Exhibit 10.1
Execution Copy
EMPLOYMENT AGREEMENT
     This EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of the
1st day of May, 2009 (the “Effective Date”), by and between the Company, as
hereinafter defined, and William T. Whamond (“Executive”). As used herein, the
“Company” shall mean HCC Insurance Holdings, Inc., a Delaware corporation, or
such other HCC entity as is designated by the Chief Executive Officer of HCC,
for which Executive devotes from time to time the substantial portion of his
efforts. The Company shall sometimes be referred to herein as “HCC.” Executive
and the Company are sometimes collectively referred to herein as the “Parties”
and individually as a “Party.”
RECITALS:
     WHEREAS, Executive is to be employed as an officer or key employee of the
Company;
     WHEREAS, it is the desire of the Company to engage Executive as an officer
or key employee of the Company; and
     WHEREAS, Executive is desirous of being employed by the Company on the
terms herein provided.
     NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:
AGREEMENT
     1. Term. Effective as of the Effective Date, the Company hereby employs
Executive, and Executive hereby accepts such employment, on the terms and
conditions set forth herein, for the period (the “Term”) commencing on the
Effective Date and expiring at the earlier to occur of (a) 11:59 p.m. on
April 30, 2013 (the “Expiration Date”) or (b) the Termination Date (as
hereinafter defined).
     2. Duties.
          (a) Duties as Executive of the Company. Executive shall, subject to
the supervision of the Chief Executive Officer of the Company (the “CEO”) or
such other person designated by the CEO, act as the Executive Vice President
and, as provided below in this Section 2(a), Chief Financial Officer of the
Company in the ordinary course of its business with all such powers reasonably
incident to the position or other such responsibilities or duties that may be
from time to time assigned by the CEO. After May 22, 2009 and no later than
August 11, 2009, at the sole discretion of Executive and upon three (3) days’
prior written notice to the CEO (with a copy to the General Counsel), Executive
shall also assume the position of Chief Financial Officer. After his appointment
as Chief Financial Officer, Executive may be reassigned or transferred to
another management position as designated by the CEO, provided such position
provides the same or greater level of responsibility as Chief Financial Officer
and provided Executive continues to report to the CEO. During normal business
hours, Executive shall devote his full time and attention to diligently
attending to the business of the Company. During the Term, Executive shall not

 

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directly or indirectly render any services of a business, commercial, or
professional nature to any other person, firm, corporation, or organization,
whether for compensation or otherwise, without the prior written consent of the
CEO. However, Executive shall have the right to engage in such activities as may
be appropriate in order to manage his personal investments and in educational,
charitable and philanthropic activities so long as such activities do not
materially interfere or conflict with the performance of his duties to the
Company hereunder. The conduct of such activity shall not be deemed to
materially interfere or conflict with Executive’s performance of his duties
until Executive has been notified in writing thereof and given a reasonable
period in which to cure the same.
          (b) Other Duties.
          (1) If elected, Executive agrees to serve as a member of such
managerial committees of the Company and of any of its direct or indirect
parents or subsidiaries (collectively, “Affiliates”) and in one or more
executive offices of any of the Company’s Affiliates, provided Executive is
indemnified for serving in any and all such capacities in a manner acceptable to
the Company and Executive. If elected, Executive agrees that he shall not be
entitled to receive any compensation for serving as a director of the Company,
or in any capacities for the Company or the Company’s Affiliates other than the
compensation to be paid to Executive by the Company pursuant to this Agreement.
          (2) Executive acknowledges and agrees that he has read and considered
the written business policies and procedures of HCC as posted on HCC’s intranet
and that he will abide by such policies and procedures throughout the term of
his employment with the Company. Executive further agrees that he will
familiarize himself with any amendments to the policies and procedures and that
he will abide by such policies and procedures as they may change from time to
time.
     3. Compensation and Related Matters.
          (a) Base Salary. Executive shall receive an initial base salary paid
by the Company of $750,000 per year during the Term. At the sole discretion of
HCC, the base salary may be increased. For purposes of this Agreement, “Base
Salary” shall mean Executive’s initial base salary or, if increased, then the
increased base salary. The Base Salary shall be paid in substantially equal
semi-monthly installments.
          (b) Bonus Plan. During the Term, Executive shall be eligible to
receive, in addition to the Base Salary, an annual cash and/or stock bonus
payment in amounts to be determined as follows:
          (1) If Executive is a participant under the 2008 Flexible Incentive
Plan (the “Incentive Plan”) for a calendar year during the Term, then
Executive’s bonus payment, if any, for such year shall be determined and paid in
accordance with the terms of the Incentive Plan.
          (2) If Executive is not a participant in the Incentive Plan, Executive
shall be eligible to receive an annual cash and/or stock bonus payment in an
amount, which may

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be zero, to be determined at the sole discretion of the CEO in accordance with
HCC’s policies. The CEO or such other person may unilaterally reduce or
eliminate any annual bonus payment, if any, up until the time the bonus is
actually paid (and notwithstanding any earlier, tentative determination of the
bonus amount). Subject to Sections 4(b), 4(c), 4(d) and 4(f), no bonus payment
shall be paid to Executive for a year if Executive’s Termination Date occurs at
any time during such year. Moreover, even if Executive is employed by HCC on the
last day of the year for which a bonus may be payable, Executive shall not be
eligible for the payment of bonus compensation for such year if this Agreement
or his employment with HCC terminates for any reason prior to the payment of
such bonus compensation, other than termination by the Company without “Cause,”
termination by Executive for “Good Reason,” Death, Disability or termination by
Executive in connection with a “Change of Control” pursuant to Section 4(f).
          (3) Notwithstanding Sections 3(b)(1) and (2), Executive’s bonus
payment for the bonus year ending December 31, 2009 shall be not less than
$250,000 and shall be paid in cash. Such payment shall occur after December 31,
2009 and on or before March 15, 2010.
          (4) Notwithstanding Sections 3(b)(1) and (2), if the Agreement expires
in accordance with its terms on the Expiration Date, Executive shall be entitled
to consideration for a prorated bonus for the bonus year ending December 31,
2013 based on that portion of the bonus year Executive was employed by the
Company. Such payment shall occur after December 31, 2013 and on or before
March 15, 2014.
          (c) Expenses. During the Term, Executive shall be entitled to receive
prompt reimbursement for all reasonable business expenses incurred by him (in
accordance with the policies and procedures established by the Company) in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
          (d) Other Benefits.
          (1) From time to time the Company may make available other
compensation and employee benefit plans and arrangements. Executive shall be
eligible to participate in such other compensation and employee benefit plans
and arrangements on the same basis as similarly situated employees, subject to
and on a basis consistent with the terms, conditions, and overall administration
of such plans and arrangements, as amended from time to time. Nothing in this
Agreement shall be deemed to confer upon the Executive or any other person
(including any beneficiary) any rights under or with respect to any such plan or
arrangement or to amend any such plan or arrangement, and the Executive and each
other person (including any beneficiary) shall be entitled to look only to the
express terms of any such plan or arrangement for his or her rights thereunder.
Nothing paid to Executive under any such plan or arrangement presently in effect
or made available in the future shall be deemed to be in lieu of the Base Salary
payable to Executive pursuant to Section 3(a).
          (2) If Executive’s employment ceases pursuant to Section 4(c), 4(d),
or 4(f), the Company shall provide continuation coverage under COBRA for
Executive and/or each of his qualified beneficiaries under the Company group
health plans in which they

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participate on the Termination Date for twelve (12) months. The Company shall
pay the full required premium for such continuation coverage.
          (e) Vacation. Executive shall be entitled to twenty-five (25) vacation
days each year of full employment during the Term, exclusive of holidays, as
long as the scheduling of Executive’s vacation does not interfere with the
Company’s normal business operation. Vacation not used by the Executive during
the calendar year will be forfeited. For purposes of this Paragraph, weekends
shall not count as Vacation days. Executive shall also be entitled to all paid
holidays given by the Company.
          (f) Life Insurance. The Company shall provide to Executive a term life
insurance policy or policies in an aggregate face amount of $1,000,000.00 and
shall pay the premiums therefor during the Term. Upon Executive’s cessation as
an employee of the Company during or after the Term for any reason other than
death, the Company shall assign such policy or policies to Executive. The life
insurance provided for in this Section 3(f) shall be in addition to the group
life insurance program covering Executive and substantially all of the employees
of the Company during the Term.
          (g) Air Travel. During the Term, Executive shall be entitled to
domestic first class and international club business class air travel, where
available, when traveling on Company business, and Executive agrees to use any
upgrade programs or opportunities for such travel whenever feasible.
          (h) Relocation Costs. Benefits in connection with Executive’s
relocation to Houston, Texas, which shall include a resale guarantee relating to
Executive’s sale of his residence in New Rochelle, New York, in accordance with
the terms of that certain Relocation Policy and Reimbursement Agreement
(“Relocation Agreement”) to be entered into contemporaneously herewith
          (i) Stock Options. Stock options, if any, issued to Executive during
the Term shall be issued under a stock option agreement containing terms with
respect to vesting and exercise upon the occurrence of certain termination
events that are substantially the same as those set forth on Exhibit 3(i)
hereto, subject to any then required approval by the Compensation Committee of
the Board.
          (j) Proration. The Base Salary payable to Executive hereunder in
respect of any calendar year during which Executive is employed by the Company
for less than the entire year shall be prorated in accordance with the number of
days in such calendar year during which he is so employed.

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     4. Termination.
          (a) Definitions.
          (1) “Cause” shall mean:
          (i) the Executive’s failure or refusal to perform substantially his
material duties, responsibilities and obligations (other than a failure
resulting from the Executive’s incapacity due to physical or mental illness or
other reasons beyond the control of the Executive) as determined in the
reasonable discretion of the CEO;
          (ii) any act involving fraud, misrepresentation, theft, embezzlement,
dishonesty or moral turpitude (“Fraud”) which results in material harm to
Company;
          (iii) conviction of (or a plea of nolo contendere) to an offense which
is a felony in the jurisdiction or which is a misdemeanor in the jurisdiction
involved but which involves Fraud;
          (iv) a material breach of this Agreement by the Executive, including
without limitation, any breach of the non-competition or confidentiality
provisions of this Agreement; or
          (v) the Executive’s failure to act or discharge or negligently acting
or discharging any material part of his duties or obligations as determined in
the reasonable discretion of the CEO.
Provided that in the event that any of the foregoing events is capable of being
cured, the Company shall provide written notice to the Executive describing the
nature of such event and the Executive shall thereafter have ten (10) calendar
days to cure such event to the satisfaction of the Company.
     (2) A “Change of Control” shall be deemed to have occurred if:
     (i) Any “person” or “group” (within the meaning of sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of 50% or more of the Company’s
then outstanding voting common stock; or
     (ii) The shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
(a) in which a majority of the directors of the surviving entity were directors
of the Company prior to such consolidation or merger, and (b) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being changed
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting

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securities of the surviving entity outstanding immediately after such merger or
consolidation; or
     (iii) The shareholders approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
          (3) A “Disability” shall mean the inability of Executive to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months. Executive
shall be considered to have a Disability (i) if he is determined to be totally
disabled by the Social Security Administration or (ii) if he is determined to be
disabled under HCC’s long-term disability plan in which Executive participates
and if such plan defines “disability” in a manner that is consistent with the
immediately preceding sentence.
          (4) A “Good Reason” shall mean any of the following (without
Executive’s express written consent):
     (i) A material diminution in the Executive’s Base Salary;
     (ii) A material diminution in Executive’s responsibilities, including
Executive’s ceasing to directly report to the CEO;
     (iii) Executive’s involuntary relocation to any place, other than the
executive offices as a result of the Company relocating its executive offices,
exceeding a distance of 50 miles from the place of Executive’s normal place of
employment on the Effective Date, except for reasonably required travel by
Executive on the Company’s business; or
     (iv) Any material breach by the Company of any material provision of this
Agreement.
However, Good Reason shall exist with respect to an above specified matter only
if such matter is not corrected, or begun to be corrected, by the Company within
thirty (30) days after the Company’s receipt of written notice of such matter
from Executive. Any such notice from Executive must be provided within thirty
(30) days after the initial existence of the specified event. In no event shall
a termination by Executive occurring more than ninety (90) days following the
initial date of the event described be a termination for Good Reason due to such
event, whether that event is corrected or not.
          (5) “Termination Date” shall mean the date Executive’s employment with
the Company terminates or is terminated for any reason pursuant to this
Agreement.
          (b) Termination Without Cause or for Good Reason: Benefits. In the
event the Company involuntarily terminates Executive’s employment with the
Company without Cause or

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if Executive terminates employment with the Company for Good Reason (a
“Termination Event”), this Agreement shall terminate and Executive shall be
entitled to the following severance benefits:
          (1) An amount equal to the Base Salary (as defined in Section 3(a))
that would have been payable after the Termination Date and before the
Expiration Date, at the rate in effect immediately prior to the Termination
Event, payable in a lump sum discounted at the rate of return on 90-day Treasury
bills in existence on the Termination Date to take into consideration the lump
sum early payment within ninety (90) days after the Termination Date; provided
that such payment shall in any event occur on or after such Termination Date and
before March 15 of the year following the year containing such Termination Date;
          (2) An amount equal to the Base Salary paid to Executive during the
prior year in lieu of any bonus payment that would have been earned for the year
in which the Termination Date occurs, payable in a lump sum discounted at the
rate of return on 90-day Treasury bills in existence on the Termination Date to
take into consideration the lump sum early payment within ninety (90) days after
the Termination Date; provided that such payment shall in any event occur on or
after such Termination Date and before March 15 of the year following the year
containing such Termination Date;
          (3) Payment of accrued Base Salary and unreimbursed business expenses
through the Termination Date in accordance with Section 3(c). Such amounts shall
be paid to Executive in a lump sum in cash within thirty (30) days after the
Termination Date; and
          (4) Executive shall be free to accept other employment during such
period, and other than as set forth herein, there shall be no offset of any
employment compensation earned by Executive in such other employment during such
period against payments due Executive under this Section 4, and there shall be
no offset in any compensation received from such other employment against the
severance benefits set forth above, unless the Executive is employed in a
position of competing with the Company as described in Section 5 below.
          (c) Termination In Event of Death: Benefits. If Executive’s employment
with the Company is terminated by reason of Executive’s death during the Term,
this Agreement shall terminate without further obligation to Executive’s legal
representatives under this Agreement, other than for:
          (1) payment of all accrued Base Salary through the Termination Date,
unreimbursed business expenses through the Termination Date in accordance with
Section 3(c), the amount of any bonus under Section 3(b) that relates to a prior
year and that is unpaid as of the date of death, and an amount equal to twelve
(12) months’ Base Salary payable to Executive’s estate in a lump sum in cash
within ninety (90) days after the date of death; provided that such payment
shall in any event occur on or after such date of death and before March 15 of
the year following the year of death;
          (2) a payment in lieu of a bonus payment under Section 3(b) with
respect to the year in which Executive dies equal to, (i) if such termination
occurs on or before December 31, 2009, $250,000, or (ii) if such termination
occurs on or after January 1, 2010,

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an amount equal to a pro rata amount of Executive’s bonus compensation for the
prior calendar year; provided that the payment of any such bonus, if any, shall
in any event occur on or after such date of death and before March 15 of the
year following the year of death; and
          (3) continuing medical benefits under Section 3(d)(2).
          (d) Termination In Event of Disability: Benefits. If Executive’s
employment with the Company is terminated by reason of Executive’s Disability
during the Term, this Agreement shall terminate, but the Company shall pay the
Executive
          (1) all accrued Base Salary through the Termination Date, unreimbursed
business expenses through the Termination Date in accordance with Section 3(c),
the amount of any bonus under Section 3(b) that relates to a prior year and that
is unpaid as of the date of Disability, and an amount equal to twelve
(12) months’ Base Salary payable to Executive in a lump sum in cash within
ninety (90) days after the Termination Date due to Disability; provided that
such payment shall in any event occur on or after such Termination Date and
before March 15 of the year following the year containing such Termination Date;
          (2) for a payment in lieu of a bonus payment under Section 3(b) with
respect to the year in which Executive’s employment terminates due to Disability
equal to, (i) if such termination occurs on or before December 31, 2009,
$250,000, or (ii) if such termination occurs on or after January 1, 2010, an
amount equal to a pro rata amount of Executive’s bonus compensation for the
prior calendar year; provided that any payment of such bonus, if any, shall in
any event occur on or after such Termination Date and before March 15 of the
year following the year containing such Termination Date.
          (e) Voluntary Termination by Executive and Termination for Cause:
Benefits. Executive may terminate his employment with the Company by giving
written notice of his intent and stating an effective Termination Date at least
ninety (90) days after the date of such notice; provided, however, that the
Company may accelerate such effective date by paying Executive through the
proposed Termination Date (but not to exceed ninety (90) days). Upon such a
termination by Executive or upon termination of Executive’s employment with the
Company for Cause by the Company, this Agreement shall terminate and the Company
shall pay to Executive all accrued Base Salary and all unreimbursed business
expenses through the Termination Date in accordance with Section 3(c). Such
amounts shall be paid to Executive in a lump sum in cash within thirty (30) days
after the Termination Date. Executive shall have no entitlement to any bonus for
the year in which the Termination Date occurs or for any unpaid bonus for the
prior year.
          (f) Voluntary Termination by Executive after a Change of Control:
Benefits. If Executive’s authority, duties, or responsibilities are materially
diminished within twelve (12) months after a Change of Control occurs, Executive
notifies the Company of such diminution within thirty (30) days, and the Company
does not fully correct the condition within thirty (30) days after receiving
such notice, Executive may voluntarily terminate her employment with the Company
and shall be entitled to the following severance benefits:

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          (1) An amount equal to the Base Salary (as defined in Section 3(a))
that would have been payable after the Termination Date and before the
Expiration Date, at the rate in effect immediately prior to the Termination
Event, payable in a lump sum discounted at the rate of return on 90-day Treasury
bills in existence on the Termination Date to take into consideration the lump
sum early payment within ninety (90) days after the Termination Date; provided
that such payment shall in any event occur on or after such Termination Date and
before March 15 of the year following the year containing such Termination Date;
          (2) An amount equal to the Base Salary paid to Executive during the
prior year in lieu of any bonus payment that would have been earned for the year
in which the Termination Date occurs, payable in a lump sum discounted at the
rate of return on 90-day Treasury bills in existence on the Termination Date to
take into consideration the lump sum early payment within ninety (90) days after
the Termination Date; provided that such payment shall in any event occur on or
after such Termination Date and before March 15 of the year following the year
containing such Termination Date;
          (3) All unreimbursed business expenses through the Termination Date in
accordance with Section 3(c). Such amounts shall be paid to Executive in a lump
sum in cash within thirty (30) days after the Termination Date;
          (4) All stock options granted to Executive prior to the Effective Date
shall vest immediately, regardless of any limitation or condition when granted,
and each such option shall be exercisable for the period provided in the
respective option grant agreement with respect to such option. The provisions of
this Section 4(f)(3) constitute an amendment to the terms of each applicable
option agreement (including agreements for options granted on or after the
Effective Date); and
          (5) Executive shall be free to accept other employment during such
period, and other than as set forth herein, there shall be no offset of any
employment compensation earned by Executive in such other employment during such
period against payments due Executive under this Section 4, and there shall be
no offset in any compensation received from such other employment against the
severance benefits set forth above, unless the Executive is employed in a
position of competing with the Company as described in Section 5 below.
          (g) Director and Officer Positions. Executive agrees that upon
termination of employment, for any reason, Executive will immediately tender his
resignation from any and all Board or officer positions held with the Company
and/or any of its Affiliates.
     5. Non-Competition, Non-Solicitation and Confidentiality. The Company
agrees to give Executive access to Confidential Information (including, without
limitation, Confidential Information, as defined below, of the Company’s
Affiliates) that Executive has not had access to or knowledge of before the
execution of this Agreement. At the time this Agreement is made, the Company
agrees to provide Executive with initial and ongoing Specialized Training, which
Executive has not had access to or knowledge of before the execution of this
Agreement. “Specialized Training” includes the training the Company provides to
its employees that is unique to its business and enhances Executive’s ability to
perform Executive’s job duties effectively.

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Specialized Training includes, without limitation, orientation training; sales
methods/techniques training; operation methods training; and computer and
systems training.
          (a) Non-Competition During Employment. Executive agrees that, in
consideration for the Company’s promise to provide Executive with Confidential
Information and Specialized Training, during the Term, he will not compete with
the Company by engaging in the conception, design, development, production,
marketing, or servicing of any product or service that is substantially similar
to the products or services which the Company provides, and that he will not
work for, in any capacity, assist, or become affiliated with as an owner,
partner, etc., either directly or indirectly, any individual or business which
offers or performs services, or offers or provides products substantially
similar to the services and products provided by Company; provided, however,
Executive shall not be prevented from owning no more than 2% of any company
whose stock is publicly traded.
          (b) Conflicts of Interest. Executive agrees that during the Term, he
will not engage, either directly or indirectly, in any activity (a “Conflict of
Interest”) that might adversely affect the Company or its Affiliates, including
ownership of a material investment in a competitor of the Company or its
Affiliates, ownership of a material interest in any supplier, contractor,
distributor, subcontractor, customer or other entity with which the Company does
business or acceptance of any material payment, service, loan, gift, trip,
entertainment, or other favor from a supplier, contractor, distributor,
subcontractor, customer or other entity with which the Company does business,
and that Executive will promptly inform the CEO as to each offer received by
Executive to engage in any such activity. As used in this Section 5(b),
“materiality” shall be viewed from the perspective of Executive. Executive
further agrees to disclose to the Company any other facts of which Executive
becomes aware which in Executive’s good faith judgment could reasonably be
expected to involve or give rise to a Conflict of Interest or potential Conflict
of Interest.
          (c) Non-Competition After Termination. Executive agrees that in order
to protect the Company’s Confidential Information, it is necessary to enter into
the following restrictive covenant, which is ancillary to the enforceable
promises between the Company and Executive otherwise contained in this
Agreement. Executive agrees that Executive shall not, at any time during the
Restricted Period (as hereinafter defined), within any of the markets in which
the Company has sold products or services or formulated a plan to sell products
or services into a market during the last twelve (12) months of Executive’s
employ, engage in or contribute Executive’s knowledge to any work which is
competitive with or similar to a product, process, apparatus, service, or
development on which Executive worked while employed by the Company. It is
understood that the geographical area set forth in this covenant is divisible so
that if this clause is invalid or unenforceable in an included geographic area,
that area is severable and the clause remains in effect for the remaining
included geographic areas in which the clause is valid. For the purpose of this
Agreement, “Restricted Period” means a period of twenty-four (24) months after
termination of Executive’s employment with the Company; provided, however, that
in the event Executive is terminated by the Company without “Cause” or Executive
terminates his employment for “Good Reason” or in connection with a “Change of
Control” pursuant to Section 4(f), such period shall be twelve (12) months. The
Restricted Period shall commence at the time Executive ceases to be a full-time
employee of the Company.

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          (d) Confidential Information. Executive agrees that he will not,
except as the Company may otherwise consent or direct in writing, reveal or
disclose, sell, use, lecture upon, publish or otherwise disclose to any third
party any Confidential Information or proprietary information of the Company, or
authorize anyone else to do these things at any time either during or subsequent
to his employment with the Company. This Paragraph shall continue in full force
and effect after termination of Executive’s employment and after the termination
of this Agreement. Executive’s obligations under this Paragraph with respect to
any specific Confidential Information and proprietary information shall cease
when that specific portion of the Confidential Information and proprietary
information becomes publicly known, in its entirety and without combining
portions of such information obtained separately. It is understood that such
Confidential Information and proprietary information of the Company include
matters that Executive conceives or develops, as well as matters Executive
learns from other employees of the Company. “Confidential Information” is
defined to include information: (1) disclosed to or known by Executive as a
consequence of or through his employment with the Company; (2) not generally
known outside the Company; and (3) that relates to any aspect of the Company or
its business, finances, operation plans, budgets, research, or strategic
development. “Confidential Information” includes, but is not limited to, the
Company’s trade secrets, proprietary information, financial documents, long
range plans, customer lists, employer compensation, marketing strategy, data
bases, costing data, computer software developed by the Company, investments
made by the Company, and any information provided to the Company by a third
party under restrictions against disclosure or use by the Company or others.
          (e) Non-Solicitation. To protect the Company’s Confidential
Information, and in the event of Executive’s termination of employment for any
reason whatsoever, whether by Executive or the Company, it is necessary to enter
into the following restrictive covenant, which is ancillary to the enforceable
promises between the Company and Executive otherwise contained in this
Agreement. Executive covenants and agrees that during Executive’s employment and
for the Non-solicitation Period, Executive will not, directly or indirectly,
either individually or as a principal, partner, agent, consultant, contractor,
employee or as a director or officer of any corporation or association, or in
any other manner or capacity whatsoever, except on behalf of the Company,
solicit business, or attempt to solicit business, and products or services
competitive with products or services sold by the Company, from the Company’s
clients or customers, or those individuals or entities with whom the Company did
business during Executive’s employment. Executive further agrees that during
Executive’s employment and for the Non-Solicitation Period, Executive will not,
either directly or indirectly, or by acting in concert with others, solicit or
influence any Company employee to leave the Company’s employment. For the
purpose of this Agreement, “Non-solicitation Period” means a period of
twenty-four (24) months after termination of Executive’s employment with the
Company; provided, however, that in the event Executive is terminated by the
Company without “Cause” or Executive terminates his employment for “Good Reason”
or in connection with a “Change of Control” pursuant to Section 4(f), such
period shall be twelve (12) months.
          (f) Return of Documents, Equipment, Etc. All writings, records, and
other documents and things comprising, containing, describing, discussing,
explaining, or evidencing any Confidential Information, and all equipment,
components, parts, tools, and the like in Executive’s custody or possession that
have been obtained or prepared in the course of Executive’s employment

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with the Company shall be the exclusive property of the Company, shall not be
copied and/or removed from the premises of the Company, except in pursuit of the
business of the Company, and shall be delivered to the Company, without
Executive retaining any copies, upon notification of the termination of
Executive’s employment or at any other time requested by the Company. The
Company shall have the right to retain, access, and inspect all property of
Executive of any kind in the office, work area, and on the premises of the
Company upon termination of Executive’s employment and at any time during
employment by the Company to ensure compliance with the terms of this Agreement.
          (g) Reaffirm Obligations. Upon termination of Executive’s employment
with the Company, Executive, if requested by Company, shall reaffirm in writing
Executive’s recognition of the importance of maintaining the confidentiality of
the Company’s Confidential Information and proprietary information, and reaffirm
any other obligations set forth in this Agreement.
          (h) Prior Disclosure. Executive represents and warrants that Executive
has not used or disclosed any Confidential Information he may have obtained from
the Company prior to signing this Agreement, in any way inconsistent with the
provisions of this Agreement.
          (i) No Previous Restrictive Agreements. Executive represents that,
except as disclosed in writing to the Company, Executive is not bound by the
terms of any agreement with any previous employer or other party to refrain from
using or disclosing any trade secret or confidential or proprietary information
in the course of Executive’s employment by the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Executive further represents that Executive’s performance of
all the terms of this Agreement and Executive’s work duties for the Company does
not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by Executive in confidence or in trust
prior to Executive’s employment with the Company, and Executive will not
disclose to the Company or induce the Company to use any confidential or
proprietary information or material belonging to any previous employer or other
party.
          (j) Breach. Executive agrees that any breach of Sections 5(a) through
(f) above cannot be remedied solely by money damages, and that in addition to
any other remedies Company may have, Company is entitled to obtain injunctive
relief against Executive. Nothing herein, however, shall be construed as
limiting the Company’s right to pursue any other available remedy at law or in
equity, including recovery of damages and termination of this Agreement and/or
any termination or offset against any payments that may be due pursuant to this
Agreement.
          (k) Right to Enter Agreement; Payment of Loans. Executive represents
and covenants to the Company that he has full power and authority to enter into
this Agreement and that the execution and performance of this Agreement will not
breach or constitute a default of any other agreement or contract to which he is
a party or by which he is bound. Executive further acknowledges that he has
repaid all outstanding loans from the Company prior to entering into this
Agreement.
          (l) Enforceability. The agreements contained in this Section 5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any

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of its obligations outside of this Section do not excuse Executive from
complying with the agreements contained herein.
          (m) Survivability. The agreements contained in this Section 5 shall
survive the termination of this Agreement for any reason.
          (n) Reformation. If a court concludes that any time period or the
geographic area specified in Sections 5(c) or (e) of this Agreement are
unenforceable, then the time period will be reduced by the number of months, or
the geographic area will be reduced by the elimination of the overbroad portion,
or both, so that the restrictions may be enforced in the geographic area and for
the time to the fullest extent permitted by law.
     6. Assignment. This Agreement, and any rights and obligations hereunder,
may not be assigned by the Executive and may be assigned by the Company only to
a successor by merger or purchasers of substantially all of the assets of the
Company. The Company shall obtain the assumption and performance of this
Agreement by any such successor or purchasers; provided, however, that such
commitment by the Company (including a failure to satisfy such commitment) shall
not give Executive the right to object to or enjoin any transaction among the
Company, any of its affiliates, and any such successor or purchasers. To the
extent a failure by the Company to satisfy the foregoing commitment constitutes
a material breach of this Agreement and to the extent not cured in accordance
with Section 4(a)(4), such failure shall constitute “Good Reason” pursuant to
Section 4(a)(4)(iii).
     7. Binding Agreement. Executive understands that his obligations under this
Agreement are binding upon Executive’s heirs, successors, personal
representatives, and legal representatives.
     8. Notices. All notices pursuant to this Agreement shall be in writing and
sent certified mail, return receipt requested, addressed as set forth below, or
by delivering the same in person to such party, or by transmission by facsimile
to the number set forth below (which shall not constitute notice). Notice
deposited in the United States Mail, mailed in the manner described hereinabove,
shall be effective upon deposit. Notice given in any other manner shall be
effective only if and when received:

         
 
  If to Executive:   William T. Whamond
 
      76 Pryer Terrace
 
      New Rochelle, New York 10804
 
       
 
  If to Company:   HCC Insurance Holdings, Inc.
 
      13403 Northwest Freeway
 
      Houston, Texas 77040
 
      Attn: General Counsel
 
      Fax: (713) 744-9648

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     9. Waiver. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.
     10. Severability. If any provision of this Agreement is determined to be
void, invalid, unenforceable, or against public policy, such provisions shall be
deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect.
     11. Entire Agreement. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Executive’s
employment with Company during the time period covered by this Agreement. This
Agreement replaces and supersedes any and all existing Agreements entered into
between Executive and the Company relating generally to the same subject matter,
if any, and shall be binding upon Executive’s heirs, executors, administrators,
or other legal representatives or assigns.
     12. Modification of Agreement. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by Executive and an
officer or other authorized executive of Company.
     13. Understand Agreement. Executive represents and warrants that he has
read and understood each and every provision of this Agreement, and Executive
understands that he has the right to obtain advice from legal counsel of his
choice, if necessary and desired, in order to interpret any and all provisions
of this Agreement, and that Executive has freely and voluntarily entered into
this Agreement.
     14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflicts
of laws principles thereof.
     15. Jurisdiction and Venue. With respect to any litigation regarding this
Agreement, Executive agrees to venue in the state or federal courts in Harris
County, Texas, and agrees to waive and does hereby waive any defenses and/or
arguments based upon improper venue and/or lack of personal jurisdiction. By
entering into this Agreement, Executive agrees to personal jurisdiction in the
state and federal courts in Harris County, Texas.
     16. Arbitration. Disputes between the parties shall be settled by binding
arbitration in the city of Houston in the State of Texas in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association (the “AAA Rules”). Arbitration will be conducted by one
(1) arbitrator The Company and Executive agree to use all commercially
reasonable efforts to cause the arbitration hearing to be conducted within sixty
(60) calendar days after the appointment of the last of the arbitrator and to
use all commercially reasonably efforts to cause the arbitrator’s decision to be
furnished within ninety-five (95) calendar days after his or her appointment.
The Company and Executive further agree that discovery shall be completed at
least twenty (20) Business Days prior to the date of the arbitration hearing.
The final decision of the arbitrators shall be furnished to the Company and
Executive in writing and shall constitute a conclusive determination of the
issue in question, binding upon the Company and Executive and shall not be
contested by either of them. In any arbitration of a non-statutory claim, the
Company and Executive

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shall each pay their own expenses (including attorneys’ fees), and the Company
and Executive shall each pay fifty percent (50%) of the fees and expenses
associated with the arbitration (including the arbitrators’ fees and expenses).
     17. Tolling. If Executive violates any of the restrictions contained in
Sections 5(c) or (e), the Restricted Period and the Non-Solicitation Period,
respectively, will be suspended and will not run in favor of Executive from the
time of the commencement of any violation until the time when Executive cures
the violation to the Company’s satisfaction.
     18. Compliance With Section 409A.
          (a) Delay in Payments. Notwithstanding anything to the contrary in
this Agreement, (i) if upon the Termination Date, Executive is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended, or any regulations or Treasury guidance promulgated thereunder
(the “Code”) and the deferral of any amounts otherwise payable under this
Agreement as a result of Executive’s termination of employment is necessary in
order to prevent any accelerated or additional tax to Executive under Code
Section 409A, then the Company will defer the payment of any such amounts
hereunder until the date that is six (6) months following the date of
Executive’s termination of employment with the Company, at which time any such
delayed amounts will be paid to Executive in a single lump sum, with interest
from the date otherwise payable at the United States prime rate as published in
the “Money Rates” section of The Wall Street Journal on the first publication
date coincident with or immediately following the Termination Date, and (ii) if
any other payments of money or other benefits due to Executive hereunder could
cause the application of an accelerated or additional tax under Code
Section 409A, such payments or other benefits shall be deferred if deferral will
make such payment or other benefits compliant under Code Section 409A and if
this subsection (ii) does not otherwise cause the application of an accelerated
or additional tax under Code Section 409A.
          (b) Overall Compliance. To the extent any provision of this Plan or
any omission from the Plan would (absent this Section 18(b)) cause amounts to be
includable in income under Code section 409A(a)(1), the Plan shall be deemed
amended to the extent necessary to comply with the requirements of Code section
409A; provided, however, that this Section 18(b) shall not apply and shall not
be construed to amend any provision of the Plan to the extent this Section 18(b)
or any amendment required thereby would itself cause any amounts to be
includable in income under Code section 409A(a)(1).
          (c) Reformation. If any provision of this Agreement would cause
Executive to incur any additional tax under Code Section 409A , the parties will
in good faith attempt to reform the provision in a manner that maintains, to the
extent possible, the original intent of the applicable provision without
violating the provision of Code Section 409A.
[signature page follows]

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     IN WITNESS WHEREOF, the Parties have executed this Agreement in multiple
copies, effective as of the date first written above.

                      EXECUTIVE:       COMPANY:                 HCC Insurance
Holdings, Inc.    
 
                   
 
  /s/ William T. Whamond
 
William T. Whamond       By:   /s/ Frank J. Bramanti
 
Frank J. Bramanti,     Date: April 28, 2009           Chief Executive Officer  
              Date: April 28, 2009    
 
                                Acknowledged by:    
 
                   
 
          By:   /s/ John N. Molbeck, Jr.    
 
                   
 
              John N. Molbeck, Jr.,    
 
              President and Chief Operating Officer                 Date:
April 28, 2009    

Signature Page
Employment Agreement — Whamond

 

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Exhibit 3(i)
Option Vesting and Exercise Provisions
Termination of Employment.
1. In the event the employment of the Employee is terminated by the Employee for
Good Reason (as defined in the Employment Agreement between the Company and the
Employee entered into effective as of May 1, 2009 (the “Employment Agreement”))
or by the Company without Cause (as such term is defined in the Employment
Agreement), the Employee shall have the right to exercise this option for the
full number of shares not previously exercised or any portion thereof, except as
to the issuance of fractional shares, to the full extent of this option at any
time within the unexpired term of this option.
2. In the event the employment of the Employee is terminated for Cause or by
Employee without Good Reason, the Employee shall have the right at any time
within thirty (30) days after the termination of such employment or, if shorter,
during the unexpired term of this option, to exercise this option for the full
number of shares not previously exercised or any portion thereof, except as to
the issuance of fractional shares, but only to the extent this option was
otherwise exercisable in accordance with Paragraph 4 hereof as of the date of
such termination of employment.
3. In the event the employment of the Employee is terminated by reason of
Disability, then the Employee shall have the right to exercise this option for
the full number of shares not previously exercised or any portion thereof,
except as to the issuance of fractional shares, to the full extent of this
option at any time within the unexpired term of this option.
4. In the event of the death of the Employee while in the employ of the Company
or the Subsidiaries, this option may be exercised for the full number of shares
not previously exercised, or any portion thereof, except as to the issuance of
fractional shares, to the full extent of this option at any time within the
unexpired term of this option, by the person or persons to whom the Employee’s
rights under this option shall pass by the Employee’s will or by the laws of
descent and distribution, whichever is applicable.
5. In the event the Employee terminates his employment on a Change of Control
(as defined in the Employment Agreement), then the Employee shall have the right
to exercise this option for the full number of shares not previously exercised
or any portion thereof, except as to the issuance of fractional shares, to the
full extent of this option at any time within the unexpired term of this option.
Exhibit 3(i)

 

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Relocation Policy and Reimbursement Agreement
This Agreement is effective as of the date signed. It is between HCC Insurance
Holdings, Inc. (the “Company” or “HCC”) and William T. Whamond (“You”, “Your”,
or “Employee”).
HCC has agreed to spend a substantial sum of money for the purpose of relocating
you and your legally-recognized immediate family members who currently live with
you to the Houston, Texas area (“Houston”).
The Company will reimburse you for reasonable and proper amounts or provide
advance assistance of expenses incurred as a result of your relocation from your
current place of residence to Houston.
You are eligible to have your relocation expenses reimbursed after relocating
from your former residence to Houston, Texas. All relocation expenses should be
filed separately from other types of reimbursable business expenses and should
be clearly marked “Relocation Expenses.”
The Administration Department will assist relocating employees to facilitate
their move. Please contact the Administration Department (Debbie Riffe, Vice
President of Administration 713-744-9634) to obtain the names of outside
services, such as movers and real estate brokers, to help you relocate.
The Internal Revenue Service (IRS) requires that certain relocation and moving
expenses paid to and on behalf of an employee be included as regular income and
reflected on the employee’s W-2. The Company includes these amounts, when
applicable, on the employee’s W-2 summary of earnings. The employee is allowed
to deduct certain moving expenses (other than those reimbursed by the Company
and excluded from the employee’s W-2) as adjustments to gross income in
calculating individual income tax. The Company will provide a breakdown of all
relocation expenses to ensure the necessary information for completing the
required tax forms. You are advised to see qualified tax counsel for advice in
these areas where specific questions arise.
To the extent the Company’s payment of reasonable relocation and moving expenses
in accordance with the foregoing is reported as taxable income to you on IRS
Form W-2, the Company shall make an additional tax gross-up payment to you such
that the total of that payment plus the amount of the reported taxable
reimbursement of relocation and moving expenses shall equal the amount of the
reported taxable reimbursement divided by 0.6355 (i.e., 1 minus the deemed
marginal income tax rate of 36.45%).
In order to address the financial concerns you may have regarding a move, HCC
has put together the following relocation package. Included in this package are
some items that may help to address some personal concerns you may also have.

  1.   The Company will assist you with two (2) house hunting trips of not more
than five (5) days and four (4) nights, each for the purpose of orienting
yourselves with the Houston area and to locate a new residence. House hunting
expenses apply to both you and your spouse: They include the cost of
transportation, meals, and lodging. You may claim these expenses only if the
travel begins after an Employment Agreement is signed and travel is

 

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      primarily to look for a place to live. The cost of transportation includes
parking fees and tolls, plus actual expenses, such as gas. Accurate records of
each expense must be kept and the original receipts provided when seeking
reimbursement. Entertainment and personal expenses are not reimbursable.

  2.   In some instances, you may wish to have an additional family member(s) to
accompany you on a house hunting trip or someone other than your spouse. In such
cases, approval by the Vice President of Human Resources will be required.    
3.   All arrangements and accommodations for these trips (includes air, rental
car, and lodging) are provided through the Company’s Corporate Travel
Department.     4.   The Company will pay for temporary housing, up to seven
months, capped at $4,500 per month for the initial 3 months and $3,000 per month
thereafter.     5.   The Company will contract with a moving van lines to
provide services to you at a discounted rate. The type and extent of assistance
in relocation of your household goods is as follows:

  a.   The cost of normal household moving service from the former permanent
residence to the new residence.     b.   The cost for normal moving services
including packing of normal household effects for shipment and unpacking and
placement of household goods at the new residence.     c.   The Company will pay
for full replacement valuation at released value of $3.50 times the shipping
weight. If the coverage is determined by you as not sufficient, additional
coverage can be purchased at your own expense.     d.   The cost of normal move
via moving van or auto carrier for two personal vehicles from the former
permanent residence to the new residence.     e.   The normal cost of storage
during the period you are in temporary housing.

No assistance will be provided for the following:

  a.   Moving or shipment of items such as livestock, boats, shrubs,
construction materials, additional cars, or similar items requiring special
handling.     b.   Removal or installation of permanently fixed items such as
lighting fixtures, fencing, patios, fireplaces, etc.     c.   Assembly or
disassembly of, pool tables, waterbeds, outdoor fixtures, appliances, etc.    
d.   Purchase of fixtures, appliances, equipment, or materials for new
residence.

 

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  e.   Tips or gifts to moving company employees.     f.   Any services
performed by you, your dependents or relatives.

  6.   When you sell your primary residence, you will be reimbursed for the
following costs, including but not limited to:

  a.   Real estate commission (limited to prevailing local rate, but not to
exceed seven percent (7%)). If you should sell your home without a real-estate
agent, you will receive 2% of the selling price as a bonus.     b.   One real
estate appraisal.     c.   Real estate transfer taxes.     d.   Title survey
costs.     e.   Legally required inspection fees (if paid by seller).

  7.   When you purchase a residence to be used as your primary residence in
Houston, you will be reimbursed for customary buying cost, including, but not
limited to:

  a.   Mortgage applications and credit rating fee.     b.   Cost of building
inspection, plot survey, and termite inspection, if required by mortgage lending
institution.     c.   Title insurance premium (only if specifically required by
state statute or mortgage lending institution).     d.   Recording fees and
property tax transfer.

No reimbursement will be allowed for the following:

  a.   Baby-sitting.     b.   Care of pets.     c.   Disconnecting and
connecting appliances and utilities.     d.   Removing and installing antennas,
carpet and draperies.     e.   Home cleaning, maintenance or repair costs.

  8.   After joining HCC, you promptly will obtain two bona fide appraisals for
the value of your New Rochelle residence. After receiving those two appraisals,
you will place the home on the market at a fair market price. If your home has
not sold after 90 days on the

 

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      market, at the Executive’s option, HCC will purchase the home at the
average price of the two appraisals. The Executive must elect this option no
later than 120 days after joining HCC. The appraisals, marketing of the home
and, if necessary, HCC’s purchase of the home, must be completed within six
months of your joining HCC.

  9.   The Company will provide transportation for you and your family at the
time of the move by air transportation (First Class). At the time of the move,
if you drive your family to Houston, you will be paid daily expenses of $400 not
to exceed a total of $2000. If air transportation is chosen as the travel
method, please contact the Company’s Corporate Travel Department for assistance
with making reservations. Eight days advance notice is required.

Before any reimbursement is made under this Relocation Policy and Reimbursement
Agreement, you will be required to sign a Promissory Note requiring you to
reimburse the Company for all expenses paid by the Company and all payments to
you (including any amounts withheld for taxes), if you should voluntarily leave
the employment of the Company before December 31, 2009 (unless for Good Reason
or Special Reason as defined in the employment Agreement).
You understand and agree that the Company’s agreement to pay certain relocation
costs and expenses is contingent upon your relocation to Houston, no later than
July 1, 2009, as well as your continued employment with the Company until at
least December 31, 2009. You further understand and agree that should you
voluntarily leave the Company’s employment before December 31, 2009 (unless for
Good Reason as defined in the Employment Agreement), you must repay the Company
all expenses paid by the Company and all payments to you (including the tax
gross-up payment and any amounts withheld for taxes) in connection with the
relocation.
You further agree and authorize the Company to withhold wages, expense
reimbursements, unused earned paid time off, benefits and any other monies or
property due you in order to satisfy any repayment obligation.
In order to receive relocation benefits, the Relocation Policy and Reimbursement
Agreement, together with the Employment Agreement, must be signed and returned
to the General Counsel via e-mail (rrinicella@hcc.com) or facsimile transmission
(713-744-9648).
I have read, understand, and agree to abide by the terms of this Agreement.

         
Signature:
  /s/ William T. Whamond
 
  Date: April 28, 2009  
 
  William T. Whamond