Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is dated and
effective as of October 1, 2006 between BNC Insurance Services, Inc., an Arizona
corporation d/b/a Milne & BNC Insurance Services (“BNC Insurance”), and Richard
W. Milne, Jr. (“Mr. Milne”).

 

RECITALS:

 

WHEREAS, BNC Insurance and Mr. Milne are parties to that certain Employment
Agreement (the “Employment Agreement”), dated as of April 16, 2002 pursuant to
which Mr. Milne presently serves as President of BNC Insurance;

 

WHEREAS, BNC Insurance and Mr. Milne desire to amend the Employment Agreement
and, as amended, restate the Employment Agreement in its entirety;

 

WHEREAS, Mr. Milne acknowledges that during the course of his employment, Mr.
Milne has access to and is provided with confidential and proprietary
information and trade secrets of BNC Insurance which are invaluable to BNC
Insurance and vital to the success of BNC Insurance’s business; and

 

WHEREAS, BNC Insurance and Mr. Milne desire to protect such proprietary and
confidential information and trade secrets from disclosure to third parties or
unauthorized use to the detriment of BNC Insurance.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties agree to amend and restate the
Employment Agreement as follows:

 

AGREEMENTS:

 

1.            Employment. BNC Insurance hereby agrees to continue to employ Mr.
Milne, and Mr. Milne hereby agrees to serve BNC Insurance, on the terms and
conditions set forth herein.

2.            Term. Mr. Milne’s employment with BNC Insurance hereunder shall
continue until September 30, 2010, unless sooner terminated as provided herein;
provided, however, that should Mr. Milne serve until September 30, 2010, and
remain employed by BNC Insurance thereafter, such employment shall convert to a
month-to-month, at-will relationship subject to all of the terms of this
Agreement and terminable for any reason whatsoever by either BNC Insurance or
Mr. Milne upon 90 days prior written notice to the other party (the period
commencing on the date of this Agreement and continuing until the termination of
Mr. Milne’s employment is referred to herein as the “Employment Period”).
Following Mr. Milne’s ceasing, for whatever reason, to be an employee of BNC
Insurance, each party shall have the right to enforce all of its rights, and
shall be bound by all obligations, that are continuing rights and obligations
under the terms of this Agreement.

 

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3.            Duties. Mr. Milne agrees to serve BNC Insurance as its President.
In such capacity, Mr. Milne shall have the responsibility for the general
management, direction and control of the business and affairs of BNC Insurance
and shall have all of the rights, duties and powers which are commonly incident
to the office of the President and attendant to that of the president of a
subsidiary of a publicly traded company. In connection with Mr. Milne’s
employment by BNC Insurance, Mr. Milne shall be based at the principal executive
offices of BNC Insurance in Phoenix, Arizona, except for required travel
relating to BNC Insurance’s business to an extent substantially consistent with
his historical business travel practices.

4.            Exclusive Service; Prohibited Activities. Mr. Milne agrees to
devote his full business time and attention to the business and affairs of BNC
Insurance and will use his best efforts in performing faithfully his duties
under this Agreement. Mr. Milne covenants and agrees that during the Employment
Period, he will not (a) engage in business or personal activities which directly
or indirectly Compete (as defined below) with BNC Insurance’s business, or (b)
accept employment from, or provide services to, any Competing Business (as
defined below). “Compete” means to directly or indirectly engage or participate
in, invest in, own in whole or in part, lend to or become an officer, director,
partner or shareholder of, or become employed by, or render advisory, consulting
or other services to, any proprietorship, partnership, limited liability
company, corporation, or other form of business entity or division, subsidiary
or affiliate of such business entity engaged in the business of a general
insurance agency and brokerage business, or variation thereof (i.e., which sells
or arranges for the sale of commercial and/or personal lines of insurance, or
provides insurance brokerage services, employee benefits services, insurance
consulting services, or is engaged in the sale of financial services products)
(a “Competing Business”). Nothing contained herein shall restrict Mr. Milne
from: (i) serving as a member of the board of directors, board of trustees or
the like of any for-profit entity that does not Compete with BNC Insurance, or
performing services of any type for any civic or community entity, whether or
not Mr. Milne receives compensation therefor, (ii) investing his assets in such
form or manner as shall not require any significant services on his part in the
operation of the business of or property in which such investment is made as
long as such business does not Compete with BNC Insurance, (iii) serving in
various capacities with, and attending meetings of, industry or trade groups and
associations, or (iv) owning less than 5% of the equity securities of any
corporation or other entity that are publicly traded on a national securities
exchange or the Nasdaq stock market, as long as Mr. Milne’s engagement in any
activities permitted by virtue of clauses (i), (ii), (iii) and (iv) above does
not (A) materially interfere with the ability of Mr. Milne to perform the
services and discharge the responsibilities required of his under this
Agreement, (B) involve the use of BNC Insurance’s facilities, computer and other
equipment, data, proprietary and confidential information about BNC Insurance’s
Business, BNC Insurance’s company relationships, and BNC Insurance’s account
clients, and (C) Compete with BNC Insurance.

 

5.

Compensation.

5.1          Salary. During the Employment Period, BNC Insurance shall pay to
Mr. Milne a minimum annual base salary of $300,000, payable in equal
semi-monthly installments in accordance with BNC Insurance’s regular payroll
practices for similarly situated employees.

5.2          Bonus. During the Employment Period, Mr. Milne shall be eligible to
receive an annual incentive bonus on the same basis and subject to the same
requirements and limitations as may be applicable to other senior executive
employees of BNC Insurance.

 

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5.3          Benefits. Mr. Milne shall be entitled to the benefits and
perquisites maintained by BNC Insurance for its employees generally, or for its
senior executives in particular, on the same basis and subject to the same
requirements and limitations as may be applicable to other senior executive
employees of BNC Insurance.

5.4          Expenses. Mr. Milne shall be entitled to receive prompt
reimbursement for all reasonable and necessary expenses incurred by him in
performing services hereunder, including all travel and living expenses while
away from home on business or at the request of and in the service of BNC
Insurance, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by BNC Insurance.

5.5          Vacations. Mr. Milne may take paid vacation periods in whatever
length or frequency he deems appropriate to the extent that he is able to
fulfill his obligations under this Agreement.

6.            Termination. Mr. Milne’s employment hereunder may be terminated
before September 30, 2010 without any breach of this Agreement only under the
circumstances described in Sections 6.1, 6.2, 6.3 or 6.4:

6.1          Death. Mr. Milne’s employment hereunder shall terminate
automatically upon his death.

6.2          Disability. If, as a result of Mr. Milne’s incapacity due to
physical or mental illness, Mr. Milne shall have been absent from his duties
hereunder on a full-time basis for a period of 90 consecutive days, or 120
non-consecutive days within any 365 day period, BNC Insurance may terminate Mr.
Milne’s employment.

6.3          Cause. BNC Insurance may terminate Mr. Milne’s employment hereunder
for Cause. For purposes of this Agreement, BNC Insurance shall have “Cause” to
terminate Mr. Milne’s employment hereunder upon Mr. Milne’s:

(i)           failure to abide by reasonable rules and regulations governing the
transaction of business of BNC Insurance as BNC Insurance’s Board of Directors
may from time to time approve for more than 30 days after receiving written
notice thereof to Mr. Milne;

 

(ii)          persistent and willful inattention to duties, or the commission of
acts within employment with BNC Insurance amounting to gross negligence or
willful misconduct;

 

(iii)         conviction of a crime involving misappropriation of funds or
property of BNC Insurance or fraud against BNC Insurance or against any other
person or entity in the course of employment with BNC Insurance;

 

(iv)         misappropriation of any corporate opportunity, or otherwise
obtaining personal profit from any transaction which is adverse to the interests
of BNC Insurance or to the benefits of which BNC Insurance is entitled;

 

 

(v)

conviction of a felony or other crime involving moral turpitude; or

 

 

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(vi)         material violation of the terms of this Agreement which continues
for more than 30 days after written notice thereof to Mr. Milne.

 

6.4          Termination by Mr. Milne. Mr. Milne may terminate his employment
hereunder if:

(i)           within 180 days following a Change in Control (as defined below),
there is a material reduction in Mr. Milne’s authority, duties or
responsibilities from those in effect immediately prior to such Change in
Control or Mr. Milne is assigned to duties or responsibilities materially
inconsistent from those of Mr. Milne in effect immediately prior to such Change
in Control; or

 

(ii)          within 180 days following a Change in Control, BNC Insurance
requires Mr. Milne, without Mr. Milne’s prior written consent, to be based at
any office located more than 20 miles from BNC Insurance’s offices at which Mr.
Milne is based as of the date hereof, excluding travel reasonably required in
the performance of Mr. Milne’s duties hereunder.

 

For purposes of this Section 6.4, a “Change in Control” is deemed to have
occurred at such time as (A) any “person” or “group” of persons (as such terms
are used in Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), other than a trustee or fiduciary holding securities
under an employee benefit plan of BNCCORP, Inc., the parent company of BNC
Insurance (“BNC”), acquires “beneficial ownership” (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly, of 30% or more of the common
stock of BNC, other than an acquisition of common stock approved by at least
two-thirds of the Continuing Directors (as defined below) at any time when there
is outstanding no other proposal that would result in a change of control of BNC
and which had not been approved by at least two-thirds of the Continuing
Directors, or (B) a majority of the Board of Directors of BNC is not comprised
of Continuing Directors. As used in this Section 6.4, “Continuing Directors”
means any of the directors in office on the date hereof or any director whose
nomination for election to the Board of Directors of BNC was approved by the
vote of two-thirds of the directors in office on the date hereof or directors
whose nomination was previously so approved.

 

6.5          Notice of Termination. Any termination of Mr. Milne’s employment by
BNC Insurance (other than termination as a result of Mr. Milne’s death) or by
Mr. Milne shall be communicated by written notice of termination to the other
party hereto, which notice shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Mr. Milne’s
employment under the provision so indicated.

 

6.6

Compensation Upon Termination.

(i)           Except as provided in this Section 6, if Mr. Milne’s employment
hereunder is terminated for any reason, all future compensation and benefits to
which Mr. Milne is otherwise entitled under this Agreement shall cease and
terminate as of the date of such termination. Mr. Milne, or his estate in the
event of a termination as a result of his death, shall be entitled to receive
Mr. Milne’s annual base salary through the date of such termination and any
bonuses, incentive compensation or other amounts accrued or payable to Mr. Milne
but unpaid as of the date of such termination, and, except as otherwise provided
in this Section 6,

 

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Mr. Milne shall not be entitled to any other payments or other benefits from BNC
Insurance except for those which may be payable pursuant to the terms of BNC
Insurance’s employee benefit and incentive plans in which Mr. Milne participates
or the applicable agreements underlying such plans.

 

(ii)          If Mr. Milne’s employment under this Agreement is terminated by
Mr. Milne pursuant to Section 6.4, or by BNC Insurance within 180 days of a
Change in Control other than pursuant to Sections 6.1, 6.2 or 6.3, then BNC
Insurance shall pay to Mr. Milne, in one lump-sum payment within 30 days after
the date of such termination, an amount equal to two times the sum of (i) Mr.
Milne’s annual base salary and (ii) the average of the annual bonuses paid or
payable to Mr. Milne for the preceding three fiscal years, and BNC Insurance
shall have no further obligations to Mr. Milne under this Agreement except as
provided in Section 6.6(i).

 

 

7.

Mr. Milne’s Covenants, Duties and Obligations.

7.1          Confidential Business Information of BNC Insurance. Mr. Milne
acknowledges (i) that BNC Insurance’s business is “relationship based”, (ii)
that through great effort and at incalculable expense, BNC Insurance has
developed and maintained invaluable business relationships (contractual and
prospective) with BNC Insurance’s producers and other account executives, CSRs
and internal staff members, as well as insurance clients and prospects,
insurance companies, insurance brokers, independent contractors, including the
individuals who are employed by or represent the foregoing (collectively,
“Business Relationships”), and (iii) that in the course of his employment with
BNC Insurance, he will become aware of and familiar with proprietary, secret and
confidential information relating to BNC Insurance’s business, including but not
limited to information concerning internal business operations, financial
results of operations, contractual and prospective Business Relationships with
insurance customers and prospects, insurance companies, insurance brokers,
independent contractors, and other sources through which insurance is placed
with customers, including but not limited to lists of agents, brokers, policy
holders, expiration and renewal dates, inspection of credit reports, other
insurance data on various risks written by BNC Insurance, the procedures, forms,
techniques used in servicing accounts, and other documents and information. Mr.
Milne covenants and agrees that all of the foregoing information is required to
be maintained in confidence for the continued success of BNC Insurance, all of
which proprietary, secret or confidential information constitutes “trade
secrets” as that phrase is defined in the Arizona Uniform Trade Secrets Act,
§A.R.S. §44-401 et seq. Mr. Milne further covenants and agrees that BNC
Insurance’s trade secrets will not be misappropriated by Mr. Milne at any time,
and will remain the sole and exclusive property of BNC Insurance after the
termination of this Agreement, and that he will not, without the prior written
consent of BNC Insurance, while employed, or at any time after termination of
employment, directly or indirectly, (A) misappropriate or otherwise make any use
of such trade secrets except as may be required or appropriate in the course of
his employment hereunder, or (B) release or otherwise divulge such trade secrets
or any other proprietary, confidential or secret information of BNC Insurance to
any third party, except in furtherance of his employment duties hereunder.
Notwithstanding anything set forth in this Section 7.1, Mr. Milne shall not be
deemed to be in breach of this Section 7.1 if Mr. Milne (x) discloses
information pursuant to express written authorization of BNC Insurance, (y)
discloses information to any governmental authority or court, pursuant to a duty
imposed by law (provided, however, that Mr. Milne shall notify BNC Insurance of
the disclosure at least five (5) business days prior to such disclosure), or (z)
discloses information to the extent necessary to

 

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enforce and/or defend claims or causes of action between BNC Insurance and Mr.
Milne, or asserted by third parties against Mr. Milne which arise out of the
discharge of Mr. Milne’s duties hereunder.

7.2          Surrender Upon Termination. Upon termination of Mr. Milne’s
employment hereunder, Mr. Milne covenants and agrees to surrender to BNC
Insurance all of the foregoing in Mr. Milne’s possession or under his control:
(i) all original records of BNC Insurance whatsoever; (ii) all copies or other
reproductions made of those records; (iii) all electronic and printed data,
pre-printed forms, lists, tools of employment or other personal property of BNC
Insurance whatsoever; and (iv) all other tangible physical things whatsoever
containing or evidencing trade secrets of BNC Insurance, including but not
limited to any aspect of BNC Insurance’s Business and/or business relationships
with its clients and prospects, insurance companies, insurance brokers,
independent contractors, and other sources of insurance whatsoever, including
but not limited to clients’ coverage, active and prospective clients,
expirations of coverage, premiums and compilations of the same, and any other
trade secrets whatsoever. The term “record(s)” includes all electronic media or
other tangible forms in which information is transmitted and/or stored and
includes all written or graphic matter of every kind and description, however
produced or reproduced, original or reproduction, including, but not limited to,
letters, correspondence, memoranda, e-mails, notes, films, video tapes, audio
recordings, transcripts, contracts, agreements, licenses, memoranda of telephone
conversations or personal conversations, microfilm, books, newspaper articles,
magazines, advertisements, periodicals, bulletins, circulars, pamphlets,
statements, notices, reports, rules, regulations, directives, minutes of
meetings, interoffice communications, reports, financial statements, ledgers,
books of account, proposals, offers, orders, receipts, working papers, desk
calendars, appointment books, diaries, time sheets, logs, or materials similar
to any of the foregoing, however denominated, and including writings, drawings,
graphs, charts, photographs, data processing results, printouts and computations
(both in existence and stored in memory components), and other compilations from
which information can be obtained or translated, if necessary, through detection
devices into reasonably usable form.

7.3          Covenant Not to Interfere. Mr. Milne covenants and agrees that
except on behalf of and for the exclusive benefit of BNC Insurance during the
Employment Period, and for a period of two (2) years after termination of his
employment hereunder for any reason whatsoever other than his termination of the
Agreement pursuant to Section 6.4, he will not directly or indirectly in any
form or manner, on his own behalf or in combination with others, contact,
solicit, communicate with, correspond with or interact with any director,
officer, producer, or other account executive, CSR, staff member, other
employee, representative, agent, independent contractor, insurance client or
customer, insurance prospect, insurance broker, insurance carrier, other
insurance provider, or creditor of BNC Insurance (including the individuals who
are employed by or represent any of the foregoing) which in any manner shall (i)
disparage BNC Insurance or adversely affect, disrupt or interfere with BNC
Insurance’s reputation, goodwill, or business relationships, business plans,
litigation, claims, business arrangements or agreements or which results in
economic harm to BNC Insurance, (ii) interfere with or attempt to disrupt the
employment relationship between BNC Insurance and any of its employees,
including but not limited to the solicitation or encouragement of any employee
to leave the employ of BNC Insurance for any reason, or employ such employee in
any manner whatsoever, or (iii) interfere with, attempt to disrupt, solicit or
encourage the termination of any of BNC Insurance’s Business Relationships,
provided that this Section 7.3 shall not limit or

 

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prohibit Mr. Milne, after termination of Mr. Milne’s employment with BNC
Insurance, on his own behalf or on behalf of, or in conjunction with, a third
party, from accepting unsolicited contact or business from any customer,
insurance carrier or insurance broker of BNC Insurance in a manner (x) that does
not tortuously interfere with BNC Insurance’s Business Relationship with such
customer, insurance carrier or insurance broker, (y) that does not use or
otherwise misappropriate any of BNC Insurance’s trade secrets as defined above,
or (z) that does not utilize any of BNC Insurance’s records or the contents
thereof.

7.4          Covenant Concerning Books of Business/Renewals. Mr. Milne covenants
and agrees that the use, control and ownership of all insurance programs, “books
of business”, insurance accounts, agency appointments and agreements, and all
other intangible attributes of BNC Insurance’s business, including unearned and
earned commissions, contingent commissions, bonuses, and renewals with respect
to all policies written and/or serviced by Mr. Milne during the term of this
Agreement (collectively, the “Intangible Assets”) are owned exclusively and will
continue to be owned exclusively by BNC Insurance. Mr. Milne shall not by virtue
of his employment, initiation of contacts with, development of relationships
with, origination of, or services performed for, any insurance customer,
account, program, appointment or the like, acquire, earn, become entitled to, or
have any “equity” or ownership interest in any Intangible Asset. The foregoing
shall apply to insurance business and renewals existing prior to or arising
during Mr. Milne’s employment, and all records thereof. Mr. Milne hereby
disclaims, waives and releases all claims of right, title, interest and/or
ownership in and to any of the Intangible Assets of BNC Insurance, whether
currently existing or existing in the future, and covenants that Mr. Milne shall
not make or retain copies of any records pertaining thereto. All Intangible
Assets in force or existence at the time of termination of Mr. Milne’s
employment shall be the sole property of BNC Insurance and no additional
compensation shall be due to Mr. Milne with respect to said Intangible Assets.

7.5          Enforcement. Mr. Milne covenants and agrees that his experience and
capabilities are such that he can obtain gainful employment in a manner that
does not violate this Section 7 and that the enforcement of this Section 7
through temporary restraining order or injunctive relief will not prevent his
from earning a livelihood. Mr. Milne also covenants and agrees that in the event
Mr. Milne breaches any of the terms of this Section 7, said breach will result
in immediate and irreparable harm to BNC Insurance and goodwill and that an
award of damages will be inadequate to fully compensate BNC Insurance for the
breach. Upon a breach of this Section 7 by Mr. Milne, and notwithstanding
Section 8, BNC Insurance shall be entitled to equitable relief by way of
temporary restraining order or preliminary or permanent injunction (i)
restraining any continuing violation of this Section 7, and (ii) affirmatively
enjoining Mr. Milne to redress the breach by (A) ceasing and desisting
prohibited contacts and activities, (B) restoring to BNC Insurance any
misappropriated trade secrets and records, and (C) remitting back to BNC
Insurance the commissions, profits, and other fruits of the breach.

7.6          Notification to Subsequent BNC Insurance. If, following termination
of Mr. Milne’s employment, Mr. Milne accepts other employment or enters into a
business relationship with any Competing Business, Mr. Milne authorizes BNC
Insurance to serve the Competing Business with a written notice of the terms of
this Section 7.

7.7          Survival. The provisions of this Section 7 shall survive the
termination or expiration of Mr. Milne’s employment hereunder, irrespective of
the reason for termination.

 

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8.

Dispute Resolution; Mandatory Arbitration.

8.1          Exclusive Remedy. Any claim, controversy or dispute whatsoever (a
“Dispute”) based upon or arising out of any aspect of this Agreement and Mr.
Milne’s employment, regardless of the title or nature of the Dispute, whether in
contract or tort, at law or in equity, based upon or arising out of this
Agreement and Mr. Milne’s employment, including without limitation the
rescission, reformation, interpretation, breach, termination, enforcement, or
validity of this Agreement shall be exclusively and finally resolved through
mandatory and binding arbitration (“Arbitration”) in accordance with the terms
hereof, provided any party to this Agreement may bring an action in the Maricopa
County Superior Court to compel Arbitration of any Dispute. Any party who fails
or refuses to submit any Dispute to binding Arbitration following a written
demand by another party or parties shall bear all costs and expenses, including
reasonable attorney’s fees, incurred by the opposing party or parties in
compelling Arbitration of such Dispute. No provision of, nor the exercise of any
rights under this Agreement shall (i) limit the right of BNC Insurance to file a
civil action in the Maricopa County Superior Court to obtain a temporary
restraining order or injunctive relief as provided in Section 8.5 of this
Agreement, or (ii) limit the right of any party to file a civil action in the
Maricopa County Superior Court to apply for a temporary restraining order and/or
a preliminary injunction to enforce compliance with this Section 8.1, provided
(A) the merits of the Dispute itself are to be submitted to Arbitration, (B) all
findings and determinations on the merits of the Dispute shall be made by the
arbitrator, and (C) the filing of any such civil action shall not be deemed an
election of remedies. The right to file a civil action can be exercised at any
time necessary to enforce this Section 8 except to the extent such civil action
is contrary to a final award or decision in any Arbitration. The institution of
a civil action for a temporary restraining order or preliminary injunction to
enforce compliance with this Section 8 shall not (x) constitute a waiver of the
right and obligation of any party, including, without limitation, the plaintiff
in the action, to submit any Dispute to Arbitration, (y) render inapplicable the
compulsory Arbitration provisions of this Agreement, or (z) constitute a breach
hereof.

8.2          Mediation. Before initiating Arbitration, the parties will attempt
in good faith to resolve any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
8) promptly by mediation between Mr. Milne and a duly authorized representative
of BNC Insurance, each party to bear one half of the expense of such mediation.

8.3          Arbitration. In the event that any Dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith mediation pursuant to the procedures of Section 8.2
within thirty (30) days after a written notice of such Dispute has been
delivered by either party hereto to the other, such Dispute shall upon written
notice by either party to the other party, be finally settled by Arbitration
administered by the American Arbitration Association in accordance with the its
arbitration rules and procedures, as modified below:

(i)      The Arbitration shall be heard by one (1) independent and impartial
arbitrator, who shall be selected by mutual agreement of the parties. If the
parties are unable to agree on an arbitrator within thirty days of the notice of
Arbitration delivered pursuant to Section 8.3, the arbitrator shall be chosen by
the American Arbitration Association in accordance with its procedures.

 

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(ii)

The Arbitration proceedings shall be conducted in Phoenix, Arizona.

 

(iii)   The parties shall allow and participate in limited discovery for the
production of documents by and taking of depositions of the parties to the
Arbitration, which shall be conducted in accordance with the procedures and
limitations set forth in the Federal Rules of Civil Procedure, provided all
discovery shall be completed within ninety (90) days following the filing of the
answer or other responsive pleading. Unresolved discovery disputes shall be
brought to the attention of the arbitrator and shall be disposed of by the
arbitrator.

 

(iv)      Each party shall have up to ten (10) hours to present evidence and
argument in a hearing before the arbitrator; provided that the arbitrator may
establish such longer times for presentations as he deems appropriate.

 

(v)        The Arbitration award shall be rendered by the arbitrator within
fifteen (15) business days after conclusion of the hearing of the matter, shall
be in writing and shall specify the factual and legal basis for the award.
Judgment thereon may be entered in any court having jurisdiction thereof. The
parties expressly waive all rights whatsoever to file an appeal from or
otherwise challenge any arbitration award.

 

(vi)       The arbitrator is empowered to (i) award money damages in
compensation for a party’s actual economic damages, (ii) award money damages,
(iii) order specific performance, and (iv) order other appropriate equitable
relief to cure a breach of this Agreement. The arbitrator will have no
authority, however, to award money damages that are not measured by the
prevailing party’s actual economic damages, such as special, incidental,
consequential, punitive or exemplary damages, the right to assert claims for
which is hereby expressly waived in consideration of BNC Insurance’s offer of
continued employment and Mr. Milne’s acceptance thereof.

 

8.4          Performance During Dispute. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
Dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.

8.5          Costs of Arbitration. Each party shall pay one-half of the costs
and expenses of Arbitration hereunder, provided the arbitrator shall award the
prevailing party its reasonable attorney’s fees and costs incurred.

9.            Assignment. Mr. Milne and BNC Insurance acknowledge and agree that
the covenants, terms and provisions contained in this Agreement constitute a
personal employment contract and the rights of the parties thereunder cannot be
transferred, sold, assigned, pledged or hypothecated, excepting that (i) Mr.
Milne’s right to any compensation hereunder may be transferred by will or
operation of law and Mr. Milne’s employee benefits may be assigned or
transferred in accordance with the policies, programs, plans or BNC Insurance
practices; and (ii) the rights and obligations of BNC Insurance under this
Agreement may be assigned or transferred by operation of law pursuant to a
merger, consolidation, share exchange, sale of substantially all of BNC
Insurance’s assets, or other reorganization of BNC Insurance, whether or not BNC
Insurance is the continuing entity, provided that the assignee or transferee is
the

 

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successor to all or substantially all of the assets of BNC Insurance and such
assignee or transferee assumes the duties of BNC Insurance, if any, as contained
in this Agreement, either contractually or as a matter of law.

10.          Capacity. Mr. Milne hereby represents and warrants that, in
entering into this Agreement, he is not in violation of any contract or
agreement, whether written or oral, with any other person, firm, partnership,
corporation or other entity to which he is a party or by which he is bound and
will not violate or interfere with the rights of any other person, firm,
partnership, corporation or other entity. In the event that such a violation or
interference does occur, notwithstanding the representation and warranty made
hereunder, Mr. Milne shall indemnify BNC Insurance from and against any and all
manner of expenses and liabilities incurred by BNC Insurance in connection with
such violation or interference. In addition, Mr. Milne agrees to notify, in
writing, any prospective employer of Mr. Milne of the existence of this
Agreement and the general terms and conditions of Section 7 hereof, and to send
a copy of the notice to BNC Insurance, failing which BNC Insurance shall have
the right to so notify such prospective employer as provided in Section 7.6.

11.          Amendment. No amendment, modification or waiver of any term,
condition, right or remedy hereunder shall be effective for any purpose unless
specifically set forth in a writing signed by the party to be bound thereby.

12.          Integration; Entire Agreement. This Agreement novates and
supersedes any prior understandings, negotiations or employment agreements
(written or oral, express or implied) between the parties hereto respecting the
employment of Mr. Milne by BNC Insurance and, together with BNC Insurance’s
employee handbook constitutes the complete understanding between the parties
with respect to the employment of Mr. Milne by BNC Insurance. In the event of an
inconsistency between this Agreement, and BNC Insurance’s employee handbook as
it is modified from time to time, the terms and provisions of this Agreement
shall control.

13.          Waiver. Neither party will be deemed to have waived any right,
power or privilege under this Agreement unless such waiver shall have been duly
executed in writing and acknowledged by the party to be charged with such
waiver. The failure of either party hereto at any time to enforce any of the
provisions of this Agreement will not be construed to be a waiver of such
provisions, nor in any way affect the validity of this Agreement or any part
thereof, or the right of any party to thereafter enforce each and every such
provision. No waiver or any breach of this Agreement will be held to be a waiver
of any other subsequent breach.

14.          Headings. The paragraph headings of this Agreement are for the
convenience of reference only and shall not expand, modify, limit or define the
text thereof.

15.          Severability. If any provision of this Agreement is hereafter
construed to be invalid or unenforceable, such invalidity or unenforceability
shall not affect the remainder of the provisions of this Agreement, which shall
be given full effect, without regard to the invalid or unenforceable portions.
Furthermore, if the scope of any provision contained in this Agreement is too
broad to permit enforcement of such provision to its full extent, then such
provision shall be enforced to the maximum extent permitted by law, and the
Parties hereby consent and agree that such scope may be judicially modified
accordingly in any proceeding brought to enforce such provision.

 

{N1547212.2}

10

 

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16.          Recovery of Attorney’s Fees and Costs. In the event a civil action
is brought to compel Arbitration of any Dispute hereunder, and in the event an
Arbitration is instituted to construe or enforce the provisions of this
Agreement or to resolve any Dispute hereunder, the prevailing party shall be
entitled to an award of its reasonable attorney’s fees and costs incurred in
connection with such civil action.

17.          Controlling Law. This Agreement shall be construed and enforced in
accordance with the substantive laws and judicial decisions of the State of
Arizona, without reference to or application of choice of law principles.

[signature page follows]

 

{N1547212.2}

11

 

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the day and year first above written.

 

 

BNC Insurance:

 

 

BNC INSURANCE SERVICES, INC.,

 

an Arizona corporation

                

By:

 

/s/ Gregory K. Cleveland

                Name:

Gregory K. Cleveland

 

Its:

Treasurer

 

 

 

MR. MILNE:

 

 

                Name:

/s/ Richard W. Milne, Jr.

 

Richard W. Milne, Jr.

 

 

 

{N1547212.2}

12