Exhibit 10.2
 
EXECUTION COPY
 
AMENDED AND RESTATED
REVOLVING LINE OF CREDIT NOTE

$150,000,000.00
West Covina, California

May 23, 2008

FOR VALUE RECEIVED, the undersigned EMPLOYERS HOLDINGS, INC. (“Borrower”)
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”)
at its office at San Gabriel Valley RCBO, 1000 Lakes Drive, Suite #250, West
Covina, CA  91790, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available funds,
the principal sum of One Hundred Fifty Million Dollars ($150,000,000.00), or so
much thereof as may be advanced and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein.

I.          DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

(a)        “Business Day” means any day except a Saturday, Sunday or any other
day on which commercial banks in Nevada are authorized or required by law to
close.

(b)        “Fixed Rate Term” means a period commencing on a Business Day and
continuing for 1, 2, 3 or 6 months, as designated by Borrower, during which all
or a portion of the outstanding principal balance of this Note bears interest
determined in relation to LIBOR; provided however, that no Fixed Rate Term may
be selected for a principal amount less than One Hundred Thousand Dollars
($100,000.00); and provided further, that no Fixed Rate Term shall extend beyond
the scheduled maturity date hereof.  If any Fixed Rate Term would end on a day
which is not a Business Day, then such Fixed Rate Term shall be extended to the
next succeeding Business Day.

(c)        “LIBOR” means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:

LIBOR = 
Base LIBOR
   
100% - LIBOR Reserve Percentage
 

(i)        “Base LIBOR” means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies.  Borrower understands and agrees that Bank may base its quotation of
the Inter-Bank Market Offered Rate
 

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upon such offers or other market indicators of the Inter-Bank Market as Bank in
its discretion deems appropriate including, but not limited to, the rate offered
for U.S. dollar deposits on the London Inter-Bank Market.

(ii)        “LIBOR Reserve Percentage” means the reserve percentage prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.

(d)        “LIBOR Margin” means, prior to May 1, 2009, seventy-five one
hundredths of one percent (0.75%), and from and after May 1, 2009, thirty one
hundredths of one percent (0.30%).

(e)        “Prime Rate” means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank’s base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

II.         INTEREST:

(a)        Interest.  The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum equal to the Prime Rate in effect from time
to time, or (ii) at a fixed rate per annum determined by Bank to be LIBOR in
effect on the first day of the applicable Fixed Rate Term plus the LIBOR Margin
in effect as of the first day of such Fixed Rate Term.  When interest is
determined in relation to the Prime Rate, each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is announced
within Bank.  With respect to each LIBOR selection hereunder, Bank is hereby
authorized to note the date, principal amount, interest rate and Fixed Rate Term
applicable thereto and any payments made thereon on Bank’s books and records
(either manually or by electronic entry) and/or on any schedule attached to this
Note, which notations shall be prima facie evidence of the accuracy of the
information noted.

(b)        Selection of Interest Rate Options.  At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower.  At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower.  At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may
 
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permit) so long as, with respect to each LIBOR selection, (A) if requested by
Bank, Borrower provides to Bank written confirmation thereof not later than
three (3) Business Days after such notice is given, and (B) such notice is given
to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a
later time during any Business Day if Bank, at its sole option but without
obligation to do so, accepts Borrower’s notice and quotes a fixed rate to
Borrower.  If Borrower does not immediately accept a fixed rate when quoted by
Bank, the quoted rate shall expire and any subsequent LIBOR request from
Borrower shall be subject to a redetermination by Bank of the applicable fixed
rate.  If no specific designation of interest is made at the time any advance is
requested hereunder or at the end of any Fixed Rate Term, Borrower shall be
deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied.

(c)        Taxes and Regulatory Costs.  Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR.  In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

(d)        Payment of Interest.  Interest accrued on this Note shall be payable
on the first day of each month, commencing June 1, 2008.

(e)        Default Interest.  From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.

III.        BORROWING AND REPAYMENT:

(a)        Borrowing and Repayment.  Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above; provided further, that
from and after May 1, 2009, the total outstanding borrowings under this Note
shall not at any time exceed Fifty Million Dollars ($50,000,000.00).  The unpaid
principal balance of this obligation at any time shall be the total amounts
advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for Borrower, which balance may be
 
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endorsed hereon from time to time by the holder.  The outstanding principal
balance of this Note shall be due and payable in full on March 26, 2011.

(b)        Advances.  Advances hereunder, to the total amount of the principal
sum stated above, may be made by the holder at the written request (including by
telefacsimile) of two persons acting together, one being either William E. Yocke
or Cynthia Morrison, and the other being either Douglas Dirks or Lenard Ormsby,
who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received by
the holder at the office designated above.  The holder may rely in good faith
upon any such request delivered to it bearing signatures that purport to be
signatures of the aforementioned persons and shall be under no duty to verify
the authenticity of any such signatures.  Further, the holder shall have no
obligation to determine whether any person requesting an advance is or has been
authorized by Borrower pursuant to its constituent documents.

(c)        Application of Payments.  Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.  All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

IV.        PREPAYMENT:

(a)        Prime Rate.  Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to the Prime Rate at any time,
in any amount and without penalty.

(b)        LIBOR.  Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however,
that if the outstanding principal balance of such portion of this Note is less
than said amount, the minimum prepayment amount shall be the entire outstanding
principal balance thereof.  In consideration of Bank providing this prepayment
option to Borrower, or if any such portion of this Note shall become due and
payable at any time prior to the last day of the Fixed Rate Term applicable
thereto by acceleration or otherwise, Borrower shall pay to Bank immediately
upon demand a fee which is the sum of the discounted monthly differences for
each month from the month of prepayment through the month in which such Fixed
Rate Term matures, calculated as follows for each such month:

     (i)
Determine the amount of interest which would have accrued each month on the
amount prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable thereto.

     (ii)
Subtract from the amount determined in (i) above the amount of interest which
would have accrued for the same month on the amount prepaid for the

 
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remaining term of such Fixed Rate Term at LIBOR in effect on the date of
prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid.

 
     (iii)
If the result obtained in (ii) for any month is greater than zero, discount that
difference by LIBOR used in (ii) above.

Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities.  Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank.  If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2.00%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed).

V.        EVENTS OF DEFAULT:

This Note is made pursuant to and is subject to the terms and conditions of that
certain Amended and Restated Credit Agreement between Borrower and Bank dated as
of May 23, 2008, as amended from time to time (the “Credit Agreement”).  Any
default in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an “Event
of Default” under this Note.

VI.        MISCELLANEOUS:

(a)        Remedies.  Upon the occurrence of any Event of Default, the holder of
this Note, at the holder’s option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate.  Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys’ fees (to include only outside counsel
fees), expended or incurred by the holder in connection with the enforcement of
the holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.

(b)        Obligations Joint and Several.  Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
 
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(c)        Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of Nevada.

As of the date hereof, this Note amends, restates in full and supersedes that
certain Revolving Line of Credit Note dated March 26, 2008, in the maximum
principal amount of $50,000,000.00 executed by Borrower in favor of Bank.

[Signature to follow on next page]

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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

EMPLOYERS HOLDINGS, INC.

By:   /s/ William E. Yocke
  William E. Yocke
  Executive Vice President,
  Chief Financial Officer