Document:

exv10w1

Exhibit 10.1

AMENDMENT TO NON-EMPLOYEE DIRECTOR

STOCK OPTION AGREEMENTS

     This AMENDMENT TO STOCK OPTION AGREEMENTS (the “Amendment”) is made and entered into effective
as of May 21, 2009 by and between HCC INSURANCE HOLDINGS, INC., a Delaware corporation (the
“Company”), and                                          (the “Director”).

W
I T N E S S E
T H :

     WHEREAS, the Company and the Director are party to (i) that certain Non-Employee Director
Stock Option Agreement Under the HCC Insurance Holdings, Inc. 2001 Flexible Incentive Plan dated
effective as of December 20, 2004 and (ii) that certain Non-Employee Director Stock Option
Agreement Under the HCC Insurance Holdings, Inc. 2004 Flexible Incentive Plan dated effective as of
January 5, 2006 (collectively, the “Option Agreements”);

     WHEREAS, under the terms of the Option Agreements, the Director holds options to purchase the
common stock of the Company as set forth on the option report attached hereto as Exhibit A;

     WHEREAS, the Company and the Director desire to amend the Option Agreements as set forth
herein; and

     WHEREAS, the Compensation Committee of the Board of Directors has approved the amendment of
the Option Agreements as set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and
other good and valuable consideration, the parties hereto agree as follows:

     1. Amendments.

     (a) Section 6(a) of each Option Agreement is amended by deleting the words “within sixty (60)
days after the termination of such employment or, if shorter, during the unexpired term of this
option,” and replacing them with “during the unexpired term of this option.”

     (b) Section 6(c) of each Option Agreement is amended by deleting the words “within thirty (30)
days after the termination of service or, if shorter, during the unexpired term of this option,”
and replacing them with “during the unexpired term of this option.”

     2. Ratification. Except as expressly provided herein, all other terms and conditions
of the Option Agreements remain unchanged, and as expressly amended hereby, the Option Agreements
are ratified and confirmed in all respects and shall remain in full force and effect.

	 	 	 	 	 	 	 
	HCC Insurance Holdings, Inc.	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Title:exv10w2

Exhibit 10.2

AMENDMENT TO

STOCK OPTION AGREEMENTS

     This AMENDMENT TO STOCK OPTION AGREEMENTS (the “Amendment”) is made and entered into effective
as of May 20, 2009 by and between HCC INSURANCE HOLDINGS, INC., a Delaware corporation (the
“Company”), and FRANK J. BRAMANTI (the “Executive”).

W
I T N E S S E
T H :

     WHEREAS, the Company and the Executive are party to (i) that certain Non-Employee Director
Stock Option Agreement Under the HCC Insurance Holdings, Inc. 2001 Flexible Incentive Plan dated
effective as of December 20, 2004; (ii) that certain Non-Employee Director Stock Option Agreement
Under the HCC Insurance Holdings, Inc. 2004 Flexible Incentive Plan dated effective as of January
5, 2006 (together with the agreement referenced in clause (i), the “Director Option Agreements”);
and (iii) that certain Non-Qualified Stock Option Agreement Under the HCC Insurance Holdings, Inc.
2004 Flexible Incentive Plan dated effective as of March 2, 2007 (the “Employee Option Agreement,”
and together with the Director Option Agreements, the “Option Agreements”);

     WHEREAS, the Company and the Executive desire to amend the Option Agreements as set forth
herein; and

     WHEREAS, the Compensation Committee of the Board of Directors has approved the amendment of
the Option Agreements as set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and
other good and valuable consideration, the parties hereto agree as follows:

     3. Amendments to the Director Option Agreements.

     (a) Section 6(a) of each Director Option Agreement is amended by deleting the words “within
sixty (60) days after the termination of such employment or, if shorter, during the unexpired term
of this option,” and replacing them with “during the unexpired term of this option.”

     (b) Section 6(c) of each Director Option Agreement is amended by deleting the words “within
thirty (30) days after the termination of service or, if shorter, during the unexpired term of this
option,” and replacing them with “during the unexpired term of this option.”

     4. Amendments to the Employee Option Agreement.

     (a) Section 6(e) of the Employee Option Agreement is amended by deleting the words “within
sixty (60) days after the termination of such employment or, if shorter, during

 

 

the unexpired term of this option,” and replacing them with “during the unexpired term of this
option.”

     (b) Section 6(a) of the Employee Option Agreement is amended by deleting the words “within
thirty (30) days after the termination of such employment or, if shorter, during the unexpired term
of this option,” and replacing them with “during the unexpired term of this option.”

     5. Ratification. Except as expressly provided herein, all other terms and conditions
of the Option Agreements remain unchanged, and as expressly amended hereby, the Option Agreements
are ratified and confirmed in all respects and shall remain in full force and effect.

     IN WITNESS WHEREOF, the parties have duly executed this Amendment effective as of the date set
forth above.

HCC Insurance Holdings, Inc.

	 	 	 
	/s/ John N. Molbeck, Jr.

	 	/s/ Frank. J. Bramanti
	 

	 	 
	John N. Molbeck, Jr.,

President and Chief Executive Officer

Date: May 21, 2009     

	 	Frank J. Bramanti

Date: May 21, 2009exv10w3

Exhibit 10.3

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR JOHN N. MOLBECK, JR.

 

 

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR JOHN N. MOLBECK, JR.

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE 1 - DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 - ELIGIBILITY
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 3 - CONTRIBUTIONS
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 4 - ADJUSTMENT OF ACCOUNT
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 5 - PAYMENT OF BENEFITS
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 6 - ADMINISTRATION OF THE PLAN
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 7 - CLAIM REVIEW PROCEDURE
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 8 - LIMITATION OF RIGHTS
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 9 - FUNDING AND ASSIGNMENT
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 10 - AMENDMENT OR TERMINATION OF THE PLAN
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 11 - GENERAL AND MISCELLANEOUS
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 12 - COMPLIANCE WITH CODE SECTION 409A
	 	 	14	 

 

 

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR JOHN N. MOLBECK, JR.

PREAMBLE

     WHEREAS, John N. Molbeck, Jr. (the “Participant”) has been appointed as the Chief Executive
Officer of the Company effective as of the Effective Date;

     WHEREAS, the Company desires to amend and restate the nonqualified deferred compensation plan
originally established effective as of August 31, 2007 for the exclusive benefit of the Participant
to reflect the increased Contributions payable to the Participant under that certain Employment
Agreement dated May 5, 2009, between the Company and the Participant (the “Employment Agreement”);
and

     WHEREAS, the Company intends that the Participant and his Beneficiary under the Plan shall
have the status of unsecured general creditors of the Company with respect to the Plan and that the
Plan shall constitute an unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select key management and highly compensated employee within the meaning of
section 201(2) and similar provisions of ERISA;

     NOW, THEREFORE, the Company hereby amends and restates the HCC Insurance Holdings, Inc.
Nonqualified Deferred Compensation Plan for John N. Molbeck, Jr., effective as of the Effective
Date. Nothing herein shall be construed to require Contributions for periods prior to the
Effective Date that exceed the Contributions required to be made under the Plan as in effect prior
to the Effective Date or to require the payment or acceleration of payment of benefits in violation
of the requirements of section 409A of the Code.

ARTICLE 1

DEFINITIONS

     1.1 “Account” shall mean the record maintained by the Committee showing the monetary
value of the individual interest in the Plan of the Participant. The term “Account” shall refer
only to a bookkeeping entry and shall not be construed to require the segregation of assets on
behalf of the Participant.

     1.2 “Accrual Date” shall mean the Valuation Date on which a Contribution is deemed to
be made to the Participant’s Account as specified by Sections 3.1 through Section 3.3 or, with
respect to Contributions credited under Section 3.4, as specified by the Committee action approving
such Contribution. The Accrual Date is relevant for purposes of adjusting the Account for deemed
investment experience hereunder.

     1.3 “Affiliate” shall mean a member of the controlled group of corporations (as
defined in section 1563 of the Code) of which the Company is a member. For purposes of Section
1.20, such term shall mean all persons with whom the Company would be considered a

1

 

single employer under Code section 414(b) and/or under Code section 414(c), as modified by the
first sentence of Treasury Regulation section 1.409A-1(h)(3).

     1.4 “Beneficiary” shall mean the beneficiary or beneficiaries (including any
contingent beneficiary or beneficiaries, if applicable) designated by the Participant to receive
death benefits, if any, hereunder.

     1.5 “Board” shall mean the Board of Directors of the Company, as constituted from time
to time.

     1.6 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time, and the rules and regulations promulgated thereunder.

     1.7 “Committee” shall mean the Compensation Committee of the Board or, if none, the
Board. An individual who ceases to be a member of such Compensation Committee (or Board, if
applicable) shall automatically cease to be a member of the Committee hereunder, and an individual
who becomes a member of such Compensation Committee (or Board, if applicable) shall automatically
become a member of the Committee hereunder.

     1.8 “Company” shall mean HCC Insurance Holdings, Inc., a Delaware corporation, or its
successor.

     1.9 “Contribution” shall mean a bookkeeping entry which reflects the periodic accrual
to the Participant’s Account, if any, as provided in Article 3 hereof.

     1.10 “Effective Date” shall mean May 5, 2009.

     1.11 “Employment Agreement” is defined in the above Preamble.

     1.12 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time, and the rules and regulations promulgated thereunder.

     1.13 “HCC Stock Rate” for a Valuation Date shall mean the one-month total return,
dividend reinvested, for the common stock of the Company (or any successor security) for the month
containing such Valuation Date, as determined in the sole discretion of the Committee; provided
that if the common stock of the Company (or the successor security) ceases to be publicly traded
prior to a Valuation Date, the HCC Stock Rate shall be equal to the S&P Rate for such Valuation
Date.

     1.14 “Investment Election” shall mean a written instrument in a form acceptable to the
Committee that is executed by the Participant and delivered to the Committee specifying the
Participant’s instructions regarding the matters addressed by Section 4.3.

     1.15 “Original Effective Date” shall mean August 31, 2007.

     1.16 “Participant” is defined in the above Preamble.

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     1.17 “Plan” shall mean this HCC Insurance Holdings, Inc. Nonqualified Deferred
Compensation Plan for John N. Molbeck, Jr., as amended from time to time.

     1.18 “Plan Year” shall mean the annual period beginning January 1 and ending December
31, both dates inclusive of each year.

     1.19 “Prime Rate” for a Valuation Date shall mean the latest United States prime
lending rate announced by Wells Fargo Bank, N.A. (or its successor) on the business day that is
coincident with or immediately precedes such Valuation Date, as adjusted to reflect monthly
compounding.

     1.20 “Separation from Service” shall mean the Participant’s “separation from service”
with the Company and its Affiliates as such term is defined for purposes of Code sections
409A(a)(2)(A)(i) and 409A(a)(2)(B)(i). To the extent permitted by Treasury Regulation section
1.409A-1(h)(5), the Participant may be considered to have such a separation from service even if he
continues to provide services as a non-employee director of the Company or any of its Affiliates.

     1.21 “Specified Employee” shall mean “specified employee” as defined by Code section
409A(a)(2)(B)(i), determined by applying the default rules applicable under such Code section
except to the extent such rules are modified by a written resolution that is adopted by the
Committee and that applies for purposes of all deferred compensation plans of the Company and its
Affiliates.

     1.22 “S&P Rate” for a Valuation Date shall mean the one-month total return, cash
dividend reinvested, for the S&P 500 Index for the month containing such Valuation Date, as
published by Standard & Poor’s (or any successor).

     1.23 “Valuation Date” shall mean the last calendar day of each month during the Plan
Year.

ARTICLE 2

ELIGIBILITY

     The only individual eligible to participate under the Plan is the Participant. He shall be
eligible to participate only while he is an employee of the Company and/or its Affiliates. No
Contributions shall be credited to the Participant’s Account with respect to periods after his
Separation from Service.

3

 

ARTICLE 3

CONTRIBUTIONS

     3.1 Initial Contributions.

     (a) As of the Original Effective Date, the Company shall and has credited the
Participant’s Account with an amount equal to $178,035.53.

     (b) As of the first Valuation Date following the Effective Date, the Company shall
credit the Participant’s Account with an amount equal to $66,397.85.

     3.2 Required Monthly Contributions before the Effective Date. The Company shall and
has credited the Participant’s Account with an amount equal to $29,166.67 as of the Valuation Date
for each month during the period beginning on September 1, 2007 and ending on the day immediately
preceding the Effective Date; provided that such accrual for the month containing the last day of
such period shall be prorated by multiplying $29,166.67 by a fraction equal to the number of
calendar days in such month prior to and including such last day divided by the total number of
calendar days in such month.

     3.3 Required Monthly Contributions after the Effective Date. The Company shall credit
the Participant’s Account with an amount equal to $79,166.67 as of the Valuation Date for each
month during the period beginning on June 1, 2009 and ending on the earliest to occur of (a) the
Participant’s Separation from Service; (b) the termination of the Employment Agreement; and (c) May
31, 2013; provided that such accrual for the month containing the last day of such period shall be
prorated by multiplying $79,166.67 by a fraction equal to the number of calendar days in such month
prior to and including such last day divided by the total number of calendar days in such month.

     3.4 Discretionary Contributions. The Committee may approve additional, discretionary
Company Contribution to the Participant’s Account for a Plan Year or portion of a Plan Year. Any
such discretionary Contributions shall be effective only upon approval by the Committee, which
approval shall specify the Accrual Date for each such discretionary Contribution. Discretionary
Contributions shall be accrued by the Company or an Affiliate as directed by the Committee.

ARTICLE 4

ADJUSTMENT OF ACCOUNT

     4.1 Contributions and Distributions. Contributions by the Company under Article 3
hereof shall be credited to the Account of the Participant as of the Accrual Date. All
distributions from the Account pursuant to Article 5 shall be charged against the Account as of the
date of such distribution.

4

 

     4.2 Deemed Investment Return.

     (a) The Participant’s Account shall be adjusted each Valuation Date to reflect earnings
(or losses) at the Prime Rate, the HCC Stock Rate, and/or the S&P Rate as applicable under
Section 4.3.

     (i) The portion of the Participant’s Account (if any) deemed invested at the
Prime Rate shall be credited with an amount equal to the balance of such portion (if
any) as of the close of the immediately preceding Valuation Date multiplied by the
Prime Rate for the current Valuation Date.

     (ii) The portion of the Participant’s Account (if any) deemed invested at the
HCC Stock Rate shall be credited with an amount equal to the balance of such portion
(if any) as of the close of the immediately preceding Valuation Date multiplied by
the HCC Stock Rate for the current Valuation Date.

     (iii) The portion of the Participant’s Account (if any) deemed invested at the
S&P Rate shall be credited (or debited) with an amount equal to the balance of such
portion (if any) as of the close of the immediately preceding Valuation Date
multiplied by the S&P Rate for the current Valuation Date.

     (b) Contributions to a Participant’s Account shall not be adjusted for deemed
investment experience for periods prior to the Accrual Date on which the Contributions are
credited to the Account (even if the Contribution amount is known prior to such date). No
amount shall be adjusted for deemed investment experience after the Valuation Date
coincident with or immediately preceding the date on which the amount is distributed from
the Participant’s Account.

     (c) The crediting of earnings and losses under the Plan does not mean and shall not be
construed to mean that the Participant’s Account is actually invested in any security, fund
or other investment, and neither the Participant nor any Beneficiary shall have any security
or other interest in any security, fund or investment, even if the Company maintains actual
investments that mirror or are substantially similar to liabilities under the Plan.

     4.3 Investment Election. The Participant (or his Beneficiary in the event of the
Participant’s death) shall be permitted to determine the manner in which his Account is deemed
invested in the Prime Rate option, the HCC Stock Rate option, and the S&P Rate option by delivering
an Investment Election to the Committee. The Investment Election shall specify the portion of the
Account (in a whole percentage of the total Account balance) to which each such option applies.
The Participant’s initial Investment Election made prior to the Original Effective Date was
effective as of September 1, 2007. A subsequent Investment Election shall be effective as of the
first day of the calendar quarter next following the date on which the election is received by the
Committee (so that the election shall apply in determining earnings for the calendar quarter
following the calendar quarter in which the election is received). An Investment Election shall
remain in effect with respect to the Participant’s Account (including subsequent

5

 

Contributions and earnings credited to the Account) until the effective date of a subsequent
Investment Election (which may be filed by the Participant (or his Beneficiary in the event of the
Participant’s death) at any time). In the absence of an effective Investment Election with respect
to all or a portion of the Participant’s Account, the Account (or such portion, as applicable)
shall be deemed invested in the Prime Rate option.

ARTICLE 5

PAYMENT OF BENEFITS

     5.1 Benefit Payment Events.

     (a) Payment of the Participant’s Account balance shall commence after the first to
occur of the following events:

     (i) the Participant’s Separation from Service due to death; and

     (ii) the Participant’s Separation from Service for any reason other than death.

     (b) If the Participant dies after Separation from Service for any reason other than
death and before the distribution of the Participant’s entire Account balance under Section
5.3 (for example, if the Participant is a Specified Employee and dies during the six-month
period described in Section 12.2), any remaining payments under such Section shall cease,
and payment shall occur instead under Section 5.2. Such payment shall not be subject to
Section 12.2.

     (c) For purposes of this Article 5, a payment made as soon as administratively
practicable after the specified Valuation Date for payment shall in any event be made within
90 days after such Valuation Date, and neither the Participant nor any Beneficiary shall
have a right to designate the taxable year of the administratively delayed payment.

     5.2 Death. In the event of the Participant’s death, his Beneficiary shall be entitled
to the entire value of all amounts credited to the Participant’s Account. Payment of such death
benefit shall be made in a single lump sum cash payment to the Beneficiary on or as soon as
administratively practicable after the first Valuation Date that is at least 30 days after the date
of the Participant’s death. The Beneficiary may not elect to defer the date of distribution or
change the form of payment of the distribution.

     (a) The Participant may designate one or more Beneficiaries to receive any benefits
payable under the Plan after the death of the Participant. The Participant may revoke or
change a prior Beneficiary designation at any time prior to his death by filing a new
Beneficiary designation with the Committee. To be effective, any Beneficiary designation or
revocation of a Beneficiary designation must be in writing on a form acceptable to the
Committee, must be signed by the Participant, and must be received by the Committee prior to
the death of the Participant.

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     (b) Any designation of a person as a Beneficiary shall be deemed to be contingent upon
the person’s surviving the Participant. Any designation of a class or group of
Beneficiaries shall be deemed to be a designation of only those members of the class or
group who are living at the time of the Participant’s death. Any designation of a trust as
a Beneficiary shall be invalid if the trust is not in existence at the time of the
Participant’s death. The Participant may designate (in the manner provided in subsection
(a), above) one or more persons as a contingent Beneficiary or Beneficiaries to receive,
upon the Participant’s death, the benefit that the primary Beneficiary would have received
had the primary Beneficiary survived the Participant.

     (c) If the Participant does not make an effective Beneficiary designation prior to
death, or if all Beneficiaries (primary and contingent) designated by the Participant
predecease him, the entire death benefit under this Section shall be paid to the
Participant’s estate. If a Beneficiary dies after the Participant and after becoming
entitled to a benefit hereunder, but before the designated payment date for such benefit,
such benefit shall be paid to the Beneficiary’s estate.

     (d) References hereunder to a benefit payable to or with respect to the Participant
include any benefit payable to the Participant’s Beneficiary or estate, as applicable.

     5.3 Separation from Service. Upon the Participant’s Separation from Service for any
reason other than death, the Participant shall be entitled to the entire value of all amounts
credited to his Account. Subject to Section 12.2, payment of the Participant’s benefit pursuant to
this Section shall be made in a single lump sum cash payment to the Participant on or as soon as
administratively practicable after the first Valuation Date that is at least 30 days after his
Separation from Service. The Participant may not elect to defer the date of distribution or change
the form of payment of the distribution.

ARTICLE 6

ADMINISTRATION OF THE PLAN

     6.1 The Plan shall be administered by the Committee. The members of the Committee shall not
receive compensation with respect to their services for the Plan. The members of the Committee
shall serve without bond or security for the performance of their duties hereunder unless
applicable law makes the furnishing of such bond or security mandatory or unless required by the
Company.

     6.2 The Committee shall perform any act which the Plan authorizes expressed by a vote at a
meeting or in a writing signed by a majority of its members without a meeting. The Committee may,
by a writing signed by a majority of its members, appoint any member of the Committee to act on
behalf of the Committee.

     6.3 The Committee may designate in writing other persons to carry out its responsibilities
under the Plan, and may remove any person designated to carry out its responsibilities under the
Plan by notice in writing to that person. The Committee may employ

7

 

persons to render advice with regard to any of its responsibilities. All usual and reasonable
expenses of the Committee shall be paid by the Company. The Company shall indemnify and hold
harmless each member of the Committee from and against any and all claims and expenses (including,
without limitation, attorney’s fees and related costs), in connection with the performance by such
member of his duties in that capacity, other than any of the foregoing arising in connection with
the willful neglect or willful misconduct of the person so acting.

     6.4 The Committee shall establish rules, not contrary to the provisions of the Plan, for the
administration of the Plan and the transaction of its business. The Committee shall interpret the
Plan in its sole and absolute discretion, and shall determine all questions arising in the
administration, interpretation, and application of the Plan. All determinations of the Committee
shall be conclusive and binding on all concerned.

     6.5 Any action to be taken hereunder by the Company shall be taken by resolution adopted by
the Board or an executive committee thereof; provided, however, that by resolution, the Board or an
executive committee thereof may delegate to any officer of the Company the authority to take any
actions hereunder, other than the power to amend or terminate the Plan.

ARTICLE 7

CLAIM REVIEW PROCEDURE

     7.1 The Committee shall automatically direct the distribution of all benefits to which the
Participant or his Beneficiary is entitled hereunder. In the event that the Participant or his
Beneficiary (the “Claimant”) believes that he (or she) has been denied benefits to which he (or
she) is entitled under the provisions of the Plan, the Committee shall, within 90 days after
receiving a written request from the Claimant, provide to the Claimant written notice of the denial
which shall set forth:

     (a) the specific reason or reasons for the denial;

     (b) specific references to pertinent Plan provisions on which the Committee based its
denial;

     (c) a description of any additional material or information needed for the Claimant to
perfect the claim and an explanation of why the material or information is needed;

     (d) a statement that the Claimant or his authorized representative may:

	 	(i)	 	Request a review upon written application to the Committee;
	 
	 	(ii)	 	Review pertinent Plan documents; and
	 
	 	(iii)	 	Submit issues and comments in writing;

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     (e) a statement that any appeal the Claimant wishes to make of the adverse
determination must be made in writing to the Committee within 60 days after receipt of the
Committee’s notice of denial of benefits and that failure to appeal the initial
determination to the Committee in writing within such 60-day period will render the
Committee’s determination final, binding, and conclusive; and

     (f) the address to which the Claimant must forward any request for review.

     7.2 If the Claimant should appeal to the Committee, he, or his duly authorized representative,
may submit, in writing, whatever issues and comments he, or his duly authorized representative,
feels are pertinent. The Committee shall re-examine all facts related to the appeal and make a
final determination as to whether the denial of the claim is justified under the circumstances.
The Committee shall advise the Claimant in writing of its decision on appeal, the specific reasons
for the decision, and the specific Plan provisions on which the decision is based. The notice of
the decision shall be given within 60 days after the Claimant’s written request for review, unless
special circumstances (such as a hearing) would make the rendering of a decision within such 60-day
period impracticable. In such case, notice of an extension shall be provided to the Claimant
within the original 60-day period, and notice of a final decision regarding the denial of a claim
for benefits will be provided within 120 days after its receipt of a request for review. If an
extension of time for review is required because of special circumstances, written notice of the
extension shall be furnished to the Claimant prior to the date the extension period commences.

     7.3 A Claimant’s compliance with the foregoing provisions of this Article is a mandatory
prerequisite to a Claimant’s right to commence any legal action with respect to any claim for
benefits under this Plan, including submission to mandatory arbitration in accordance with Section
11.7.

ARTICLE 8

LIMITATION OF RIGHTS

     The establishment of this Plan shall not be construed as giving the Participant or any person
claiming by, through, or on behalf of the Participant, any legal, equitable or other rights against
the Company, any Affiliate, or the respective officers, directors, employees, agents or
shareholders of the Company or any Affiliate except as expressly provided herein, or as giving to
the Participant or his Beneficiary, or any person claiming by, through, or on behalf of the
Participant or his Beneficiary, any equity or other interest in the assets or business of the
Company or any Affiliate or shares of stock of the Company or any Affiliate, or as giving the
Participant the right to be retained in the employment of the Company or any of its Affiliates.

ARTICLE 9

FUNDING AND ASSIGNMENT

     9.1 No Assignment or Alienation of Benefits. Except as provided in Section 12.3(a),
no benefits which shall be payable under the Plan to the Participant or his Beneficiary shall be

9

 

subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of the same shall be void. No benefits shall in any manner
be subject to the debts, contracts, liabilities, engagements or torts of the Participant or his
Beneficiary, nor shall they be subject to attachment or legal process for or against any person,
except to the extent required by law.

     9.2 No Trust or Fund Created. All benefits under the Plan shall be paid from the
general assets of the Company or, to the extent applicable, an Affiliate which has accrued a
Contribution in accordance with Article 3. Title to and beneficial ownership of any funds
represented by a Participant’s Account will at all times remain in the Company, and such funds will
continue for all purposes to be a part of the general funds of the Company and may be used for any
corporate purpose. No assets will be placed in trust or otherwise segregated from the general
assets of the Company or any Affiliate for the payment of obligations hereunder. Nothing herein
and no action taken hereunder requires or shall be construed to require the Company, any Affiliate,
or the Committee to establish or maintain any fund or trust or to segregate any amount for the
benefit of any Participant or Beneficiary; creates a trust or fiduciary relationship of any kind
between the Company and any Participant, Beneficiary, or other person; or shall create any right
to, title or interest whatsoever in or to any assets of the Company or any Affiliate or any
investment reserves, accounts, or funds that the Company or any Affiliate may purchase, establish,
or accumulate to aid in providing benefits under the Plan.

     9.3 Unsecured Creditor Status. To the extent that any person acquires a right to
receive payments hereunder, such right shall be no greater than the right of any unsecured general
creditor of the Company and, to the extent applicable, of any Affiliate which has accrued a
Contribution in accordance with Article 3.

ARTICLE 10

AMENDMENT OR TERMINATION OF THE PLAN

     10.1 Amendment. The Company reserves the right at any time to amend the Plan in whole
or in part by resolution of the Board. No amendment shall have the effect of retroactively
decreasing the Participant’s Account or depriving the Participant or his Beneficiary of rights
already accrued under the Plan unless the Participant (or his Beneficiary in the event of the
Participant’s death prior to the adoption of the amendment) consents to the amendment. In the
event that the Company shall change its name, the Plan shall be deemed to be amended to reflect the
name change without further action of the Company, and the language of the Plan shall be changed
accordingly. No amendment may be made to the Plan except in accordance with this Section.

     10.2 Termination. The Company reserves the right at any time to terminate the Plan by
resolution of the Board. No Contributions shall be credited to the Participant’s Account with
respect to periods after the termination of the Plan, but the Account shall continue to be
adjusted for deemed investment experience under Section 4.2. Except as provided in Section
12.3(d), the termination of the Plan shall not accelerate the payment of benefits under the Plan.

10

 

ARTICLE 11

GENERAL AND MISCELLANEOUS

     11.1 Severability. In the event that any provision of this Plan shall be declared
illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining
provisions of this Plan but shall be fully severable and this Plan shall be construed and enforced
as if said illegal or invalid provision had never been inserted herein.

     11.2 Construction. The section headings and numbers are included only for convenience
of reference and are not to be taken as limiting or extending the meaning of any of the terms and
provisions of this Plan. Whenever appropriate, words used in the singular shall include the plural
or the plural may be read as the singular. The words “hereof,” “herein,” “hereunder” and other
similar compounds of the word “here” shall, unless otherwise specifically stated, mean and refer to
the entire Plan, not to any particular provision or Section. The word “including” and words of
similar import when used in this Plan shall mean “including, without limitation,” unless the
context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.

     11.3 Governing Law. Except to the extent superseded by applicable Federal law, the
validity and effect of this Plan and the rights and obligations of all persons affected hereby
shall be construed and determined in accordance with the laws of the State of Texas, without giving
effect to conflict of laws principles thereof.

     11.4 Taxes.

     (a) All amounts payable hereunder shall be reduced by any and all federal, state, and
local taxes imposed upon the Participant or his Beneficiary which are required to be paid or
withheld by the Plan, the Company, an Affiliate, or any fund from which such amounts are
paid. The Participant or Beneficiary, as applicable, shall be responsible for the payment
of all taxes relating to benefits accrued under or payable from the Plan, including (without
limitation) income, excise, self-employment, payroll, Social Security, and Medicare taxes.
To the extent taxes of the Participant must be withheld or paid by the Company or an
Affiliate with respect to amounts not distributable from the Plan, the Participant shall pay
such amount to the Company or Affiliate or shall permit the Company or Affiliate pay to
withhold such amount from other compensation payable to the Participant.

     (b) Deemed investment earnings credited at the Prime Rate shall be subject to Social
Security and Medicare (FICA) taxes when credited and vested to the extent such earnings
exceed earnings determined at an interest rate equivalent to the latest, monthly adjusted
average corporate bond yield as announced by Moody’s Investors Service.

     (c) If any action or omission by the Company or any Affiliate causes any benefit or
payment under the Plan to be subject to an additional tax (including any additional
interest) under Code section 409A(a)(1)(B), the Company shall pay a “tax gross-up” payment
to the Participant in the amount necessary to pay such additional tax

11

 

(including any additional interest) and to pay all Federal, state, and local income,
excise, employment, and other taxes (including any additional taxes and interest under Code
section 409A(a)(1)(B)) on such gross-up payment, such that the Participant retains, after
the payment of all applicable taxes, the amount necessary to pay such additional tax
(including interest) under Code section 409A(a)(1)(B). Such tax gross-up payment shall be
paid to the Participant on or as soon as administratively practicable after the Valuation
Date next following the date of such action or omission by the Company or any Affiliate and,
in any event, shall be paid by the end of the taxable year of the Participant next following
the taxable year in which the Participant remits such additional tax (including any
additional interest).

     11.5 Waiver. Neither the failure nor any delay on the part of the Company, any
Affiliate, or the Committee to exercise any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or
privilege preclude any other or further exercise thereof, or the exercise of any other right, power
or privilege available to the Company, its Affiliates, or the Committee at law or in equity.

     11.6 Benefit Payments to Minors and Incompetents. Notwithstanding Section 9.1,
whenever any benefit which shall be payable under the Plan is to be paid to or for the benefit of
any person who is then a minor or is determined by the Committee, on the basis of qualified medical
advice, to be incompetent, the Committee need not require the appointment of a guardian or
custodian, but shall be authorized to cause the same to be paid over to the person having custody
of the minor or incompetent, or to cause the same to be paid to the minor or incompetent without
the intervention of a guardian or custodian, or to cause the same to be paid to a legal guardian or
custodian of the minor or incompetent, if one has been appointed, or to cause the same to be used
for the benefit of the minor or incompetent.

     11.7 Arbitration. Subject to exhaustion of the administrative claim process under
Article 7, any dispute controversy or claim arising out of or relating to this Plan or the breach
thereof, which cannot be resolved by the Company, the Committee, and the Participant, shall be
submitted to final and binding arbitration.

     (a) The arbitration shall be conducted in accordance with the National Rules for the
resolution of Employment Disputes of the American Arbitration Association (“AAA”). If the
parties cannot agree on an arbitrator, a list of seven arbitrators will be requested from
AAA, and the arbitrator will be selected using alternate strikes with Participant striking
first. The cost of the arbitration will be shared equally by the Participant and the
Company. Arbitration of such disputes is mandatory and in lieu of any and all civil causes
of action and lawsuits either party may have against the other arising out of Participant’s
participation in or benefits under the Plan. Such arbitration shall be held in Houston,
Texas.

     (b) Judgment on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof by the filing of a petition to enforce the award. Costs of filing may
be recovered by the party that initiates such action to have the award enforced.

12

 

     (c) The Company shall promptly reimburse the Participant for all eligible, reasonable
costs and expenses incurred in connection with any dispute, controversy, or claim submitted
to binding arbitration in accordance with this Section in an amount up to, but not exceeding
$200,000 per taxable year of the Participant, unless the Participant’s Separation from
Service was for “cause,” as such term is defined by the Employment Agreement, in which event
the Participant shall not be entitled to reimbursement unless and until it is determined he
was terminated other than for “cause” (as defined by the Employment Agreement). To be
eligible for reimbursement under this subsection (c), (i) the expenses must be incurred
during the period beginning on the Original Effective Date and ending on the date that is
ten years after the Participant’s Separation from Service and (ii) the expenses must be
submitted to the Committee for reimbursement within 90 days after the end of the taxable
year of the Participant in which the expenses were incurred. Amounts eligible for
reimbursement shall be paid to the Participant before the last day of the taxable year of
the Participant following the taxable year in which the expenses were incurred. The amount
of expenses eligible for reimbursement during the Participant’s taxable year may not affect
the expenses eligible for reimbursement in any other taxable year of the Participant. The
Participant’s right to reimbursement under this subsection (c) may not be assigned,
alienated, or exchanged for any other benefit.

     11.8 Notices. All notices or elections required by or made in accordance with this
Plan shall be in writing and sent certified mail, return receipt requested, addressed as set forth
below (or to any successor address for which notice is provided), or by delivering the same in
person, or by transmission by facsimile to the number set forth below (or to any successor number
for which notice is provided). Notice deposited in the United States Mail, mailed in the manner
described herein above, shall be effective upon deposit. Notice given in any other manner shall be
effective only if and when received.

	 	 	 
	If to Participant:

	 	John N. Molbeck, Jr.
	 

	 	11111 Claymore Road
	 

	 	Houston, Texas 77024
	 

	 	Fax: (832) 358-9529
	 
	 	 
	If to the Committee:

	 	HCC Insurance Holdings, Inc.
	 

	 	13403 Northwest Freeway
	 

	 	Houston, Texas 77040
	 

	 	Fax: (713) 462-2401
	 

	 	Attention: Compensation Committee

     11.9 Relationship to Employment Agreement. The Plan is intended to implement the
commitments of the Company under section 3(b) of the Employment Agreement, but shall not otherwise
be affected by the terms or requirements of the Employment Agreement. Benefits are payable
hereunder solely pursuant to the terms of this Plan without regard to the terms of the Employment
Agreement or any amendments to the Employment Agreement. To the extent the terms of this Plan are
inconsistent with or otherwise conflict with the terms of the Employment Agreement, the terms of
this Plan shall prevail and be controlling with respect to all matters relating to the Plan or
section 3(b) of the Employment Agreement.

13

 

ARTICLE 12

COMPLIANCE WITH CODE SECTION 409A

     12.1 Interpretation. The Plan and the provisions of this Article 12 are intended to
constitute good faith compliance with the requirements of Code section 409A and shall be construed
and applied in accordance with such requirements. In the event of any conflict or inconsistency
between the provisions of this Article 12 and any other provisions of the Plan, the provisions of
this Article 12 shall be controlling.

     12.2 Delayed Payment to a Specified Employee. Payment to the Participant pursuant to
Section 5.3 shall be delayed to the extent required by Code section 409A(a)(2)(B)(i).
Accordingly, if the Participant is a Specified Employee, any payments which the Participant is
otherwise entitled to receive under Section 5.3 during the six-month period beginning on the date
of the Participant’s Separation from Service shall be accumulated and paid effective as of the
earlier to occur of (a) the first Valuation Date that occurs on or after the date that is six
months after the date the Participant’s Separation from Service or (b) the first Valuation Date
that is at least 30 days after the date of the Participant’s death. The Participant’s Account,
including such delayed payments, shall be adjusted for investment experience in accordance with
Section 4.2 while payment is delayed pursuant to his Section. Reimbursements under Sections
11.4(c) and 11.7(c) shall be subject to the provisions of this Section to the extent required by
Code section 409A(a)(2)(B)(i).

     12.3 No Acceleration of Benefit Payments. Except as provided in this Section and
notwithstanding anything herein to the contrary, the payment of benefits under the Plan shall not
be accelerated in a manner that would cause such benefits to be includable in income under Code
section 409A.

     (a) The Committee may establish a procedure for the Plan to administer qualified
domestic relations orders. Such procedure shall comply with the applicable requirements of
ERISA Sections 206(d)(3) and 514(b)(7). The Committee may approve immediate payment to an
alternative payee (who is not the Participant) pursuant to the terms of a qualified domestic
relations order, as defined under ERISA sections 206(d)(3) and 514(b)(7). Any such payment
shall not be prohibited by Section 9.1 and shall not be subject to the limitation of Section
12.2.

     (b) If a benefit hereunder is required to be included in the income of the Participant
under Code section 409A as a result of the failure to comply with the requirements of Code
section 409A, the benefit amount so includable shall be paid to the Participant as of the
Valuation Date next following such compliance failure. This subsection shall not accelerate
the payment of a benefit that is subject to the six-month delay under Section 12.2.

     (c) The Committee may accelerate the payment of amounts credited to the Participant’s
Account (i) to the extent necessary for any Federal officer or employee in the executive
branch to comply with an ethics agreement with the Federal government and (ii) to the extent
reasonably necessary to avoid the violation of an applicable Federal, state, local, or
foreign ethics law or conflicts of interest law. Any such payment shall be

14

 

made in a single lump sum cash payment to the Participant on or as soon as
administratively practicable after the first Valuation Date that occurs on or after the
Committee’s determination. Any such payment shall not be subject to the limitation of
Section 12.2.

     (d) The entire amount credited to the Participant’s Account shall be paid to the
Participant if the Plan is terminated in accordance with Section 10.2 and the Committee
determines that the requirements of Treasury Regulation 1.409A-3(j)(4)(ix) have been and
will be satisfied in connection with such termination. Any such payment shall be made in a
single lump sum cash payment to the Participant on or as soon as administratively
practicable after the first Valuation Date that occurs on or after the Plan termination and
the Committee’s determination. This subsection shall not accelerate the payment of a
benefit that is subject to the six-month delay under Section 12.2.

     12.4 Overall Compliance. To the extent any provision of this Plan or any omission
from the Plan would (absent this Section 12.4) 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 12.4 shall not apply and
shall not be construed to amend any provision of the Plan to the extent this Section 12.4 or any
amendment required thereby would itself cause any amounts to be includable in income under Code
section 409A(a)(1).

[Signature page follows]

15

 

     IN WITNESS WHEREOF, the Company has caused its corporate seal to be affixed hereto and these
presents to be duly executed in its name and behalf by a duly authorized officer on this
21st day of May, 2009.

	 	 	 	 	 
	 	 	COMPANY
	 
	 	 	 	 
	 	 	HCC INSURANCE HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. B. Williams
	 

	 	 	 	 
	 

	 	Title:
	 	Chairman of the Board

ATTEST:

/s/ James L. Simmons                         

Vice President & Secretary

[CORPORATE SEAL]

16

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