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. 


1






	
 

	
 


	
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; 





2






	
 

	
 

	
 

	
 


	
 

	
 

	
(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 1⁄2) 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





3






	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
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.





4






	
 

	
 

	
 

	
 


	
 

	
(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:





5






	
 

	
 

	
 

	
 


	
 

	
 

	
(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.





6






	
 

	
 

	
 

	
 


	
 

	
 

	
(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 





7






	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
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. 





8






	
 

	
 

	
 


	
 

	
(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





9






	
 

	
 

	
 


	
 

	
 

	
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


10






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. 


11






	
 

	
 


	
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






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

	
 

	
 

	
 





13