ex10-2.htm


    Exhibit
10.2

     

    Execution Copy

     

    SECOND
AMENDED AND RESTATED

    REVOLVING
LINE OF CREDIT NOTE

    


    


    
       

      
        	 $150,000,000.00	 	
                 West Covina, California

              
	 	 	
                 September 30, 2008

              


      

       

    

     

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

    


    I.    DEFINITIONS:

    


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

    


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

    


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

    


    (c)    “LIBOR” means the rate per
annum determined pursuant to the following formula:

    


    
      	
              LIBOR
      =

            	
              Base
      LIBOR

            	 
      
	 
      	
              100% -
      LIBOR Reserve Percentage

            	 
      


    

    


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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    


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

    


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

    


    II.    INTEREST:

    


    (a)    Interest.  The
outstanding principal balance of this Note shall bear interest (computed on the
basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate
per annum one and one-quarter percent (1.25%) above the Prime Rate in effect
from time to time, or (ii) at a fixed rate per annum determined by Bank to be
one and one-quarter percent (1.25%) above LIBOR in effect on the first day of
each Fixed Rate Term.  When interest is determined in relation to the
Prime Rate, each change in the rate of interest hereunder shall become effective
on the date each Prime Rate change is announced within Bank.  With
respect to each LIBOR selection hereunder, Bank is hereby authorized to note the
date, principal amount, interest rate and Fixed Rate Term applicable thereto and
any payments made thereon on Bank’s books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information
noted.

    


    (b)    Selection of Interest Rate
Options.  At any time any portion of this Note bears interest
determined in relation to LIBOR, it may be continued by Borrower at the end of
the Fixed Rate Term applicable thereto so that all or a portion thereof bears
interest determined in relation to the Prime Rate or to LIBOR for a new Fixed
Rate Term designated by Borrower.  At any time any portion of this
Note bears interest determined in relation to the Prime Rate, Borrower may
convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower.  At
such time as Borrower requests an advance hereunder or wishes to select a LIBOR
option for all or a portion of the outstanding principal balance hereof, and at
the end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i)
the interest rate option selected by Borrower; (ii) the principal amount
subject thereto; and (iii) for each LIBOR selection, the length of the
applicable Fixed Rate Term. Any such notice may be given by telephone (or such
other electronic method as Bank may permit) so long as, with respect to each
LIBOR selection, (A) if requested by Bank, Borrower provides to Bank written
confirmation thereof not later than three (3) Business Days after such notice is
given, and (B) such notice is given to Bank prior to 10:00 a.m. on the first day
of the Fixed Rate Term, or at a later time during any Business Day if Bank, at
its sole option but without obligation to do so, accepts Borrower’s notice and
quotes a fixed rate to Borrower.  If 

     

    
      
        
        

      

      
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    Borrower
does not immediately accept a fixed rate when quoted by Bank, the quoted rate
shall expire and any subsequent LIBOR request from Borrower shall be subject to
a redetermination by Bank of the applicable fixed rate.  If no
specific designation of interest is made at the time any advance is requested
hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have
made a Prime Rate interest selection for such advance or the principal amount to
which such Fixed Rate Term applied.

    


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

    


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

    


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

    


    III.    BORROWING AND
REPAYMENT:

    


    (a)    Borrowing and
Repayment.  Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above; provided further, that from and
after January 1, 2010 but prior to January 1, 2011, the total
outstanding borrowings under this Note shall not at any time exceed One Hundred
Million Dollars ($100,000,000.00); provided further, that from and after
January 1, 2011, the total outstanding borrowings under this Note shall not
at any time exceed Fifty Million Dollars ($50,000,000.00).  The unpaid
principal balance of this obligation at any time shall be the total amounts
advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for Borrower, which balance may be endorsed hereon from time
to time by the holder.  The outstanding principal balance of this Note
shall be due and payable in full on March 26, 2011.

     

    
      
        
        

      

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

    


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

    


    IV.    PREPAYMENT:

    


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

    


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

    


    
      	
               
      (i)    

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

            


    

    


    
      	
               
      (ii)    

            	
              Subtract from
      the amount determined in (i) above the amount of interest which would have
      accrued for the same month on the amount prepaid for the remaining term of
      such Fixed Rate Term at LIBOR in effect on the date of prepayment for new
      loans made for such term and in a principal amount equal to the amount
      prepaid.

            


    

     

     

    
      
        
        

      

      
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      (iii)    

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

            


    

    


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

    


    V.    EVENTS OF
DEFAULT:

    


    This Note is made pursuant to and is
subject to the terms and conditions of that certain Second Amended and Restated
Credit Agreement between Borrower and Bank dated as of
September 30, 2008, as amended from time to time (the “Credit
Agreement”).  Any default in the payment or performance of any
obligation under this Note, or any defined event of default under the Credit
Agreement, shall constitute an “Event of Default” under this
Note.

    


    VI.    MISCELLANEOUS:

    


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

    


    (b)    Obligations Joint and
Several.  Should more than one person or entity sign this Note
as a Borrower, the obligations of each such Borrower shall be joint and
several.

     

    
      
        
        

      

      
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    (c)    Governing
Law.  This Note shall be governed by and construed in
accordance with the laws of the State of Nevada.

    


    As of the date hereof, this Note
amends, restates in full and supersedes that certain Amended and Restated
Revolving Line of Credit Note dated May 23, 2008, in the maximum principal
amount of $150,000,000.00 executed by Borrower in favor of Bank.

    


    [Signature
to follow on next page]

     

     

    
      
        
        

      

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

    


    
      	
              EMPLOYERS
      HOLDINGS, INC.

            	 
      
	 
      	 
      	 
      
	
              By:

            	
               /s/ William E. Yocke

            	 
      
	 
      	
              William
      E. Yocke

            	 
      
	 
      	
              Executive
      Vice President,

            	 
      
	 
      	
              Chief
      Financial Officer