Exhibit 10.6






EXHIBIT 10.6




EXECUTIVE EMPLOYMENT AGREEMENT




     This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) made as of January 1, 2006, by and between:
Penn Millers Mutual Holding Company, a Pennsylvania non- stock corporation (the “MHC”), Penn
Millers Holding Corporation, a Pennsylvania business corporation (the “Holding Corporation”) and
Penn Millers Insurance Company, a Pennsylvania property and casualty stock insurance company (the
“Insurance Company”) all with offices at 72 North Franklin Street, Wilkes-Barre, PA 18773-0016.
The MHC, the Holding Corporation and the Insurance Company, and their direct and indirect
subsidiaries, are sometimes referred to collectively herein as the “Penn Millers System”,


AND




     FRANK JOANLANNE, an individual domiciled at 7 Winding Way, Dallas, PA 18612 (“Executive”).



     Executive currently serves as Senior Vice President. Insurance Company desires to retain the
services of Executive. In reliance upon various oral and written representations, Insurance
Company is willing to employ Executive and Executive is willing to serve Insurance Company on the
terms and conditions provided in this Agreement. Accordingly, in consideration of the promises and
the respective covenants and agreements of the parties, and intending to be legally bound, the
parties agree as follows:


1. Employment. Insurance Company agrees to employ Executive, and Executive agrees to serve
Insurance Company on the terms and conditions set forth in this Agreement.



2. Term of Agreement. Executive’s term of employment under this Agreement shall commence on
January 1, 2006 (“Effective Date”) and shall continue for a period of three (3) years through
December 31, 2008. Commencing on January 1, 2008 and on each January 1st (“Anniversary
Date”) thereafter, this Agreement shall automatically be renewed for one additional year beyond the
term otherwise established, unless one party provides written notice to the other party, at least
90 days in advance of an Anniversary Date, of its intent not to renew this Agreement for an
additional one year term (“Non-Renewal Notice”). Nothing in this provision shall preclude
termination as otherwise provided or permitted under this Agreement.



3. Position and Duties. Executive shall devote substantially all of his working time to Insurance
Company to the exclusion of any other business activity. Executive shall serve as Senior Vice
President and shall report directly to the President and CEO of Insurance Company. Executive shall
submit such direct reports as are needed, from time to time, and shall be responsible for the
day-to-day operations as follows: will provide guidance, direction, training, and support for
related staff to assure business produced by the Insurance Company provides the Insurance Company
with desired profitable results.




 









 




The parties agree that the Company may change Executive’s job description from time to time, so
long as the duties that Company requires Executive to perform are of an executive or management
level consistent with his background, experience and skills. Insurance Company reserves the right
to re-assign the person or persons to whom Executive must directly report and said person shall
hold a higher or lateral level of responsibility with Insurance Company.



4. Covenant Not to Compete; Nonsolicitation; Confidential Information.




     4.1 During Executive’s employment with Company and for a two (2) year period thereafter (the
“Restricted Period”), Executive shall not directly or indirectly, either for his own account or as
an agent, consultant, employee, partner, officer, director, proprietor, investor (except as an
investor owning less than 5% of the stock of a publicly owned company) or otherwise, of any person,
firm, corporation, or enterprise:




	 	a.	 	solicit or hire any employees of Company or induce any of
such employees to terminate their employment relationship with Company; or
	 
	 	b.	 	solicit, induce or attempt to solicit or induce any
customer, supplier or other entity doing business with the Company to cease
doing business with the Company or, in the case of a customer, to do place
agribusiness insurance, as that term is commonly understood in the industry,
with any competitor of the Company.





     4.2 The limitations described in Section 4.1 shall be construed to prohibit Executive during
the Restricted Period, or if Section 7.3.b. applies, the lesser of the Restricted Period or the
period during which Executive continues to receive compensation under Section 7.3.b. from directly
or indirectly owning, managing, operating, rendering services for (as a consultant or an advisor)
or accepting any employment with (a) Nationwide Agribusiness Insurance Company, Michigan Millers
Insurance Company or Westfield Insurance Company, (b) the agribusiness insurance business of any
other insurance company, and (c) any other property and casualty insurance or reinsurance line of
business to the extent that such ownership, management, operating, rendering of services or
employment (and the activities necessarily incident thereto) have, or could reasonably be expected
to have, a material adverse effect on the Company’s business insurance business within a one
hundred (100) mile radius of Wilkes-Barre, Pennsylvania.



     4.3 Confidentiality. Executive agrees that he will not at any time during the Term of
this Agreement (as determined under Section 2 hereof) or at any time thereafter for any reason, in
any fashion, form or manner, either directly or indirectly, divulge, disclose or communicate to any
person, firm, corporation or other business entity, in any manner whatsoever, any confidential
information or trade secrets concerning the business of Company, including, without limiting the
generality of the foregoing, any customer lists or other customer identifying information, the
techniques, methods or systems of the Company’s operation or management, any information regarding
its financial matters, or any other material information concerning the business of Company, its
manner of operation, its plan or other material data. The provisions of this Section 4.3 shall not
apply to (i) information that is public knowledge other than as a result of disclosure by the
Executive in breach of this Section 4.3; (ii) information disseminated by



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Company to third parties in the ordinary course of business; (iii) information lawfully
received by the Executive from a third party who, based upon inquiry by the Executive, is not bound
by a confidential relationship to Company, or (iv) information disclosed under a requirement of law
or as directed by applicable legal authority having jurisdiction over the Executive.




     4.4 Although Executive and Company consider the restrictions contained in Sections 4.1, 4.2
and 4.3 to be the minimum restriction reasonable for the purposes of preserving Company’s goodwill
and other proprietary rights, if a final determination is made by a court that the time or
territory, or any other restriction contained in Sections 4.1, 4.2 and 4.3 is an unreasonable or
otherwise unenforceable restriction against Executive, the provisions of Sections 4.1, 4.2 and 4.3
will not be rendered void, but will be deemed amended to apply as to such maximum time and
territory and to such other extent as the court may determine to be reasonable.



     4.5 Executive agrees that this Covenant may be assigned by Company, as needed, to effect its
purpose and intent and that Company’s Assignee shall be entitled to the full benefit of the
restrictions enjoyed by Company under the terms of this Covenant.



5. Compensation and Related Matters.




     5.1 Base Compensation. During the period of Executive’s employment, Insurance Company
shall pay to him annual base compensation of $181,324.41 (“Base Compensation”). The Board of
Directors of Insurance Company shall periodically review Executive’s employment performance, in
accordance with policies generally in effect from time to time, for possible merit or
cost-of-living increases in such Base Compensation. Except for a reduction which is proportionate
to an Insurance Company company-wide reduction in executive or senior management pay, not including
eliminated positions or unfilled positions, the annual Base Compensation paid to Executive in any
calendar year shall not be less than the annual Base Compensation paid to him in the immediately
preceding calendar year. The frequency and manner of payment of such Base Compensation shall be in
accordance with Insurance Company’s executive payroll practices, as in effect from time to time.
Nothing in this Agreement shall be construed as precluding Executive from entering into any salary
reduction or deferral plan or arrangement during the term of this Agreement. During the initial
calendar year of this Agreement, the amount set forth in the first sentence of this subsection
shall be pro rated to reflect the portion of such calendar year which follows the Effective Date.



     5.2 Incentive Compensation. During the period of Executive’s employment with
Insurance Company, he shall be eligible to participate in any incentive plans or programs such as
stock programs, options programs, long term cash plans, etc., that may be developed from time to
time for Insurance Company. Actual participation will be at the sole and final determination of
the Board of Directors of Insurance Company.



     5.3 Supplemental Executive Retirement Plan. Executive shall be entitled to
participate in the Penn Millers System’s Supplemental Executive Retirement Plan (the “SERP”) in
accordance with the terms of that Plan as they may be amended from time to time.



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     5.4 Employee Benefit Plans and Other Plans or Arrangements. Executive shall be
entitled to participate in any Penn Millers System benefit or incentive plans on the same basis as
other executive officers of Insurance Company. Insurance Company may provide Executive with those
perquisites that are reasonable and customary for similar positions.



     5.5 Expenses. During the period of Executive’s employment hereunder, he shall be
entitled to receive reimbursement for reasonable and necessary expenses related to the business of
Insurance Company, in accordance with the general policies and procedures established by insurance
Company.



     5.6 Annual Stipend. Executive shall be entitled to receive, in lieu of any other
reimbursement for or payment of country club or social club membership fees, dues or other fees and
any automobile allowance, an annual reimbursement allowance of $10,000 for 2006, and thereafter as
determined by the Insurance Company’s Board of Directors. This annual reimbursement allowance will
be paid quarterly, in arrears, provided that Executive provides the Insurance Company with such
verification of his actual expenses paid for the purposes described above or similar purposes as
approved by the Board in its discretion, as the Insurance Company shall reasonably request. For
purposes of any Company benefit plan, including, without limitation, retirement (including the
SERP), life insurance, accidental death or dismemberment insurance, disability insurance or
incentive compensation purposes, the annual stipend payable under this section shall not be
considered wages or other compensation.



6. Termination for Cause.




     6.1 In General. Insurance Company shall be entitled to terminate Executive’s
employment for Cause in any of the following circumstances:




	 	•	 	Breach of his fiduciary duty or his duty of loyalty
	 
	 	•	 	Material dishonesty
	 
	 	•	 	Material misuse or theft of corporate property
	 
	 	•	 	Finding of Sexual Harassment
	 
	 	•	 	Fraternization which affects his objectivity in the treatment of fellow
employees which occurs after being warned to cease
	 
	 	•	 	Abusive or threatening behavior which occurs after being warned to cease
	 
	 	•	 	Excessive Absenteeism having a material effect on corporate business
operations
	 
	 	•	 	Conviction of Felony charges
	 
	 	•	 	Conviction of any criminal charge involving moral turpitude




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	 	•	 	Conviction of any charge of DUI or substance abuse
	 
	 	•	 	Substance Abuse, or
	 
	 	•	 	Material neglect of management duties





     6.2 Compensation. Within a reasonable time after Termination for Cause, Insurance
Company shall pay Executive, in one lump sum, his accrued but unpaid Base Compensation earned
through the date of Executive’s termination and any accrued but unpaid or otherwise vested benefits
to which Executive is entitled under the terms of any Penn Millers System benefit or incentive
plan. Contingent upon his prior agreement with and signature to a complete release and hold
harmless agreement which shall completely release Penn Millers System, its parent, affiliates,
officers, directors and employees (collectively the “Released Parties” and individually a “Released
Party”) and which shall forever waive all claims of any nature that Executive may have against any
Released Party, Executive shall receive, in one lump sum payment, an amount equal to one year’s
premium for then current life, health and disability insurance coverage under the Penn Millers
System benefit plans. In the event of termination for Cause hereunder, Executive shall forfeit any
right to any unvested deferred incentive awards and shall be entitled to no Success Sharing Plan
awards for the year of his termination or for any award cycle that remains uncompleted at the date
of his termination.



7. Termination Without Cause.




     7.1 Termination by Employee on Voluntary Basis. In the event that Executive
voluntarily terminates his employment hereunder, without Good Reason, as defined below, Executive
shall be, subject to Section 7.4, entitled to be paid, within a reasonable time following his
termination:




	 	a.	 	His accrued but unpaid Base Compensation and any accrued
but unpaid or otherwise vested benefits under any Penn Millers System
benefit or incentive plan;
	 
	 	b.	 	If, but only if Executive’s voluntary termination of
employment is by reason of his normal retirement at or after age 65,
Executive shall be entitled to pro rata partial payments from the Penn
Millers System’s Success Sharing Plan based on actual performance, i.e., the
extent to which the targets set under such Plans are actually attained, and
pro-rated based on number of full months worked. Payments under this
Section 7.1.b. will be paid when such payments would have been made had
Executive remained employed; and
	 
	 	c.	 	Except as specified in 7.1.a. and b. Executive will be
entitled to no severance payments and no incentive plan payments that have
not become vested and payable prior to his termination of employment.





     7.2 Termination By Reason of Death or Permanent Disability: In the event Executive’s
employment is terminated by reason of death or permanent disability (defined for



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this purposes as a condition by reason of which Executive is entitled to and receiving
disability benefits under the U.S. Social Security Act) Executive, or his estate, shall be, subject
to Section 7.4, entitled to be paid:





	 	a.	 	His accrued but unpaid Base Compensation and any accrued
but unpaid or otherwise vested benefits under any Penn Millers System
benefit or incentive plan.





     7.3 Termination by Insurance Company Without Cause or by Executive With Good Reason:
In the event that Executive’s employment hereunder is terminated by the Insurance Company without
Cause (as defined in Section 6.1), whether before or after a Change in Control (as defined in
Section 7.6 below) or by the Executive with Good Reason (as defined in Section 7.5 below), whether
before or after a Change in Control, Executive shall be, subject to Section 7.4, entitled to be
paid or have provided:




	 	a.	 	His accrued but unpaid Base Compensation and any accrued
but unpaid or otherwise vested benefits under any Penn Millers System
benefit or incentive plan;
	 
	 	b.	 	Continuation of Executive’s Base Compensation for the
lesser of the remaining Term of this Agreement or two (2) years;
	 
	 	c.	 	Continuation of employer-provided healthcare benefits for
12 months at the levels in effect on the date of Executive’s termination,
and thereafter to elect COBRA continuation for the remainder of Executive’s
or his qualified dependents’ COBRA eligibility, it being understood that
Executive’s and his dependents’ COBRA eligibility period will include the
period during which the Company is providing benefits under this
Section 7.3.c.; and
	 
	 	d.	 	A Success Sharing Plan payment for year of termination
based on actual earned award pro-rated by number of full months worked; paid
when such benefit would have been paid had Executive remained employed.





     7.4 Requirement of Release; Cessation on Competition.




	 	a.	 	Notwithstanding anything to the contrary in Sections 7.1,
7.2 or 7.3, Executive’s entitlement to any payments other than Executive’s
accrued but unpaid Base Compensation and any accrued but unpaid or otherwise
vested benefits under any Penn Millers System benefit or incentive plan
determined at the time of Executive’s termination of employment shall be
contingent upon Executive’s prior agreement with and signature to a complete
release and hold harmless agreement which shall completely release Penn
Millers System, its parent, affiliates, officers, directors and employees
(collectively the “Released Parties” and individually a “Released Party”)
and which shall forever waive all claims of any nature that Executive may
have against any Released Party, including without




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	 	 	 	limitation all claims arising out of Executive’s employment within the Penn
Millers System or the termination of that employment.
	 
	 	b.	 	Notwithstanding anything to the contrary in Section 7.3,
in the event that the Executive breaches Sections 4.1 or 4.2 of this
Agreement, any remaining payments or benefits to be provided under
Section 7.3 shall not be paid or provided immediately upon such breach.





     7.5 Good Reason: Executive shall be considered to have terminated employment hereunder
for Good Reason if such termination of employment is on account of:




	 	a.	 	A material diminution of the Executive’s duties,
authority or responsibility or the assignment to the Executive of duties
materially inconsistent with Section 3 hereof;
	 
	 	b.	 	A reduction in Base Compensation (from current amount)
other than a reduction specifically contemplated by Section 5.1 hereof;
	 
	 	c.	 	Any change in employee’s principal place of work (other
than a temporary change occasioned by the Company’s business needs) that
would increase Executive’s commute by 45 miles or more; or
	 
	 	d.	 	A material breach by Insurance Company of its obligations
under this Agreement.




Notwithstanding the foregoing, a termination by Executive shall not be for “Good Reason,” whether
or not a Change in Control has occurred, unless the Executive shall have given the Company at least
ten business days written notice specifying the grounds upon which Executive intends to terminate
his employment hereunder for “Good Reason”. In addition, any action or inaction which is remedied
within ten business days following such written notice shall not constitute “Good Reason” for
termination hereunder.




     7.6 Change in Control: A Change in Control of the Insurance Company shall have
occurred if:




	 	a.	 	During any period of 24 months, individuals who
constitute the Board of Directors of the Insurance Company at the beginning
of such period, and any new director described in the sentence at the end of
this section, cease for any reason to constitute a majority of the Board;
	 
	 	b.	 	The Insurance Company merges or consolidates with any
other corporation, other than a merger or consolidation which would result
in the voting members of the Insurance Company immediately prior thereto
continuing to represent, either directly or indirectly, at least 51% of the
combined voting power of the members of the Insurance Company or of such
surviving entity immediately after such merger or consolidation; or




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	 	c.	 	The Board approves a plan of complete liquidation of the
Insurance Company, or there is consummated the sale or disposition by the
Insurance Company of all or substantially all of the Insurance Company’s
assets, or the Insurance Company is dissolved and its assets distributed in
a judicial proceeding.




A director is described in this sentence for purposes of 7.6.a. above, if both (1) his or her
initial assumption of office is not in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of directors of the
Insurance Company, and (2) his or her election by the Board or nomination for election by the
Insurance Company’s Board was approved by a majority vote of the Directors then still in office who
either were directors at the beginning of the period or whose elections met the conditions of this
sentence.




     7.7 Exclusive Remedy. Except for any explicit rights and remedies Executive may have
under any other contract, plan or arrangement with Insurance Company, the compensation and benefits
payable under this Agreement and the remedy for enforcement shall constitute Executive’s exclusive
rights and remedy in the event of the termination of his employment.


8. Withholding Taxes. All compensation and benefits provided in this Agreement shall, to the
extent required by law, be subject to federal, state, and local tax withholding.



9. Applicable Law and Jurisdiction. This Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles, unless and to the extent preempted by the laws of the United States of
America. Any controversy or dispute arising out of or relating to this Agreement, including an
alleged breach, shall be subject to the jurisdiction of Court of Common Pleas of Luzerne County.



10. Additional Equitable Remedy. Executive acknowledges and agrees that Insurance Company’s remedy
at law for a breach or a threatened breach of the provisions of this Agreement would be inadequate.
In recognition of this fact, in the event of such a breach or threatened breach by Executive, it
is agreed that Insurance Company shall be entitled to request equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent injunction, or any other
equitable remedy which may then be available. Nothing in this section shall be construed as
prohibiting Insurance Company from pursuing any other remedy available under this Agreement for
such a breach or threatened breach.



11. Officer Liability Insurance. Insurance Company shall provide Executive with coverage under a
standard directors and officers’ liability insurance policy, at Insurance Company’s expense, in
amounts consistent with amounts provided to the other officers and directors of Insurance Company.



12. Notices. Any notice required or permitted under this Agreement shall be sufficient if it is in
writing and shall be deemed given (i) at the time of personal delivery to the addressee, or (ii) at
the time sent First Class U.S. Mail, with form 3817 requested, addressed as follows:




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To Insurance Company:

72 North Franklin St.

Wilkes-Barre, PA 18773-0016




To Executive:

7 Winding Way

Dallas, PA 18612



13. No Waiver. The failure by any party to this Agreement at any time or times to require strict
performance by any other party of any of the provisions, terms, or conditions contained in this
Agreement shall not waive, affect, or diminish any right of the first party at any time or times to
demand strict performance therewith and with any other provision, term, or condition contained in
this Agreement. Any actual waiver of a provision, term, or condition contained in this Agreement
shall not constitute a waiver of any other provision, term, or condition, whether prior or
subsequent to such actual waiver and whether of the same or a different type. The failure of
Insurance Company to promptly terminate Executive’s employment for Cause shall not be construed as
a waiver of the right of termination, and such right may be exercised at any time following the
occurrence of the event giving rise to such right.



14. Survival. Notwithstanding the termination of this Agreement, the provisions which specify
continuing obligations, compensation and benefits, and rights shall remain in effect until such
time as all such obligations are discharged, all such compensation and benefits are received, and
no party or beneficiary has any remaining actual or contingent rights under this Agreement.



15. Severability. In the event any provision in this Agreement shall be held illegal or invalid
for any reason, such illegal or invalid provision shall not affect the remaining provisions and
this Agreement shall be construed, administered and enforced as though such illegal or invalid
provision were not contained in this Agreement.



16. Binding Effect and Benefit. The provisions of this Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of Insurance Company and the executors, personal
representatives, surviving spouse, heirs, devisees, and legatees of Executive.



17. Entire Agreement. This Agreement embodies the entire agreement among the parties with respect
to the subject matter of this Agreement, and it supersedes all prior discussions and oral
understandings of the parties with respect thereto.



18. No Assignment. This Agreement, and the benefits and obligations under this Agreement, shall
not be assignable by any party except as provided in Section 4.5 and by operation of law.



19. No Attachment. Except as otherwise provided by law, no right to receive compensation or
benefits under this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to set off, execution, attachment,
levy, or similar process, and any attempt, voluntary or involuntary, to effect any such action
shall be null and void.




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20. Captions. The captions of the several sections and subsections of this Agreement have been
inserted for convenience of reference only. They constitute no part of this Agreement and are not
to be considered in the construction of this Agreement.



21. Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed one and the same instrument which may be sufficiently evidenced by any one
counterpart.



22. Number. Wherever any words are used in the singular form, they shall be construed as though
they were used in the plural form, as the context requires, and vice versa.




     IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as
of the date first above written.



	 	 	 	 	 	 	 
	For:

	 	Penn Millers Insurance Company	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ J. Harvey Sproul, Jr.
 

J. Harvey Sproul, Jr., Chairman
	 	DATE: 5/17/06
	 	 
	 
	 	 	 	 	 	 
	 

	 	/s/ Frank Joanlanne	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Frank Joanlanne
	 	DATE: 5/1 /06	 	 






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