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
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.
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.
The
Employee shall continue to serve as Executive Vice President, Chief
Administrative Officer and shall perform such duties as may be
assigned by the Chief Executive Officer from time to time. At the
request of the Board of Directors of the Company (the
“Board”), the Employee shall also serve as a director
of the Company and/or one or more of the Company Affiliates at no
additional compensation. The Employee agrees that upon the
termination of his employment with the Company, he shall resign
from the Board and any and all boards of the Company Affiliates
effective on the Termination Date.
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4.
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Compensation and
Benefits.
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(a)
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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.
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(b)
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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).
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(c)
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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.
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(d)
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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.
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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.
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(a)
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The Company, at any time, may
terminate this Agreement and the Employee’s employment
immediately for “Cause”. Cause is defined
as:
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(i)
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A material breach of this
Agreement by the Employee;
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(ii)
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Failure or inability of the
Employee to obtain or maintain any required licenses or
certificates;
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(iii)
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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)
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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.
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(b)
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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:
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(i)
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A material diminution in the
Employee’s base compensation;
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(ii)
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A material diminution in the
Employee’s authority, duties or responsibilities;
or
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(iii)
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Any other action or inaction that
constitutes a material breach by the Company of this Agreement (as
may be amended from time to time).
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(c)
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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):
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(i)
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Death of the Employee;
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(ii)
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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
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(iii)
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At any time for any other reason
or no reason in the sole and absolute discretion of the
Company.
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7.
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Payments Upon
Termination.
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(a)
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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”):
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(i)
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In lieu of any further salary
payments to the Employee for periods subsequent to the Termination
Date and in lieu of any severance benefit otherwise payable to the
Employee, an amount equal to one and one half (1 ½) times
Base Salary, payable in equal bi-weekly installments on the
Company’s regular payroll dates as in effect on such
Termination Date, for eighteen (18) months following the
Termination Date, commencing with the payroll date
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applicable to the first full
payroll period following the Termination Date; provided, however,
that such payments shall be delayed to the extent required under
Section 25 below. The payments shall be subject to normal payroll
deductions.
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(ii)
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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.
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(b)
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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.
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(c)
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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:
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(i)
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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;
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(ii)
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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
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(iii)
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That the Employee reaffirms the
covenants contained herein, in writing, including, but not limited
to, the covenants set forth in
Section 10.
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Notwithstanding anything in this
Agreement to the contrary, in any case where the first and last
days of the applicable release and nonrevocability periods provided
for in the Global Release of Liability (the “Applicable
Release Period”) are in two separate taxable years, any
payments required to be made to the Employee under this Agreement
that are treated as deferred compensation for purposes of Section
409A (as defined below) shall be made in the later taxable year, as
soon as practicable, but in no event later than thirty (30) days
following the conclusion of the Applicable Release
Period.
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(d)
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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:
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(i)
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Any unpaid salary through the
Termination Date; and
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(ii)
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Payment for any accrued and
unused vacation as of the Termination Date.
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(e)
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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):
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(i)
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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
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(ii)
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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.
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(f)
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Definition of Change in
Control . For
purposes of this Agreement, a “Change in Control” shall
be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
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(i)
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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
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(ii)
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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
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(iii)
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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
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(iv)
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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.
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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
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