Exhibit 10.1

EMPLOYMENT AGREEMENT

          This Employment Agreement (this “Agreement”) by and between Employers
Holdings, Inc., a Nevada corporation (the “Company”) and John P. Nelson (the
“Employee”) is entered into as of the 17th day of December, 2008, effective as
of January 1, 2009 (the “Effective Date”).

RECITALS

     A. The Employee has knowledge and experience applicable to the position of
Executive Vice President, Chief Administrative Officer.

     B. The Company desires to continue to employ the Employee to perform
certain services for the Company, its parent, if any, and their respective
subsidiaries and affiliates (the “Company Affiliates”), as may be required or
requested of the Employee in his position as Executive Vice President, Chief
Administrative Officer, and the Employee desires to continue to be so employed
by the Company and to perform such services for the Company and the Company
Affiliates.

          In consideration of the premises above and mutual covenants and
promises set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are mutually acknowledged, the parties agree as
follows:

TERMS

 

 

1.

Employment.

     The Company agrees to continue to employ the Employee and the Employee
accepts such continued employment upon the terms and conditions specified
herein. The Employee agrees to continue to devote substantially all of his time
and effort during working hours in the performance of the duties called for
herein and agrees that any other non-employment related duties (i.e., industry
related groups, service on boards, etc.) will not be allowed to materially
interfere with the performance of the duties called for herein.

 

 

2.

Term.

     The term of this Agreement shall commence on the Effective Date, and
continue for three (3) years (the “Initial Term”), until December 31, 2011, and,
thereafter, shall automatically renew for successive two (2) year periods (each,
an “Additional Term;” the Initial Term and any Additional Terms, collectively
the “Term”), unless either party gives written notice to the other no later than
six (6) months prior to expiration of the Initial Term or any Additional Term,
as applicable, of an intent not to renew this Agreement; subject, however to
earlier termination of the Employee’s employment with the Company in accordance
with this Agreement (the “Termination Date”). The expiration of this Agreement
at the end of the Term, in and of itself, shall not constitute, nor be construed
or interpreted as, a termination of the Employee’s employment that would make
him eligible for benefits or payments under Section 7 below. This Agreement
shall expire upon the termination of the Employee’s employment for any reason,
subject to the provisions of subsection 10(h) below.

 

 

3.

Services and Duties.

     The Employee shall continue to serve as Executive Vice President, Chief
Administrative Officer and shall perform such duties as may be assigned by the
Chief Executive Officer from time to time. At the request of the Board of
Directors of the Company (the “Board”), the Employee shall also serve as a
director of the Company and/or one or more of the Company Affiliates at no
additional compensation. The Employee agrees that upon the termination of his
employment with the Company, he shall resign from the Board and any and all
boards of the Company Affiliates effective on the Termination Date.

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4.

Compensation and Benefits.

 

 

 

 

(a)

During the term of this Agreement, the Company shall pay to the Employee an
annual salary of not less than $250,000 (“Base Salary”), which amount shall be
paid according to the Company’s regular payroll practices. The Company agrees to
review the Base Salary on an annual basis and adjust the salary to comply with
the executive compensation policy in effect at the time of the review. Any
increase made to the annual salary will establish the new Base Salary for the
Employee. All payments made pursuant to this Agreement, including but not
limited to this subsection 4(a), shall be reduced by and subject to withholding
for all federal, state, and local taxes and any other withholding required by
applicable laws and regulations.

 

 

 

 

(b)

The Company will provide an annual incentive (the “Annual Incentive”) to the
Employee during the Term based on the Employee’s and the Company’s performance,
as determined by the Board (or a committee thereof) in its sole discretion. In
this regard, the Board (or a committee thereof) shall set an annual incentive
target of not less than forty-five percent (45%) of Base Salary, and the Annual
Incentive shall be paid in accordance with the Company’s regular practice for
its senior officers, as in effect from time to time. To the extent not
duplicative of the specific benefits provided herein, the Employee shall be
eligible to participate in all incentive compensation, retirement, supplemental
retirement, and deferred compensation plans, policies and arrangements that are
provided generally to other senior officers of the Company at a level (in terms
of the amount and types of benefits and incentive compensation that the Employee
has the opportunity to receive and the terms thereof) determined in the sole
discretion of the Board (or a committee thereof).

 

 

 

 

(c)

The Employee agrees that the amounts payable and benefits provided under this
Agreement, including but not limited to any amounts payable or benefits provided
under this Section 4 and Section 7 constitute good, valuable and separate
consideration for the non-competition, assignment and release of liability
provisions contained herein. The Employee acknowledges that he is aware of the
effect of the non-competition, assignment and release of liability provisions
contained herein and agrees that the amounts payable and benefits provided under
this Agreement, including but not limited to the amounts payable and benefits
provided under this Section 4 and Section 7, if any, constitute sufficient
consideration for his agreement to these provisions.

 

 

 

 

(d)

In addition to the compensation called for in this Agreement, the Employee shall
be entitled to receive any and all employee benefits and perquisites generally
provided from time to time to other similarly situated officers of the Company
as well as the benefits and perquisites listed on “Exhibit A” attached hereto
and incorporated herein by this reference.

 

 

5.

Insurance.

     The Employee agrees to submit to a physical examination at a reasonable
time as requested by the Company for the purpose of the Company’s obtaining life
insurance on the life of the Employee for the benefit of the Company; provided,
however, that the Company shall bear the costs for such examinations and shall
pay all premiums on any life insurance obtained as a result of such
examinations. The Employee further agrees to submit to drug testing in
accordance with the Company’s policies and procedures.

 

 

6.

Termination.

 

 

 

 

 

 

 

(a)

The Company, at any time, may terminate this Agreement and the Employee’s
employment immediately for “Cause”. Cause is defined as:

 

 

 

 

 

 

(i)

A material breach of this Agreement by the Employee;

 

 

 

 

 

 

(ii)

Failure or inability of the Employee to obtain or maintain any required licenses
or certificates;

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(iii)

Willful violation by the Employee of any law, rule or regulation, including but
not limited to any material insurance law or regulation, which violation may, as
determined by the Company, adversely affect the ability of the Employee to
perform his duties hereunder or may subject the Company to liability or negative
publicity; or

 

 

 

 

 

 

(iv)

Conviction or commission of or the entry of a guilty plea or plea of no contest
to any felony or to any other crime involving moral turpitude.

 

 

 

 

 

(b)

The Employee may terminate this Agreement and his employment with the Company
immediately for “Good Reason,” which shall mean the occurrence of any of the
following events with respect to which the Employee has notified the Company of
the existence thereof within no more than ninety (90) days of the initial
existence thereof and which is not cured by the Company within thirty (30) days
of the Company’s receipt of written notice from the Employee of the events
alleged to constitute such Good Reason:

 

 

 

 

 

 

(i)

A material diminution in the Employee’s base compensation;

 

 

 

 

 

 

(ii)

A material diminution in the Employee’s authority, duties or responsibilities;
or

 

 

 

 

 

 

(iii)

Any other action or inaction that constitutes a material breach by the Company
of this Agreement (as may be amended from time to time).

 

 

 

 

 

(c)

The Company may also terminate this Agreement and the Employee’s employment upon
the occurrence of one or more of the following events or reasons, subject to
applicable law (or, in the case of subsection 6(c)(i) below, termination of this
Agreement and the Employee’s employment will be automatic):

 

 

 

 

 

 

(i)

Death of the Employee;

 

 

 

 

 

 

(ii)

The Employee is deemed to be disabled in accordance with the policies of the
Company or the law or if the Employee is unable to perform the essential job
functions of the Employee’s position with the Company, with or without
reasonable accommodation, for a period of more than 100 business days in any 120
consecutive business day period. The Employee is entitled to any and all short
term or long term disability programs, like any other employee, in accordance
with the terms of such programs and the policies of the Company; or

 

 

 

 

 

 

(iii)

At any time for any other reason or no reason in the sole and absolute
discretion of the Company.

 

 

7.

Payments Upon Termination.

 

 

 

 

 

(a)

Qualifying Termination and Severance Pay. If the Company terminates the
Employee’s employment prior to the expiration of the Term but other than during
the CIC Period (as defined below) for any reason other than as specified above
in subsection 6(a) for Cause, subsection 6(c)(i) by reason of the death of the
Employee, or subsection 6(c)(ii) for disability, or if the Employee terminates
his employment for Good Reason pursuant to subsection 6(b), the Employee shall
receive the following severance pay (the “Severance Pay”):

 

 

 

 

 

 

(i)

In lieu of any further salary payments to the Employee for periods subsequent to
the Termination Date and in lieu of any severance benefit otherwise payable to
the Employee, an amount equal to one and one half (1 ½) times Base Salary,
payable in equal bi-weekly installments on the Company’s regular payroll dates
as in effect on such Termination Date, for eighteen (18) months following the
Termination Date, commencing with the payroll date

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applicable to the first full payroll period following the Termination Date;
provided, however, that such payments shall be delayed to the extent required
under Section 25 below. The payments shall be subject to normal payroll
deductions.

 

 

 

 

 

 

(ii)

Continuation of the medical, dental and vision insurance coverage in effect on
the Termination Date for a period of eighteen (18) months following the
Termination Date with the Company paying the employer portion of the premium and
the Employee paying the employee portion, including dependents if applicable, of
the premium during such eighteen (18) month period, provided that the Employee
elects to continue such insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (“COBRA”). The Employee is solely
responsible for taking the actions necessary to exercise his rights under COBRA
for the insurance coverage the Employee has in effect, including coverage for
dependents if applicable, on the Termination Date.

 

 

 

 

 

(b)

Severance Pay as Liquidated Damages. The parties agree, in the event of a
material breach of this Agreement by the Company with respect to which the
Employee has given notice and that is not cured, in either case, in accordance
with subsection 6(b), following which the Employee terminates his employment for
Good Reason, that actual damages are speculative and that the amount of the
Severance Pay or, if applicable, the CIC Severance Pay (as defined below) set
forth herein is liquidated damages and is a reasonable estimate of what damages
would be for a material breach of this Agreement.

 

 

 

 

 

(c)

Conditions to Severance Pay or CIC Severance Pay. The Employee agrees and
acknowledges that the following must be satisfied by the Employee before he is
entitled to the Severance Pay or, if applicable, the CIC Severance Pay provided
for herein:

 

 

 

 

 

 

(i)

That the Employee returns any and all equipment, software, data, property and
information of the Company and the Company Affiliates, including documents and
records or copies thereof relating in any way to any proprietary information of
the Company or any of the Company Affiliates whether prepared by the Employee or
any other person or entity. That the Employee further agrees that he shall not
retain any proprietary information of the Company or any of the Company
Affiliates after the Termination Date;

 

 

 

 

 

 

(ii)

That the Employee executes a Global Release of Liability, in a form to be
determined by the Company in its sole discretion, which releases the Company and
the Company Affiliates from liability for any and all claims, complaints and
causes of action, whether based in law or equity, arising from, related to or
associated with the Employee’s employment by the Company or under this Agreement
and that such release has become effective and non-revocable. That the Employee
further acknowledges and agrees that he has not made and will not make any
assignment of any claim, cause or right of action, or any right of any kind
whatsoever, arising from, related to or associated with the employment of the
Employee by the Company; and

 

 

 

 

 

 

(iii)

That the Employee reaffirms the covenants contained herein, in writing,
including, but not limited to, the covenants set forth in
Section 10.

 

 

 

 

 

 

Notwithstanding anything in this Agreement to the contrary, in any case where
the first and last days of the applicable release and nonrevocability periods
provided for in the Global Release of Liability (the “Applicable Release
Period”) are in two separate taxable years, any payments required to be made to
the Employee under this Agreement that are treated as deferred compensation for
purposes of Section 409A (as defined below) shall be made in the later taxable
year, as soon as practicable, but in no event later than thirty (30) days
following the conclusion of the Applicable Release Period.

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(d)

Voluntary Termination by the Employee. The Employee may terminate his employment
and this Agreement for reasons other than those identified in subsection 6(b)
upon not less than sixty (60) days prior written notice. If the Employee
terminates his employment and this Agreement pursuant to this subsection 7(d),
he shall be entitled only to the following:

 

 

 

 

 

 

(i)

Any unpaid salary through the Termination Date; and

 

 

 

 

 

 

(ii)

Payment for any accrued and unused vacation as of the Termination Date.

 

 

 

 

 

(e)

Qualifying Change in Control Termination. If, before the expiration of the Term,
the Company terminates the Employee’s employment within the period commencing
six (6) months prior to and ending eighteen (18) months following a Change in
Control (as defined below), such period referred to herein as the “CIC Period,”
for any reason other than as specified above in subsection 6(a) for Cause,
subsection 6(c)(i) for the death of the Employee, or subsection 6(c)(ii) for
disability, or if the Employee terminates his employment and this Agreement for
Good Reason pursuant to subsection 6(b), the Employee shall receive the
severance pay set forth in subsections (i) and (ii) below (the “CIC Severance
Pay”), provided that if the Employee’s employment is terminated during the six
(6) month period prior to a Change in Control, the Employee shall be entitled to
CIC Severance Pay only if such termination (x) was by the Company other than for
Cause but at the request or direction of any person that has entered into an
agreement with the Company the consummation of which would constitute a Change
in Control, (y) was by the Employee for Good Reason and the circumstance or
event that constitutes Good Reason occurred at the request or direction of such
person or (z) was by the Company without Cause and the Employee reasonably
demonstrates that such termination was otherwise in connection with or in
anticipation of a Change in Control; and if the Employee is not entitled to CIC
Severance Pay hereunder, then the Employee’s termination of employment will not
be deemed to have occurred during the CIC Period for purposes of subsection
7(a):

 

 

 

 

 

 

(i)

In lieu of any further salary payments to the Employee for periods subsequent to
the Termination Date and in lieu of any severance benefit otherwise payable to
the Employee, a lump sum cash payment equal to two (2) times the sum of (A) Base
Salary and (B) the average of the annual bonus amounts earned by the Employee
for the three (3) years preceding the year in which the Change in Control
occurs; provided, however, that if the Termination Date occurs prior to January
1, 2010, then (B) shall instead be the average of the annual bonus amounts
earned by the Employee in 2007 and 2008. Such payment shall be made as soon as
practicable (but in no event later than sixty (60) days) following the
Termination Date; provided, however, that such payments shall be delayed to the
extent required under Section 25 below; and

 

 

 

 

 

 

(ii)

Continuation of the medical, dental and vision insurance coverage in effect on
the Employee’s Termination Date for a period of eighteen (18) months following
the Termination Date with the Company paying the employer portion of the premium
and the Employee paying the employee portion, including dependents if
applicable, of the premium during such eighteen (18)-month period, provided that
the Employee elects to continue such insurance coverage under COBRA. The
Employee is solely responsible for taking the actions necessary to exercise his
rights under COBRA for the insurance coverage the Employee has in effect,
including coverage for dependents if applicable, on the Termination Date.

 

 

 

 

 

(f)

Definition of Change in Control. For purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

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(i)

Any one person, or more than one person acting as a group, acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company; or

 

 

 

 

 

 

(ii)

Any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12)-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the Company
possessing 35% or more of the total voting power of the stock of the Company; or

 

 

 

 

 

 

(iii)

A majority of members of the Board is replaced during any twelve (12)-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board before the date of the appointment or election; or

 

 

 

 

 

 

(iv)

Any one person or group acquires (or has acquired during the immediately
preceding twelve (12)-month period ending on the date of the most recent
acquisition) assets of the Company with an aggregate gross fair market value of
not less than forty percent (40%) of the aggregate gross fair market value of
the assets of the Company immediately prior to such acquisition. For this
purpose, gross fair market value shall mean the fair value of the affected
assets determined without regard to any liabilities associated with such assets.

 

 

 

 

 

Notwithstanding the foregoing, (1) a “Change in Control” shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the holders of the common
stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity that owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions, and (2) a
“Change in Control” shall not be deemed to have occurred as result of any
secondary offering of Company common stock to the general public through a
registration statement filed with the Securities and Exchange Commission. The
Board shall determine whether a Change in Control has occurred hereunder in a
manner consistent with the provisions of Section 409A.

 

 

 

 

 

(g)

No Duplication of Payments or Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Employee shall not be eligible to receive any
payments or benefits under both subsections 7(a) and 7(e); but rather, to the
extent the conditions set forth in subsection 7(a) and subsection 7(e) are
satisfied, the Employee shall be eligible to receive benefits under only
subsection 7(e).

 

 

 

 

 

(h)

Golden Parachute (Section 280G) Excise Taxes.

 

 

 

 

 

 

(i)

Subject to subsection 7(h)(ii) below, if it is determined that any payment or
benefit received or to be received by the Employee, whether pursuant to this
Agreement or otherwise (the “Severance Payments”), is a “parachute payment”
within the meaning of section 280G of the Internal Revenue Code (the “Code”)
(all such payments and benefits, including the Severance Payments as applicable,
but excluding the Gross-Up Payment (as defined below) being hereinafter called
“Total Payments”) that will be subject (in whole or part) to the tax imposed
under section 4999 of the Code (the “Excise Tax”), then the Company shall pay to
the Employee on or as soon as practicable following the day on which the Excise
Tax is remitted by the Employee (but not later than the end of the taxable year
following the year in which the Excise Tax is incurred and subject to the
provisions set forth in Section 25 below, including if applicable, the Six Month
Delay (as defined in such section)) an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Employee, after deduction of
any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Total Payments.

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(ii)

In the event that the amount of the Total Payments does not exceed 110% of the
largest amount that would result in no portion of the Total Payments being
subject to the Excise Tax (the “Safe Harbor”), the non-cash portion of the Total
Payments shall first be reduced (if necessary, to zero), and the cash portion of
the Total Payments shall thereafter be reduced (if necessary, to zero) so that
the amount of the Total Payments is equal to the Safe Harbor.

 

 

 

 

 

 

(iii)

For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (A) no portion of the Total
Payments shall be taken into account which, in the opinion of tax counsel (“Tax
Counsel”) selected by the Board in existence immediately prior to the Change in
Control, does not constitute a “parachute payment” within the meaning of section
280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the
Code, (B) the Severance Payments shall be reduced only to the extent necessary
so that the Total Payments (other than those referred to in clause (A)) in their
entirety constitute reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not
subject to disallowance as deductions by reason of section 280G of the Code, in
the opinion of Tax Counsel, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company’s independent auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. If the Employee disputes the Company’s
calculations (in whole or in part), the reasonable opinion of Tax Counsel with
respect to the matter in dispute shall prevail.

 

 

 

 

 

 

(iv)

If the Excise Tax is finally determined to be less than the amount taken into
account hereunder in calculating the Gross-Up Payment, the Employee shall repay
to the Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Employee to the extent that such repayment
results in a reduction in Excise Tax and/or a federal, state or local income or
employment tax deduction) plus interest on the amount of such repayment at 120%
of the rate provided in section 1274(b)(2)(B) of the Code. If the Excise Tax is
determined to exceed the amount taken into account hereunder in calculating the
Gross-Up Payment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Employee with respect to such
excess) at the time that the amount of such excess is finally determined.

 

 

 

 

 

 

(v)

The Employee and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Total
Payments. The Company also shall pay to the Employee all legal fees and expenses
incurred by the Employee in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder. Such payments shall be made within sixty
(60) business days after delivery of the Employee’s written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require (but in no event shall any such payment be made after the
end of the calendar year following the calendar year in which the expenses were
incurred), provided that no such payment shall be made in respect of fees or
expenses incurred by the Employee after the later of the tenth (10th)
anniversary of the effective date of the Employee’s termination with the Company
or the Employee’s death and, provided further, that, upon the Employee’s
“separation from service” (as such term is defined under Section 409A) with the
Company, in no event shall any additional such payments be made prior to the
date that is six (6) months

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after the date of the Employee’s “separation from service” to the extent such
payment delay is required under section 409A(a)(2)(B) of the Code.

 

 

 

 

8.

Licensing.

     The Employee has obtained and possesses, or will obtain and possess, and
will maintain throughout the Term hereof, all licenses, approvals, permits, and
authorization (the “Licenses”) necessary to perform the Employee’s duties
hereunder (if any). Any costs, attorneys’ fees, investigation fees or other
expenses incurred in connection with obtaining or maintaining such Licenses
shall be borne by the Company, provided that payment of such fees or costs by
the Company shall be made no later than the end of the year following the year
in which the expenses were incurred. The Employee warrants that the Employee is
fully eligible, under all standards and requirements, to obtain, possess, and
maintain such Licenses and that the Employee will commit no acts during the Term
hereof that would jeopardize or eliminate the Employee’s ability to possess or
maintain such Licenses.

 

 

9.

Rules and Regulations.

     The Employee shall observe, enforce, and comply with the policies,
philosophies, strategies, rules, and regulations of the Company, as they may be
promulgated and/or modified from time to time, and shall carry out and perform
the orders, directions, and policies of the Company, as they may be stated
and/or amended from time to time, either orally or in writing. A violation of
this Section 9 by the Employee is a material breach of this Agreement.

 

 

10.

Restrictive Covenants.

     In consideration of the amounts payable and benefits provided under Section
4, and, if applicable, Section 7 and subsection 10(a), the other compensation
paid hereunder, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree to the
following provisions of this Section 10:

 

 

 

 

(a)

Non-Competition. The Employee understands and agrees that the Company and the
Company Affiliates do business throughout the State of Nevada and other states.
The Employee further understands and agrees that he is a high ranking officer of
the Company and will have access to confidential and trade secret information
and goodwill of the Company and the Company Affiliates that will allow the
Employee to unfairly compete with the Company and the Company Affiliates
justifying this restriction. If the Employee’s employment is terminated (by
either the Employee or the Company), during the Term, for any reason other than
as specified above in subsection 6(c)(i) by reason of the death of the Employee,
or subsection 6(c)(ii) for disability, then for a period of eighteen (18) months
commencing on the Termination Date, the Employee agrees that, without the
written permission of the Company, he will not engage (whether as owner,
partner, controlling stockholder, controlling investor, employee, adviser,
consultant, or otherwise) in any business that is in direct competition with the
business being conducted by the Company or any of the Company Affiliates as of
the Termination Date, in Nevada or in any other state in which the Company is
conducting such business (the “Non-Compete Area”) as of the Termination Date.

 

 

 

 

(b)

Non-Solicitation. Without limiting the generality of the foregoing, the Employee
agrees that for a period of eighteen (18) months following the Employee’s
termination of employment (for any reason, by either the Employee or the
Employer), he will not, without the prior written consent of the Company,
directly or indirectly solicit or attempt to solicit, within the Non-Compete
Area, any business from any person or entity that the Company or any of the
Company Affiliates called upon, solicited, or conducted business with as of such
termination date, any persons or entities that have been customers of the
Company or any of the Company Affiliates or recruit any person who has been or
is an employee of the Company or any of the Company Affiliates, during the
preceding one (1)-year period from such termination date. In addition, the
Employee agrees that he shall not directly or indirectly solicit or encourage
any employee of the Company or any of the Company Affiliates to go to work for
or with the Employee for a period of one (1)-year following such termination
date.

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(c)

In the event the Employee violates subsection 10(a) or 10(b), the applicable
period of time during which the respective restriction applies will
automatically be extended for the period of time from which the Employee began
such violation until he permanently ceases such violation. If any provision of
this covenant is invalid in whole or in part, it will be limited, whether as to
time, area covered, or otherwise as and to the extent required for its validity
under the applicable law and as so limited, will be enforceable.

 

 

 

 

(d)

Confidential Information. The Employee acknowledges that he has had or will have
access to the confidential information of the Company and the Company Affiliates
(including, but not limited to, records regarding sales, price and cost
information, marketing plans, customer names, customer lists, sales techniques,
distribution plans or procedures, and other material relating to the business
conducted by the Company and the Company Affiliates), proprietary, or trade
secret information (the “Confidential Information”), and agrees never to use the
Confidential Information other than for the sole benefit of the Company and the
Company Affiliates and further agrees to never disclose such Confidential
Information (except as may be required by regulatory authorities or as may be
required by law) to any entity or person that is not an officer or employee of
the Company or a Company Affiliate at the time of such disclosure (unless at
such time such Confidential Information is subject to a policy of the Company or
a Company Affiliate restricting disclosure to non-officers), in which case
disclosure shall be limited solely to officers of the Company or the applicable
Company Affiliate at the time of such disclosure, without the prior written
consent of the Company. The Employee further acknowledges that this covenant to
maintain Confidential Information is necessary to protect the goodwill and
proprietary interests of the Company and the Company Affiliates and the
restriction against the disclosure of Confidential Information is reasonable in
light of the consideration and other value the Employee has received or will
receive pursuant to this Agreement and otherwise pursuant to his employment by
the Company.

 

 

 

 

(e)

From and following the Employee’s termination of employment, the Employee agrees
to cooperate with the Company and the Company Affiliates in any litigation,
administrative proceeding, investigation or audit involving any matters with
which the Employee has knowledge of from his employment with the Company. The
Company shall reimburse the Employee for reasonable expenses, including
reasonable compensation for services rendered at his hourly rate of compensation
as of such termination date, incurred in providing such assistance and approved
by the Company. The Company shall reimburse the Employee for such expenses
incurred in accordance with the policies and procedures of the Company, but in
no event no later than the end of the year following the year in which the
expenses were incurred.

 

 

 

 

(f)

In the event of a violation of this Section 10, the Company and the Company
Affiliates shall be entitled to any form of relief at law or equity, and the
parties agree and acknowledge that injunctive relief is an appropriate, but not
exclusive, remedy to enforce the provisions hereof. The existence of any claim
or cause of action of the Employee against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense of the Company’s
enforcement of the covenants set forth in this Section 10. The Employee hereby
submits to the jurisdiction of the courts of the State of Nevada and federal
courts therein for the purposes of any actions or proceedings instituted by the
Company to enforce its rights under this Agreement, to seek money damages or
seek injunctive relief. The Employee further acknowledges and agrees (i) that
the obligations contained in Section 10 of this Agreement are necessary to
protect the interests of the Company and the Company Affiliates, (ii) that the
restrictions contained herein are fair, do not unreasonably restrict the
Employee’s further employment and business opportunities, and are commensurate
with the compensation arrangements set out in this Agreement and (iii) that such
compensation arrangements constitute separate consideration for the obligations
set forth in this Section 10. The covenants contained in Section 10 shall each
be construed as an agreement independent of any other provisions of this
Agreement. Both parties intend to make the covenants of Section 10 binding only
to the extent that it may be lawfully done under existing applicable laws. If a
court of competent jurisdiction

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decides any part of any covenant is overly broad, thereby making the covenant
unenforceable, the parties agree that such court shall substitute a reasonable,
judicially enforceable limitation in place of the offensive part of the covenant
and as so modified the covenant shall be as fully enforceable as set forth
herein by the parties themselves in the modified form.

 

 

 

 

(g)

The Employee acknowledges that it is possible that the corporate structure of
the Company could change during the term of this Agreement. The Employee hereby
acknowledges and affirms that the Company may assign its rights under this
Agreement, including but not limited to its rights to enforce the covenants set
forth in subsections 10(a), 10(b) and 10(c), to a third-party without the
approval of or additional consideration to the Employee. The Employee
acknowledges and agrees that the consideration called for herein is good and
sufficient consideration for the Company’s right to assign its rights under this
Agreement.

 

 

 

 

(h)

Subsections 10(a) through (g), inclusive, of this Agreement shall survive either
termination of the employment relationship and/or termination of this Agreement
for the full period set forth in subsections 10(a) through (g), inclusive.

 

 

 

11.

Work for Hire.

     The Employee agrees that any work, invention, idea or report that he
produces or that results from or is suggested by the work the Employee does on
behalf of the Company or any of the Company Affiliates is “work for hire”
(hereinafter referred to as “Work”) and will be the sole property of the
Company. The Employee agrees to sign any documents, during or after employment
that the Company deems necessary to confirm its ownership of the Work, and the
Employee agrees to cooperate with the Company to allow the Company to take
advantage of its ownership of such Work.

 

 

12.

Assignment of Agreement.

     The Employee agrees that his services are unique and personal and that,
accordingly, the Employee may not assign his rights or delegate his duties or
obligations under this Agreement. The Company may assign its rights, duties, and
obligations under this Agreement to any successor to its business. This
Agreement shall inure to the benefit of and be binding upon the Company’s
successors and assigns.

Indemnification of the Employee.

     The Company shall indemnify the Employee and hold him harmless for acts or
decisions made by him in good faith while performing services for the Company or
any of the Company Affiliates to the maximum extent allowed by law. The Company
shall also use its reasonable efforts to obtain coverage for him under any
insurance policy now in force or hereinafter obtained during Term covering the
officers and directors of the Company against lawsuits, subject to the business
judgment of the Board. The Company shall pay all expenses, including attorneys’
fees of an attorney selected and retained by the Company to represent the
Employee, actually and necessarily incurred by the Employee in connection with
the defense of such act, suit, or proceeding and in connection with any related
appeal, including the cost of court settlements, provided that, to the extent
required by Section 409A, any such payment by the Company shall be made no later
than the end of the year following the year in which the expenses were incurred.

 

 

13.

Notices.

     Any notice, document, or other communication (hereinafter “Notice”) which
either party may be required or may desire to give to the other party shall be
in writing, and any such notice may be given or delivered personally or by mail
or facsimile. Any such notices given or delivered personally shall be given or
delivered by hand to an officer of the entity to which they are being given or
delivered or the individual, as the case may be, and shall be deemed given or
delivered when so given or delivered by hand. Any such notices given or
delivered by facsimile will be deemed given or delivered upon receipt by the
sender of a successful facsimile transmission to the facsimile number below, and
any

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such notices given or delivered by mail shall be deemed given or delivered three
(3) days after it is deposited in the U.S. mail, certified or registered mail,
return receipt requested, with all postage and fees prepaid, addressed to the
person or entity in question as follows:

If to the Employee:

John P. Nelson

To the address (or facsimile number, if applicable) on record with the Company

If to the Company:
Chief Executive Officer
Employers Holdings, Inc.
10375 Professional Circle
Reno, Nevada 89521-4802
Fax: (775) 886-5499

or, in either case, to such other address as either party may have previously
notified the other pursuant to the provisions of this Section 14.

 

 

14.

Severability.

     In the event that any provision hereof shall be declared by a court of
competent jurisdiction to be void or voidable as contrary to law or public
policy, such declaration shall not affect the continuing validity or
enforceability of any other provisions hereof insofar as it may be reasonable
and practicable to continue to enforce such other provision in the absence of
the provision which shall have been declared to be void and voidable.

 

 

15.

Remedy for Breach.

     Both parties recognize that the services to be performed by the Employee
are special and unique. The Company will have the right to seek and obtain
damages and any available equitable remedies for the Employee’s breach of this
Agreement. The Employee’s remedy for any breach of this Agreement is strictly
limited to the Severance Pay or CIC Severance Pay, as the case may be, called
for herein.

 

 

16.

Mitigation of Damages.

     The Employee shall not be required to mitigate damages or the amount of any
payment provided under this Agreement by obtaining other employment or otherwise
after the termination of employment hereunder, and any amounts earned by the
Employee, whether from self-employment or other employment shall not reduce the
amount of any Severance Pay or CIC Severance Pay, as the case may be, called for
herein.

 

 

17.

Attorneys’ Fees and Costs.

     In any claim or dispute between the parties arising out of or associated
with this Agreement or the breach hereof or otherwise arising out of or
associated with the Employee’s employment by the Company, the prevailing party
shall be entitled to recover all reasonable attorneys’ fees, expenses, and costs
thereof or associated therewith, provided that, to the extent required by
Section 409A, any such payment by the Company shall be made no later than the
end of the year following the year in which such fees, expenses and costs were
incurred. The term “prevailing party” means the party obtaining substantially
the relief sought via litigation or through an action in arbitration.

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18.

Integration, Amendment, and Waiver.

     This Agreement and such other written agreements referenced in this
Agreement, constitute the entire agreement between the parties pertaining to the
subject matter contained in it except as expressly provided herein, and
supersedes all prior agreements, representations, assurances, and understandings
of the parties, including any prior employment agreements. No amendment of,
addition to, or modification of this Agreement shall be binding unless executed
in writing by the parties. Any term or provision of this Agreement may be waived
in a signed writing at any time by the party that is entitled to the benefit
thereof, provided, however, that any waiver shall apply only to the specific
event or omission waived and shall not constitute a continuing waiver. Any term
or provision of this Agreement may be amended or supplemented at any time by a
written instrument executed by all the parties hereto.

 

 

19.

Captions.

     The captions and section headings of this Agreement are for convenience and
reference only, and shall have no effect on the interpretation or construction
of this Agreement.

 

 

20.

Applicable Law.

     The substantive laws of the State of Nevada shall govern the validity,
construction, interpretation, performance, and effect of this Agreement.

 

 

21.

Arbitration.

     Any controversy, cause of action or claim related to or arising out of or
in connection with the Employee’s employment with the Company, including but not
limited to termination of such employment or under this Agreement, other than an
action to enforce the provisions of Section 10 herein or the breach thereof,
shall be settled by arbitration according to the rules of the American
Arbitration Association applicable to disputes arising in Nevada and under
Nevada law. Any party to the arbitration may enter judgment upon the award
rendered by the arbitrator in any court having jurisdiction thereof. The
arbitrator shall not be entitled to amend or alter the terms of this Agreement.
Notwithstanding this Section 22, the Company shall be entitled to seek any
available equitable remedy for enforcement of provisions of this Agreement.

 

 

22.

Authorization.

     The Company and the Employee, individually and severally, represent and
warrant to the other party that it has the authorization, power and right to
deliver, execute and fully perform the obligations under this Agreement in
accordance with its terms. The Employee represents and warrants to the Company
that there is no restriction or limitation, by reason of this Agreement or
otherwise, upon the Employee’s right or ability to enter into this Agreement and
fulfill his obligations under this Agreement.

 

 

23.

Acknowledgment.

     The Employee acknowledges that he has been given a reasonable period of
time to study this Agreement before signing it. The Employee certifies that he
has fully read, has received an explanation of, and completely understands the
terms, nature, and effect of this Agreement. The Employee further acknowledges
that he is executing this Agreement freely, knowingly, and voluntarily and that
the Employee’s execution of this Agreement is not the result of any fraud,
duress, mistake, or undue influence whatsoever. In executing this Agreement, the
Employee does not rely on any inducements, promises, or representations by the
Company or any person other than the terms and conditions of this Agreement.

 

 

25.

Section 409A.

     Notwithstanding anything to the contrary in this Agreement, the payment of
consideration, compensation, and benefits pursuant to this Agreement shall be
interpreted and administered in a manner intended to avoid the imposition

12

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of additional taxes under section 409A of the Code and the regulations and
guidance promulgated thereunder (“Section 409A”). Notwithstanding any provision
to the contrary in this Agreement or otherwise, no payment or distribution under
this Agreement or otherwise that constitutes an item of “deferred compensation”
under Section 409A and becomes payable by reason of the termination of the
Employee’s employment hereunder shall be made to the Employee unless and until
the termination of the Employee’s employment constitutes a “separation from
service” (as such term is defined in Section 409A).

     In addition, no such payment or distribution of deferred compensation shall
be made to the Employee prior to the earlier of (a) the expiration of the six
(6) month period (the “Six Month Period”) measured from the date of the
Employee’s “separation from service” (as such term is defined in Section 409A),
and (b) the date of the Employee’s death, if the Employee is deemed at the time
of such separation from service to be a “specified employee” within the meaning
of that term under Section 409A (the “Six Month Delay”) and if such delayed
commencement is otherwise required to avoid an “additional tax” under section
409A(a)(1)(B) of the Code. All payments and benefits that are delayed pursuant
to the immediately preceding sentence shall be paid to the Employee in a lump
sum upon expiration of such six (6) month period (or if earlier, upon the
Employee’s death).

          Notwithstanding the foregoing provisions, to the extent permitted
under Section 409A, any separate payment or benefit under this Agreement or
otherwise shall not be “deferred compensation” subject to Section 409A and the
Six Month Delay to the extent provided in the exceptions in Treasury Regulation
section 1.409A-1(b)(4) and (b)(9) and any other applicable exception or
provision under Section 409A. Further, each individual installment payment that
becomes payable under this Agreement and each payment of the Severance Pay or if
applicable, the CIC Severance Pay shall be a “separate payment” under Section
409A. Specifically, to the extent the provisions of Treasury Regulation section
1.409A-1(b)(9) are applicable to the Severance Pay or if applicable, the CIC
Severance Pay, the portion of such severance pay set forth in respectively,
subsection 7(a)(i) or subsection 7(e)(i) above that is less than the limit
prescribed under Treasury Regulation section 1.409A-1(b)(9)(iii)(A) (or any
successor provision) (the “Separation Pay Amount”) shall be payable to the
Employee in the manner prescribed in subsection 7(a)(i) or subsection 7(e)(i),
as applicable, without regard to the Six Month Delay. Following the Six Month
Delay, (1) to the extent applicable, the Employee shall receive a lump sum cash
payment equal to the Severance Pay or CIC Severance Pay, as applicable, he
otherwise would have received during the Six Month Period (absent the Six Month
Delay) less the Separation Pay Amount and (2) the Employee shall receive the
remainder of his Severance Pay or CIC Severance Pay, as applicable, in the
manner prescribed by subsection 7(a) or subsection 7(e), as applicable.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
Effective Date.

 

 

 

 

 

COMPANY:

 

EMPLOYEE:

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

 

/s/ Douglas D. Dirks

 

 

/s/ John P. Nelson

 

 

 

 

 

 

Name: Douglas D. Dirks

 

 

Name: John P. Nelson

 

 

 

 

 

 

Chief Executive Officer

 

 

 

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