ex10-3.htm


    


     

    Exhibit
10.3

     

     

     

     

    EMPLOYMENT
AGREEMENT

     

     

    This
Employment Agreement (this “Agreement”) by and between Employers Holdings, Inc.,
a Nevada corporation (the “Company”) and Lenard T. Ormsby (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 Legal
Officer and General Counsel.

     

     

    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 Legal Officer and General Counsel, 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, 

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    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 Legal Officer ad and General Counsel 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.

     

     

    
      	
              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
      $355,000 (“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).

            


    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (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;

            


    

     

     

    
      	
               
      

            	
              (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

            


    

     

     

    
      
        
        

      

      
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              (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.

            


    

     

     

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    
      	
              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 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.

            


    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (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.

     

     

    
      	
               
      

            	
              (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:

            


    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (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

            


    

     

     

    
      
        
        

      

      
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                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:

            


    

     

     

    
      	
               
      

            	
              (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


     

    
      
        
        

      

      
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    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.

            


    

     

     

    
      	
               
      

            	
              (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.

            


    

     

     

    
      
        
        

      

      
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              (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
      

            


    

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                 
      

              	
                 

              	
                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 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:

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (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. 

            


    

     

     

    
      	
               
      

            	
              (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
  

            


    

     

     

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    
       

      
        	
                 
      

              	
                 

              	
                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

            


    

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
       

      
        	
                 
      

              	
                 

              	
                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 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.

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    
      	
              13.

            	
              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.

     

     

    
      	
              14.

            	
              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 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:

     

    Lenard
T. Ormsby

     

    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

     

    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    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.

     

     

    
      	
              15.

            	
              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.

     

     

    
      	
              16.

            	
              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.

     

     

    
      	
              17.

            	
              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.

     

     

    
      	
              18.

            	
              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.

     

     

    
      	
              19.

            	
              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 

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

    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.

     

     

    
      	
              20.

            	
              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.

     

     

    
      	
              21.

            	
              Applicable
      Law.

            


    

     

     

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

     

     

    
      	
              22.

            	
              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.

     

     

    
      	
              23.

            	
              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.

     

     

    
      	
              24.

            	
              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 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    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 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.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    


     

     

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

     

    
      
        
          
            
              
                	
                        COMPANY:

                      	 
      	
                        EMPLOYEE:

                      
	 	 	 
	
                        By:

                      	 
      	 
      	
                        By:

                      	 
      
	 
      	/s/
      Douglas D. Dirks	
                         

                      	 
      	 
      	/s/
      Lenard T. Ormsby	
                         

                      
	 
      	
                        Name:
      Douglas D. Dirks

                                  
      Chief Executive Officer

                      	 
      	 
      	
                        Name:
      Lenard T.
Ormsby

                      


              

            

          

        

      

    

     

          


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    


     

    


     

     

    Appendix
A

     

     

    


     

     

    Perquisites

     

     

    1.
Automobile Allowance in the amount of $1,200.00 per month

     

     

    2.
Annual Executive Physical Examination as a part of the Company’s executive
wellness program

     

     

    3.
Life Insurance as a part of the Company’s group life insurance program in an
amount equal to three (3) times the Employee’s Base Salary

     

     

    


     

    
 

    20