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EXHIBIT 10(6)
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is executed this 25 day of
April , 1996 and dated as of and effective as of the 15th day of April, 1996, by
and between Western Surety Company (the "Company"), a South Dakota Corporation,
and Stephen T. Pate (the "Employee").
RECITALS
1. Employment.
(a) For the term indicated in Section 2 hereof, the Company
engages and employs Employee, and Employee accepts such employment and agrees to
act as an employee of the Company, all in accordance with the terms provided
herein.
(b) The Employee is hereby employed as President and Chief
Operating Officer, and he agrees to perform such duties as are commensurate with
such office, subject to the direction, approval and control of the Chief
Executive Officer of the Company and its Board of Directors. The Company agrees
that, so long as the Employee is employed under this Agreement, all voting
rights held, directly or indirectly, by them, their nominees or assignees, shall
all be voted in favor of the Employee to be nominated to the Board of any
subsidiaries of the Company, and to be elected to such Boards at each meeting of
their respective stockholders at which the class of Directors to which the
Employee is assigned is to be elected.
(c) The Employee agrees that during the term hereof he shall
serve the Company diligently and faithfully and will devote all of his work
time, skill, effort and energy to the conduct of the business of the Company.
2. Term of Employment.
(a) The term of the Employee's employment hereunder shall
commence April 15, 1996 and continue until April 14, 1998 (the "Term"), unless
sooner terminated as provided below. Upon the expiration of the original Term,
Employee's employment by the Company shall thereafter continue from month to
month on the same terms and conditions, with either party then having the right
to terminate said employment upon thirty (30) days prior written notice to the
other.
(b) This Agreement shall be terminated upon the occurrence of
any of the following:
(i) the mutual agreement of the Company and the
Employee;
(ii) the death of Employee;
(iii) if Employee shall be unable to perform his
duties hereunder by reason of illness or
incapacity for any consecutive two (2) month
period or for three (3) months in the
aggregate during any twelve (12) month
period, upon written notice from the
Company;
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(iv) for good and sufficient cause, upon written
notice from the Company; or
(v) a determination by the Board of Directors of
the Company that the termination of this
Agreement is necessary by reason of a
determination of the Director of Insurance
of the State of South Dakota (or by any
other insurance department having
jurisdiction over the Company or any
subsidiary or affiliate) that the Employee
must be removed or disqualified from acting
as an officer or director of the Company.
(c) This Agreement may also be terminated at any time by the
Company, without good and sufficient cause, in which case the Company shall pay
the Employee, within thirty (30) days of said termination, one lump sum payment
representing the discounted present value (using a eight percent (8%) interest
rate) of the balance of the salary that the Company would have paid Employee
during the Term of this Agreement, if Employee's employment had not been so
terminated.
3. Compensation.
(a) The Company shall pay Employee a base salary at the annual
rate of $262,500.00 for the first 12-months hereunder, payable according to the
Company's regular payroll policy. The base salary paid hereunder shall be
reviewed by the Company after the first 12-months hereunder (however in no event
shall base salary be decreased as a result of such review).
(b) The compensation payable hereunder shall be subject to all
applicable withholding taxes, other normal payroll deductions and any other
amounts required by law to be withheld.
(c) In addition to the base salary hereunder, the Company
shall determine and pay to Employee a discretionary performance bonus after each
full calendar year during the Term of this Agreement, such bonus to be in the
amount not less than $0 and not more than $50,000.00.
4. Expenses. The Company will reimburse Employee in accordance with the
Company's standard policy guidelines for the reasonable and necessary expenses
incurred by Employee in the normal course of the Company's business.
5. Benefits. During the term of this Agreement, Employee shall be
entitled to participate in all customary employee benefit programs, including
health insurance programs, the 401(k) retirement program and health club
membership, which are established for the Company's employees similarly situated
to Employee, all to the extent he satisfies the eligibility requirements
thereof. Employee shall also be entitled to paid annual vacation time of up to
four weeks in accordance with the Company's standard policy guidelines as to
prior notice and approval thereof. In addition, the Company shall reimburse the
Employee for the initiation fees, regular monthly assessments, special
assessments and other charges incurred by Employee to join and maintain a
membership at the Minnehaha Country Club during the Term of this Agreement.
6. Non-Competition. The Company has, since 1900, developed a unique and
successful approach to the miscellaneous bond business. The miscellaneous bond
business is a unique and
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highly specialized segment of the American property and casualty insurance
industry. The Company actively markets its products in all 50 states of the
United States of America and in the District of Columbia. The Company's products
are marketed to and through the independent insurance agency network and the
continued goodwill of agents is essential to the Company. In the course of the
Employee's employment, Employee will acquire confidential information in both
written and non-written form of a special and unique nature and value relating
to the Company's business and such information shall be considered by the
parties to be trade secrets owned by the Company. This information shall
include, but is not limited to, the names and addresses of customers (agents)
and potential customers, records concerning customer contacts and customer
purchases, the identity of customers' key employees, information concerning
Company systems, policies, methods of operations, procedures, manuals, pricing
and all other non-public information acquired by the Employee as a result of or
during the course of employment. Due to the unique nature of its forms,
procedures and sales techniques and the training it provides to its employees,
the Company is susceptible to significant and material injury from former
employees utilizing their Company training and knowledge to the Company's
competitive disadvantage. Therefore, the Employee hereby agrees that upon the
termination of this Agreement, for any reason, the Employee shall:
(a) Return to the Company any equipment, records, lists
or other business related materials (including
originals and all copies) acquired by the Employee in
the course of employment with the Company; and
(b) Not at any time or in any manner, either directly or
indirectly, divulge or disclose the Company's trade
secrets to any other person or entity; and
(c) For two (2) years thereafter refrain from (i) hiring
any person who was an employee of the Company at any
time during the term of this Agreement, and (ii)
calling upon or otherwise contacting any of the top
200 customers (agents) of the Company for the
previous calendar year, for the purpose of soliciting
small, miscellaneous fidelity and surety bonds, which
is the Company's main business.
Employee's obligations under this paragraph 6 shall survive
the termination of this Agreement and his employment by the Company and shall
terminate with regard to any confidential information only when it ceases to be
confidential information.
7. Remedies. Both parties recognize that the services to be rendered by
Employee are unique in character and that a breach by Employee of the terms and
conditions of this Agreement would irreparably harm the Company. Accordingly, in
the event of any such breach, in addition to all other remedies available to it
in law, the Company shall be entitled to have an injunction issued by any court
of competent jurisdiction enjoining and restraining Employee and each and every
party concerned therewith from doing any act in violation of any provisions of
this Agreement. For purposes of this paragraph and paragraph 6 hereof, the term
"Company" shall include the Company, its subsidiaries and other affiliates and
their respective successors and assigns. The term "affiliate" as used herein
includes any entity controlling, controlled by or under common control with the
Company.
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8. Miscellaneous.
(a) The parties hereto agree that the time period, the
geographical area and the scope of the restrictions contained in paragraph 6
hereof are divisible and severable; and further, in the event any of said
provisions are held to be invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall have no effect on the
validity or enforceability of any other provision hereof and such provisions as
are held invalid or unenforceable shall be deemed modified to the extent
necessary to make them valid and enforceable.
(b) In any court proceeding brought to enforce this Agreement,
the prevailing party shall be awarded his or its reasonable attorneys' fees and
the other expenses of such proceeding.
(c) This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof.
(d) The provisions and terms of this Agreement shall be
governed and construed according to the laws of the State of South Dakota
without regard to its choice of law provisions. The parties hereto agree that
the state circuit court situated in Minnehaha County, South Dakota shall be the
exclusive jurisdiction of any disputes relating to this Agreement and that said
court shall have personal jurisdiction over the parties. By initialling this
paragraph, Employee consents to the personal jurisdiction of said court. STP
(initial)
(e) Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered or
forty-eight (48) hours after deposit in the U.S. mail, postage prepaid,
certified or registered mail, and sent to the following addresses:
If to Employee: Stephen T. Pate
4804 Caraway Circle
Sioux Falls, So. Dakota 57106
If to Company: Western Surety Company
101 South Phillps Avenue
Sioux Falls, South Dakota 57102
Attention: Dan Kirby
With a copy to: Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1600
Chicago, Illinois 60606
Attention: Kelly L. Stonebraker
(f) The obligations of the Company under this Agreement may be
assigned by the Company to any affiliate of or successor in interest to the
Company. This Agreement shall not be assignable by Employee. Subject to the
foregoing, this Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and upon their respective heirs, personal
representative, successors and assigns.
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(g) This Agreement supersedes the Employment Agreement by and
between the Company and the Employee which was effective as of October 24, 1994,
and such prior Employment Agreement is hereby terminated effective as of April
15, 1996.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY:
WESTERN SURETY COMPANY
By: / s / Joe P. Kirby
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Title: CEO
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EMPLOYEE:
/ s / Stephen T. Pate
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STEPHEN T. PATE
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JOINDER
Surewest Financial Corp. ("Surewest") hereby executes this Joinder to
that certain Employment Agreement dated as of April 15, 1996 by and between
Western Surety Company and Stephen T. Pate ("Employee") in order to agree to and
be bound by the following provisions:
BOARD OF DIRECTORS. SUREWEST COVENANTS AND AGREES THAT, SO LONG AS
THE EMPLOYEE IS EMPLOYED UNDER SAID EMPLOYMENT AGREEMENT, ALL VOTING RIGHTS
HELD, DIRECTLY OR INDIRECTLY, BY SUREWEST, OR ITS NOMINEES, SHALL BE VOTED IN
FAVOR OF THE EMPLOYEE TO BE NOMINATED TO THE BOARD OF DIRECTORS OF WESTERN
SURETY COMPANY (AND ALL OF ITS SUBSIDIARIES), AND TO BE ELECTED TO SUCH BOARDS
AT EACH MEETING OF THEIR RESPECTIVE STOCKHOLDERS AT WHICH THE CLASS OF DIRECTORS
TO WHICH THE EMPLOYEE IS ASSIGNED IS TO BE ELECTED.
IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the
day and year below.
SUREWEST FINANCIAL CORP.
By: / s / Joe P. Kirby
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Title: CEO
Dated: April 25, 1996
/ s / Stephen T. Pate
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STEPHEN T. PATE
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