Document:

exv10w28

 

Exhibit 10.28

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

               This Securities Purchase Agreement (this “Agreement”) is made as of September 8, 2005, 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 desires to sell to Purchaser shares of the Company’s Class B Common
Stock, par value $.01 per share (the “Shares”),

          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, from time
to time, as set forth herein, the applicable number of 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 $1,000,000 (the “Purchase Price”) to purchase Shares in installments, as provided for on
Schedule C attached hereto (the “Installment Schedule,” and each date individually, an “Installment
Date”). The number of Shares that Purchaser will receive in consideration for such payments will
be determined by dividing (i) the applicable portion of the purchase price due on each Installment
Date (each individually, a “Payment”) (ii) the Closing Price of the Company’s Common Stock on the
date of actual payment (with fractional Shares rounded up to the next whole Share). If Purchaser
fails to make full payment on any Installment Date, the number of Shares that Purchaser shall be
entitled to receive, with respect to such Installment Date, will be equal to the Payment divided by
the Closing Price of the Common Stock on the date of actual payment, or if such day is not a
Trading Day, the Trading Day first preceding the date of actual payment. Each Payment shall be
made by wire transfer in immediately available funds to an account designated by the Company.

     (d) Delivery. With respect to each installment, the Company shall deliver, or cause
to be delivered, the applicable number of Shares to the Purchaser as promptly as practical after
full payment was made.

 

 

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 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:

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     (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.

     (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.

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     (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 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

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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 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

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to trading on a 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.

     (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

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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 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

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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.

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

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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 North Armando Street

Anaheim, CA 92806

Facsimile: 714-414-1290

Attention: Chris Michaels, CEO

If to the Company:

Specialty Underwriters’ Alliance, Inc.

222 South Riverside Plaza

Chicago, Illinois 60606

Facsimile: 312-277-1800

Attention: Scott W. Goodreau

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).

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     (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.

     (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.

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          (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.

          (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.

11

 

     (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/ William S. Loder
 	 
	 	 	Name:  	William S. Loder 	 
	 	 	Title:  	Chief Underwriting Officer 	 
	 
	 	THE PURCHASER:

AMERICAN TEAM MANAGERS INSURANCE SERVICES, INC.

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

13

 

Schedule A

PURCHASER:

American Team Managers Insurance Services, Inc.

1030 North 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

 

Schedule C

INSTALLMENT SCHEDULE

$100,000 due and payable at the closing of a Qualified Equity Offering (as defined herein) and
$50,000 due and payable monthly, commencing on the sixtieth day following the Qualified Equity
Offering. For purposes hereof, a “Qualified Equity Offering” shall mean a private equity offering
of the capital stock of the Company pursuant to an effective registration statement under the
Securities Act of 1933, as amended, other than pursuant to a registration statement on Form S-4 or
Form S-8 or any successor or similar form, in each case in which the proceeds to the Company are
not less than $100,000,000, before deduction of underwriting commissions, placement agent fees or
similar charges, and other offering expenses.

16exv10w29

 

Exhibit 10.29

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

          This Securities Purchase Agreement (this “Agreement”) is made as of September 28, 2005, 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 desires to sell to Purchaser shares of the Company’s Class B Common
Stock, par value $.01 per share (the “Shares”),

          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, from time
to time, as set forth herein, the applicable number of 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 $1,000,000 (the “Purchase Price”) to purchase Shares in installments, as provided for on
Schedule C attached hereto (the “Installment Schedule,” and each date individually, an “Installment
Date”). The number of Shares that Purchaser will receive in consideration for such payments will
be determined by dividing (i) the applicable portion of the purchase price due on each Installment
Date (each individually, a “Payment”) (ii) the Closing Price of the Company’s Common Stock on the
date of actual payment (with fractional Shares rounded up to the next whole Share). If Purchaser
fails to make full payment on any Installment Date, the number of Shares that Purchaser shall be
entitled to receive, with respect to such Installment Date, will be equal to the Payment divided by
the Closing Price of the Common Stock on the date of actual payment, or if such day is not a
Trading Day, the Trading Day first preceding the date of actual payment. Each Payment shall be
made by wire transfer in immediately available funds to an account designated by the Company.

     (d) Delivery. With respect to each installment, the Company shall deliver, or cause
to be delivered, the applicable number of Shares to the Purchaser as promptly as practical after
full payment was made.

 

 

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 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:

2

 

     (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.

     (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.

3

 

     (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 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

4

 

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 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

5

 

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.

     (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

6

 

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 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

7

 

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.

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

8

 

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:

ÆON Insurance Group, Inc.

18525 Sutter Blvd., Suite 140

Morgan Hill, CA 95037

Facsimile: 408-779-7399

Attention: Lee Wendleton, President

If to the Company:

Specialty Underwriters’ Alliance, Inc.

222 South Riverside Plaza

Chicago, Illinois 60606

Facsimile: 312-277-1800

Attention: Scott W. Goodreau

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

9

 

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.

     (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.

10

 

          (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.

          (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.

11

 

     (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/ William S. Loder
 	 
	 	 	Name:  	William S. Loder 	 
	 	 	Title:  	Chief Underwriting Officer 	 
	 
	 	THE PURCHASER:

ÆON INSURANCE GROUP, INC.

 	 
	 	By:  	/s/ Lee Wendleton
 	 
	 	 	Name:  	Lee Wendleton 	 
	 	 	Title:  	President 	 
	 

13

 

Schedule A

PURCHASER:

ÆON Insurance Group, Inc.

18525 Sutter Blvd., Suite 140

Morgan Hill, CA 95037

Facsimile: 408-779-7399

Attention: Lee Wendleton, President

 

 

Schedule B

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

15

 

Schedule C

INSTALLMENT SCHEDULE

$50,000 due and payable at the closing of a Qualified Equity Offering (as defined herein), $50,000
due and payable 180 days after the closing of a Qualified Equity Offering, $100,000 due and payable
on the one year anniversary after the closing of a Qualified Equity Offering (the “Anniversary”),
$150,000 due and payable 180 after the Anniversary and $650,000 due and payable on the two year
anniversary after the closing of a Qualified Equity Offering. For purposes hereof, a “Qualified
Equity Offering” shall mean a private equity offering of the capital stock of the Company pursuant
to an effective registration statement under the Securities Act of 1933, as amended, other than
pursuant to a registration statement on Form S-4 or Form S-8 or any successor or similar form, in
each case in which the proceeds to the Company are not less than $100,000,000, before deduction of
underwriting commissions, placement agent fees or similar charges, and other offering expenses.

16

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