
determination of the following:

          (a) The number of shares constituting that series and the distinctive
designation of that series;

          (b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payments of dividends on shares of that series;

          (c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;

          (d) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provisions for adjustment of
the conversion rate in such events as the Board of Directors shall determine;

          (e) Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different rates;

          (f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;

 

 

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

          (h) Any other relative rights, preferences and limitations of that series.

          FIFTH: The name and mailing address of the incorporator is as follows:

	 	 	Purvi Shah

Debevoise & Plimpton

919 Third Avenue

New York, New York 10022

          SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for the
purpose of creating, defining, limiting and regulating the powers of the
Corporation and its directors and stockholders:

          (a) The number of directors of the Corporation shall be fixed and may be
altered from time to time in the manner provided in the By-Laws, and vacancies
in the Board of Directors and newly created directorships resulting from any
increase in the authorized number of directors may be filled, and directors
maybe removed, as provided in the By-Laws.

          (b) The election of directors may be conducted in any manner approved by
the stockholders at the time when the election is held and need not be by
written ballot.

          (c) All corporate powers and authority of the Corporation (except as at
the time otherwise provided by law, by this Certificate of Incorporation or by
the By-Laws) shall be vested in and exercised by the Board of Directors.

          (d) The Board of Directors shall have the power without the assent or vote
of the stockholders to adopt, amend, alter or repeal the By-Laws of the
Corporation, except to the extent that the By-Laws or this Certificate of
Incorporation otherwise provide.

          (e) The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7)
of subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented. Neither the amendment
or repeal of this section nor the adoption of any provision of this Certificate
of Incorporation inconsistent with this section shall adversely affect any
right or protection of a director of the Corporation existing at the time of
such amendment, repeal or adoption.

          (f) The Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, or by any successor thereto, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to
in or covered by said section. The Corporation shall advance expenses to the
fullest extent permitted by said Section. Such right to indemnification and
advancement of expenses shall continue as to a person who has ceased to be a
director, officer, employee or agent

 

 

and shall inure to the benefit of the heirs, executors and administrators
of such a person. The indemnification and advancement of expenses provided for
herein shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise.

          SEVENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by the laws of the State of Delaware, and all rights
herein conferred upon stockholders or directors are granted subject to this
reservation.

     IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by Courtney C. Smith, its Chief
Executive Officer, this 10th day of May, 2004.

	 	 	 	 	 
	 	 	/s/ Courtney C. Smith
	 	 	

	

	 	Name:
	 	Courtney C. Smith
	

	 	Title:
	 	Chief Executive Officer

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