10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                    

Commission File Number: 000-50891

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	20-0432760
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
222 South Riverside Plaza, Chicago, Illinois	60606
(Address of Principal Executive Offices)	(Zip Code)

(888) 782-4672

(Registrant’s Telephone Number, Including Area Code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ      No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o      No þ

     As of August 1, 2008, there were 14,437,355 shares of our common stock, $0.01 par value, or the Common Stock, outstanding and 1,069,844 shares of our Class B common stock, $0.01 par value, or the Class B Shares, outstanding.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures About Market Risk		16
Item 4. Controls and Procedures		17
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		19
Item 1A. Risk Factors		19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3. Defaults Upon Senior Securities		19
Item 4. Submission of Matters to a Vote of Security Holders		19
Item 5. Other Information		20
Item 6. Exhibits		21

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

2

PART I — FINANCIAL INFORMATION

Item 1. Business

Specialty Underwriters’ Alliance, Inc.
Consolidated Balance Sheets
As of June 30, 2008 and December 31, 2007
(dollars in thousands)

	6/30/2008			12/31/2007
	(unaudited)
ASSETS
Fixed maturity investments, at fair value (amortized cost: $203,535 and $176,592)	$	201,294		$	177,735
Short-term investments, at amortized cost (which approximates fair value)		38,942			51,652
Total Investments		240,236			229,387
Cash		147			968
Insurance premiums receivable		68,396			68,887
Reinsurance recoverable on paid and unpaid loss and loss adjustment expenses		73,398			77,204
Prepaid reinsurance premiums		417			631
Investment income accrued		2,159			1,909
Equipment and capitalized software at cost (less accumulated depreciation of $12,098 and $8,927)		13,268			12,796
Intangible assets		10,745			10,745
Deferred acquisition costs		15,790			17,495
Deferred tax asset		1,445			—
Other assets		2,595			2,512
Total Assets	$	428,596		$	422,534
LIABILITIES & STOCKHOLDERS’ EQUITY
Liabilities
Loss and loss adjustment expense reserves	$	194,870		$	184,736
Unearned insurance premiums		78,488			86,741
Insured deposit funds		13,792			12,515
Accounts payable and other liabilities		7,231			7,405
Total Liabilities		294,381			291,397
Stockholders’ equity
Common stock at $.01 par value per share - authorized: 30,000,000 shares; issued: 14,712,355 and 14,697,355 shares; and outstanding: 14,437,355 shares and 14,697,355 shares		147			147
Class B common stock at $.01 par value per share - authorized: 2,000,000 shares; issued and outstanding: 1,029,037 shares and 869,738 shares		10			9
Paid-in capital - common stock		129,612			129,431
Paid-in capital - class B common stock		6,900			6,139
Accumulated deficit		(17	)		(5,732	)
Treasury stock		(1,347	)		—
Accumulated other comprehensive income		(1,090	)		1,143
Total Stockholders’ Equity		134,215			131,137
Total Liabilities & Stockholders’ Equity	$	428,596		$	422,534

The accompanying notes are an integral part of these consolidated financial statements.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

3

Specialty Underwriters’ Alliance, Inc.
Consolidated Statements of Operations and Comprehensive Income
For the Three and Six Months Ended June 30, 2008 and 2007
(Unaudited — dollars in thousands, except for earnings per share)

	Three Months Ended						Six Months Ended
	6/30/2008			6/30/2007			6/30/2008			6/30/2007
Revenues
Earned insurance premiums	$	34,195		$	37,194		$	69,945		$	72,556
Net investment income		2,670			2,338			5,323			4,418
Net realized gains		7			24			38			27
Total revenue		36,872			39,556			75,306			77,001
Expenses
Loss and loss adjustment expenses		20,941			21,894			41,999			42,030
Acquisition expenses		7,267			9,172			15,970			17,900
Other operating expenses		5,412			5,418			11,339			10,915
Total expenses		33,620			36,484			69,308			70,845
Pretax income		3,252			3,072			5,998			6,156
Federal income tax expense		(1,002	)		(62	)		(283	)		(124	)
Net income		2,250			3,010			5,715			6,032
Net change in unrealized gains and losses for investments held, after tax		(2,685	)		(2,418	)		(2,233	)		(1,785	)
Comprehensive income (loss)	$	(435	)	$	592		$	3,482		$	4,247
Earnings per share available to common stockholders (in dollars)
Basic	$	0.14		$	0.20		$	0.37		$	0.39
Diluted	$	0.14		$	0.20		$	0.36		$	0.39
Weighted average shares outstanding
Basic		15,666			15,406			15,623			15,390
Diluted		15,809			15,406			15,766			15,390

The accompanying notes are an integral part of these consolidated financial statements.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

4

Specialty Underwriters’ Alliance, Inc.
Consolidated Statement of Stockholders’ Equity
As of June 30, 2008
(Unaudited — dollars in thousands)

															Accumulated
															Other Comp-			Total
	Common		Paid-in		Common		Paid-in		Retained						rehensive			Stock-
	Stock		Capital		Stock		Capital		Earnings			Treasury			Income			holders’
	Class A		Class A		Class B		Class B		(Deficit)			Stock			(Loss)			Equity
Balance at December 31, 2007	$	147	$	129,431	$	9	$	6,139	$	(5,732	)	$	—		$	1,143		$	131,137
Net income										5,715									5,715
Net change in unrealized investment gains, net of tax																(2,233	)		(2,233	)
Stock issuance				74		1		761											836
Treasury stock purchases													(1,347	)					(1,347	)
Stock based compensation				107															107
Balance at June 30, 2008	$	147	$	129,612	$	10	$	6,900	$	(17	)	$	(1,347	)	$	(1,090	)	$	134,215

The accompanying notes are an integral part of these consolidated financial statements.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

5

Specialty Underwriters’ Alliance, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2008 and 2007
(Unaudited — dollars in thousands)

	Six Months Ended
	6/30/2008			6/30/2007
Cash flows from operations
Net income	$	5,715		$	6,032
Charges (credits) to reconcile net income to cash flows from operations:
Change in deferred income tax		(307	)		(26	)
Net realized (gains) losses		(38	)		(27	)
Amortization of bond premium (discount)		(10	)		(23	)
Depreciation		3,171			2,148
Net change in:
Reinsurance recoverable on unpaid loss and loss adjustment expense reserves		3,806			3,121
Loss and loss adjustment expense reserves		10,134			19,375
Insurance premiums receivable		491			(7,391	)
Unearned insurance premiums		(8,253	)		5,215
Deferred acquisition costs		1,705			647
Prepaid reinsurance premiums		214			2,892
Insured deposit funds		1,277			318
Other, net		(312	)		2,120
Total adjustments		11,878			28,369
Net cash flows provided by operations		17,593			34,401
Cash flows from investing activities
Net (increase) decrease in short-term investments		12,710			(11,008	)
Redemptions, calls and maturities of fixed maturity investments		18,042			9,803
Purchases of fixed maturity investments		(44,938	)		(30,540	)
Purchase of equipment and capitalized software		(3,643	)		(4,798	)
Net cash flows used for investing activities		(17,829	)		(36,543	)
Cash flows from financing activities
Issuance of common stock		762			325
Treasury stock purchases		(1,347	)		—
Net cash provided by (used for) financing activities		(585	)		325
Net increase (decrease) in cash during the period		(821	)		(1,817	)
Cash at beginning of the period		968			2,375
Cash at the end of the period	$	147		$	558

The accompanying notes are an integral part of these consolidated financial statements.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

6

Specialty Underwriters’ Alliance, Inc.
Notes to Consolidated Financial Statements
(unaudited — dollars in thousands, except per share and stock amounts)

Note 1. Basis of Presentation

     The Consolidated Financial Statements (unaudited) include the accounts of Specialty Underwriters’ Alliance, Inc., or SUA or the Company, and its consolidated subsidiary, SUA Insurance Company. SUA completed an initial public offering, or IPO, of its common stock on November 23, 2004. Concurrent with the IPO, SUA completed the acquisition of Potomac Insurance Company of Illinois, or Potomac. Potomac has subsequently been renamed SUA Insurance Company.

     The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. Certain financial information that is normally included in annual financial statements, including certain financial statements footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in SUA’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission, or SEC.

     The interim financial data as of June 30, 2008, and for the three and six month periods ended June 30, 2008 and June 30, 2007 is unaudited. However, in the opinion of management, the interim data includes all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the Company’s results for the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to prior period financial statement line items to enhance the comparability of the results presented.

Note 2. Earnings Per Share

     Basic earnings per share are based on the weighted average number of common shares outstanding during the period, while diluted earnings per share includes the weighted average number of common shares and potential dilution from shares issuable pursuant to equity incentive compensation using the treasury stock method. The following table shows the computation of the Company’s earnings per share:

	Three Months Ended				Six Months Ended
	6/30/08		6/30/07		6/30/08		6/30/07
Numerator for earnings per share
Net income	$	2,250	$	3,010	$	5,715	$	6,032
Denominator for earnings per share
Weighted average shares outstanding used in computation of earnings per share
Common stock (class A and B) issued		15,684		15,406		15,632		15,390
Common stock in treasury		18		—		9		—
Weighted average shares outstanding - basic		15,666		15,406		15,623		15,390
Effect of dilutive securities1 Unvested deferred stock awards		143		—		143		—
Weighted average shares outstanding - diluted		15,809		15,406		15,766		15,390
Earnings per share
Basic	$	0.14	$	0.20	$	0.37	$	0.39
Diluted	$	0.14	$	0.20	$	0.36	$	0.39

¹ Outstanding options of 718,066 and 742,466 as of June 30, 2008 and June 30, 2007, respectively, have been excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2008 and June 30, 2007, as they were anti-dilutive.

Note 3. Income Taxes

     As of June 30, 2008 and December 31, 2007 the Company had tax basis net operating loss carryforwards of $0 and $2,068, respectively. The Company also accumulated start-up and organization expenditures through December 31, 2004 of $2,364 that are deductible over a 60 month period commencing on November 23, 2004. The unamortized portions of these costs were $637 and $873 at June 30, 2008 and December 31, 2007, respectively.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

7

Specialty Underwriters’ Alliance, Inc.
Notes to Consolidated Financial Statements
(unaudited — dollars in thousands, except per share and stock amounts)

     Beginning in first quarter of 2008, based on continuing profitability trends, the Company believes that it is more likely than not that the deferred income tax assets will be realized. As such, the Company elected to eliminate its valuation allowance and establish the full net deferred tax asset.

     The components of current and deferred income taxes for the three months and six months ended June 30, 2008 and 2007 are as follows:

	Three Months Ended					Six Months Ended
	6/30/08		6/30/07			6/30/08			6/30/07
Current tax expense	$	553	$	99		$	590		$	150
Deferred tax (benefit)/expense		449		(37	)		(307	)		(26	)
Total income tax expense	$	1,002	$	62		$	283		$	124

Note 4. Unpaid Loss and Loss Adjustment Expense Reserves

     Loss and loss adjustment expense (or LAE) reserves are estimates of amounts needed to pay claims and related expenses in the future for insured events that have already occurred. The Company establishes estimates of amounts recoverable from its reinsurers in a manner consistent with the claims liability covered by the reinsurance contracts, net of an allowance for uncollectible amounts. The Company’s loss and LAE reserves represent management’s best estimate of reserves based on a composite of the results of various actuarial methods, as well as consideration of known facts and trends.

     At June 30, 2008, the Company reported gross loss and LAE reserves of $194,870, of which $57,555 represented the gross direct loss and LAE reserves of Potomac, which is fully reinsured by OneBeacon Insurance Company, or OneBeacon. The Company experienced favorable prior year loss development of $1,272 due to favorable claims experience primarily within our commercial automobile business. At December 31, 2007, the Company reported gross loss and LAE reserves of $184,736, of which $63,529 represented the gross direct loss and LAE reserves of Potomac, which are fully reinsured by OneBeacon. Included in the reserves for the Company are tabular reserve discounts for workers’ compensation and excess workers’ compensation pension claims of $1,831 as of June 30, 2008 and $1,505 as of December 31, 2007. The reserves are discounted on a tabular basis at four percent using the 2001 United States Actuarial Life Tables for Female and Male population.

     Potomac was a participant in the OneBeacon Amended and Restated Reinsurance Agreement. Under that agreement, Potomac ceded all of its insurance assets and liabilities into a pool, or Pool, and assumed a 0.5% share of the Pool’s assets and liabilities. On April 1, 2004, Potomac ceased its participation in the Pool and entered into reinsurance agreements whereby Potomac reinsured all of its business written with OneBeacon effective as of January 1, 2004. As a result, Potomac will not share in any favorable or unfavorable development of prior losses recorded by it or the Pool after January 1, 2004, unless OneBeacon fails to perform on its reinsurance obligation.

Note 5. Recent Accounting Pronouncements

     In February 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to choose to measure and report many financial instruments and certain other assets and liabilities at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing entities the opportunity to reduce the complexity in accounting for financial instruments and to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We have elected not to report any financial assets or liabilities at fair value under SFAS No. 159.

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosure requirements regarding fair value measurement. Where applicable, SFAS No. 157 simplifies and codifies previously issued guidance on fair value. The Company’s adoption of FAS 157, effective January 1, 2008, results in additional financial statement disclosures and has no effect on the conduct of the Company’s business, its financial condition and results of operations.

     SFAS No. 157 establishes a fair value hierarchy which requires maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. $194,122 of our financial instruments, all of which are fixed maturity investments, are Level 2, as their fair value is determined using significant observable

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

8

Specialty Underwriters’ Alliance, Inc.
Notes to Consolidated Financial Statements
(unaudited — dollars in thousands, except per share and stock amounts)

inputs such as recent sales, the credit rating of the issuer, duration of the security, yields on comparably rated publicly traded securities and risk-free yield curves. The remaining $7,171 of our financial instruments, also all fixed maturity investments, which were previously categorized as Level 2 are now categorized as Level 3, as their fair value is determined by a combination of matrix, dealer quotation and pricing services.

     During the three month period ended June 30, 2008, the change in unrealized gains and losses for those instruments categorized as Level 3 was negative $720.

Note 6. Equity Based Compensation

     On May 1, 2007, the stockholders of the Company approved the 2007 Stock Incentive Plan, or 2007 Plan. The 2007 Plan replaces the 2004 Stock Option Plan, or 2004 Plan. Options previously granted under the 2004 Plan will continue for the life of such options. The 2007 Plan provides for the issuance of up to 800,000 shares of the Company’s common stock in the form of stock options, stock appreciation rights, restricted stock awards, and deferred stock awards. In addition, should any of the options outstanding under the 2004 Plan be terminated, those shares will become available under the 2007 Plan.

     On April 4, 2008 the Compensation Committee of the Board of Directors granted deferred stock awards for 258,750 shares of common stock to all employees of the Company, including the executive officers. The awards granted to the non executive employees vest on the first anniversary of the grant date and the awards for the executive officers vest equally on either the first four or the first five anniversaries of the grant date.

     The 2007 Plan provides for an automatic grant of 3,000 unrestricted shares of common stock to each independent director on the first business day following such director’s re-election to the Board of Directors at the Annual Meeting of the Stockholders. On May 7, 2008, 15,000 shares were issued to independent directors who were re-elected to the Board at the 2008 Annual Meeting of the Stockholders held on May 6, 2008.

     The compensation expense associated with the grants made during the second quarter of 2008 was $135, based on the fair market value of the shares on the date of grant pursuant to SFAS 123R and amortized over the vesting period of the award. No other awards were made under the 2007 Plan or the 2004 Plan and 10,000 shares were terminated under the 2004 Plan in the second quarter of 2008.

     In addition there was equity based compensation expenses of $46, relating to stock options previously granted

Note 7. Stock Repurchase

     In April 2008, the board of directors authorized the repurchase of up to 275,000 shares of the Company’s Common Stock at an aggregate purchase price of up to $1,650. Under the authorization, repurchases may be made from time to time in the open market, pursuant to trading plans meeting the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorization expires on October 15, 2008. During the three months ended June 30, 2008, the Company repurchased all 275,000 shares of Common Stock under its stock repurchase authorization for a total cost of approximately $1,347. The average cost per share repurchased was $4.90 including commission. At June 30, 2008, the Company had fully utilized its authority to repurchase shares of Common Stock.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

9

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, the discussions of our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, those set forth under the caption “Risk Factors” in the Business section of our Annual Report on Form 10-K for the year ended December 31, 2007. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

Overview

     We were formed on April 3, 2003 for the purpose of offering products in the specialty commercial property and casualty insurance market by using an innovative business model. Specialty insurance typically serves niche groups of insureds that require highly specialized knowledge of a business class to achieve underwriting profits. This segment has traditionally been underserved by most standard commercial property and casualty insurers, due to the complex business knowledge and the investment required to achieve attractive underwriting profits. Competition in this segment is based primarily on client service, availability of insurance capacity, specialized policy forms, efficient claims handling and other value-based considerations, rather than just price.

     On November 23, 2004 we completed our IPO and concurrent private placements and completed the acquisition of Potomac. After giving effect to the acquisition, we changed the name of Potomac to SUA Insurance Company.

     Prior to our IPO, all activities consisted of start-up activities related to our IPO and costs to establish the infrastructure required to commence insurance operations.

     On January 1, 2005 we commenced our insurance operations.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

10

Three Months Ended June 30, 2008 as compared to the Three Months Ended June 30, 2007

RESULTS OF OPERATION

	Three Months Ended
	6/30/2008			6/30/2007			% Change
	(dollars in millions,
	except for per share data)
Gross written premiums	$	41.8		$	48.6			-14.0	%
Net written premiums		39.9			46.2			-13.6	%
Earned premiums	$	34.2		$	37.2			-8.1	%
Net investment income		2.7			2.3			17.4	%
Net realized gains		—			0.1
Total revenues		36.9			39.6			-6.8	%
Net loss and loss adjustment expense		20.9			21.9			-4.6	%
Acquisition expenses		7.3			9.2			-20.7	%
Other operating expenses		5.4			5.4			0.0	%
Total expenses		33.6			36.5			-7.9	%
Pre-tax income		3.3			3.1			6.5	%
Federal income tax		(1.0	)		(0.1	)		*
Net income	$	2.3		$	3.0			-23.3	%
Earnings per share available to common stockholders
Basic	$	0.14		$	0.20			-30.0	%
Diluted	$	0.14		$	0.20			-30.0	%
Weighted average shares outstanding
Basic		15.7			15.4			1.9	%
Diluted		15.8			15.4			2.6	%
Key operating ratios
Net loss and loss adjustment expense ratio		61.2	%		58.9	%		3.9	%
Ratio of acquisition expense to earned premiums		21.3	%		24.7	%		-13.8	%
Ratio of all other expenses to gross written premiums		13.0	%		11.1	%		17.1	%

* Not meaningful

     Net income for the quarter ended June 30, 2008 was $2.3 million, compared to net income of $3.0 million for the quarter ended June 30, 2007. Earnings per share for the quarter ended June 30, 2008 was $0.14, versus earnings per share of $0.20 for the quarter ended June 30, 2007. The primary reason for the decrease in net income was due to a change in our tax position. In the second quarter of 2008 we became a full taxpayer due to the utilization of prior period remaining tax loss carry forwards.

     Gross written premiums were $41.8 million for the three months ended June 30, 2008 compared to $48.6 million for the three months ended June 30, 2007. The decrease in gross written premiums is attributable to several factors. We continue to experience a soft insurance market which has led to downward pressure on premiums in all lines which the Company writes. The weakening economy has resulted in (1) lower payrolls which have lowered our workers’ compensation exposure and therefore premiums and (2) a reduction in our contractors program as a result of fewer construction projects being started.

     Earned premiums were $34.2 million for the quarter ended June 30, 2008 compared to $37.2 million for the quarter ended June 30, 2007. Premiums are earned ratably over the terms of our insurance policies, which are 12 months. The decrease in earned premiums is a result of reduced premium writing in prior quarters.

     Net investment income was $2.7 million for the quarter ended June 30, 2008 versus $2.3 million for the quarter ended June 30, 2007. The increase in net investment income reflects growth in our total investments from $194.1 million at June 30, 2007 to $240.2 million at June 30, 2008 resulting from positive operating cash flows.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

11

     Other operating expenses were $5.4 million for the quarter ended June 30, 2008, which consisted of salaries and benefit costs of $2.0 million, $0.2 million of professional and consulting fees, $1.7 million of depreciation and amortization, $0.1 million of stock based compensation expense and $1.4 million of other expenses. For the quarter ended June 30, 2007, other operating expenses were $5.4 million, comprised of salaries and benefit costs of $1.7 million, $0.5 million of professional and consulting fees, $1.1 million of depreciation and amortization, $0.4 million of stock based compensation expense and $1.7 million of other expenses.

     Acquisition expenses were $7.3 million for the three months ended June 30, 2008 compared to $9.2 for the quarter ended June 30, 2007. The decrease in our acquisition expense is the result of a decrease in premiums.

     For the second quarter of 2008, our net loss and loss adjustment expense ratio was 61.2%, compared to 58.9% for the comparable quarter in 2007. This increase was primarily driven by higher loss ratios in our workers’ compensation book of business due to lower rates. This was partially offset by improvements of approximately $0.6 million across all lines for prior accident years.

     Our gross written premiums by partner agent for the three months ended June 30, 2008 and 2007 was as follows:

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
Risk Transfer Holdings, Inc.	$	22.3		53.3	%	$	23.4		48.2	%
American Team Managers		6.5		15.6	%		9.0		18.5	%
AEON Insurance Group, Inc.		5.2		12.4	%		6.9		14.2	%
Appalachian Underwriters, Inc.		2.1		5.0	%		5.7		11.7	%
Northern Star Management, Inc.		2.0		4.8	%		—		0.0	%
First Light Program Manager, Inc.		1.0		2.4	%		—		0.0	%
Specialty Risk Solutions, LLC		0.9		2.2	%		1.2		2.5	%
Insential, Inc		0.4		1.0	%		0.5		1.0	%
Flying Eagle Insurance Service, Inc		0.3		0.7	%		1.1		2.3	%
Other		1.1		2.6	%		0.8		1.6	%
Total	$	41.8		100.0	%	$	48.6		100.0	%

     Our gross written premiums for the three months ended June 30, 2008 and 2007 by state was as follows:

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
California	$	14.2		34.0	%	$	14.9		30.6	%
Florida		10.7		25.6	%		15.2		31.3	%
Texas		1.3		3.1	%		3.3		6.8	%
Other States		15.6		37.3	%		15.2		31.3	%
Total	$	41.8		100.0	%	$	48.6		100.0	%

     The reduction in gross written premiums in Florida was primarily driven by reduced exposure in our workers’ compensation business.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

12

     Our gross written premiums by line of business for the three months ended June 30, 2008 and 2007 was as follows:

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
Workers’ compensation	$	26.4		63.2	%	$	27.2		56.0	%
Commercial automobile		10.4		24.9	%		10.3		21.1	%
General liability		4.2		10.0	%		10.0		20.6	%
All Other		0.8		1.9	%		1.1		2.3	%
Total	$	41.8		100.0	%	$	48.6		100.0	%

     The decrease in our general liability business is due to a reduction in our contractors programs as a result of fewer construction projects being started.

Six Months Ended June 30, 2008 as compared to the Six Months Ended June 30, 2007

RESULTS OF OPERATION

	Six Months Ended
	6/30/2008			6/30/2007			% Change
	(dollars in millions,
	except for per share data)
Gross written premiums	$	65.9		$	83.6			-21.2	%
Net written premiums		61.6			77.8			-20.8	%
Earned premiums	$	69.9		$	72.6			-3.7	%
Net investment income		5.3			4.4			20.5	%
Net realized gains		0.1			—
Total revenues		75.3			77.0			-2.2	%
Net loss and loss adjustment expense		42.0			42.0			0.0	%
Acquisition expenses		16.0			17.9			-10.6	%
Other operating expenses		11.3			10.9			3.7	%
Total expenses		69.3			70.8			-2.1	%
Pre-tax income		6.0			6.1			-1.6	%
Federal income tax		(0.3	)		(0.1	)		*
Net income	$	5.7		$	6.0			-5.0	%
Earnings per share available to common stockholders
Basic	$	0.37		$	0.39			-5.1	%
Diluted	$	0.36		$	0.39			-7.7	%
Weighted average shares outstanding
Basic		15.6			15.4			1.3	%
Diluted		15.8			15.4			2.6	%
Key operating ratios
Net loss and loss adjustment expense ratio		60.0	%		57.9	%		3.6	%
Ratio of acquisition expense to earned premiums		22.8	%		24.7	%		-7.7	%
Ratio of all other expenses to gross written premiums		17.2	%		13.1	%		31.3	%

* Not meaningful

     Net income for the six months ended June 30, 2008 was $5.7 million, compared to net income of $6.0 million for the six months ended June 30, 2007. Earnings per share for the six months ended June 30, 2008 was $0.37, basic or $0.36 diluted, versus earnings per share of $0.39, basic and diluted, for the six months ended June 30, 2007.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

13

Gross written premiums were $65.9 million for the six months ended June 30, 2008 compared to $83.6 million for the comparable period ended June 30, 2007. The decrease in gross written premiums is attributable to several factors. We continue to experience a soft insurance market which has led to downward pressure on premiums in all lines which the Company writes. The weakening economy has resulted in (1) lower payrolls which have lowered our workers’ compensation exposure and therefore premiums and (2) a reduction in our contractors program as a result of fewer construction projects being started.

     Earned premiums were $69.9 million for the six months ended June 30, 2008 compared to $72.6 million for the six months ended June 30, 2007. Premiums are earned ratably over the terms of our insurance policies, which are 12 months. The decrease in earned premiums is primarily a result of decreased earned premiums during the second quarter of 2008 which resulted from reduced premium writing in prior quarters.

     Net investment income was $5.3 million for the six months ended June 30, 2008 versus $4.4 million for the six months ended June 30, 2007. The increase in net investment income reflects growth in our total investments from $194.1 million at June 30, 2007 to 240.2 million at June 30, 2008 resulting from positive operating cash flows.

     Other operating expenses were $11.3 million for the six months ended June 30, 2008, which consisted of salaries and benefit costs of $4.2 million, $0.9 million of professional and consulting fees, $3.2 million of depreciation and amortization, $0.2 million of stock based compensation expense and $ 2.8 million of other expenses. For the six months ended June 30, 2007, other operating expenses were $10.9 million, comprised of salaries and benefit costs of $3.3 million, $1.7 million of professional and consulting fees, $2.1 million of depreciation and amortization, $0.7 million of stock based compensation expense and $3.1 million of other expenses.

     Acquisition expenses were $16.0 million for the six months ended June 30, 2008 compared to $17.9 for the six months ended June 30, 2007. The decrease in our acquisition expense is the result of a decrease in premiums.

     For the first six months of 2008, our net loss and loss adjustment expense ratio was 60.0%, compared to 57.9% for the comparable six months in 2007. This increase was primarily driven by higher loss ratios in our workers’ compensation book of business due to lower rates. This was partially offset by improvements of approximately $1.3 million primarily in our commercial automobile business for prior accident years.

     Our gross written premiums by partner agent for the six months ended June 30, 2008 and 2007 was as follows:

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
Risk Transfer Holdings, Inc.	$	31.5		47.8	%	$	37.5		44.8	%
American Team Managers		12.7		19.2	%		20.2		24.2	%
AEON Insurance Group, Inc.		10.8		16.4	%		11.9		14.2	%
Appalachian Underwriters, Inc.		3.9		5.9	%		10.1		12.1	%
Northern Star Management, Inc.		2.0		3.0	%		—		0.0	%
First Light Program Manager, Inc.		1.4		2.1	%		—		0.0	%
Specialty Risk Solutions, LLC		0.9		1.4	%		1.2		1.4	%
Insential, Inc		0.7		1.1	%		0.8		1.0	%
Flying Eagle Insurance Service, Inc		0.5		0.8	%		1.1		1.3	%
Other		1.5		2.3	%		0.8		1.0	%
Total	$	65.9		100.0	%	$	83.6		100.0	%

     Our gross written premiums for the six months ended June 30, 2008 and 2007 by state was as follows:

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

14

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
California	$	25.7		39.0	%	$	28.7		34.3	%
Florida		12.4		18.8	%		22.5		26.9	%
Texas		6.2		9.4	%		8.3		9.9	%
Other States		21.6		32.8	%		24.1		28.9	%
Total	$	65.9		100.0	%	$	83.6		100.0	%

     The reduction in gross written premiums in Florida was primarily driven by reduced exposure in our workers’ compensation business.

     Our gross written premiums by line of business for the six months ended June 30, 2008 and 2007 was as follows:

	6/30/2008					6/30/2007
			% of Total					% of Total
	Gross Written		Gross Written			Gross Written		Gross Written
	Premium		Premium			Premium		Premium
	(dollars in millions)
Workers’ compensation	$	38.3		58.1	%	$	45.9		54.9	%
Commercial automobile		18.0		27.3	%		17.3		20.7	%
General liability		8.1		12.3	%		18.6		22.2	%
All Other		1.5		2.3	%		1.8		2.2	%
Total	$	65.9		100.0	%	$	83.6		100.0	%

     The decrease in our general liability business is due to a reduction in our contractors programs as a result of fewer construction projects being started. Our workers’ compensation business has been impacted by rate decreases in Florida and California during 2007 and the first quarter of 2008 as well as decreases in payrolls.

Liquidity and Capital Resources

     Specialty Underwriters’ Alliance, Inc. is organized as a holding company and, as such, has no direct operations of its own. Its assets consist primarily of investments in its subsidiary, through which it conducts substantially all of its insurance operations.

     As a holding company, Specialty Underwriters’ Alliance, Inc. has continuing funding needs for general corporate expenses, the payment of principal and interest on future borrowings, if any, taxes and the payment of other obligations. Funds to meet these obligations come primarily from dividends and other statutorily permissible payments from our operating subsidiary. The ability of our operating subsidiary to make payments to us is limited by the applicable laws and regulations of Illinois. There are restrictions on the payment of dividends to us by our insurance subsidiary.

Cash Flows

     A summary of our cash flows is as follows:

	Six Months Ended
	6/30/2008			6/30/2007
	(dollars in millions)
Cash provided by (used in)
Operating activities	$	17.6		$	34.4
Investing activities		(17.8	)		(36.5	)
Financing activities		(0.6	)		0.3
Change in cash		(0.8	)		(1.8	)

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

15

     For the six months ended June 30, 2008, net cash from operating activities was $17.6 million, principally consisting of premium and deposit collections exceeding losses and expenses paid out. This amount compares to net cash from operating activities of $34.4 million for the six months ended June 30, 2007. The decrease in net cash provided by operating activities was primarily driven by the reduction in written premiums.

     Cash used for investment activities was $17.8 million for the six months ended June 30, 2008, principally representing purchases of investments and additions to equipment and capitalized software. For the six months ended June 30, 2007, cash used in investment activities was $36.5 million, also principally representing increases in investments and additions to equipment and capitalized software.

     For the six months ended June 30, 2008, we had net cash flows from financing activities of negative $0.6 million as a result of the repurchase of shares of our Common Stock for $1.3 million and the sales of Class B Shares to partner agents for $0.7 million. For the six months ended June 30, 2007, cash flows from financing activities from sales of Class B Shares to partner agents was $0.3 million.

Fixed Maturity Investments

     Our investment portfolio consists of marketable fixed maturity and short-term investments. All fixed maturity investments are classified as available for sale and are reported at their estimated fair value based on quoted market prices. Realized gains and losses are credited or charged to income in the period in which they are realized. Changes in unrealized gains or losses are reported as a separate component of comprehensive income, and accumulated unrealized gains or losses are reported as a separate component of accumulated other comprehensive income in stockholders’ equity.

     The aggregate fair market value of our fixed maturity investments at June 30, 2008 was $240.2 million compared to amortized cost of $242.5 million. The aggregate fair market value of our fixed maturity investments at December 31, 2007 was $229.4 million compared to amortized cost of $228.2 million. During the first six months of 2008 we increased our investment in municipal bonds to $45.3 million from $4.3 million, at fair value, due to their favorable tax treatment.

     We have concluded that none of the available-for-sale securities with unrealized losses at June 30, 2008 has experienced an other-than-temporary impairment. We considered our intent and ability to hold the securities for a sufficient time to allow for a recovery in value in this determination.

     At June 30, 2008, we held $3.4 million in fair value, $4.7 million in book value, of investments with sub-prime exposure, all of which were rated “A” or better by established rating agencies.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

     Market risk can be described as the risk of change in fair value of a financial instrument due to changes in interest rates, creditworthiness, foreign exchange rates or other factors. We seek to mitigate that risk by a number of actions, as described below.

Interest Rate Risk

     Our exposure to market risk for changes in interest rates is concentrated in our investment portfolio. We monitor this exposure through periodic reviews of our consolidated asset and liability positions. We model and periodically review estimates of cash flows, as well as the impact of interest rate fluctuations relating to the investment portfolio and insurance reserves.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

16

     The table below summarizes the estimated effects of hypothetical increases and decreases in market interest rates on our investment portfolio:

						After Tax
				Estimated Fair		Increase
			Assumed Change	Value After		(Decrease) in
	Fair Value at		in Relevant	Change		Carrying
	6/30/2008		Interest Rate	in Interest Rate		Value
	(dollars in thousands)
Total Investments	$	240,236	100 bp decrease	$	248,834	$	8,598
			50 bp decrease		244,580		4,344
			50 bp increase		234,827		(5,409	)
			100 bp increase		231,482		(8,754	)

     The average duration of our fixed maturity investments at June 30, 2008 was approximately 3.7 years.

Credit Risk

     Our portfolio includes primarily fixed income securities and short-term investments, which are subject to credit risk. This risk is defined as default or the potential loss in market value resulting from adverse changes in the borrower’s ability to repay the debt. In our risk management strategy and investment policy, we earn competitive relative returns while investing in a diversified portfolio of securities of high credit quality issuers to limit the amount of credit exposure to any one issuer.

     The portfolio of fixed maturities consists solely of high quality bonds at June 30, 2008. The following table summarizes bond ratings at market or fair value:

	As of 6/30/2008
			Percent of
	Amount		Portfolio
Bond Ratings	(dollars in thousands)
AAA rated and U.S. Government and affiliated agency securities	$	113,739		56.5	%
AA rated		49,420		24.6	%
A rated		35,519		17.6	%
BBB Rated		2,616		1.3	%
Total	$	201,294		100.0	%

     We also have other receivable amounts subject to credit risk, including reinsurance recoverables from OneBeacon Insurance Company. To mitigate the risk of counterparties’ nonpayment of amounts due under these arrangements, we established business and financial standards for reinsurer approval, incorporating ratings by major rating agencies and considering then-current market information.

Item 4: Controls and Procedures

     Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures. Disclosure controls and procedures are our controls and procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, or the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

     As required by SEC Rules 13a-15(b) and 15d-15(b), we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

17

     Changes in Internal Control Over Financial Reporting. There were no changes to our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, these internal controls.

     Inherent Limitations on Effectiveness of Controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure controls and procedures and internal control over financial reporting systems are met.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

18

PART II — OTHER INFORMATION

Item 1: Legal Proceedings

     None.

Item 1A: Risk Factors

     There have been no material changes to the Risk Factors previously disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Item 2: Recent Sales of Unregistered Securities

     Information with respect to purchases of our Common Stock during the three months ended June 30, 2008 was as follows:

					Total Number of		Maximum Number of
	Total		Average		Shares Purchased		Shares that May Yet
	Number of		Price		as Part of Publically		be Purchased Under
	Shares		Paid per		Announced Plans or		the Plans or Programs
	Purchased1		Share2		Programs		at End of Month
April 1 to April 31		—		—		—		275,000
May 1 to May 31		97,300	$	4.7340		97,300		177,700
June 1 to June 30		177,700		4.9258		177,700		—
Total		275,000	$	4.8580		275,000		—

1	The Company announced the repurchase program on April 8, 2008 for the purchase of up to 275,000 shares of Common Stock for up to an aggregate purchase price of $1.65 million. All shares available to be purchased under the program have been acquired.
2	Price per share data does not include the $0.04 per share commission

     There were no sales of unregistered securities that have not been previously reported on a Current Report on Form 8-K.

Item 3: Defaults Upon Senior Securities

     None.

Item 4: Submission of Matters to a Vote of Security Holders

     At our Annual Meeting of stockholders held on May 6, 2008, the stockholders elected each of the following director nominees to hold office until the next annual meeting of stockholders or until their successors are duly elected and qualified, with the following votes:

	For		Withheld
Courtney C. Smith		12,053,993		872,352
Peter E. Jokiel		10,896,120		2,029,255
Robert E. Dean		12,071,379		853,966
Raymond C. Groth		10,899,875		2,025,470
Paul A. Philp		12,072,879		852,466
Robert H. Whitehead		12,072,879		852,466
Russell E. Zimmermann		12,072,879		852,466

     At the same meeting, the selection of PricewaterhouseCoopers LLP as independent auditors for the current year was ratified, with the following votes:

For	Against	Abstentions
12,842,989	82,466	0

     No other matters were voted on at the meeting.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

19

Item 5: Other Information

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

     On August 5, 2008, the Board of the Company adopted amended and restated bylaws, effective on August 5, 2008. Many of the amendments to the bylaws were made to update the bylaws to conform with changes to applicable Delaware corporate laws and to clarify existing provisions of the bylaws in accordance with modern corporate practice. The below description of certain of the amendments to the Company’s bylaws is qualified in its entirety by reference to the Amended and Restated Bylaws of the Company, a copy of which is filed as Exhibit 3.1 to this Report on Form 10-Q and incorporated by reference herein. The specific language of the Company’s bylaws as they existed prior to this amendment and restatement can be found in Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed by the Company on November 2, 2007, which is incorporated by reference herein. The following is a summary of the amended sections of the Company’s bylaws.

     Section 1.02 – Special Meetings. The by-law regarding special meetings was amended to give only the President (or, in the event of his or her absence or disability, any Vice President), a majority of the Board of Directors or a majority of a committee thereof the authority to call special meetings of the stockholders and to limit the purpose of a special meeting to only those purposes stated in the notice for the meeting.

     Section 1.04 – Quorum. The by-law regarding quorum was amended to clarify that a quorum for a stockholder meeting consists of a majority of the aggregate voting power of the stock issued and outstanding and entitled to vote at such meeting of the stockholders.

     Section 1.07 – Adjournment. This by-law was amended to give the presiding officer at any stockholder meeting the power to adjourn any stockholder meeting, whether or not a quorum is present.

     Section 1.09 – Organization; Procedure. This by-law was modified to give the Board of Directors the authority to select the presiding officer of any stockholder meeting in the event of the President’s absence or disability.

     Section 1.11 – Conduct of Meetings. This by-law was added to grant the presiding officer at any stockholder meeting and the Board of Directors the ability to adopt rules and regulations regarding meeting procedure, as well as grant the presiding officer the right and authority to convene, to adjourn and to conclude any stockholder meeting and to establish rules, regulations and procedures for the conduct of the meetings to maintain order and safety.

     Section 1.12 – Notice of Stockholder Business and Nominations. This by-law was added to provide that if a stockholder wishes to nominate a person or persons for election to the Board of Directors or bring other business before a stockholders meeting, such stockholder may only do so by delivering prior written notice to the Company’s corporate secretary, within the time period specified in the by-law, and by complying with certain other requirements specified therein. The stockholder’s notice must include, among other things, certain information as to each person whom the stockholder proposes to nominate for election as a director or as to each matter of business that the stockholder proposes to bring before a stockholders meeting. The stockholder’s notice must also include certain information as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made.

     Section 2.02 – Number and Term of Office. This provision was amended to clarify that only the Board of Directors may modify the number of Directors constituting the entire Board of Directors.

     Section 2.12 – Removal of Directors. This by-law was amended to clarify that the affirmative vote of the holders of not less than a majority of the voting power of all the shares of capital stock of the Company issued and outstanding and entitled to vote for the election of such director would be required to remove a director and provides that any vacancies resulting from removal of a director may only be filled in accordance with Section 2.13 of the by-laws.

     Section 2.13 – Vacancies and Newly Created Directorships. This by-law was amended to allow only the Board of Directors to fill vacancies created by removal of a director or a newly created directorship position, provided, however, if there are no Directors in office, or less than a majority of the whole Board of Directors, then the vacancies may be filled in the manner provided by statute.

     Section 5.05 — Record Dates. This by-law was amended to require that any stockholder seeking to take action by written consent shall give notice to the Board of Directors, such that the Board of Directors may fix a record date for taking action by written consent.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

20

     Section 9.01 – Amendment. This by-law was amended to change the voting threshold for amendments, alterations or repeals of the by-laws by stockholders to the affirmative vote of six-six and two-thirds percent of the voting power of all the shares of capital stock of the Company issued and outstanding and entitled to vote thereon.

Item 6: Exhibits

     Exhibits:

Exhibit
Number		Description
	3.1	Amended and Restated By-laws of the Company effective August 5, 2008
	10.1+	Employment Agreement dated April 7, 2008 between the Company and Courtney C. Smith
	10.2+	Employment Agreement dated April 7, 2008 between the Company and Peter E. Jokiel
	10.3+	Employment Agreement dated April 7, 2008 between the Company and Gary J. Ferguson
	10.4+	Change of Control Agreement dated April 7, 2008 between the Company and Barry G. Cordeiro
	10.5+	Change of Control Agreement dated April 7, 2008 between the Company and Scott W. Goodreau
	10.6+	Change of Control Agreement dated April 7, 2008 between the Company and Scott K. Charbonneau
	10.7+	Change of Control Agreement dated April 7, 2008 between the Company and Daniel A. Cacchione
	10.8+	Change of Control Agreement dated April 7, 2008 between the Company and Daniel J. Rohan
	31.1	Certification of Courtney C. Smith, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Peter E. Jokiel, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Courtney C. Smith, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of Peter E. Jokiel, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

+ Indicates a management contract or compensatory plan or arrangement.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

21

     Signatures

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC. (Registrant)
By:	/s/ Courtney C. Smith
	Name: Courtney C. Smith
	Title: President and Chief Executive Officer
Date: August 8, 2008
By:	/s/ Peter E. Jokiel
	Name: Peter E. Jokiel
	Title: Executive Vice President and Chief Financial Officer
Date: August 8, 2008

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

22

     Exhibits Index:

Exhibit
Number		Description
	3.1	Amended and Restated By-laws of the Company effective August 5, 2008
	10.1+	Employment Agreement dated April 7, 2008 between the Company and Courtney C. Smith
	10.2+	Employment Agreement dated April 7, 2008 between the Company and Peter E. Jokiel
	10.3+	Employment Agreement dated April 7, 2008 between the Company and Gary J. Ferguson
	10.4+	Change of Control Agreement dated April 7, 2008 between the Company and Barry G. Cordeiro
	10.5+	Change of Control Agreement dated April 7, 2008 between the Company and Scott W. Goodreau
	10.6+	Change of Control Agreement dated April 7, 2008 between the Company and Scott K. Charbonneau
	10.7+	Change of Control Agreement dated April 7, 2008 between the Company and Daniel A. Cacchione
	10.8+	Change of Control Agreement dated April 7, 2008 between the Company and Daniel J. Rohan
	31.1	Certification of Courtney C. Smith, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Peter E. Jokiel, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Courtney C. Smith, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of Peter E. Jokiel, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

+ Indicates a management contract or compensatory plan or arrangement.

2008 Second Quarter Form 10-Q
Specialty Underwriters’ Alliance, Inc.

23

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED BY-LAWS

OF

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

Dated as of August 5, 2008

Table of Contents

Section	Page
ARTICLE I
STOCKHOLDERS
Section 1.01 Annual Meetings		1
Section 1.02 Special Meetings		1
Section 1.03 Notice of Meetings; Waiver; Record Date		1
Section 1.04 Quorum		2
Section 1.05 Voting		2
Section 1.06 Voting by Ballot		3
Section 1.07 Adjournment		3
Section 1.08 Proxies		3
Section 1.09 Organization; Procedure		4
Section 1.10 Consent of Stockholders in Lieu of Meeting		4
Section 1.11 Conduct of Meetings		4
Section 1.12 Notice of Stockholder Business and Nominations		5
ARTICLE II
BOARD OF DIRECTORS
Section 2.01 General Powers		9
Section 2.02 Number and Term of Office		9
Section 2.03 Election of Directors		10
Section 2.04 Annual and Regular Meetings		10
Section 2.05 Special Meetings; Notice		10
Section 2.06 Quorum; Voting		10
Section 2.07 Adjournment		10
Section 2.08 Action Without a Meeting		11
Section 2.09 Regulations; Manner of Acting		11
Section 2.10 Action by Telephonic Communications		11
Section 2.11 Resignations		11
Section 2.12 Removal of Directors		11
Section 2.13 Vacancies and Newly Created Directorships		11
Section 2.14 Compensation		11
Section 2.15 Reliance on Accounts and Reports, etc		11
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01 How Constituted		12
Section 3.02 Powers		12
Section 3.03 Proceedings		13

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Section	Page
Section 3.04 Quorum and Manner of Acting		13
Section 3.05 Action by Telephonic Communications		13
Section 3.06 Absent or Disqualified Members		13
Section 3.07 Resignations		14
Section 3.08 Removal		14
Section 3.09 Vacancies		14
ARTICLE IV
OFFICERS
Section 4.01 Number		14
Section 4.02 Election		14
Section 4.03 Salaries		14
Section 4.04 Removal and Resignation; Vacancies		14
Section 4.05 Authority and Duties of Officers		14
Section 4.06 The President		15
Section 4.07 The Vice President		15
Section 4.08 The Secretary		15
Section 4.09 The Treasurer		16
Section 4.10 Additional Officers		17
Section 4.11 Security		17
ARTICLE V
CAPITAL STOCK
Section 5.01 Certificates of Stock, Uncertificated Shares		17
Section 5.02 Signatures; Facsimile		17
Section 5.03 Lost, Stolen or Destroyed Certificates		17
Section 5.04 Transfer of Stock		18
Section 5.05 Record Dates		18
Section 5.06 Registered Stockholders		19
Section 5.07 Transfer Agent and Registrar		19
ARTICLE VI
INDEMNIFICATION
Section 6.01 Nature of Indemnity		19
Section 6.02 Successful Defense		20
Section 6.03 Determination That Indemnification Is Proper		20
Section 6.04 Advance Payment of Expenses		21
Section 6.05 Procedure for Indemnification of Directors and Officers		21
Section 6.06 Survival; Preservation of Other Rights		21
Section 6.07 Insurance		22
Section 6.08 Severability		22

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Section	Page
ARTICLE VII
OFFICES
Section 7.01 Registered Office		22
Section 7.02 Other Offices		22
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Dividends		22
Section 8.02 Reserves		23
Section 8.03 Execution of Instruments		23
Section 8.04 Corporate Indebtedness		23
Section 8.05 Deposits		23
Section 8.06 Checks		24
Section 8.07 Sale Transfer, etc. of Securities		24
Section 8.08 Voting as Stockholder		24
Section 8.09 Fiscal Year		24
Section 8.10 Seal		24
Section 8.11 Books and Records; Inspection		24
Section 8.12 Emergency By-Laws		24
Section 8.13 Electronic Transmission		25
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01 Amendment		25
ARTICLE X
CONSTRUCTION
Section 10.01 Construction		26

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SPECIALTY UNDERWRITERS’ ALLIANCE, INC.

AMENDED AND RESTATED BY-LAWS

Dated as of August 5, 2008

ARTICLE I

STOCKHOLDERS

     Section 1.01 Annual Meetings. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies, and at such date and hour, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting.

     Section 1.02 Special Meetings. Special meetings of the stockholders, for any purpose or purposes, may be called at any time by the President (or, in the event of his or her absence or disability, by any Vice President), by a majority of the Board of Directors or by a majority of a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in these By-Laws, include the power to call such meetings. Special meetings of the stockholders of the Corporation may not be called by any other person or persons. Business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice for such meeting. Such special meetings of the stockholders shall be held at such places, within or without the State of Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies, as shall be specified in the respective notices or waivers of notice thereof.

     Section 1.03 Notice of Meetings; Waiver; Record Date.

     (a) Notice of Meetings.

     (i) The Secretary or any Assistant Secretary shall cause written notice of the place, if any, date and hour of each meeting of the stockholders, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten nor more than sixty days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If a stockholder meeting is to be held via electronic communications and stockholders will take action at such meeting, the notice of such meeting must: (i) specify the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such meeting; and (ii) provide the information required to access the stockholder list.

     (ii) For notice given by electronic transmission to a stockholder to be effective, such stockholder must consent to the Corporation’s giving notice by that particular form of electronic transmission. A stockholder may revoke consent to receive notice by electronic transmission by written notice to the Corporation. A stockholder’s consent to notice by electronic transmission is automatically revoked if the Corporation is unable to deliver two consecutive electronic transmission notices and such inability becomes known to the Secretary, Assistant Secretary, the transfer agent or other person responsible for giving notice.

     (iii) Notices are deemed given (i) if by mail, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the record of stockholders of the Corporation, or, if he or she shall have filed with the Secretary of the Corporation a written request that notices to him or her be mailed to some other address, then directed to him or her at such other address; (ii) if by facsimile, when faxed to a number where the stockholder has consented to receive notice; (iii) if by electronic mail, when mailed electronically to an electronic mail address at which the stockholder consented to receive such notice; (iv) if by posting on an electronic network (such as a website or chatroom) together with a separate notice to the stockholder of such specific posting, upon the later to occur of (A) such posting or (B) the giving of the separate notice of such posting; or (v) if by any other form of electronic communication, when directed to the stockholder in the manner consented to by the stockholder. Such further notice shall be given as may be required by law.

     (b) Waiver. A written waiver of any notice of any annual or special meeting signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to notice, shall be deemed equivalent to notice, whether provided before or after the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice. The attendance of any stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.

     Section 1.04 Quorum. Except as otherwise required by law or by the Certificate of Incorporation or these By-Laws, the presence, in person or represented by proxy, of the holders of a majority of the aggregate voting power of the stock issued and outstanding, entitled to vote at a meeting, shall constitute a quorum for the transaction of business at such meeting of the stockholders.

     Section 1.05 Voting. If, pursuant to Section 5.05 of these By-Laws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his or her name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice

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is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law or by the Certificate of Incorporation or by these By-Laws, the vote of a majority of the shares represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting.

     Section 1.06 Voting by Ballot. No vote of the stockholders need be taken by written ballot, or by a ballot submitted by electronic transmission, unless otherwise required by law. Any vote which need not be taken by written ballot, or by a ballot submitted by electronic transmission, may be conducted in any manner approved by the meeting.

     Section 1.07 Adjournment. If a quorum is not present at any meeting of the stockholders, the stockholders present in person or by proxy shall have the power to adjourn any such meeting from time to time until a quorum is present. The presiding officer of any meeting shall also have the power to adjourn the meeting, whether or not a quorum is present. Notice of any adjourned meeting of the stockholders of the Corporation need not be given if the place, if any, date and hour thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, are announced at the meeting at which the adjournment is taken, provided, however, that if the adjournment is for more than thirty days, or if after the adjournment a new record date for the adjourned meeting is fixed pursuant to Section 5.05 of these By-Laws, a notice of the adjourned meeting, conforming to the requirements of Section 1.03 of these By-Laws, shall be given to each stockholder of record entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted on the original date of the meeting.

     Section 1.08 Proxies. Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to vote at any such meeting and express such consent or dissent for him or her by proxy. A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No such proxy shall be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by telegram, cablegram, or other electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

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     Section 1.09 Organization; Procedure. At every meeting of stockholders the presiding officer shall be the President or, in the event of his or her absence or disability, a presiding officer chosen by a majority of the Board of Directors. The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding officer, shall act as Secretary of the meeting. The order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.

     Section 1.10 Consent of Stockholders in Lieu of Meeting. To the fullest extent permitted by law, but subject to the provisions of Section 5.05(b), whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted (but not less than the minimum number of votes otherwise prescribed by law) and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

     Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

     Section 1.11 Conduct of Meetings. At each meeting of stockholders, the presiding officer of the meeting shall fix and announce the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at the meeting and shall determine the order of business and all other matters of procedure. The Board of Directors may adopt by resolution such rules, regulations, and procedures for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with any such rules and regulations adopted by the Board of Directors, the presiding officer of the meeting shall have the right and authority to convene, to adjourn and to conclude the meeting and to establish rules, regulations, and procedures, which need not be in writing, for the conduct of the meeting and to maintain order and safety. Without limiting the foregoing, he or she may:

     (a) restrict attendance at any time to bona fide stockholders of record and their proxies and other persons in attendance at the invitation of the presiding officer or Board of Directors;

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     (b) place restrictions on entry to the meeting after the time fixed for the commencement thereof;

     (c) restrict dissemination of solicitation materials and use of audio or visual recording devices at the meeting;

     (d) adjourn the meeting without a vote of the stockholders, whether or not there is a quorum present; and

     (e) make rules governing speeches and debate, including time limits and access to microphones.

     The presiding officer of the meeting shall act in his or her absolute discretion and his or her rulings shall not be subject to appeal.

     Section 1.12 Notice of Stockholder Business and Nominations.

     (a) Annual Meetings of Stockholders.

     (i) Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who (i) was a stockholder of record at the time of giving of notice provided for in this By-Law and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in this By-Law as to such business or nomination; clause (c) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

     (ii) Without qualification, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 1.12(a)(i)(c) of this By-Law, the stockholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one-hundred twentieth day and not later than the close of business on the ninetieth day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that (x) in the event that the date of the annual meeting is more than thirty days before or more than sixty days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one-hundred twentieth day prior to the date of such annual meeting and not later than the close of business on the later of the ninetieth day prior to the date of such annual meeting or, (y) if the first public announcement of the date of such annual

5

meeting is less than one-hundred days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

     (iii) To be in proper form, a stockholder’s notice given pursuant to Section 1.12(a)(ii) or 1.12(b) to the Secretary must:

     (A) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Company, (D) any short interest in any security of the Company (for purposes of this By-Law a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than ten days after the record date for the meeting to disclose such

6

ownership as of the record date), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed (x) in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder and (y) if applicable, to any governmental authority that has direct or indirect supervision over the Corporation;

     (B) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner, if any, in such business and (ii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder;

     (C) set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors: (i) all information relating to such person that would be required to be disclosed (x) in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (y) if applicable, to any governmental authority that has direct or indirect supervision over the Corporation; and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and

     (D) with respect to each nominee for election or reelection to the Board of Directors, include a completed and signed questionnaire with respect to the background and qualification of such person (which questionnaire shall be provided by the Secretary upon written request).

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The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

     (iv) Notwithstanding anything in the second sentence of Section 1.12(a)(ii) to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one-hundred days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

     (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice provided for in this By-Law and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this By-Law as to such nomination. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 1.12(a)(ii) and (iii) with respect to any nomination shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one-hundred twentieth day prior to the date of such special meeting and not later than the close of business on the later of the ninetieth day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than one-hundred days prior to the date of such special meeting, the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

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     (c) General.

     (i) Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the presiding officer of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal or nomination shall be disregarded.

     (ii) For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

     (iii) Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-Law; provided, however, that any references in these By-Laws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 1.12(a)(i)(c) or 1.12(b) of this By-Law. Nothing in this By-Law shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these By-Laws.

ARTICLE II

BOARD OF DIRECTORS

     Section 2.01 General Powers. Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers of the Corporation.

     Section 2.02 Number and Term of Office. The number of Directors constituting the entire Board of Directors shall be seven, which number may be modified from time to time only by resolution of the Board of Directors, but in no event shall the number of Directors be less than one. Each Director (whenever elected) shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.

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     Section 2.03 Election of Directors. The Directors shall be elected at each annual meeting of the stockholders. If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors shall be elected by a plurality of the votes validly cast in such election.

     Section 2.04 Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, radio or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him or her at his or her usual place of business, or shall be delivered to him or her personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.

     Section 2.05 Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the President or, in the event of his or her absence or disability, by any Vice President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on twenty-four hours’ notice, if notice is given to each Director personally or by telephone or telegram, or on five days’ notice, if notice is mailed to each Director, addressed to him or her at his or her usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat.

     Section 2.06 Quorum; Voting. At all meetings of the Board of Directors, the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

     Section 2.07 Adjournment. A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place. No notice need be given of any adjourned meeting unless the time and place of the adjourned meeting are not announced at the time of adjournment, in which case notice conforming to the requirements of Section 2.05 of these By-Laws shall be given to each Director.

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     Section 2.08 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

     Section 2.09 Regulations; Manner of Acting. To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such.

     Section 2.10 Action by Telephonic Communications. Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

     Section 2.11 Resignations. Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation, signed by such Director, to the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

     Section 2.12 Removal of Directors. Any Director may be removed at any time, either for or without cause, by the affirmative vote of the holders of not less than a majority of the voting power of all the shares of capital stock of the Corporation issued and outstanding and entitled to vote for the election of such Director. Any vacancy in the Board of Directors caused by any such removal may be filled in the manner provided in Section 2.13 of these By-Laws.

     Section 2.13 Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships may be filled only by a majority of the Directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal. If there are no Directors in office, or less than a majority of the whole Board of Directors, the vacancies may be filled in the manner provided by statute.

     Section 2.14 Compensation. The amount, if any, which each Director shall be entitled to receive as compensation for his or her services as such shall be fixed from time to time by resolution of the Board of Directors.

     Section 2.15 Reliance on Accounts and Reports, etc. A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be

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fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

ARTICLE III

EXECUTIVE COMMITTEE AND OTHER COMMITTEES

     Section 3.01 How Constituted. The Board of Directors may designate one or more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any such Committee, who may replace any absent or disqualified member or members at any meeting of such Committee. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or re-designated from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.

     Section 3.02 Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee, except as otherwise provided in this section, shall have and may exercise all the powers and authority of the Board of Directors in the management of the property, affairs and business of the Corporation; provided, however, that the Executive Committee shall not have the power and authority to declare dividends or to authorize the issuance of stock of the Corporation. Each such other Committee, except as otherwise provided in this section, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. Neither the Executive Committee nor any such other Committee shall have the power or authority:

     (a) to amend the Certificate of Incorporation;

     (b) to adopt an agreement of merger or consolidation;

     (c) to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets;

     (d) to recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution;

     (e) to amend the By-Laws of the Corporation;

     (f) to remove any President, Vice President, Assistant Secretary or Assistant Treasurer of the Corporation;

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     (g) to authorize the borrowing of funds, other than under existing facilities, that is material to the capital structure of the Corporation;

     (h) to authorize any new compensation or benefit program;

     (i) to appoint or discharge the Corporation’s independent public accountants;

     (j) to authorize the annual operating plan, annual capital expenditure plan and strategic plan; or

     (k) to abolish or usurp the authority of the Board of Directors.

          The Executive Committee shall have, and any such other Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.

     Section 3.03 Proceedings. Each such Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.

     Section 3.04 Quorum and Manner of Acting. Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

     Section 3.05 Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

     Section 3.06 Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

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     Section 3.07 Resignations. Any member (and any alternate member) of any Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Chairman or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.

     Section 3.08 Removal. Any member (and any alternate member) of any Committee may be removed from his or her position as a member (or alternate member, as the case may be) of such Committee at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.

     Section 3.09 Vacancies. If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors.

ARTICLE IV

OFFICERS

     Section 4.01 Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also may elect one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board of Directors may determine. Any number of offices may be held by the same person. No officer need be a Director of the Corporation.

     Section 4.02 Election. Unless otherwise determined by the Board of Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

     Section 4.03 Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.

     Section 4.04 Removal and Resignation; Vacancies. Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Board of Directors or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors.

     Section 4.05 Authority and Duties of Officers. The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law.

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     Section 4.06 The President. The President shall preside at all meetings of the stockholders and directors at which he or she is present, shall be the chief executive officer and the chief operating officer of the Corporation, shall have general control and supervision of the policies and operations of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall manage and administer the Corporation’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer and a chief operating officer of a corporation. He or she shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He or she shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the President or the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors or the Chairman may from time to time prescribe.

     Section 4.07 The Vice President. Each Vice President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the President. In the absence of the President, the duties of the President shall be performed and his or her powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President.

     Section 4.08 The Secretary. The Secretary shall have the following powers and duties:

     (a) He or she shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose.

     (b) He or she shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.

     (c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he or she shall furnish a copy of such resolution to the members of such Committee.

     (d) He or she shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he or she may attest the same.

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     (e) He or she shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation or these By-Laws.

     (f) He or she shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record.

     (g) He or she shall sign (unless the Treasurer, an Assistant Treasurer or an Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.

     (h) He or she shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, or the President.

     Section 4.09 The Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the following powers and duties:

     (a) He or she shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation.

     (b) He or she shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with Section 8.05 of these By-Laws.

     (c) He or she shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.

     (d) He or she shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his or her transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.

     (e) He or she shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation.

     (f) He or she may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.

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     (g) He or she shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, or the President.

     Section 4.10 Additional Officers. The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him or her, for or without cause.

     Section 4.11 Security. The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

ARTICLE V

CAPITAL STOCK

     Section 5.01 Certificates of Stock, Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws.

     Section 5.02 Signatures; Facsimile. All signatures on the certificate referred to in Section 5.01 of these By-Laws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

     Section 5.03 Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of

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Directors may require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

     Section 5.04 Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

     Section 5.05 Record Dates.

     (a) Meetings. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty or fewer than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

     (b) Written Consents. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of

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the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

     (c) Distributions and Other Actions. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

     Section 5.06 Registered Stockholders. Prior to due surrender of a certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

     Section 5.07 Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

     Section 6.01 Nature of Indemnity. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he or she is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the

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Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his or her conduct was unlawful; except that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (1) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

     The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

     Section 6.02 Successful Defense. To the extent that a present or former director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 6.01 of these By-Laws or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

     Section 6.03 Determination That Indemnification Is Proper. Any indemnification of a present or former director or officer of the Corporation under Section 6.01 of these By-Laws (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any indemnification of a present or former employee or agent of the Corporation under Section 6.01 of these By-Laws (unless ordered by a court) may be made by the Corporation upon a determination that indemnification of the employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any such determination shall be made, with respect to a person who is a director or officer at the time of such determination (1) by a majority vote of the Directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

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     Section 6.04 Advance Payment of Expenses. Expenses (including attorneys’ fees) incurred by a present director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate. The Corporation, or in respect of a present director or officer the Board of Directors, may authorize the Corporation’s counsel to represent such present or former director, officer, employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.

     Section 6.05 Procedure for Indemnification of Directors and Officers. Any indemnification of a director, officer, employee or agent of the Corporation under Sections 6.01 and 6.02 of these By-Laws, or advance of costs, charges and expenses to such person under Section 6.04 of these By-Laws, shall be made promptly, and in any event within thirty days, upon the written request of such person. If a determination by the Corporation that such person is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty days, the right to indemnification or advances as granted by this Article shall be enforceable by such person in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these By-Laws where the required undertaking, if any, has been received by or tendered to the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these By-Laws, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors or any committee thereof, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors or any committee thereof, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

     Section 6.06 Survival; Preservation of Other Rights. The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in any such capacity at any time while these provisions as well as the relevant provisions of the Delaware Corporation Law are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a “contract

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right” may not be modified retroactively without the consent of such director, officer, employee or agent.

     The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and 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.

     Section 6.07 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article, provided that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors.

     Section 6.08 Severability. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII

OFFICES

     Section 7.01 Registered Office. The registered office of the Corporation in the State of Delaware shall be located at 9 East Loockerman Street in the City of Dover, County of Kent. The name of the registered agent is National Registered Agents, Inc.

     Section 7.02 Other Offices. The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE VIII

GENERAL PROVISIONS

     Section 8.01 Dividends. Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of

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Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s Capital Stock.

     A member of the Board of Directors, or a member of any Committee designated by the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid

     Section 8.02 Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve.

     Section 8.03 Execution of Instruments. The President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization must be in writing or by electronic transmission and may be general or limited to specific contracts or instruments.

     Section 8.04 Corporate Indebtedness. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors or the President. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors or the President shall authorize. When so authorized by the Board of Directors or the President, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of the interest thereon, by instruments executed and delivered in the name of the Corporation.

     Section 8.05 Deposits. Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination.

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     Section 8.06 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors or the President from time to time may determine.

     Section 8.07 Sale Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the President, any Vice President, the Secretary or the Treasurer or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment.

     Section 8.08 Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, the President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons.

     Section 8.09 Fiscal Year. The fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation’s first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31.

     Section 8.10 Seal. The seal of the Corporation shall be circular in form and shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

     Section 8.11 Books and Records; Inspection. Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

     Section 8.12 Emergency By-Laws. The provisions in this Section 8.12 shall be operative during any emergency in the conduct of the business of the Corporation resulting from a catastrophe, disaster, calamity or other similar event, notwithstanding any different provision in the preceding Articles of these By-Laws or in the Corporation’s Certificate of Incorporation. To the extent not inconsistent with the provisions of this Section 8.12, the provisions in the preceding Articles of these By-Laws shall remain in effect during such emergency, and upon its termination the provisions in this Section 8.12 shall cease to be operative. During any such emergency:

     (a) An emergency meeting or meetings of the Board of Directors or of the surviving members thereof shall be called by the Chairman of the Board, if available, or,

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if he is not available, by any other director or directors of the Corporation; any such meeting shall be held at such time and place and upon such notice, if any, as the person or persons calling the meeting shall deem proper under the circumstances. The Board may take any action at any such meeting that it deems necessary and appropriate to meet the emergency.

     (b) Vacancies on the Board of Directors shall be filled as soon as practicable in the manner specified in Section 2.13 of Article II of these By-Laws. In filling vacancies, consideration shall be given to senior officers of the Corporation.

     (c) The presence of three directors shall be sufficient for the transaction of business at emergency meetings of the Board of Directors, except that if there are less than three surviving directors, the surviving director or directors, although less than a quorum, may fill vacancies on the Board.

     (d) These By-Laws may be amended by the Board of Directors without notice of the proposed amendment being given in the notice of the meeting.

     (e) Without limiting the generality of the foregoing, the Board of Directors is authorized to make all necessary determinations of fact regarding the extent and severity of the emergency and the availability of members of the Board; to designate and replace officers, agents and employees of the Corporation and otherwise provide for continuity of management; and to elect a chairman, adopt rules of procedures and fill vacancies.

     (f) The emergency powers provided in this Section 8.12 shall be in addition to any powers provided by law.

No officer, director or employee acting in accordance with the provisions of this Section 8.12 shall be liable except for willful misconduct.

     Section 8.13 Electronic Transmission. For purposes of these By-Laws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

ARTICLE IX

AMENDMENT OF BY-LAWS

     Section 9.01 Amendment. Subject to the provisions of the Certificate of Incorporation, these By-Laws may be amended, altered or repealed:

     (a) by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting; or

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     (b) by the affirmative vote of the holders of not less than sixty-six and two-thirds percent of the voting power of all the shares of capital stock of the Corporation issued and outstanding and entitled to vote thereon at any regular or special meeting of the stockholders if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.

ARTICLE X

CONSTRUCTION

     Section 10.01 Construction. In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the Certificate of Incorporation of the Corporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

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EX-10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated April 7, 2008, is made between Specialty Underwriters’ Alliance, Inc., a Delaware corporation (the “Company”), and Courtney C. Smith (the “Executive”).

WITNESSETH:

     WHEREAS, on November 19, 2003, the Company and the Executive (collectively, the “Parties”) entered into an agreement (as such agreement was amended and amended and restated prior to the date hereof, the “Prior Agreement”) whereby the Company agreed to employ the Executive as President and Chief Executive Officer (“Chief Executive Officer”) and the Executive accepted such employment; and

     WHEREAS, the Company has an interest in ensuring continuity of its leadership; and

     WHEREAS, the Company wishes to continue the services of the Executive in the capacity of Chief Executive Officer upon the terms and conditions hereinafter set forth and the Executive wishes to accept such employment; and

     WHEREAS, it is desirable that the Prior Agreement be replaced by this Agreement so that, on and after the date of this Agreement, this Agreement shall contain the terms and conditions governing the employment of the Executive in the capacity as Chief Executive Officer of the Company.

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

          SECTION 1. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions hereinafter set forth.

          SECTION 2. Term. The term of this Agreement shall commence on the date hereof and shall terminate by its terms as follows: (i) on December 31, 2009, if on or before October 1, 2008 the Company delivers to the Executive a written notice that this Agreement shall not be extended beyond December 31, 2009, or (ii) if no such notice is delivered by October 1, 2008, then this Agreement automatically shall be extended as of each January 1st for an additional calendar year unless, at least 15 months prior to the end of the then-current term, the Company shall have delivered to the Executive a written notice that this Agreement shall not be so extended¹; and, provided, further, that the Executive’s employment hereunder may be terminated on an earlier date in accordance with the provisions of this Agreement. Delivery of a notice by the Company set forth in the preceding sentence shall serve only to set an ending date of this Agreement and shall not, for any reason, be deemed to be a Termination Without Cause

¹ By way of example only, if the Company intends to have this Agreement terminate by its terms on December 31, 2010, the Company must give such written notice no later than September 30, 2009.

(as hereinafter defined). For purposes of this Agreement, all references to “Employment Period” shall mean the period beginning on the date hereof and ending on the effective termination of the Executive’s employment, and “Termination Date” shall mean the last day of the Executive’s employment under this Agreement (and not the date on which any notice described in the first sentence of this Section 2 is given).

          SECTION 3. Duties. During the Employment Period, the Executive shall be employed as Chief Executive Officer of the Company and shall perform such duties consistent with such title and shall report to the Board of Directors. If requested by the Company, during the Employment Period, the Executive shall also serve, without additional compensation, in one or more executive positions and/or as a member of the board of directors of the Company (the “Board of Directors”) or any Affiliate (as defined herein) of the Company. The Executive shall comply fully with all applicable laws, rules and regulations as well as with the Company’s policies, compliance manuals and procedures.

          SECTION 4. Time to be devoted to Employment. The Executive shall devote his entire working time to the business of the Company and shall use his best efforts, skills and abilities in his diligent and faithful performance of his duties and responsibilities hereunder. During the Employment Period, the Executive shall not engage in any other business activities or hold any office or positions regardless of whether any such activity, office or position is pursued for profit or other pecuniary advantage, without the prior consent of the Company; provided, however, the Executive may own, solely as an investment, 1.0% or less of the securities of any publicly traded corporation.

          SECTION 5. Compensation; Business Expenses; Benefits; Other Matters. (a) Base Salary. The Company shall pay the Executive an annual salary (the “Base Salary”) of $463,050, less applicable withholding and other deductions, payable in accordance with the Company’s then current payroll practices. The Base Salary will be reviewed annually by the Company’s Board of Directors or the Compensation Committee of the Board of Directors (the “Compensation Committee”), and may be increased, but not decreased, in the sole discretion of the Board of Directors or Compensation Committee. Upon any such increase the term “Base Salary” shall mean such increased amount.

          (b) Annual Bonus. At such times that the Company has a bonus plan(s) for its senior executive officers, the Executive shall be eligible to participate in such plan(s) and, if determined in the sole judgment of the Board of Directors or any committee that administers such bonus plan, to receive an annual bonus pursuant to such bonus plan. Notwithstanding the foregoing, nothing in this Agreement shall be construed as requiring the Company to establish or maintain any bonus plan or to pay to the Executive any annual bonus. The amount and timing of any annual bonus that may be paid to the Executive will be in the sole discretion of the Board of Directors or any committee that administers such bonus plan.

          (c) Equity Compensation. The Executive shall be eligible to receive such stock options, awards of restricted stock or other types of equity-based compensation as may be determined by the Board of Directors or the Compensation Committee in its sole discretion and upon such terms and conditions as are determined by the Board of Directors or the Compensation Committee in its sole discretion

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          (d) Participation in Benefits. The Executive shall be eligible to participate in, and receive benefits under, any pension, profit sharing, medical, group health, hospitalization and disability insurance, stock purchase, stock option, stock ownership, vacation or other employee benefit plan, program or policy of the Company which may be in effect at any time during the course of his employment by the Company and which shall be generally available to senior executive officers of the Company occupying positions of comparable status or responsibility, subject to the terms of such plans, programs or policies. In addition, the Executive shall receive annual reimbursement of up to $10,000 per calendar year for aggregate expenses incurred for financial planning, including the preparation of income tax returns, upon presentation of appropriate receipts for such expenses; provided that (i) the amount of such expenses eligible for reimbursement in one calendar year shall not affect the amount of such expenses eligible for reimbursement in any other calendar year, and (ii) such reimbursement shall be made promptly and in no event later than December 31st of the calendar year next following the calendar year in which such expenses were paid by the Executive.

          (e) Expense Reimbursement. The Company shall, upon presentation by the Executive to the Company of such appropriate documentation as may be required by the Company, reimburse the Executive, in accordance with its practice from time to time for officers of the Company, for all reasonable and authorized expenses and other disbursements incurred by the Executive for or on behalf of the Company in the performance of his duties hereunder.

          (f) Paid Time Off. During the Employment Period, the Executive shall be entitled to take thirty-four paid time off days (“PTO”) for each year during the Employment Period, all or a portion of which may be carried over from year to year in accordance with the then-current PTO policy of the Company. The Executive may schedule the PTO as he elects, subject to the Company’s business needs. The Executive shall also be entitled to the paid holidays set forth in the Company’s policies.

          (g) Indemnification. To the fullest extent permitted under applicable law and the charter and by-laws of the Company, the Company and any of its Affiliates shall indemnify and hold harmless the Executive, and advance payment to Executive for costs and expenses, for all liability incurred by him to any third party as a result of the performance of his duties under this Agreement, subject to the recoupment of such advances by the Company if it is ultimately determined that the Executive was not entitled to such indemnification. The Company shall ensure that the Executive is covered by the Company’s director and officer liability insurance policies during the Employment Period and for at least six (6) years thereafter in an amount reasonably determined by the Board of Directors.

          SECTION 6. Involuntary Termination. (a) Disability. If the Executive is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Executive) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement (such condition being hereinafter referred to as a “Disability”) for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued PTO), the Company may, at any time thereafter during the continuation of such Disability, at its option, terminate the Employment Period and the employment of the Executive under this Agreement immediately by giving him written notice to that effect. Until the

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Executive’s employment hereunder shall have been terminated in accordance with the immediately preceding sentence, the Executive shall be entitled to receive the compensation and benefits provided in Section 5 notwithstanding any such Disability (less any Company-paid benefits that he receives, such as short term disability or workers compensation, during such period).

          (b) Death. If the Executive dies, the Employment Period and his employment hereunder shall cease as of the date of his death.

          SECTION 7. Termination For Cause. (a) The Company may terminate the employment of the Executive hereunder at any time for Cause (as hereinafter defined) (such termination being referred to herein as a “Termination For Cause”) by giving the Executive written notice of such termination in accordance with Section 7(b). As used in this Agreement, “Cause” means that the Executive: (i) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (ii) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (iii) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its Affiliates; (iv) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (v) has materially breached his obligations as set forth in this Agreement.

          (b) Termination for Cause shall occur only if the Company shall have given written notice to the Executive specifying the nature of the breach or behavior, and, if the Termination for Cause is pursuant to clauses (ii), (iii) or (v) of Section 7(a), the Executive fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten (10) days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (ii), (iii) or (v) of Section 7(a).

          SECTION 8. Termination Without Cause. The Company may terminate the employment of the Executive hereunder without Cause (such termination being hereinafter referred to as a “Termination Without Cause”) by giving the Executive written notice of such termination, such termination to take effect on the date specified in such notice, which date shall not be earlier than the date on which such notice is given. For the avoidance of doubt, any notice given by the Company to the Executive pursuant to the first sentence of Section 2 shall not be deemed or considered a notice of a Termination Without Cause.

          SECTION 9. Good Reason; Termination due to a Change in Control. (a) The Executive may terminate his employment hereunder upon the existence of Good Reason. For purposes of this Agreement, the following shall constitute “Good Reason”: after written notice setting forth the alleged Good Reason by the Executive to the Company (which notice must be delivered within ninety (90) days of the initial existence of the event or circumstances that constitutes the Good Reason), and the expiration of a 60-day cure period, there continues to be: (i) a material diminution in the Executive’s authority, duties or responsibilities; and/or (ii) a material breach by the Company of any material provision of this Agreement.

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          (b) If the Executive terminates this Agreement and his employment hereunder within twenty-four (24) months of a Change in Control (as defined below) for Good Reason, for purposes of this Agreement such termination shall be considered a “Termination due to a Change in Control”. For purpose of this Agreement, any termination of the Executive’s employment by the Company within twenty-four (24) months of a Change in Control other than pursuant to Section 6 or Section 7 also shall be considered a Termination due to a Change in Control. A “Change in Control” shall be deemed to have occurred if:

     (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose),

     (ii) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation,

     (iii) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition, or

     (iv) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

     Notwithstanding the foregoing, for purposes of clause (i), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of

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clause (ii), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (A) to a stockholder in exchange for his stock, (B) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (C) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

          SECTION 10. Effect of Termination.

          (a) Definitions. For purposes of this Agreement, the terms “Accrued Rights,” “Severance Payments” and “Change in Control Severance Payments” shall have the following meanings:

Accrued Rights. The Company shall pay Executive a one-time, lump-sum amount equal to the sum of (A) his earned but unpaid Base Salary, and, if applicable, any accrued and unpaid bonus, each pro-rated through the Termination Date and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date. In addition, the Company shall provide to Executive all payments, rights and benefits due as of the Termination Date under the terms of the Company’s employee and fringe benefit plans, practices, programs and arrangements referred to in Section 5 hereof (together with clauses (A) and (B), the “Accrued Rights”).

Severance Payments. The Company shall pay Executive a lump—sum amount equal to the sum of (A) (i) 225% of his Base Salary if a Termination Without Cause or Termination for Good Reason occurs on or before December 31, 2009 or (ii) 150% of his Base Salary if a Termination Without Cause or Termination for Good Reason occurs on or after January 1, 2010, and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date (if not already covered by a payment of Accrued Rights).

Change in Control Severance Payments. The Company shall pay Executive a lump—sum amount equal to the sum of (A) (i) three times his Base Salary, if the Change in Control occurred on or before December 31, 2009 or (ii) two times his Base Salary, if the Change in Control occurred on or after January 1, 2010 and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date; in addition, all stock options, restricted stock awards or other types of equity-based compensation then held by the Executive which were not previously vested or exercised shall become fully vested and/or exercisable.

          (b) Termination for Cause; Resignation by Executive; Disability; Death. Upon the termination of the Executive’s employment hereunder due to a Termination for Cause, the Resignation by Executive, Disability or death, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights, which shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. For purposes of this Agreement, the defined terms “Resignation” and “Resigns”

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shall refer to the Executive voluntarily terminating his employment hereunder, other than for Good Reason or Termination due to a Change in Control.

          (c) Termination Without Cause; Termination for Good Reason. Upon the termination of the Executive’s employment hereunder due to a Termination Without Cause or Termination for Good Reason, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. As used in this Agreement, “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

          (d) Termination due to a Change in Control.

               (i) Upon the termination of the Executive’s employment hereunder due to a Termination due to a Change in Control, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Change in Control Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for the Change in Control Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive (and full vesting with respect to stock options, restricted stock awards or other types of equity-based compensation shall occur) upon the effective date of the release (and no later than such March 15th date).

               (ii) Notwithstanding any other provisions of this Agreement, if any of the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Executive has the right to receive either directly or indirectly from the Company or any of its Affiliates, would constitute an excess parachute payment (the

7

“Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Executive from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Executive’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Executive if such reduction were not made.

               (iii) All determinations required to be made under clause (ii) of this Section 10(d), and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Executive. The Company shall pay all fees and expenses of the Accounting Firm.

          (e) Severance upon expiration of this Agreement pursuant to Section 2. If the Company delivers a timely notice to the Executive pursuant to Section 2 of this Agreement so that this Agreement expires by its terms, then, as long as the Executive’s employment hereunder has not been otherwise terminated on a date earlier than the applicable December 31st date in accordance with the provisions of this Agreement, upon such expiration of this Agreement on such applicable December 31st date the Executive’s employment shall terminate and neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein (which, in connection with an expiration on December 31, 2009, shall be determined by reference to clause (A)(i) in the definition of “Severance Payments” in Section 10(a) of this Agreement, and in connection with any other such expiration by reference to clause (A)(ii) of such definition). The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

          (f) 409A.

               (i) In the event that any cash severance benefit or other benefit under this Section 10 shall be subject to Section 409A of the Code and would fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of

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Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee may attach conditions to or adjust the amounts paid pursuant to this Section 10(f) to preserve, as closely as possible, the economic consequences that would have applied in the absence of this Section 10(f); provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. The awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

               (ii) To the extent required in order to comply with Section 409A of the Code (if applicable), amounts that would otherwise be payable under Section 10 during the six-month period immediately following the date of termination shall instead be paid on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A of the Code.

          (g) Clawback. If the Company, based upon a final, non-appealable judicial or regulatory determination, determines that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable to the Executive hereunder, to the extent that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, (A) the Executive shall reimburse the Company for (i) any discretionary bonus or other incentive-based or equity-based compensation received by the Executive from the Company or any of its Affiliates and (ii) any profits realized from the sale of securities of the Company, in either case during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement and (B) if the material noncompliance resulted from misconduct by the Executive, (i) neither the Executive nor the Executive’s estate shall be entitled to exercise any stock options or other types of equity-based compensation then held by the Executive and (ii) such written conclusion of legal counsel or judicial determination shall be the grounds for termination of the Executive’s employment by the Company pursuant to Section 7 hereof.

          SECTION 11. Disclosure of Information; Work Product; Warranty. (i) The Executive acknowledges and agrees that there are certain trade secrets and confidential and proprietary information (collectively, “Confidential Information”) which have been developed by the Company and which are used by the Company in its business. Confidential Information shall include, without limitation: (i) customer lists and supplier lists; (ii) the details of the Company’s relationships with its customers, including the financial relationship with a customer, knowledge of the internal “politics"/workings of a customer organization, a customer’s technical needs and job specifications, knowledge of a customer’s strategic plans and the identities of contact persons within a customer’s organization; (iii) the Company’s marketing and development plans, business plans; and (iv) other information proprietary to the Company’s business. The Executive shall not, at any time during or after the Employment Period, use or disclose any Confidential Information, except to authorized representatives of the Company or

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the customer or as required in the performance of his duties and responsibilities hereunder. Upon the termination of the Executive’s employment hereunder for any reason, the Executive shall as promptly as practicable return all customer and/or Company property, such as computers, software and cell phones, and documents (and any copies including in machine or human-readable form), to the Company. The Executive shall not be required to keep confidential any information, which is or becomes publicly available or is already in his possession (unless obtained from the Company or one of its customers). Further, the Executive shall be free to use and employ his general skills, know-how and expertise, and to use, disclose and employ any generalized ideas, concepts, know-how, methods, techniques or skills, including those gained or learned during the course of the performance of any services hereunder, so long as he applies such information without disclosure or use of any Confidential Information.

               (ii) The Executive agrees that all copyrights, patents, trade secrets or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by him during the Employment Period and for a period of six (6) months thereafter, that (i) relate, whether directly or indirectly, to the Company’s actual or anticipated business, research or development or (ii) are suggested by or as a result of any work performed by the Executive on the Company’s behalf, shall, to the extent possible, be considered works made for hire within the meaning of the Copyright Act (17 U.S.C. § 101 et. seq.) (the “Work Product”). All Work Product shall be and remain the property of the Company. To the extent that any such Work Product may not, under applicable law, be considered works made for hire, the Executive hereby grants, transfers, assigns, conveys and relinquishes, and agrees to grant, transfer, assign, convey and relinquish from time to time, on an exclusive basis, all of his right, title and interest in and to the Work Product to the Company in perpetuity or for the longest period otherwise permitted by applicable law. Consistent with his recognition of the Company’s absolute ownership of all Work Product, the Executive agrees that he shall (i) not use any Work Product for the benefit of any party other than the Company and (ii) perform such acts and execute such documents and instruments as the Company may now or hereafter deem reasonably necessary or desirable to evidence the transfer of absolute ownership of all Work Product to the Company; provided, however, if following ten (10) days’ written notice from the Company, the Executive refuses, or is unable, due to disability, incapacity, or death, to execute such documents relating to the Work Product, he hereby appoints any of the Company’s officers as his attorney-in-fact to execute such documents on his behalf. This agency is coupled with an interest and is irrevocable without the Company’s prior written consent.

               (iii) The Executive represents and warrants to the Company that (i) there are no claims that would adversely affect his ability to assign all right, title and interest in and to the Work Product to the Company; (ii) the Work Product does not violate any patent, copyright or other proprietary right of any third party; (iii) the Executive has the legal right to grant the Company the assignment of his interest in the Work Product as set forth in this Agreement; and (iv) he has not brought and will not bring to his employment hereunder, or use in connection with such employment, any trade secret, confidential or proprietary information, or computer software, except for software that he has a right to use for the purpose for which it shall be used, in his employment hereunder.

          SECTION 12. Restrictive Covenants. (a) Non-Competition. The Executive hereby acknowledges and recognizes that during the Employment Period he will be privy to

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trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Executive. Accordingly, Executive agrees that, in consideration of the premises contained herein, and the consideration to be received by the Executive hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for the applicable period specified in Section 12(g) below from and after the Termination Date (the Employment Period and such additional applicable period collectively being the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in this Section 12(a) shall prohibit the Executive or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

          (b) Customer Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (b)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (b)(ii) and (b)(iii) above, the business solicited is business in which the Company is currently engaged.

          (c) Employee Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

          (d) Non-Disparagement of the Company. The Executive covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

          (e) Non-Disparagement of the Executive. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

          (f) Acknowledgement. The Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and

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ability), the Executive does not believe would prevent him from earning a living other than in a business which competes with the Company.

          (g) Period of Non-Competition following Employment Period. For purposes of this Agreement, with respect to the Non-Competition Period, the applicable period following the Termination Date, in respect of the following reasons for termination, shall be:

               (i) Resignation by Executive: two (2) years; unless the Executive shall have given the Company at least nine (9) months notice of his effective resignation date, in which case fifteen (15) months;

               (ii) Death or Disability: none;

               (iii) Termination for Cause: one (1) year;

               (iv) Termination Without Cause: one (1) year;

               (v) Termination for Good Reason: one (1) year;

               (vi) Termination due to Change in Control: two (2) years.

          SECTION 13. Enforcement; Severability; Etc. It is the desire and intent of the Parties that this Agreement, including, without limitation, the provisions of Sections 11, 12, 13 and 14 of this Agreement, shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of Sections 11, 12 and 14 of this Agreement is adjudicated to be invalid or unenforceable or shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law and such provision shall be deemed modified and amended to the extent necessary to render such provision enforceable in such jurisdiction. The terms of this Agreement are intended to be, and shall be interpreted so as to, comply with Section 409A of the Code, and without having the Executive incur any tax or penalty under Section 409A of the Code as a consequence of the receipt of any payments or benefits under this Agreement. In the event that it is determined that any term or provision of this Agreement does not so comply, then such non-compliant term or provision shall be amended so as to conform to Section 409A of the Code and, to the extent possible, preserve the original intent of the Agreement.

          SECTION 14. Remedies. It is understood by the Parties hereto that the Executive’s obligations and the restrictions and remedies set forth in Sections 11 and 12 are essential elements of this Agreement and that but for his agreement to comply with and/or agree to such obligations, restrictions and remedies, the Company would not have entered into this Agreement or employed (or continued to employ) him. The Executive acknowledges and understands that the provisions of Sections 11 and 12 of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of Sections 11 and 12 of this Agreement would cause the Company irreparable harm. In the event of a breach or threatened breach by the Executive of the provisions of Sections 11 and 12 of this Agreement, the Company

12

shall be entitled to an injunction restraining him from such breach or other equitable relief, without posting a bond, in addition to other remedies available to the Company. In the event of a breach by the Executive of the provisions of Section 12 of this Agreement, the term of the Non-Competition Period shall be extended by the period of the duration of such breach. All remedies available for breach of this Agreement are cumulative, and neither the pursuit of any remedy nor anything contained in this Agreement shall be construed as an election of a remedy or as prohibiting the Company from or limiting the Company in pursuing any other remedies available for any breach or threatened breach of this Agreement.

          SECTION 15. Notices. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-6001, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Executive, at the address set forth under the name of the Executive on the signature page hereto, or to such other address as the Party to whom notice is to be given may have furnished to the other Party or Parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

          SECTION 16. Tax Withholding. The payments and benefits under this Agreement may be compensation and as such may be included in either the Executive’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          SECTION 17. Binding Agreement; Benefit. Subject to Section 23 below, the provisions of this Agreement will be binding upon, and will inure to the benefit of, the respective heirs, legal representatives, successors and assigns of the Parties. The Executive acknowledges and agrees that each Affiliate of the Company shall be an intended third party beneficiary of this Agreement.

          SECTION 18. Governing Law. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each Party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,

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action or proceeding is improper. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such Party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          SECTION 19. Waiver of Breach. The failure of a Party to enforce any term, provision, or condition of this Agreement at any time or times shall not be deemed a waiver of that term, provision, or condition. The waiver by either Party of a breach of any provision of this Agreement by the other Party must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach by such other Party.

          SECTION 20. Entire Agreement; Amendments. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements or understandings between the Parties with respect thereto. Notwithstanding the foregoing, this Agreement is not intended to exclude any other types of benefits not addressed by this Agreement that may be available to the Executive upon a termination of employment with the Company or its Affiliates, such as “COBRA” continuation. This Agreement may be amended only by an agreement in writing signed by the Parties hereto and authorized by the Company’s Board of Directors or Compensation Committee.

          SECTION 21. Representations and Warranties by Executive. The Executive represents and warrants that he is not a party to or subject to any restrictive covenants, legal restrictions or other agreements in favor of any person or entity which would in any way preclude, inhibit, impair or limit the Executive’s ability to perform his obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements. The Executive acknowledges that he has had a sufficient period of time within which to review this Agreement, including Sections 11 and 12, with an attorney of his choice and he has done so to the extent he desired.

          SECTION 22. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

          SECTION 23. Assignment. This Agreement and the Executive’s performance hereunder are personal to the Executive and shall not be assignable by the Executive. The Company may assign this Agreement to any Affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Executive’s rights under Sections 9(b) and 10(d).

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          SECTION 24. Interpretation; Counterparts. No provision of this Agreement is to be interpreted for or against any Party because that Party drafted such provision. For purposes of this Agreement: “herein,” “hereby,” “hereinafter,” “herewith,” “hereafter” and “hereinafter” refer to this Agreement in its entirety, and not to any particular subsection or paragraph. This Agreement may be executed in counterparts, including a facsimile, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

          SECTION 25. No Mitigation. The Executive shall not be required to mitigate the amount of any benefits under this Agreement by seeking other employment or otherwise. The benefits to be provided pursuant to this Agreement shall not be reduced by any compensation or benefits payable or provided to the Executive as a result of employment by another employer after the date of termination or otherwise.

          SECTION 26. Survival. The provisions of Sections 5(g), 11, 12, 13, 14, 15, 17, 18 and 21 and any other provisions of this Agreement that by their meaning are intended to survive shall survive termination of this Agreement or termination of the employment of the Executive for any reason.

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     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Peter E. Jokiel
	Peter E. Jokiel
	Executive Vice President & Chief Financial Officer
EXECUTIVE
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer

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EX-10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated April 7, 2008, is made between Specialty Underwriters’ Alliance, Inc., a Delaware corporation (the “Company”), and Peter E. Jokiel (the “Executive”).

WITNESSETH:

     WHEREAS, on November 19, 2003, the Company and the Executive (collectively, the “Parties”) entered into an agreement (as such agreement was amended and amended and restated prior to the date hereof, the “Prior Agreement”) whereby the Company agreed to employ the Executive as Executive Vice President and Chief Financial Officer (“Chief Financial Officer”) and the Executive accepted such employment; and

     WHEREAS, the Company has an interest in ensuring continuity of its leadership; and

     WHEREAS, the Company wishes to continue the services of the Executive in the capacity of Chief Financial Officer upon the terms and conditions hereinafter set forth and the Executive wishes to accept such employment; and

     WHEREAS, it is desirable that the Prior Agreement be replaced by this Agreement so that, on and after the date of this Agreement, this Agreement shall contain the terms and conditions governing the employment of the Executive in the capacity as Executive Vice President and Chief Financial Officer of the Company.

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

          SECTION 1. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions hereinafter set forth.

          SECTION 2. Term. The term of this Agreement shall commence on the date hereof and shall terminate by its terms as follows: (i) on December 31, 2009, if on or before October 1, 2008 the Company delivers to the Executive a written notice that this Agreement shall not be extended beyond December 31, 2009, or (ii) if no such notice is delivered by October 1, 2008, then this Agreement automatically shall be extended as of each January 1st for an additional calendar year unless, at least 15 months prior to the end of the then-current term, the Company shall have delivered to the Executive a written notice that this Agreement shall not be so extended¹; and, provided, further, that the Executive’s employment hereunder may be terminated on an earlier date in accordance with the provisions of this Agreement. Delivery of a notice by the Company set forth in the preceding sentence shall serve only to set an ending date of this Agreement and shall not, for any reason, be deemed to be a Termination Without Cause

¹ By way of example only, if the Company intends to have this Agreement terminate by its terms on December 31, 2010, the Company must give such written notice no later than September 30, 2009.

(as hereinafter defined). For purposes of this Agreement, all references to “Employment Period” shall mean the period beginning on the date hereof and ending on the effective termination of the Executive’s employment, and “Termination Date” shall mean the last day of the Executive’s employment under this Agreement (and not the date on which any notice described in the first sentence of this Section 2 is given).

          SECTION 3. Duties. During the Employment Period, the Executive shall be employed as Executive Vice President and Chief Financial Officer of the Company and shall perform such duties consistent with such title and shall report to the Chief Executive Officer of the Company. If requested by the Company, during the Employment Period, the Executive shall also serve, without additional compensation, in one or more executive positions and/or as a member of the board of directors of the Company (the “Board of Directors”) or any Affiliate (as defined herein) of the Company. The Executive shall comply fully with all applicable laws, rules and regulations as well as with the Company’s policies, compliance manuals and procedures.

          SECTION 4. Time to be devoted to Employment. The Executive shall devote his entire working time to the business of the Company and shall use his best efforts, skills and abilities in his diligent and faithful performance of his duties and responsibilities hereunder. During the Employment Period, the Executive shall not engage in any other business activities or hold any office or positions regardless of whether any such activity, office or position is pursued for profit or other pecuniary advantage, without the prior consent of the Company; provided, however, the Executive may own, solely as an investment, 1.0% or less of the securities of any publicly traded corporation.

          SECTION 5. Compensation; Business Expenses; Benefits; Other Matters. (a) Base Salary. The Company shall pay the Executive an annual salary (the “Base Salary”) of $405,200, less applicable withholding and other deductions, payable in accordance with the Company’s then current payroll practices. The Base Salary will be reviewed annually by the Company’s Board of Directors or the Compensation Committee of the Board of Directors (the “Compensation Committee”), and may be increased, but not decreased, in the sole discretion of the Board of Directors or Compensation Committee. Upon any such increase the term “Base Salary” shall mean such increased amount.

          (b) Annual Bonus. At such times that the Company has a bonus plan(s) for its senior executive officers, the Executive shall be eligible to participate in such plan(s) and, if determined in the sole judgment of the Board of Directors or any committee that administers such bonus plan, to receive an annual bonus pursuant to such bonus plan. Notwithstanding the foregoing, nothing in this Agreement shall be construed as requiring the Company to establish or maintain any bonus plan or to pay to the Executive any annual bonus. The amount and timing of any annual bonus that may be paid to the Executive will be in the sole discretion of the Board of Directors or any committee that administers such bonus plan.

          (c) Equity Compensation. The Executive shall be eligible to receive such stock options, awards of restricted stock or other types of equity-based compensation as may be determined by the Board of Directors or the Compensation Committee in its sole discretion and

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upon such terms and conditions as are determined by the Board of Directors or the Compensation Committee in its sole discretion

          (d) Participation in Benefits. The Executive shall be eligible to participate in, and receive benefits under, any pension, profit sharing, medical, group health, hospitalization and disability insurance, stock purchase, stock option, stock ownership, vacation or other employee benefit plan, program or policy of the Company which may be in effect at any time during the course of his employment by the Company and which shall be generally available to senior executive officers of the Company occupying positions of comparable status or responsibility, subject to the terms of such plans, programs or policies. In addition, the Executive shall receive annual reimbursement of up to $10,000 per calendar year for aggregate expenses incurred for financial planning, including the preparation of income tax returns, upon presentation of appropriate receipts for such expenses; provided that (i) the amount of such expenses eligible for reimbursement in one calendar year shall not affect the amount of such expenses eligible for reimbursement in any other calendar year, and (ii) such reimbursement shall be made promptly and in no event later than December 31st of the calendar year next following the calendar year in which such expenses were paid by the Executive.

          (e) Expense Reimbursement. The Company shall, upon presentation by the Executive to the Company of such appropriate documentation as may be required by the Company, reimburse the Executive, in accordance with its practice from time to time for officers of the Company, for all reasonable and authorized expenses and other disbursements incurred by the Executive for or on behalf of the Company in the performance of his duties hereunder.

          (f) Paid Time Off. During the Employment Period, the Executive shall be entitled to take thirty-four paid time off days (“PTO”) for each year during the Employment Period, all or a portion of which may be carried over from year to year in accordance with the then-current PTO policy of the Company. The Executive may schedule the PTO as he elects, subject to the Company’s business needs. The Executive shall also be entitled to the paid holidays set forth in the Company’s policies.

          (g) Indemnification. To the fullest extent permitted under applicable law and the charter and by-laws of the Company, the Company and any of its Affiliates shall indemnify and hold harmless the Executive, and advance payment to Executive for costs and expenses, for all liability incurred by him to any third party as a result of the performance of his duties under this Agreement, subject to the recoupment of such advances by the Company if it is ultimately determined that the Executive was not entitled to such indemnification. The Company shall ensure that the Executive is covered by the Company’s director and officer liability insurance policies during the Employment Period and for at least six (6) years thereafter in an amount reasonably determined by the Board of Directors.

          SECTION 6. Involuntary Termination. (a) Disability. If the Executive is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Executive) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement (such condition being hereinafter referred to as a “Disability”) for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any

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accrued PTO), the Company may, at any time thereafter during the continuation of such Disability, at its option, terminate the Employment Period and the employment of the Executive under this Agreement immediately by giving him written notice to that effect. Until the Executive’s employment hereunder shall have been terminated in accordance with the immediately preceding sentence, the Executive shall be entitled to receive the compensation and benefits provided in Section 5 notwithstanding any such Disability (less any Company-paid benefits that he receives, such as short term disability or workers compensation, during such period).

          (b) Death. If the Executive dies, the Employment Period and his employment hereunder shall cease as of the date of his death.

          SECTION 7. Termination For Cause. (a) The Company may terminate the employment of the Executive hereunder at any time for Cause (as hereinafter defined) (such termination being referred to herein as a “Termination For Cause”) by giving the Executive written notice of such termination in accordance with Section 7(b). As used in this Agreement, “Cause” means that the Executive: (i) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (ii) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (iii) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its Affiliates; (iv) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (v) has materially breached his obligations as set forth in this Agreement.

          (b) Termination for Cause shall occur only if the Company shall have given written notice to the Executive specifying the nature of the breach or behavior, and, if the Termination for Cause is pursuant to clauses (ii), (iii) or (v) of Section 7(a), the Executive fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten (10) days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (ii), (iii) or (v) of Section 7(a).

          SECTION 8. Termination Without Cause. The Company may terminate the employment of the Executive hereunder without Cause (such termination being hereinafter referred to as a “Termination Without Cause”) by giving the Executive written notice of such termination, such termination to take effect on the date specified in such notice, which date shall not be earlier than the date on which such notice is given. For the avoidance of doubt, any notice given by the Company to the Executive pursuant to the first sentence of Section 2 shall not be deemed or considered a notice of a Termination Without Cause.

          SECTION 9. Good Reason; Termination due to a Change in Control. (a) The Executive may terminate his employment hereunder upon the existence of Good Reason. For purposes of this Agreement, the following shall constitute “Good Reason”: after written notice setting forth the alleged Good Reason by the Executive to the Company (which notice must be delivered within ninety (90) days of the initial existence of the event or circumstances that constitutes the Good Reason), and the expiration of a 60-day cure period, there continues to be:

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(i) a material diminution in the Executive’s authority, duties or responsibilities; and/or (ii) a material breach by the Company of any material provision of this Agreement.

          (b) If the Executive terminates this Agreement and his employment hereunder within twenty-four (24) months of a Change in Control (as defined below) for Good Reason, for purposes of this Agreement such termination shall be considered a “Termination due to a Change in Control”. For purpose of this Agreement, any termination of the Executive’s employment by the Company within twenty-four (24) months of a Change in Control other than pursuant to Section 6 or Section 7 also shall be considered a Termination due to a Change in Control. A “Change in Control” shall be deemed to have occurred if:

     (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose),

     (ii) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation,

     (iii) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition, or

     (iv) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

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     Notwithstanding the foregoing, for purposes of clause (i), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (ii), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (A) to a stockholder in exchange for his stock, (B) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (C) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

          SECTION 10. Effect of Termination.

          (a) Definitions. For purposes of this Agreement, the terms “Accrued Rights,” “Severance Payments” and “Change in Control Severance Payments” shall have the following meanings:

Accrued Rights. The Company shall pay Executive a one-time, lump-sum amount equal to the sum of (A) his earned but unpaid Base Salary, and, if applicable, any accrued and unpaid bonus, each pro-rated through the Termination Date and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date. In addition, the Company shall provide to Executive all payments, rights and benefits due as of the Termination Date under the terms of the Company’s employee and fringe benefit plans, practices, programs and arrangements referred to in Section 5 hereof (together with clauses (A) and (B), the “Accrued Rights”).

Severance Payments. The Company shall pay Executive a lump—sum amount equal to the sum of (A) (i) 225% of his Base Salary if a Termination Without Cause or Termination for Good Reason occurs on or before December 31, 2009 or (ii) 150% of his Base Salary if a Termination Without Cause or Termination for Good Reason occurs on or after January 1, 2010, and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date (if not already covered by a payment of Accrued Rights).

Change in Control Severance Payments. The Company shall pay Executive a lump—sum amount equal to the sum of (A) (i) three times his Base Salary, if the Change in Control occurred on or before December 31, 2009 or (ii) two times his Base Salary, if the Change in Control occurred on or after January 1, 2010 and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date; in addition, all stock options, restricted stock awards or other types of equity-based compensation then held by the Executive which were not previously vested or exercised shall become fully vested and/or exercisable.

          (b) Termination for Cause; Resignation by Executive; Disability; Death. Upon the termination of the Executive’s employment hereunder due to a Termination for Cause, the Resignation by Executive, Disability or death, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights, which shall be paid to the Executive immediately upon

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termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. For purposes of this Agreement, the defined terms “Resignation” and “Resigns” shall refer to the Executive voluntarily terminating his employment hereunder, other than for Good Reason or Termination due to a Change in Control.

          (c) Termination Without Cause; Termination for Good Reason. Upon the termination of the Executive’s employment hereunder due to a Termination Without Cause or Termination for Good Reason, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. As used in this Agreement, “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

          (d) Termination due to a Change in Control.

               (i) Upon the termination of the Executive’s employment hereunder due to a Termination due to a Change in Control, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Change in Control Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for the Change in Control Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive (and full vesting with respect to stock options, restricted stock awards or other types of equity-based compensation shall occur) upon the effective date of the release (and no later than such March 15th date).

               (ii) Notwithstanding any other provisions of this Agreement, if any of the benefits and payments provided under this Agreement, either alone or together with other

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benefits and payments which the Executive has the right to receive either directly or indirectly from the Company or any of its Affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Executive from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Executive’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Executive if such reduction were not made.

               (iii) All determinations required to be made under clause (ii) of this Section 10(d), and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Executive. The Company shall pay all fees and expenses of the Accounting Firm.

          (e) Severance upon expiration of this Agreement pursuant to Section 2. If the Company delivers a timely notice to the Executive pursuant to Section 2 of this Agreement so that this Agreement expires by its terms, then, as long as the Executive’s employment hereunder has not been otherwise terminated on a date earlier than the applicable December 31st date in accordance with the provisions of this Agreement, upon such expiration of this Agreement on such applicable December 31st date the Executive’s employment shall terminate and neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein (which, in connection with an expiration on December 31, 2009, shall be determined by reference to clause (A)(i) in the definition of “Severance Payments” in Section 10(a) of this Agreement, and in connection with any other such expiration by reference to clause (A)(ii) of such definition). The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

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          (f) 409A.

               (i) In the event that any cash severance benefit or other benefit under this Section 10 shall be subject to Section 409A of the Code and would fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee may attach conditions to or adjust the amounts paid pursuant to this Section 10(f) to preserve, as closely as possible, the economic consequences that would have applied in the absence of this Section 10(f); provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. The awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

               (ii) To the extent required in order to comply with Section 409A of the Code (if applicable), amounts that would otherwise be payable under Section 10 during the six-month period immediately following the date of termination shall instead be paid on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A of the Code.

          (g) Clawback. If the Company, based upon a final, non-appealable judicial or regulatory determination, determines that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable to the Executive hereunder, to the extent that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, (A) the Executive shall reimburse the Company for (i) any discretionary bonus or other incentive-based or equity-based compensation received by the Executive from the Company or any of its Affiliates and (ii) any profits realized from the sale of securities of the Company, in either case during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement and (B) if the material noncompliance resulted from misconduct by the Executive, (i) neither the Executive nor the Executive’s estate shall be entitled to exercise any stock options or other types of equity-based compensation then held by the Executive and (ii) such written conclusion of legal counsel or judicial determination shall be the grounds for termination of the Executive’s employment by the Company pursuant to Section 7 hereof.

          SECTION 11. Disclosure of Information; Work Product; Warranty. (i) The Executive acknowledges and agrees that there are certain trade secrets and confidential and proprietary information (collectively, “Confidential Information”) which have been developed by the Company and which are used by the Company in its business. Confidential Information shall include, without limitation: (i) customer lists and supplier lists; (ii) the details of the Company’s relationships with its customers, including the financial relationship with a customer, knowledge of the internal “politics"/workings of a customer organization, a customer’s technical

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needs and job specifications, knowledge of a customer’s strategic plans and the identities of contact persons within a customer’s organization; (iii) the Company’s marketing and development plans, business plans; and (iv) other information proprietary to the Company’s business. The Executive shall not, at any time during or after the Employment Period, use or disclose any Confidential Information, except to authorized representatives of the Company or the customer or as required in the performance of his duties and responsibilities hereunder. Upon the termination of the Executive’s employment hereunder for any reason, the Executive shall as promptly as practicable return all customer and/or Company property, such as computers, software and cell phones, and documents (and any copies including in machine or human-readable form), to the Company. The Executive shall not be required to keep confidential any information, which is or becomes publicly available or is already in his possession (unless obtained from the Company or one of its customers). Further, the Executive shall be free to use and employ his general skills, know-how and expertise, and to use, disclose and employ any generalized ideas, concepts, know-how, methods, techniques or skills, including those gained or learned during the course of the performance of any services hereunder, so long as he applies such information without disclosure or use of any Confidential Information.

               (ii) The Executive agrees that all copyrights, patents, trade secrets or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by him during the Employment Period and for a period of six (6) months thereafter, that (i) relate, whether directly or indirectly, to the Company’s actual or anticipated business, research or development or (ii) are suggested by or as a result of any work performed by the Executive on the Company’s behalf, shall, to the extent possible, be considered works made for hire within the meaning of the Copyright Act (17 U.S.C. § 101 et. seq.) (the “Work Product”). All Work Product shall be and remain the property of the Company. To the extent that any such Work Product may not, under applicable law, be considered works made for hire, the Executive hereby grants, transfers, assigns, conveys and relinquishes, and agrees to grant, transfer, assign, convey and relinquish from time to time, on an exclusive basis, all of his right, title and interest in and to the Work Product to the Company in perpetuity or for the longest period otherwise permitted by applicable law. Consistent with his recognition of the Company’s absolute ownership of all Work Product, the Executive agrees that he shall (i) not use any Work Product for the benefit of any party other than the Company and (ii) perform such acts and execute such documents and instruments as the Company may now or hereafter deem reasonably necessary or desirable to evidence the transfer of absolute ownership of all Work Product to the Company; provided, however, if following ten (10) days’ written notice from the Company, the Executive refuses, or is unable, due to disability, incapacity, or death, to execute such documents relating to the Work Product, he hereby appoints any of the Company’s officers as his attorney-in-fact to execute such documents on his behalf. This agency is coupled with an interest and is irrevocable without the Company’s prior written consent.

               (iii) The Executive represents and warrants to the Company that (i) there are no claims that would adversely affect his ability to assign all right, title and interest in and to the Work Product to the Company; (ii) the Work Product does not violate any patent, copyright or other proprietary right of any third party; (iii) the Executive has the legal right to grant the Company the assignment of his interest in the Work Product as set forth in this Agreement; and (iv) he has not brought and will not bring to his employment hereunder, or use in connection with such employment, any trade secret, confidential or proprietary information, or

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computer software, except for software that he has a right to use for the purpose for which it shall be used, in his employment hereunder.

          SECTION 12. Restrictive Covenants. (a) Non-Competition. The Executive hereby acknowledges and recognizes that during the Employment Period he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Executive. Accordingly, Executive agrees that, in consideration of the premises contained herein, and the consideration to be received by the Executive hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for the applicable period specified in Section 12(g) below from and after the Termination Date (the Employment Period and such additional applicable period collectively being the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in this Section 12(a) shall prohibit the Executive or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

          (b) Customer Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (b)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (b)(ii) and (b)(iii) above, the business solicited is business in which the Company is currently engaged.

          (c) Employee Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

          (d) Non-Disparagement of the Company. The Executive covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

          (e) Non-Disparagement of the Executive. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

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          (f) Acknowledgement. The Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Executive does not believe would prevent him from earning a living other than in a business which competes with the Company.

          (g) Period of Non-Competition following Employment Period. For purposes of this Agreement, with respect to the Non-Competition Period, the applicable period following the Termination Date, in respect of the following reasons for termination, shall be:

               (i) Resignation by Executive: two (2) years; unless the Executive shall have given the Company at least nine (9) months notice of his effective resignation date, in which case fifteen (15) months;

               (ii) Death or Disability: none;

               (iii) Termination for Cause: one (1) year;

               (iv) Termination Without Cause: one (1) year;

               (v) Termination for Good Reason: one (1) year;

               (vi) Termination due to Change in Control: two (2) years.

          SECTION 13. Enforcement; Severability; Etc. It is the desire and intent of the Parties that this Agreement, including, without limitation, the provisions of Sections 11, 12, 13 and 14 of this Agreement, shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of Sections 11, 12 and 14 of this Agreement is adjudicated to be invalid or unenforceable or shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law and such provision shall be deemed modified and amended to the extent necessary to render such provision enforceable in such jurisdiction. The terms of this Agreement are intended to be, and shall be interpreted so as to, comply with Section 409A of the Code, and without having the Executive incur any tax or penalty under Section 409A of the Code as a consequence of the receipt of any payments or benefits under this Agreement. In the event that it is determined that any term or provision of this Agreement does not so comply, then such non-compliant term or provision shall be amended so as to conform to Section 409A of the Code and, to the extent possible, preserve the original intent of the Agreement.

          SECTION 14. Remedies. It is understood by the Parties hereto that the Executive’s obligations and the restrictions and remedies set forth in Sections 11 and 12 are essential elements of this Agreement and that but for his agreement to comply with and/or agree to such obligations, restrictions and remedies, the Company would not have entered into this Agreement or employed (or continued to employ) him. The Executive acknowledges and

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understands that the provisions of Sections 11 and 12 of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of Sections 11 and 12 of this Agreement would cause the Company irreparable harm. In the event of a breach or threatened breach by the Executive of the provisions of Sections 11 and 12 of this Agreement, the Company shall be entitled to an injunction restraining him from such breach or other equitable relief, without posting a bond, in addition to other remedies available to the Company. In the event of a breach by the Executive of the provisions of Section 12 of this Agreement, the term of the Non-Competition Period shall be extended by the period of the duration of such breach. All remedies available for breach of this Agreement are cumulative, and neither the pursuit of any remedy nor anything contained in this Agreement shall be construed as an election of a remedy or as prohibiting the Company from or limiting the Company in pursuing any other remedies available for any breach or threatened breach of this Agreement.

          SECTION 15. Notices. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-6001, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Executive, at the address set forth under the name of the Executive on the signature page hereto, or to such other address as the Party to whom notice is to be given may have furnished to the other Party or Parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

          SECTION 16. Tax Withholding. The payments and benefits under this Agreement may be compensation and as such may be included in either the Executive’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          SECTION 17. Binding Agreement; Benefit. Subject to Section 23 below, the provisions of this Agreement will be binding upon, and will inure to the benefit of, the respective heirs, legal representatives, successors and assigns of the Parties. The Executive acknowledges and agrees that each Affiliate of the Company shall be an intended third party beneficiary of this Agreement.

          SECTION 18. Governing Law. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each Party hereby irrevocably submits to the non-exclusive

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jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such Party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          SECTION 19. Waiver of Breach. The failure of a Party to enforce any term, provision, or condition of this Agreement at any time or times shall not be deemed a waiver of that term, provision, or condition. The waiver by either Party of a breach of any provision of this Agreement by the other Party must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach by such other Party.

          SECTION 20. Entire Agreement; Amendments. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements or understandings between the Parties with respect thereto. Notwithstanding the foregoing, this Agreement is not intended to exclude any other types of benefits not addressed by this Agreement that may be available to the Executive upon a termination of employment with the Company or its Affiliates, such as “COBRA” continuation. This Agreement may be amended only by an agreement in writing signed by the Parties hereto and authorized by the Company’s Board of Directors or Compensation Committee.

          SECTION 21. Representations and Warranties by Executive. The Executive represents and warrants that he is not a party to or subject to any restrictive covenants, legal restrictions or other agreements in favor of any person or entity which would in any way preclude, inhibit, impair or limit the Executive’s ability to perform his obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements. The Executive acknowledges that he has had a sufficient period of time within which to review this Agreement, including Sections 11 and 12, with an attorney of his choice and he has done so to the extent he desired.

          SECTION 22. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

          SECTION 23. Assignment. This Agreement and the Executive’s performance hereunder are personal to the Executive and shall not be assignable by the Executive. The Company may assign this Agreement to any Affiliate or to any successor to all or substantially

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all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Executive’s rights under Sections 9(b) and 10(d).

          SECTION 24. Interpretation; Counterparts. No provision of this Agreement is to be interpreted for or against any Party because that Party drafted such provision. For purposes of this Agreement: “herein,” “hereby,” “hereinafter,” “herewith,” “hereafter” and “hereinafter” refer to this Agreement in its entirety, and not to any particular subsection or paragraph. This Agreement may be executed in counterparts, including a facsimile, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

          SECTION 25. No Mitigation. The Executive shall not be required to mitigate the amount of any benefits under this Agreement by seeking other employment or otherwise. The benefits to be provided pursuant to this Agreement shall not be reduced by any compensation or benefits payable or provided to the Executive as a result of employment by another employer after the date of termination or otherwise.

          SECTION 26. Survival. The provisions of Sections 5(g), 11, 12, 13, 14, 15, 17, 18 and 21 and any other provisions of this Agreement that by their meaning are intended to survive shall survive termination of this Agreement or termination of the employment of the Executive for any reason.

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     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
EXECUTIVE
By:	/s/ PeterE. Jokiel
	Peter E. Jokiel

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EX-10.3

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated April 7, 2008, is made between Specialty Underwriters’ Alliance, Inc., a Delaware corporation (the “Company”), and Gary J. Ferguson (the “Executive”).

WITNESSETH:

     WHEREAS, on November 19, 2003, the Company and the Executive (collectively, the “Parties”) entered into an agreement (as such agreement was amended and amended and restated prior to the date hereof, the “Prior Agreement”) whereby the Company agreed to employ the Executive as Senior Vice President and Chief Claims Officer (“Chief Claims Officer”) and the Executive accepted such employment; and

     WHEREAS, the Company has an interest in ensuring continuity of its leadership; and

     WHEREAS, the Company wishes to continue the services of the Executive in the capacity of Chief Claims Officer upon the terms and conditions hereinafter set forth and the Executive wishes to accept such employment; and

     WHEREAS, it is desirable that the Prior Agreement be replaced by this Agreement so that, on and after the date of this Agreement, this Agreement shall contain the terms and conditions governing the employment of the Executive in the capacity as Chief Claims Officer of the Company.

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

          SECTION 1. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions hereinafter set forth.

          SECTION 2. Term. The term of this Agreement shall commence on the date hereof and shall terminate by its terms as follows: (i) on December 31, 2008, if on or before October 1, 2008 the Company delivers to the Executive a written notice that this Agreement shall not be extended beyond December 31, 2008, or (ii) if no such notice is delivered by October 1, 2008, then this Agreement automatically shall terminate on December 31, 2009 (if in effect, the period from January 1, 2009 to December 31, 2009 is herein referred to as the “Extension Period”); provided, that the Executive’s employment hereunder may be terminated on an earlier date in accordance with the provisions of this Agreement. For purposes of this Agreement, all references to “Employment Period” shall mean the period beginning on the date hereof and ending on the effective termination of the Executive’s employment, and “Termination Date” shall mean the last day of the Executive’s employment under this Agreement (and not the date on which any notice described in the first sentence of this Section 2 is given).

          SECTION 3. Duties. During the Employment Period, the Executive shall be employed as Chief Claims Officer of the Company and shall perform such duties consistent with

such title and shall report to the Chief Executive Officer of the Company. If requested by the Company, during the Employment Period, the Executive shall also serve, without additional compensation, in one or more executive positions and/or as a member of the board of directors of the Company (the “Board of Directors”) or any Affiliate (as defined herein) of the Company. The Executive shall comply fully with all applicable laws, rules and regulations as well as with the Company’s policies, compliance manuals and procedures.

          SECTION 4. Time to be devoted to Employment. The Executive shall devote his entire working time to the business of the Company and shall use his best efforts, skills and abilities in his diligent and faithful performance of his duties and responsibilities hereunder; provided, however, that during the Extension Period, if applicable, the Executive shall be a “part-time” employee and shall not be required to work more than 30 hours per week. During the Employment Period, the Executive shall not engage in any other business activities or hold any office or positions regardless of whether any such activity, office or position is pursued for profit or other pecuniary advantage, without the prior consent of the Company; provided, however, the Executive may own, solely as an investment, 1.0% or less of the securities of any publicly traded corporation.

          SECTION 5. Compensation; Business Expenses; Benefits; Other Matters. (a)  Base Salary. The Company shall pay the Executive an annual salary (the “Base Salary”) of $289,500, less applicable withholding and other deductions, payable in accordance with the Company’s then current payroll practices; provided, however, for and during the Extension Period, if applicable, the Base Salary shall be $125,000, less applicable withholding and other deductions, payable in accordance with the Company’s then current payroll practices.

          (b) Annual Bonus. At such times that the Company has a bonus plan(s) for its senior executive officers, the Executive shall be eligible to participate in such plan(s) and, if determined in the sole judgment of the Board of Directors or any committee that administers such bonus plan, to receive an annual bonus pursuant to such bonus plan. Notwithstanding the foregoing, nothing in this Agreement shall be construed as requiring the Company to establish or maintain any bonus plan or to pay to the Executive any annual bonus. The amount and timing of any annual bonus that may be paid to the Executive will be in the sole discretion of the Board of Directors or any committee that administers such bonus plan.

          (c) Equity Compensation. The Executive shall be eligible to receive such stock options, awards of restricted stock or other types of equity-based compensation as may be determined by the Board of Directors or the Compensation Committee of the Board of Directors (the “Compensation Committee”) in its sole discretion and upon such terms and conditions as are determined by the Board of Directors or the Compensation Committee in its sole discretion

          (d) Participation in Benefits. Other than during the Extension Period, if applicable, the Executive shall be eligible to participate in, and receive benefits under, any pension, profit sharing, medical, group health, hospitalization and disability insurance, stock purchase, stock option, stock ownership, vacation or other employee benefit plan, program or policy of the Company which may be in effect at any time during the course of his employment by the Company and which shall be generally available to senior executive officers of the Company occupying positions of comparable status or responsibility, subject to the terms of such

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plans, programs or policies. In addition, other than during the Extension Period, the Executive shall receive annual reimbursement of up to $10,000 per calendar year for aggregate expenses incurred for financial planning, including the preparation of income tax returns, upon presentation of appropriate receipts for such expenses; provided that (i) the amount of such expenses eligible for reimbursement in one calendar year shall not affect the amount of such expenses eligible for reimbursement in any other calendar year, and (ii) such reimbursement shall be made promptly and in no event later than December 31st of the calendar year next following the calendar year in which such expenses were paid by the Executive. During the Extension Period, if applicable, the Executive shall not eligible to participate in, and receive benefits under, any benefit plans or arrangements of the Company, including, without limitation, those described in this Section 5(d).

          (e) Expense Reimbursement. The Company shall, upon presentation by the Executive to the Company of such appropriate documentation as may be required by the Company, reimburse the Executive, in accordance with its practice from time to time for officers of the Company, for all reasonable and authorized expenses and other disbursements incurred by the Executive for or on behalf of the Company in the performance of his duties hereunder.

          (f) Paid Time Off. During the Employment Period, other than during the Extension Period, if applicable, the Executive shall be entitled to take twenty-nine paid time off days (“PTO”) for each year during the Employment Period, all or a portion of which may be carried over from year to year in accordance with the then-current PTO policy of the Company. The Executive may schedule the PTO as he elects, subject to the Company’s business needs. For the avoidance of doubt, during the Extension Period, if applicable, the Executive shall not be entitled to any PTO days. The Executive shall also be entitled to the paid holidays set forth in the Company’s policies.

          (g) Indemnification. To the fullest extent permitted under applicable law and the charter and by-laws of the Company, the Company and any of its Affiliates shall indemnify and hold harmless the Executive, and advance payment to Executive for costs and expenses, for all liability incurred by him to any third party as a result of the performance of his duties under this Agreement, subject to the recoupment of such advances by the Company if it is ultimately determined that the Executive was not entitled to such indemnification. The Company shall ensure that the Executive is covered by the Company’s director and officer liability insurance policies during the Employment Period and for at least six (6) years thereafter in an amount reasonably determined by the Board of Directors.

          SECTION 6. Involuntary Termination. (a) Disability. If the Executive is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Executive) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement (such condition being hereinafter referred to as a “Disability”) for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued PTO), the Company may, at any time thereafter during the continuation of such Disability, at its option, terminate the Employment Period and the employment of the Executive under this Agreement immediately by giving him written notice to that effect. Until the Executive’s employment hereunder shall have been terminated in accordance with the

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immediately preceding sentence, the Executive shall be entitled to receive the compensation and benefits provided in Section 5 notwithstanding any such Disability (less any Company-paid benefits that he receives, such as short term disability or workers compensation, during such period).

          (b) Death. If the Executive dies, the Employment Period and his employment hereunder shall cease as of the date of his death.

          SECTION 7. Termination For Cause. (a) The Company may terminate the employment of the Executive hereunder at any time for Cause (as hereinafter defined) (such termination being referred to herein as a “Termination For Cause”) by giving the Executive written notice of such termination in accordance with Section 7(b). As used in this Agreement, “Cause” means that the Executive: (i) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (ii) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (iii) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its Affiliates; (iv) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (v) has materially breached his obligations as set forth in this Agreement.

          (b) Termination for Cause shall occur only if the Company shall have given written notice to the Executive specifying the nature of the breach or behavior, and, if the Termination for Cause is pursuant to clauses (ii), (iii) or (v) of Section 7(a), the Executive fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten (10) days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (ii), (iii) or (v) of Section 7(a).

          SECTION 8. Termination Without Cause. The Company may terminate the employment of the Executive hereunder without Cause (such termination being hereinafter referred to as a “Termination Without Cause”) by giving the Executive written notice of such termination, such termination to take effect on the date specified in such notice, which date shall not be earlier than the date on which such notice is given. For the avoidance of doubt, any notice given by the Company to the Executive pursuant to clause (i) in the first sentence of Section 2 shall not be deemed or considered a notice of a Termination Without Cause.

          SECTION 9. Good Reason; Termination due to a Change in Control. (a) The Executive may terminate his employment hereunder upon the existence of Good Reason. For purposes of this Agreement, the following shall constitute “Good Reason”: after written notice setting forth the alleged Good Reason by the Executive to the Company (which notice must be delivered within ninety (90) days of the initial existence of the event or circumstances that constitutes the Good Reason), and the expiration of a 60-day cure period, there continues to be: (i) a material diminution in the Executive’s authority, duties or responsibilities; and/or (ii) a material breach by the Company of any material provision of this Agreement.

          (b) If the Executive terminates this Agreement and his employment hereunder within twenty-four (24) months of a Change in Control (as defined below) for Good Reason, for

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purposes of this Agreement such termination shall be considered a “Termination due to a Change in Control”. For purpose of this Agreement, any termination of the Executive’s employment by the Company within twenty-four (24) months of a Change in Control other than pursuant to Section 6 or Section 7 also shall be considered a Termination due to a Change in Control. A “Change in Control” shall be deemed to have occurred if:

     (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose),

     (ii) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation,

     (iii) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition, or

     (iv) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

     Notwithstanding the foregoing, for purposes of clause (i), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (ii), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (A) to a stockholder in exchange for his stock, (B) to an entity in which the

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Company has (directly or indirectly) more than 50% ownership, or (C) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

          SECTION 10. Effect of Termination.

          (a) Definitions. For purposes of this Agreement, the terms “Accrued Rights,” “Severance Payments” and “Change in Control Severance Payments” shall have the following meanings:

Accrued Rights. The Company shall pay Executive a one-time, lump-sum amount equal to the sum of (A) his earned but unpaid Base Salary, and, if applicable, any accrued and unpaid bonus, each pro-rated through the Termination Date and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date. In addition, the Company shall provide to Executive all payments, rights and benefits due as of the Termination Date under the terms of the Company’s employee and fringe benefit plans, practices, programs and arrangements referred to in Section 5 hereof (together with clauses (A) and (B), the “Accrued Rights”).

Severance Payments. The Company shall pay Executive a lump–sum amount equal to the sum of 150% of his Base Salary if a Termination Without Cause or Termination for Good Reason occurs on or before the applicable stated termination date set forth in the first sentence of Section 2, and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date (if not already covered by a payment of Accrued Rights).

Change in Control Severance Payments. The Company shall pay Executive a lump–sum amount equal to the sum of (A) two times his Base Salary, if the Change in Control occurred on or before the applicable stated termination date set forth in the first sentence of Section 2, and (B) any unreimbursed business expenses or other amounts due to Executive from the Company as of the Termination Date; in addition, all stock options, restricted stock awards or other types of equity-based compensation then held by the Executive which were not previously vested or exercised shall become fully vested and/or exercisable.

          (b) Termination for Cause; Resignation by Executive; Disability; Death. Upon the termination of the Executive’s employment hereunder due to a Termination for Cause, the Resignation by Executive, Disability or death, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights, which shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. For purposes of this Agreement, the defined terms “Resignation” and “Resigns” shall refer to the Executive voluntarily terminating his employment hereunder, other than for Good Reason or Termination due to a Change in Control.

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          (c) Termination Without Cause; Termination for Good Reason. Upon the termination of the Executive’s employment hereunder due to a Termination Without Cause or Termination for Good Reason, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. As used in this Agreement, “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

          (d) Termination due to a Change in Control.

               (i) Upon the termination of the Executive’s employment hereunder due to a Termination due to a Change in Control, neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Change in Control Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for the Change in Control Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive (and full vesting with respect to stock options, restricted stock awards or other types of equity-based compensation shall occur) upon the effective date of the release (and no later than such March 15th date).

               (ii) Notwithstanding any other provisions of this Agreement, if any of the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Executive has the right to receive either directly or indirectly from the Company or any of its Affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such

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benefits and payments to the Executive from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Executive’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Executive if such reduction were not made.

               (iii) All determinations required to be made under clause (ii) of this Section 10(d), and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Executive. The Company shall pay all fees and expenses of the Accounting Firm.

          (e) Severance upon expiration of this Agreement pursuant to Section 2. Unless the Executive’s employment hereunder has not been otherwise terminated on an earlier date in accordance with the provisions of this Agreement, this Agreement expires by its terms on the applicable stated termination date set forth in the first sentence of Section 2, and, upon such expiration of this Agreement, the Executive’s employment shall terminate and neither the Executive nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein. The Accrued Rights shall be paid to the Executive immediately upon termination or as otherwise provided pursuant to the applicable plan, practice, program or arrangement. In consideration for such Severance Payments, and as a condition of the receipt thereof, the Executive agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature, excluding those arising in connection with the enforcement of Executive’s indemnification rights. Such release must become effective on or before March 15th of the calendar year next following the calendar year in which such termination occurs. Provided the release becomes so effective, the Severance Payments shall be paid to the Executive upon the effective date of the release (and no later than such March 15th date).

          (f) 409A.

               (i) In the event that any cash severance benefit or other benefit under this Section 10 shall be subject to Section 409A of the Code and would fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee may attach conditions to or adjust the amounts paid pursuant to this Section 10(f) to preserve, as closely as possible, the economic consequences that would have applied in the absence of this Section 10(f); provided, however, that no such condition or adjustment shall result in the payments being subject to Section

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409A(a)(1) of the Code. The awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

               (ii) To the extent required in order to comply with Section 409A of the Code (if applicable), amounts that would otherwise be payable under Section 10 during the six-month period immediately following the date of termination shall instead be paid on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A of the Code.

          (g) Clawback. If the Company, based upon a final, non-appealable judicial or regulatory determination, determines that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable to the Executive hereunder, to the extent that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, (A) the Executive shall reimburse the Company for (i) any discretionary bonus or other incentive-based or equity-based compensation received by the Executive from the Company or any of its Affiliates and (ii) any profits realized from the sale of securities of the Company, in either case during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement and (B) if the material noncompliance resulted from misconduct by the Executive, (i) neither the Executive nor the Executive’s estate shall be entitled to exercise any stock options or other types of equity-based compensation then held by the Executive and (ii) such written conclusion of legal counsel or judicial determination shall be the grounds for termination of the Executive’s employment by the Company pursuant to Section 7 hereof.

          SECTION 11. Disclosure of Information; Work Product; Warranty. (i) The Executive acknowledges and agrees that there are certain trade secrets and confidential and proprietary information (collectively, “Confidential Information”) which have been developed by the Company and which are used by the Company in its business. Confidential Information shall include, without limitation: (i) customer lists and supplier lists; (ii) the details of the Company’s relationships with its customers, including the financial relationship with a customer, knowledge of the internal “politics”/workings of a customer organization, a customer’s technical needs and job specifications, knowledge of a customer’s strategic plans and the identities of contact persons within a customer’s organization; (iii) the Company’s marketing and development plans, business plans; and (iv) other information proprietary to the Company’s business. The Executive shall not, at any time during or after the Employment Period, use or disclose any Confidential Information, except to authorized representatives of the Company or the customer or as required in the performance of his duties and responsibilities hereunder. Upon the termination of the Executive’s employment hereunder for any reason, the Executive shall as promptly as practicable return all customer and/or Company property, such as computers, software and cell phones, and documents (and any copies including in machine or human-readable form), to the Company. The Executive shall not be required to keep confidential any information, which is or becomes publicly available or is already in his possession (unless obtained from the Company or one of its customers). Further, the Executive shall be free to use and employ his general skills, know-how and expertise, and to use, disclose

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and employ any generalized ideas, concepts, know-how, methods, techniques or skills, including those gained or learned during the course of the performance of any services hereunder, so long as he applies such information without disclosure or use of any Confidential Information.

               (ii) The Executive agrees that all copyrights, patents, trade secrets or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by him during the Employment Period and for a period of six (6) months thereafter, that (i) relate, whether directly or indirectly, to the Company’s actual or anticipated business, research or development or (ii) are suggested by or as a result of any work performed by the Executive on the Company’s behalf, shall, to the extent possible, be considered works made for hire within the meaning of the Copyright Act (17 U.S.C. § 101 et. seq.) (the “Work Product”). All Work Product shall be and remain the property of the Company. To the extent that any such Work Product may not, under applicable law, be considered works made for hire, the Executive hereby grants, transfers, assigns, conveys and relinquishes, and agrees to grant, transfer, assign, convey and relinquish from time to time, on an exclusive basis, all of his right, title and interest in and to the Work Product to the Company in perpetuity or for the longest period otherwise permitted by applicable law. Consistent with his recognition of the Company’s absolute ownership of all Work Product, the Executive agrees that he shall (i) not use any Work Product for the benefit of any party other than the Company and (ii) perform such acts and execute such documents and instruments as the Company may now or hereafter deem reasonably necessary or desirable to evidence the transfer of absolute ownership of all Work Product to the Company; provided, however, if following ten (10) days’ written notice from the Company, the Executive refuses, or is unable, due to disability, incapacity, or death, to execute such documents relating to the Work Product, he hereby appoints any of the Company’s officers as his attorney-in-fact to execute such documents on his behalf. This agency is coupled with an interest and is irrevocable without the Company’s prior written consent.

               (iii) The Executive represents and warrants to the Company that (i) there are no claims that would adversely affect his ability to assign all right, title and interest in and to the Work Product to the Company; (ii) the Work Product does not violate any patent, copyright or other proprietary right of any third party; (iii) the Executive has the legal right to grant the Company the assignment of his interest in the Work Product as set forth in this Agreement; and (iv) he has not brought and will not bring to his employment hereunder, or use in connection with such employment, any trade secret, confidential or proprietary information, or computer software, except for software that he has a right to use for the purpose for which it shall be used, in his employment hereunder.

          SECTION 12. Restrictive Covenants. (a) Non-Competition. The Executive hereby acknowledges and recognizes that during the Employment Period he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Executive. Accordingly, Executive agrees that, in consideration of the premises contained herein, and the consideration to be received by the Executive hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for the applicable period specified in Section 12(g) below from and after the Termination Date (the Employment Period and such additional applicable period collectively being the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director,

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consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in this Section 12(a) shall prohibit the Executive or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

          (b) Customer Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (b)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (b)(ii) and (b)(iii) above, the business solicited is business in which the Company is currently engaged.

          (c) Employee Non-Solicitation. During the Non-Competition Period, the Executive shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

          (d) Non-Disparagement of the Company. The Executive covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

          (e) Non-Disparagement of the Executive. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

          (f) Acknowledgement. The Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Executive does not believe would prevent him from earning a living other than in a business which competes with the Company.

          (g) Period of Non-Competition following Employment Period. For purposes of this Agreement, with respect to the Non-Competition Period, the applicable period following the Termination Date, in respect of the following reasons for termination, shall be:

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               (i) Resignation by Executive: two (2) years; unless the Executive shall have given the Company at least nine (9) months notice of his effective resignation date, in which case fifteen (15) months;

               (ii) Death or Disability: none;

               (iii) Termination for Cause: one (1) year;

               (iv) Termination Without Cause: one (1) year;

               (v) Termination for Good Reason: one (1) year;

               (vi) Termination due to Change in Control: two (2) years.

          SECTION 13. Enforcement; Severability; Etc. It is the desire and intent of the Parties that this Agreement, including, without limitation, the provisions of Sections 11, 12, 13 and 14 of this Agreement, shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of Sections 11, 12 and 14 of this Agreement is adjudicated to be invalid or unenforceable or shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law and such provision shall be deemed modified and amended to the extent necessary to render such provision enforceable in such jurisdiction. The terms of this Agreement are intended to be, and shall be interpreted so as to, comply with Section 409A of the Code, and without having the Executive incur any tax or penalty under Section 409A of the Code as a consequence of the receipt of any payments or benefits under this Agreement. In the event that it is determined that any term or provision of this Agreement does not so comply, then such non-compliant term or provision shall be amended so as to conform to Section 409A of the Code and, to the extent possible, preserve the original intent of the Agreement.

          SECTION 14. Remedies. It is understood by the Parties hereto that the Executive’s obligations and the restrictions and remedies set forth in Sections 11 and 12 are essential elements of this Agreement and that but for his agreement to comply with and/or agree to such obligations, restrictions and remedies, the Company would not have entered into this Agreement or employed (or continued to employ) him. The Executive acknowledges and understands that the provisions of Sections 11 and 12 of this Agreement are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of the provisions of Sections 11 and 12 of this Agreement would cause the Company irreparable harm. In the event of a breach or threatened breach by the Executive of the provisions of Sections 11 and 12 of this Agreement, the Company shall be entitled to an injunction restraining him from such breach or other equitable relief, without posting a bond, in addition to other remedies available to the Company. In the event of a breach by the Executive of the provisions of Section 12 of this Agreement, the term of the Non-Competition Period shall be extended by the period of the duration of such breach. All remedies available for breach of this Agreement are cumulative, and neither the pursuit of any remedy nor anything contained in this Agreement shall be construed as an election of a remedy or as

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prohibiting the Company from or limiting the Company in pursuing any other remedies available for any breach or threatened breach of this Agreement.

          SECTION 15. Notices. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-6001, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Executive, at the address set forth under the name of the Executive on the signature page hereto, or to such other address as the Party to whom notice is to be given may have furnished to the other Party or Parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

          SECTION 16. Tax Withholding. The payments and benefits under this Agreement may be compensation and as such may be included in either the Executive’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          SECTION 17. Binding Agreement; Benefit. Subject to Section 23 below, the provisions of this Agreement will be binding upon, and will inure to the benefit of, the respective heirs, legal representatives, successors and assigns of the Parties. The Executive acknowledges and agrees that each Affiliate of the Company shall be an intended third party beneficiary of this Agreement.

          SECTION 18. Governing Law. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each Party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such Party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT

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IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          SECTION 19. Waiver of Breach. The failure of a Party to enforce any term, provision, or condition of this Agreement at any time or times shall not be deemed a waiver of that term, provision, or condition. The waiver by either Party of a breach of any provision of this Agreement by the other Party must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach by such other Party.

          SECTION 20. Entire Agreement; Amendments. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements or understandings between the Parties with respect thereto. Notwithstanding the foregoing, this Agreement is not intended to exclude any other types of benefits not addressed by this Agreement that may be available to the Executive upon a termination of employment with the Company or its Affiliates, such as “COBRA” continuation. This Agreement may be amended only by an agreement in writing signed by the Parties hereto and authorized by the Company’s Board of Directors or Compensation Committee.

          SECTION 21. Representations and Warranties by Executive. The Executive represents and warrants that he is not a party to or subject to any restrictive covenants, legal restrictions or other agreements in favor of any person or entity which would in any way preclude, inhibit, impair or limit the Executive’s ability to perform his obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements. The Executive acknowledges that he has had a sufficient period of time within which to review this Agreement, including Sections 11 and 12, with an attorney of his choice and he has done so to the extent he desired.

          SECTION 22. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

          SECTION 23. Assignment. This Agreement and the Executive’s performance hereunder are personal to the Executive and shall not be assignable by the Executive. The Company may assign this Agreement to any Affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Executive’s rights under Sections 9(b) and 10(d).

          SECTION 24. Interpretation; Counterparts. No provision of this Agreement is to be interpreted for or against any Party because that Party drafted such provision. For purposes of this Agreement: “herein,” “hereby,” “hereinafter,” “herewith,” “hereafter” and “hereinafter” refer to this Agreement in its entirety, and not to any particular subsection or paragraph. This Agreement may be executed in counterparts, including a facsimile, and each such counterpart

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shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

          SECTION 25. No Mitigation. The Executive shall not be required to mitigate the amount of any benefits under this Agreement by seeking other employment or otherwise. The benefits to be provided pursuant to this Agreement shall not be reduced by any compensation or benefits payable or provided to the Executive as a result of employment by another employer after the date of termination or otherwise.

          SECTION 26. Survival. The provisions of Sections 5(g), 11, 12, 13, 14, 15, 17, 18 and 21 and any other provisions of this Agreement that by their meaning are intended to survive shall survive termination of this Agreement or termination of the employment of the Executive for any reason.

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     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer

EXECUTIVE
By:	/s/ Gary J. Ferguson
	Gary J. Ferguson

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EX-10.4

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) made as of April 7, 2008 between Specialty Underwriters’ Alliance, Inc., a Delaware corporation, and its subsidiaries and affiliates (the “Company”), and Barry G. Cordeiro (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee has had a valued association with the Company and on the date hereof is a Senior Vice President and the Chief Information Officer of the Company; and

WHEREAS, the Employee’s expertise and service to the Company have been of an extraordinary character and of particular importance to the Company; and

WHEREAS, the Company wishes to retain the Employee’s services and allow him to devote his undivided attention to the affairs of the Company by providing a benefit to the Employee in the event of a “change in control” of the Company;

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual covenants and promises of the parties hereto, the Company and the Employee agree as follows:

SECTION ONE
SEVERANCE BENEFITS

(A) If the Employee’s employment is terminated by the Company without Cause or the Employee terminates his employment for Good Reason upon or within twenty-four months following the occurrence of a Change in Control (such twenty-four-month period following the occurrence of the Change in Control being hereinafter referred to as the “Benefit Trigger Period”), the following benefits shall be provided to the Employee:

(i) The Company shall pay to the Employee an amount equal to the sum of (a) two times the Employee’s annual base salary and (b) any unreimbursed business expenses or other amounts due to the Employee from the Company as of the Employee’s date of termination.

(ii) All stock options, restricted stock awards or other types of equity-based compensation then held by the Employee which were not previously vested or exercisable shall become fully vested and/or exercisable, as of the date of such termination of employment.

In consideration of the above benefits, and as a condition of the receipt thereof, the Employee agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any

nature, excluding those arising in connection with the enforcement of the Employee’s indemnification rights (if any).

(B) If, within the Benefit Trigger Period, the Employee’s employment is terminated by the Company for Cause, by the Employee without Good Reason, or because of the Employee’s death or Disability, or if such employment is terminated for any reason following the expiration of the Benefit Trigger Period, no benefits shall be provided to the Employee pursuant to this Agreement.

(C) For purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise:

(i) “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is cotnrolled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following:

(a) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose);

(b) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation;

(c) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition; or

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(d) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

Notwithstanding the foregoing, for purposes of clause (a), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (b), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (i) to a stockholder in exchange for his stock, (ii) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (iii) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

(iii) The Employee’s employment shall be deemed to have been terminated for “Cause” if his employment is terminated because the Employee (a) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (b) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (c) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its affiliates; (d) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (e) has materially breached the duties of his employment. Notwithstanding the foregoing, termination for Cause shall occur only if the Company shall have given written notice to the Employee specifying the nature of the breach or behavior, and, if the termination for Cause is pursuant to clauses (b), (c) or (e) of this subsection, the Employee fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (b), (c) or (e) of this subsection.

(iv) “Disability” shall mean the Employee is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Employee) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services requested to be performed by him for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued vacation time).

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(v) “Good Reason” shall mean, after written notice setting forth the alleged Good Reason by the Employee to the Company, and the expiration of a 60-day cure period, there continues to be: (a) a material adverse change in the Employee’s title, position or responsibilities; and/or (b) a material reduction of the Employee’s base salary.

SECTION TWO
PAYMENT LIMITATION

Notwithstanding any other provision of this Agreement to the contrary, if the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Employee has the right to receive either directly or indirectly from the Company or any of its affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Employee from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Employee’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Employee if such reduction were not made. All determinations required to be made under this Section Two, and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of the Employee’s termination of employment or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Employee. The Company shall pay all fees and expenses of the Accounting Firm.

SECTION THREE
RESTRICTIVE COVENANTS

(A) Non-Competition. The Employee hereby acknowledges and recognizes that during the term of Employee’s employment with the Company (the “Employment Period”) he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein, and the consideration to be received by the Employee hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for a period of one year after the Employment Period (collectively the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in subsection (A) of this Section Three shall prohibit the Employee or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

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(B) Customer Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (B)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (B)(ii) and (B)(iii) above, the business solicited is business in which the Company is currently engaged.

(C) Employee Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

(D) Non-Disparagement of the Company. The Employee covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

(E) Non-Disparagement of the Employee. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

(F) Acknowledgement. The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living other than in a business which competes with the Company.

SECTION FOUR
MODIFICATION OF AGREEMENT

No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by both parties.

SECTION FIVE
SEVERABILITY

All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such

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invalid agreements or covenants were not contained herein. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, contrary to which the parties hereto have no legal right to contract, the latter shall prevail, but in such event any provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements.

SECTION SIX
STRICT ADHERENCE

The failure of a party to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

SECTION SEVEN
ASSIGNMENT

This Agreement is personal to the Employee and shall not be assignable by the Employee. The Company may assign this Agreement to any affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Employee’s rights under subsection (a) of Section One of this Agreement.

SECTION EIGHT
OTHER RIGHTS

This Agreement shall not affect or impair the rights or obligations of the Company or the Employee under any employment agreement between the Company and the Employee, or, except to the extent of the additional benefits provided under subsection (a) of Section One of this Agreement (which shall be in addition to, and not in lieu of, any other benefits to which the Employee may be entitled), under any written plan, contract or arrangement, or pension, profit sharing or other compensation plan.

SECTION NINE
NOTICES

All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-5808, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Employee, at the address set forth under the name of the Employee on the signature page hereto, or to such other address as the party to whom notice is to be given may have furnished to the other party or parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal

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delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

SECTION TEN
ERISA; NON-PROPERTY INTEREST

To the extent that this Agreement is considered to be a plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), it shall be considered an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of U.S. Department of Labor Regulations Section 2520.104-23 or Section 2520.104-24, as applicable. The Employee shall have solely the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. Nothing herein contained shall be construed to give to or vest in the Employee or any other person now or at any time in the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract or other property of any kind whatsoever owned by the Company or in which the Company may have any right, title or interest now or at any time in the future. It is the intention of the Company and the Employee that this Agreement be unfunded for tax purposes and for purposes of Title I of ERISA.

SECTION ELEVEN
GOVERNING LAW

This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY

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SECTION TWELVE
COUNTERPARTS; FACSIMILE SIGNATURES, EXECUTION AND DELIVERY

This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same document, and may be effective upon transmission of a signed facsimile by one party to the other.

SECTION THIRTEEN
TAXES

(A) The payments and benefits under this Agreement may be compensation and as such may be included in either the Employee’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(B) In the event that any cash severance benefit or other benefit under this Agreement shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee of the Company may attach conditions to or adjust the amounts paid pursuant to this Agreement to preserve, as closely as possible, the economic consequences that would have applied in the absence of this subsection (B) of Section Thirteen; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. Awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
HOLDER
By:	/s/ Barry G. Cordeiro
	Barry G. Cordeiro

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EX-10.5

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) made as of April 7, 2008 between Specialty Underwriters’ Alliance, Inc., a Delaware corporation, and its subsidiaries and affiliates (the “Company”), and Scott W. Goodreau (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee has had a valued association with the Company and on the date hereof is a Senior Vice President, the General Counsel, Administration & Corporate Relations, and the Secretary of the Company; and

WHEREAS, the Employee’s expertise and service to the Company have been of an extraordinary character and of particular importance to the Company; and

WHEREAS, the Company wishes to retain the Employee’s services and allow him to devote his undivided attention to the affairs of the Company by providing a benefit to the Employee in the event of a “change in control” of the Company;

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual covenants and promises of the parties hereto, the Company and the Employee agree as follows:

SECTION ONE
SEVERANCE BENEFITS

(A) If the Employee’s employment is terminated by the Company without Cause or the Employee terminates his employment for Good Reason upon or within twenty-four months following the occurrence of a Change in Control (such twenty-four-month period following the occurrence of the Change in Control being hereinafter referred to as the “Benefit Trigger Period”), the following benefits shall be provided to the Employee:

(i) The Company shall pay to the Employee an amount equal to the sum of (a) two times the Employee’s annual base salary and (b) any unreimbursed business expenses or other amounts due to the Employee from the Company as of the Employee’s date of termination.

(ii) All stock options, restricted stock awards or other types of equity-based compensation then held by the Employee which were not previously vested or exercisable shall become fully vested and/or exercisable, as of the date of such termination of employment.

In consideration of the above benefits, and as a condition of the receipt thereof, the Employee agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any

nature, excluding those arising in connection with the enforcement of the Employee’s indemnification rights (if any).

(B) If, within the Benefit Trigger Period, the Employee’s employment is terminated by the Company for Cause, by the Employee without Good Reason, or because of the Employee’s death or Disability, or if such employment is terminated for any reason following the expiration of the Benefit Trigger Period, no benefits shall be provided to the Employee pursuant to this Agreement.

(C) For purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise:

(i) “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is cotnrolled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following:

(a) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose);

(b) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation;

(c) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition; or

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(d) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

Notwithstanding the foregoing, for purposes of clause (a), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (b), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (i) to a stockholder in exchange for his stock, (ii) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (iii) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

(iii) The Employee’s employment shall be deemed to have been terminated for “Cause” if his employment is terminated because the Employee (a) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (b) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (c) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its affiliates; (d) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (e) has materially breached the duties of his employment. Notwithstanding the foregoing, termination for Cause shall occur only if the Company shall have given written notice to the Employee specifying the nature of the breach or behavior, and, if the termination for Cause is pursuant to clauses (b), (c) or (e) of this subsection, the Employee fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (b), (c) or (e) of this subsection.

(iv) “Disability” shall mean the Employee is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Employee) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services requested to be performed by him for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued vacation time).

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(v) “Good Reason” shall mean, after written notice setting forth the alleged Good Reason by the Employee to the Company, and the expiration of a 60-day cure period, there continues to be: (a) a material adverse change in the Employee’s title, position or responsibilities; and/or (b) a material reduction of the Employee’s base salary.

SECTION TWO
PAYMENT LIMITATION

Notwithstanding any other provision of this Agreement to the contrary, if the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Employee has the right to receive either directly or indirectly from the Company or any of its affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Employee from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Employee’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Employee if such reduction were not made. All determinations required to be made under this Section Two, and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of the Employee’s termination of employment or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Employee. The Company shall pay all fees and expenses of the Accounting Firm.

SECTION THREE
RESTRICTIVE COVENANTS

(A) Non-Competition. The Employee hereby acknowledges and recognizes that during the term of Employee’s employment with the Company (the “Employment Period”) he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein, and the consideration to be received by the Employee hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for a period of one year after the Employment Period (collectively the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in subsection (A) of this Section Three shall prohibit the Employee or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

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(B) Customer Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (B)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (B)(ii) and (B)(iii) above, the business solicited is business in which the Company is currently engaged.

(C) Employee Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

(D) Non-Disparagement of the Company. The Employee covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

(E) Non-Disparagement of the Employee. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

(F) Acknowledgement. The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living other than in a business which competes with the Company.

SECTION FOUR
MODIFICATION OF AGREEMENT

No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by both parties.

SECTION FIVE
SEVERABILITY

All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such

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invalid agreements or covenants were not contained herein. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, contrary to which the parties hereto have no legal right to contract, the latter shall prevail, but in such event any provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements.

SECTION SIX
STRICT ADHERENCE

The failure of a party to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

SECTION SEVEN
ASSIGNMENT

This Agreement is personal to the Employee and shall not be assignable by the Employee. The Company may assign this Agreement to any affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Employee’s rights under subsection (a) of Section One of this Agreement.

SECTION EIGHT
OTHER RIGHTS

This Agreement shall not affect or impair the rights or obligations of the Company or the Employee under any employment agreement between the Company and the Employee, or, except to the extent of the additional benefits provided under subsection (a) of Section One of this Agreement (which shall be in addition to, and not in lieu of, any other benefits to which the Employee may be entitled), under any written plan, contract or arrangement, or pension, profit sharing or other compensation plan.

SECTION NINE
NOTICES

All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-5808, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Employee, at the address set forth under the name of the Employee on the signature page hereto, or to such other address as the party to whom notice is to be given may have furnished to the other party or parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal

6

delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

SECTION TEN
ERISA; NON-PROPERTY INTEREST

To the extent that this Agreement is considered to be a plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), it shall be considered an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of U.S. Department of Labor Regulations Section 2520.104-23 or Section 2520.104-24, as applicable. The Employee shall have solely the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. Nothing herein contained shall be construed to give to or vest in the Employee or any other person now or at any time in the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract or other property of any kind whatsoever owned by the Company or in which the Company may have any right, title or interest now or at any time in the future. It is the intention of the Company and the Employee that this Agreement be unfunded for tax purposes and for purposes of Title I of ERISA.

SECTION ELEVEN
GOVERNING LAW

This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY

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SECTION TWELVE
COUNTERPARTS; FACSIMILE SIGNATURES, EXECUTION AND DELIVERY

This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same document, and may be effective upon transmission of a signed facsimile by one party to the other.

SECTION THIRTEEN
TAXES

(A) The payments and benefits under this Agreement may be compensation and as such may be included in either the Employee’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(B) In the event that any cash severance benefit or other benefit under this Agreement shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee of the Company may attach conditions to or adjust the amounts paid pursuant to this Agreement to preserve, as closely as possible, the economic consequences that would have applied in the absence of this subsection (B) of Section Thirteen; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. Awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
HOLDER
By:	/s/ Scott W. Goodreau
	Scott W. Goodreau

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EX-10.6

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) made as of April 7, 2008 between Specialty Underwriters’ Alliance, Inc., a Delaware corporation, and its subsidiaries and affiliates (the “Company”), and Scott K. Charbonneau (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee has had a valued association with the Company and on the date hereof is a Vice President and the Chief Actuary of the Company; and

WHEREAS, the Employee’s expertise and service to the Company have been of an extraordinary character and of particular importance to the Company; and

WHEREAS, the Company wishes to retain the Employee’s services and allow him to devote his undivided attention to the affairs of the Company by providing a benefit to the Employee in the event of a “change in control” of the Company;

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual covenants and promises of the parties hereto, the Company and the Employee agree as follows:

SECTION ONE
SEVERANCE BENEFITS

(A) If the Employee’s employment is terminated by the Company without Cause or the Employee terminates his employment for Good Reason upon or within twenty-four months following the occurrence of a Change in Control (such twenty-four-month period following the occurrence of the Change in Control being hereinafter referred to as the “Benefit Trigger Period”), the following benefits shall be provided to the Employee:

(i) The Company shall pay to the Employee an amount equal to the sum of (a) the Employee’s annual base salary and (b) any unreimbursed business expenses or other amounts due to the Employee from the Company as of the Employee’s date of termination.

(ii) All stock options, restricted stock awards or other types of equity-based compensation then held by the Employee which were not previously vested or exercisable shall become fully vested and/or exercisable, as of the date of such termination of employment.

In consideration of the above benefits, and as a condition of the receipt thereof, the Employee agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any

nature, excluding those arising in connection with the enforcement of the Employee’s indemnification rights (if any).

(B) If, within the Benefit Trigger Period, the Employee’s employment is terminated by the Company for Cause, by the Employee without Good Reason, or because of the Employee’s death or Disability, or if such employment is terminated for any reason following the expiration of the Benefit Trigger Period, no benefits shall be provided to the Employee pursuant to this Agreement.

(C) For purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise:

(i) “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is cotnrolled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following:

(a) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose);

(b) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation;

(c) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition; or

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(d) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

Notwithstanding the foregoing, for purposes of clause (a), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (b), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (i) to a stockholder in exchange for his stock, (ii) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (iii) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

(iii) The Employee’s employment shall be deemed to have been terminated for “Cause” if his employment is terminated because the Employee (a) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (b) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (c) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its affiliates; (d) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (e) has materially breached the duties of his employment. Notwithstanding the foregoing, termination for Cause shall occur only if the Company shall have given written notice to the Employee specifying the nature of the breach or behavior, and, if the termination for Cause is pursuant to clauses (b), (c) or (e) of this subsection, the Employee fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (b), (c) or (e) of this subsection.

(iv) “Disability” shall mean the Employee is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Employee) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services requested to be performed by him for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued vacation time).

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(v) “Good Reason” shall mean, after written notice setting forth the alleged Good Reason by the Employee to the Company, and the expiration of a 60-day cure period, there continues to be: (a) a material adverse change in the Employee’s title, position or responsibilities; and/or (b) a material reduction of the Employee’s base salary.

SECTION TWO
PAYMENT LIMITATION

Notwithstanding any other provision of this Agreement to the contrary, if the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Employee has the right to receive either directly or indirectly from the Company or any of its affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Employee from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Employee’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Employee if such reduction were not made. All determinations required to be made under this Section Two, and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of the Employee’s termination of employment or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Employee. The Company shall pay all fees and expenses of the Accounting Firm.

SECTION THREE
RESTRICTIVE COVENANTS

(A) Non-Competition. The Employee hereby acknowledges and recognizes that during the term of Employee’s employment with the Company (the “Employment Period”) he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein, and the consideration to be received by the Employee hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for a period of one year after the Employment Period (collectively the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in subsection (A) of this Section Three shall prohibit the Employee or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

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(B) Customer Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (B)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (B)(ii) and (B)(iii) above, the business solicited is business in which the Company is currently engaged.

(C) Employee Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

(D) Non-Disparagement of the Company. The Employee covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

(E) Non-Disparagement of the Employee. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

(F) Acknowledgement. The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living other than in a business which competes with the Company.

SECTION FOUR
MODIFICATION OF AGREEMENT

No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by both parties.

SECTION FIVE
SEVERABILITY

All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such

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invalid agreements or covenants were not contained herein. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, contrary to which the parties hereto have no legal right to contract, the latter shall prevail, but in such event any provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements.

SECTION SIX
STRICT ADHERENCE

The failure of a party to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

SECTION SEVEN
ASSIGNMENT

This Agreement is personal to the Employee and shall not be assignable by the Employee. The Company may assign this Agreement to any affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Employee’s rights under subsection (a) of Section One of this Agreement.

SECTION EIGHT
OTHER RIGHTS

This Agreement shall not affect or impair the rights or obligations of the Company or the Employee under any employment agreement between the Company and the Employee, or, except to the extent of the additional benefits provided under subsection (a) of Section One of this Agreement (which shall be in addition to, and not in lieu of, any other benefits to which the Employee may be entitled), under any written plan, contract or arrangement, or pension, profit sharing or other compensation plan.

SECTION NINE
NOTICES

All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-5808, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Employee, at the address set forth under the name of the Employee on the signature page hereto, or to such other address as the party to whom notice is to be given may have furnished to the other party or parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal

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delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

SECTION TEN
ERISA; NON-PROPERTY INTEREST

To the extent that this Agreement is considered to be a plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), it shall be considered an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of U.S. Department of Labor Regulations Section 2520.104-23 or Section 2520.104-24, as applicable. The Employee shall have solely the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. Nothing herein contained shall be construed to give to or vest in the Employee or any other person now or at any time in the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract or other property of any kind whatsoever owned by the Company or in which the Company may have any right, title or interest now or at any time in the future. It is the intention of the Company and the Employee that this Agreement be unfunded for tax purposes and for purposes of Title I of ERISA.

SECTION ELEVEN
GOVERNING LAW

This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY

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SECTION TWELVE
COUNTERPARTS; FACSIMILE SIGNATURES, EXECUTION AND DELIVERY

This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same document, and may be effective upon transmission of a signed facsimile by one party to the other.

SECTION THIRTEEN
TAXES

(A) The payments and benefits under this Agreement may be compensation and as such may be included in either the Employee’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(B) In the event that any cash severance benefit or other benefit under this Agreement shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee of the Company may attach conditions to or adjust the amounts paid pursuant to this Agreement to preserve, as closely as possible, the economic consequences that would have applied in the absence of this subsection (B) of Section Thirteen; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. Awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
HOLDER
By:	/s/ Scott K. Charbonneau
	Scott K. Charbonneau

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EX-10.7

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) made as of April 7, 2008 between Specialty Underwriters’ Alliance, Inc., a Delaware corporation, and its subsidiaries and affiliates (the “Company”), and Daniel A. Cacchione (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee has had a valued association with the Company and on the date hereof is a Vice President and the Chief Underwriting Officer; and

WHEREAS, the Employee’s expertise and service to the Company have been of an extraordinary character and of particular importance to the Company; and

WHEREAS, the Company wishes to retain the Employee’s services and allow him to devote his undivided attention to the affairs of the Company by providing a benefit to the Employee in the event of a “change in control” of the Company;

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual covenants and promises of the parties hereto, the Company and the Employee agree as follows:

SECTION ONE
SEVERANCE BENEFITS

(A) If the Employee’s employment is terminated by the Company without Cause or the Employee terminates his employment for Good Reason upon or within twenty-four months following the occurrence of a Change in Control (such twenty-four-month period following the occurrence of the Change in Control being hereinafter referred to as the “Benefit Trigger Period”), the following benefits shall be provided to the Employee:

(i) The Company shall pay to the Employee an amount equal to the sum of (a) the Employee’s annual base salary and (b) any unreimbursed business expenses or other amounts due to the Employee from the Company as of the Employee’s date of termination.

(ii) All stock options, restricted stock awards or other types of equity-based compensation then held by the Employee which were not previously vested or exercisable shall become fully vested and/or exercisable, as of the date of such termination of employment.

In consideration of the above benefits, and as a condition of the receipt thereof, the Employee agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any

nature, excluding those arising in connection with the enforcement of the Employee’s indemnification rights (if any).

(B) If, within the Benefit Trigger Period, the Employee’s employment is terminated by the Company for Cause, by the Employee without Good Reason, or because of the Employee’s death or Disability, or if such employment is terminated for any reason following the expiration of the Benefit Trigger Period, no benefits shall be provided to the Employee pursuant to this Agreement.

(C) For purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise:

(i) “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is cotnrolled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following:

(a) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose);

(b) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation;

(c) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition; or

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(d) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

Notwithstanding the foregoing, for purposes of clause (a), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (b), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (i) to a stockholder in exchange for his stock, (ii) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (iii) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

(iii) The Employee’s employment shall be deemed to have been terminated for “Cause” if his employment is terminated because the Employee (a) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (b) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (c) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its affiliates; (d) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (e) has materially breached the duties of his employment. Notwithstanding the foregoing, termination for Cause shall occur only if the Company shall have given written notice to the Employee specifying the nature of the breach or behavior, and, if the termination for Cause is pursuant to clauses (b), (c) or (e) of this subsection, the Employee fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (b), (c) or (e) of this subsection.

(iv) “Disability” shall mean the Employee is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Employee) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services requested to be performed by him for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued vacation time).

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(v) “Good Reason” shall mean, after written notice setting forth the alleged Good Reason by the Employee to the Company, and the expiration of a 60-day cure period, there continues to be: (a) a material adverse change in the Employee’s title, position or responsibilities; and/or (b) a material reduction of the Employee’s base salary.

SECTION TWO
PAYMENT LIMITATION

Notwithstanding any other provision of this Agreement to the contrary, if the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Employee has the right to receive either directly or indirectly from the Company or any of its affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Employee from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Employee’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Employee if such reduction were not made. All determinations required to be made under this Section Two, and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of the Employee’s termination of employment or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Employee. The Company shall pay all fees and expenses of the Accounting Firm.

SECTION THREE
RESTRICTIVE COVENANTS

(A) Non-Competition. The Employee hereby acknowledges and recognizes that during the term of Employee’s employment with the Company (the “Employment Period”) he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein, and the consideration to be received by the Employee hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for a period of one year after the Employment Period (collectively the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in subsection (A) of this Section Three shall prohibit the Employee or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

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(B) Customer Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (B)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (B)(ii) and (B)(iii) above, the business solicited is business in which the Company is currently engaged.

(C) Employee Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

(D) Non-Disparagement of the Company. The Employee covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

(E) Non-Disparagement of the Employee. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

(F) Acknowledgement. The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living other than in a business which competes with the Company.

SECTION FOUR
MODIFICATION OF AGREEMENT

No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by both parties.

SECTION FIVE
SEVERABILITY

All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such

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invalid agreements or covenants were not contained herein. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, contrary to which the parties hereto have no legal right to contract, the latter shall prevail, but in such event any provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements.

SECTION SIX
STRICT ADHERENCE

The failure of a party to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

SECTION SEVEN
ASSIGNMENT

This Agreement is personal to the Employee and shall not be assignable by the Employee. The Company may assign this Agreement to any affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Employee’s rights under subsection (a) of Section One of this Agreement.

SECTION EIGHT
OTHER RIGHTS

This Agreement shall not affect or impair the rights or obligations of the Company or the Employee under any employment agreement between the Company and the Employee, or, except to the extent of the additional benefits provided under subsection (a) of Section One of this Agreement (which shall be in addition to, and not in lieu of, any other benefits to which the Employee may be entitled), under any written plan, contract or arrangement, or pension, profit sharing or other compensation plan.

SECTION NINE
NOTICES

All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-5808, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Employee, at the address set forth under the name of the Employee on the signature page hereto, or to such other address as the party to whom notice is to be given may have furnished to the other party or parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal

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delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

SECTION TEN
ERISA; NON-PROPERTY INTEREST

To the extent that this Agreement is considered to be a plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), it shall be considered an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of U.S. Department of Labor Regulations Section 2520.104-23 or Section 2520.104-24, as applicable. The Employee shall have solely the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. Nothing herein contained shall be construed to give to or vest in the Employee or any other person now or at any time in the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract or other property of any kind whatsoever owned by the Company or in which the Company may have any right, title or interest now or at any time in the future. It is the intention of the Company and the Employee that this Agreement be unfunded for tax purposes and for purposes of Title I of ERISA.

SECTION ELEVEN
GOVERNING LAW

This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY

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SECTION TWELVE
COUNTERPARTS; FACSIMILE SIGNATURES, EXECUTION AND DELIVERY

This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same document, and may be effective upon transmission of a signed facsimile by one party to the other.

SECTION THIRTEEN
TAXES

(A) The payments and benefits under this Agreement may be compensation and as such may be included in either the Employee’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(B) In the event that any cash severance benefit or other benefit under this Agreement shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee of the Company may attach conditions to or adjust the amounts paid pursuant to this Agreement to preserve, as closely as possible, the economic consequences that would have applied in the absence of this subsection (B) of Section Thirteen; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. Awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
HOLDER
By:	/s/ Daniel A. Cacchione
	Daniel A. Cacchione

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EX-10.8

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) made as of April 7, 2008 between Specialty Underwriters’ Alliance, Inc., a Delaware corporation, and its subsidiaries and affiliates (the “Company”), and Daniel J. Rohan (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Employee has had a valued association with the Company and on the date hereof is a Vice President and the Controller of the Company; and

WHEREAS, the Employee’s expertise and service to the Company have been of an extraordinary character and of particular importance to the Company; and

WHEREAS, the Company wishes to retain the Employee’s services and allow him to devote his undivided attention to the affairs of the Company by providing a benefit to the Employee in the event of a “change in control” of the Company;

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual covenants and promises of the parties hereto, the Company and the Employee agree as follows:

SECTION ONE
SEVERANCE BENEFITS

(A) If the Employee’s employment is terminated by the Company without Cause or the Employee terminates his employment for Good Reason upon or within twenty-four months following the occurrence of a Change in Control (such twenty-four-month period following the occurrence of the Change in Control being hereinafter referred to as the “Benefit Trigger Period”), the following benefits shall be provided to the Employee:

(i) The Company shall pay to the Employee an amount equal to the sum of (a) the Employee’s annual base salary and (b) any unreimbursed business expenses or other amounts due to the Employee from the Company as of the Employee’s date of termination.

(ii) All stock options, restricted stock awards or other types of equity-based compensation then held by the Employee which were not previously vested or exercisable shall become fully vested and/or exercisable, as of the date of such termination of employment.

In consideration of the above benefits, and as a condition of the receipt thereof, the Employee agrees to execute a release releasing the Company and its Affiliates from all actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any

nature, excluding those arising in connection with the enforcement of the Employee’s indemnification rights (if any).

(B) If, within the Benefit Trigger Period, the Employee’s employment is terminated by the Company for Cause, by the Employee without Good Reason, or because of the Employee’s death or Disability, or if such employment is terminated for any reason following the expiration of the Benefit Trigger Period, no benefits shall be provided to the Employee pursuant to this Agreement.

(C) For purposes of this Agreement, the following terms shall have the meanings set forth below, unless the context clearly indicates otherwise:

(i) “Affiliate” means, with respect to any person or entity, any other person or entity who directly or indirectly through one or more intermediaries controls, is cotnrolled by, or is under common control with such person or entity; “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of a person or entity whether through ownership of voting securities, by contract or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following:

(a) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (“Person”), acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such Person) direct or indirect beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the then outstanding securities of the Company (provided that acquisitions by the Executive or any existing stockholder of the Company owning more than 20% of the combined voting power of the then outstanding securities of the Company as of the date of this Agreement shall be ignored for this purpose);

(b) a merger or consolidation of the Company with any other corporation is consummated, other than a merger or consolidation which resulted in all or substantially all of the holders of the Company’s voting securities immediately prior thereto continuing to hold at least 50% of the combined voting power of the outstanding voting securities of the Company or of the surviving entity immediately after such merger or consolidation;

(c) the Board of Directors of the Company approves a plan of complete liquidation of the Company or the Company is sold or all or substantially all of the Company’s assets are sold or disposed of other than any such sale or disposition where all or substantially all of the holders of the Company’s voting securities immediately prior thereto continue to hold at least 50% of the combined voting power of the outstanding voting securities of the acquiror or transferee entity immediately after such sale or disposition; or

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(d) individuals who, on the date following the date of the Company’s 2007 annual meeting of stockholders, are directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the directors; provided, however, that if the appointment or election (or nomination for election) of any new director was approved or recommended by a majority vote of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, unless such new director’s initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Incumbent Board.

Notwithstanding the foregoing, for purposes of clause (a), a Change in Control will not be deemed to have occurred if the power to control (directly or indirectly) the management and policies of the Company is not transferred from a Person to another Person; and, for purposes of clause (b), a Change in Control will not be deemed to occur if the assets of the Company are transferred: (i) to a stockholder in exchange for his stock, (ii) to an entity in which the Company has (directly or indirectly) more than 50% ownership, or (iii) to a Person that has (directly or directly) more than 50% ownership of the Company with respect to its stock outstanding, or to any entity in which such Person possesses (directly or indirectly) more than 50% ownership.

(iii) The Employee’s employment shall be deemed to have been terminated for “Cause” if his employment is terminated because the Employee (a) has committed an act constituting a misdemeanor involving moral turpitude or a felony under the laws of the United States or any state or political subdivision thereof; (b) has committed an act constituting a breach of fiduciary duty, gross negligence or willful misconduct; (c) has engaged in conduct that violated the Company’s then existing material internal policies or procedures and which is detrimental to the business, reputation, character or standing of the Company or any of its affiliates; (d) has committed an act of fraud, self dealing, conflict of interest, dishonesty or misrepresentation; or (e) has materially breached the duties of his employment. Notwithstanding the foregoing, termination for Cause shall occur only if the Company shall have given written notice to the Employee specifying the nature of the breach or behavior, and, if the termination for Cause is pursuant to clauses (b), (c) or (e) of this subsection, the Employee fails to correct (if correctable) such breach or behavior as soon as practicable thereafter but no later than ten days after receipt of the applicable notice, provided that there shall be only one notice and opportunity to correct with respect to clauses (b), (c) or (e) of this subsection.

(iv) “Disability” shall mean the Employee is incapacitated or disabled (as determined by a physician mutually acceptable to the Company and the Employee) by accident, sickness or otherwise so as to render him mentally or physically incapable of performing the services requested to be performed by him for an aggregate period of 180 days or more during any twelve month period (whether or not consecutive and after using up any accrued vacation time).

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(v) “Good Reason” shall mean, after written notice setting forth the alleged Good Reason by the Employee to the Company, and the expiration of a 60-day cure period, there continues to be: (a) a material adverse change in the Employee’s title, position or responsibilities; and/or (b) a material reduction of the Employee’s base salary.

SECTION TWO
PAYMENT LIMITATION

Notwithstanding any other provision of this Agreement to the contrary, if the benefits and payments provided under this Agreement, either alone or together with other benefits and payments which the Employee has the right to receive either directly or indirectly from the Company or any of its affiliates, would constitute an excess parachute payment (the “Excess Payment”) under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the Employee hereby agrees that the benefits and payments provided under this Agreement shall be reduced (but not below zero) by the amount necessary to prevent any such benefits and payments to the Employee from constituting an Excess Payment; provided, however, that such reduction shall be made only if, by reason of such reduction, the Employee’s net after-tax economic benefit shall exceed the net after-tax economic benefit to the Employee if such reduction were not made. All determinations required to be made under this Section Two, and the assumptions to be utilized in arriving at such determination, shall be made by the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of the Employee’s termination of employment or, if the parties determine that the certified public accounting firm used for auditing purposes by the Company immediately prior to the date of termination cannot make such determination because of legal restrictions, the parties shall agree on a different certified public accounting firm (such certified public accounting firm is hereinafter referred to as the “Accounting Firm”), which shall promptly provide detailed supporting calculations both to the Company and the Employee. The Company shall pay all fees and expenses of the Accounting Firm.

SECTION THREE
RESTRICTIVE COVENANTS

(A) Non-Competition. The Employee hereby acknowledges and recognizes that during the term of Employee’s employment with the Company (the “Employment Period”) he will be privy to trade secrets and confidential information critical to the Company’s business and that the Company would find it extremely difficult or impossible to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein, and the consideration to be received by the Employee hereunder, he will not and will not permit any of his Affiliates to, except with the Company’s prior written consent, during the Employment Period and for a period of one year after the Employment Period (collectively the “Non-Competition Period”), engage, directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in any activity that competes with the Company or any of its Affiliates in the business of insurance. Nothing in subsection (A) of this Section Three shall prohibit the Employee or any of his Affiliates from owning for passive investment purposes less than 5% of the publicly traded securities of any corporation listed on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.

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(B) Customer Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entity which (i) is currently a customer or party to any insurance-related contract with the Company and/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with the Company and/or its Affiliates during the two year period immediately preceding such solicitation or (iii) was solicited by the Company and/or its Affiliates during the two year period immediately preceding such solicitation, provided that in the case of (B)(i) above such solicitation diverted or attempted to divert the business of the Company and/or its Affiliates to another person or entity or in the case of (B)(ii) and (B)(iii) above, the business solicited is business in which the Company is currently engaged.

(C) Employee Non-Solicitation. During the Non-Competition Period, the Employee shall not, and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment, engage and/or hire, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who is then employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractor or consultant to end his/her business relationship with the Company and/or its Affiliates.

(D) Non-Disparagement of the Company. The Employee covenants that he will not, directly or indirectly at any time during or after the Employment Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents.

(E) Non-Disparagement of the Employee. The Company covenants that it will not, directly or indirectly at any time during or after the Employment Period, disparage the Executive.

(F) Acknowledgement. The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to clearly justify such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living other than in a business which competes with the Company.

SECTION FOUR
MODIFICATION OF AGREEMENT

No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by both parties.

SECTION FIVE
SEVERABILITY

All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there

5

is any conflict between any provision of this Agreement and any statute, law, ordinance, order or regulation, contrary to which the parties hereto have no legal right to contract, the latter shall prevail, but in such event any provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements.

SECTION SIX
STRICT ADHERENCE

The failure of a party to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

SECTION SEVEN
ASSIGNMENT

This Agreement is personal to the Employee and shall not be assignable by the Employee. The Company may assign this Agreement to any affiliate or to any successor to all or substantially all of the business and/or assets of the Company, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. However, any such assignment by the Company shall still be subject to the Employee’s rights under subsection (a) of Section One of this Agreement.

SECTION EIGHT
OTHER RIGHTS

This Agreement shall not affect or impair the rights or obligations of the Company or the Employee under any employment agreement between the Company and the Employee, or, except to the extent of the additional benefits provided under subsection (a) of Section One of this Agreement (which shall be in addition to, and not in lieu of, any other benefits to which the Employee may be entitled), under any written plan, contract or arrangement, or pension, profit sharing or other compensation plan.

SECTION NINE
NOTICES

All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600, Chicago, IL 60606-5808, Facsimile: (312) 277-1800, Attention: General Counsel with a copy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W. Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Employee, at the address set forth under the name of the Employee on the signature page hereto, or to such other address as the party to whom notice is to be given may have furnished to the other party or parties in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when

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received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted. Written notice from the Company’s Board of Directors shall constitute proper notice from the Company in all cases relating to this Agreement.

SECTION TEN
ERISA; NON-PROPERTY INTEREST

To the extent that this Agreement is considered to be a plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), it shall be considered an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees, within the meaning of U.S. Department of Labor Regulations Section 2520.104-23 or Section 2520.104-24, as applicable. The Employee shall have solely the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. Nothing herein contained shall be construed to give to or vest in the Employee or any other person now or at any time in the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract or other property of any kind whatsoever owned by the Company or in which the Company may have any right, title or interest now or at any time in the future. It is the intention of the Company and the Employee that this Agreement be unfunded for tax purposes and for purposes of Title I of ERISA.

SECTION ELEVEN
GOVERNING LAW

This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of Illinois without giving effect to any principles of conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY

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SECTION TWELVE
COUNTERPARTS; FACSIMILE SIGNATURES, EXECUTION AND DELIVERY

This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same document, and may be effective upon transmission of a signed facsimile by one party to the other.

SECTION THIRTEEN
TAXES

(A) The payments and benefits under this Agreement may be compensation and as such may be included in either the Employee’s W-2 earnings statements or 1099 statements. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(B) In the event that any cash severance benefit or other benefit under this Agreement shall fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then the payment of such benefits shall be delayed to the minimum extent necessary so that such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and any such payments or benefits will be accumulated and paid or provided on the earliest permissible date pursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the Compensation Committee of the Company may attach conditions to or adjust the amounts paid pursuant to this Agreement to preserve, as closely as possible, the economic consequences that would have applied in the absence of this subsection (B) of Section Thirteen; provided, however, that no such condition or adjustment shall result in the payments being subject to Section 409A(a)(1) of the Code. Awards or grants of options, restricted stock and/or other types of equity-based compensation may contain additional provisions relating to the application of Section 409A of the Code and to this Agreement and the payments and benefits distributed hereunder.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
By:	/s/ Courtney C. Smith
	Courtney C. Smith
	President & Chief Executive Officer
HOLDER
By:	/s/ Daniel J. Rohan
	Daniel J. Rohan

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EX-31.1

Exhibit 31.1 CERTIFICATION

I, Courtney C. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Specialty Underwriters’ Alliance, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008

/s/ Courtney C. Smith  

Courtney C. Smith 

President and Chief Executive Officer 

EX-31.2

Exhibit 31.2 CERTIFICATION

I, Peter E. Jokiel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Specialty Underwriters’ Alliance, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(c)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(d)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
(e)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(f)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(g)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(h)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008

/s/ Peter E. Jokiel  

Peter E. Jokiel 

Executive Vice President and Chief Financial Officer 

EX-32.1

Exhibit 32.1

Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     I, Courtney C. Smith, Chief Executive Officer of Specialty Underwriters’ Alliance, Inc. (the “Company”), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows:

     (i) The quarterly report on Form 10-Q of the Company for the period ended June 30, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (ii) The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

     IN WITNESS WHEREOF, I have executed this Certification this 8^th day of August, 2008.

/s/ Courtney C. Smith  

Courtney C. Smith 

Chief Executive Officer 

A signed original of this written statement required by Section 906 has been provided to Specialty Underwriters’ Alliance, Inc. and will be retained by Specialty Underwriters’ Alliance, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     I, Peter E. Jokiel, Chief Financial Officer of Specialty Underwriters’ Alliance, Inc. (the “Company”), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows:

     (i) The quarterly report on Form 10-Q of the Company for the period ended June 30, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (ii) The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

     IN WITNESS WHEREOF, I have executed this Certification this 8^th day of August, 2008.

/s/ Peter E. Jokiel  

Peter E. Jokiel 

Chief Financial Officer 

A signed original of this written statement required by Section 906 has been provided to Specialty Underwriters’ Alliance, Inc. and will be retained by Specialty Underwriters’ Alliance, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.