Document:

exv10w1

 

EXHIBIT 10.1

PIONEER COMPANIES, INC.,

Issuer

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

Trustee

FIRST SUPPLEMENTAL INDENTURE

Dated as of August 31, 2007

2.75% Convertible Senior Subordinated Notes due 2027

Supplementing the Indenture

dated as of March 26, 2007

between Pioneer Companies, Inc. and

Wells Fargo Bank, National Association, As Trustee

 

 

     FIRST SUPPLEMENTAL INDENTURE, dated as of August 31, 2007 (the “First Supplemental
Indenture”), between Pioneer Companies, Inc., a Delaware corporation (the “Company”), and Wells
Fargo Bank, National Association, a national banking association duly organized and existing under
the laws of the United States, as trustee hereunder (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Company has heretofore made, executed and delivered to the Trustee an Indenture,
dated as of March 26, 2007 (the “Indenture”), between the Company and the Trustee, providing for
the issuance of 2.75% Convertible Senior Subordinated Notes due 2027 (the “Notes”);

     WHEREAS, the Company issued the Notes in a private placement on March 26 2007, and the Notes
remain outstanding as of the date hereof;

     WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of May 20, 2007 (the “Merger
Agreement”), by and among the Company, Olin Corporation, a Virginia corporation (“Olin”), and
Princeton Merger Corp., a wholly owned subsidiary of Olin (“Merger Sub”), Merger Sub will be merged
with and into the Company and the Company shall be the surviving corporation (the “Merger”); and
pursuant to the Merger Agreement, each issued and outstanding share of common stock, par value
$0.01 per share (the “Common Stock”), of the Company will be exchanged for the right to receive
merger consideration in cash in an amount equal to $35.00 and, following the Merger, all of the
Common Stock will be cancelled;

     WHEREAS, the Merger occurred on August 31, 2007;

     WHEREAS, Section 15.01(a) of the Indenture has heretofore provided that, subject to and upon
compliance with the provisions of the Indenture, on or prior to the Trading Day immediately
preceding the Maturity Date, the holder of any Note not previously redeemed or repurchased shall
have the right, at such holder’s option, to convert the principal amount of the Note, or any
portion of such principal amount which is a multiple of $1,000, into cash or, as provided in the
Indenture, cash and Common Stock, at a rate of 28.3222 shares of Common Stock per $1,000 principal
amount under the circumstances and during the periods set forth in the Indenture, subject to
adjustment as set forth in the Indenture;

     WHEREAS, the Merger constitutes a Fundamental Change pursuant to paragraph (2) of the
definition of Fundamental Change in the Indenture;

     WHEREAS, Section 15.13(a) of the Indenture provides that in the event of a conversion of Notes
by a holder in connection with an event described in paragraphs (1) or (2) of the definition of
Fundamental Change that occurs on or prior to March 1, 2014, the Conversion Rate applicable to each
$1,000 principal amount of Notes which are surrendered for conversion at any time during the period
that is 15 Trading Days prior to the date announced by the Company as the anticipated effective
date for the Fundamental Change and until and including the Designated Event Repurchase Date
corresponding to such Fundamental Change, shall be increased by an additional number of shares of
Common Stock (the “Additional Shares”) determined by reference to the table set forth in Section
15.13(e), based on the date on which the Fundamental Change becomes effective and the price paid
per share of the Common Stock in the Fundamental Change transaction (“Stock Price”); provided, that
if the actual Stock Price is between two Stock Price amounts in the table or the actual Effective
Date is between two Effective Dates in the table, the number of Additional Shares will be
determined by a straight-line interpolation between the number of Additional Shares set forth for
the higher and lower Stock Price amounts and the two Effective Dates, as applicable, based on a
365-day year;

     WHEREAS, with respect to the Merger, the Effective Date is August 31, 2007 and the Stock Price
is $35.00;

     WHEREAS, the Company has determined that, with respect to the Merger, the number of Additional
Shares is 6.5016 and, accordingly, the Conversion Rate as adjusted for the Additional Shares is
34.8238;

 

 

     WHEREAS, as a result of the Merger, a holder of one share of Common Stock is entitled to
receive cash in the amount of $35.00 in exchange for each such share;

     WHEREAS, Section 15.06 of the Indenture provides that if the Company is a party to any
consolidation, merger or combination with another Person as a result of which holders of Common
Stock are entitled to receive cash, securities or other property or assets with respect to or in
exchange for such Common Stock, then the Company or the successor or purchasing Person, as the case
may be, shall execute with the Trustee a supplemental indenture to the Indenture providing for the
conversion and settlement of the Notes and any applicable adjustments thereto such that the right
to convert each $1,000 principal amount of Notes will be changed to a right to convert such Note by
reference to the kind and amount of cash, securities or other property or assets that a holder of a
number of shares of Common Stock equal to the Conversion Rate immediately prior to such transaction
would have owned or been entitled to receive;

     WHEREAS, the Company is executing and delivering to the Trustee this First Supplemental
Indenture in accordance with the provisions of Section 15.06 of the Indenture; and

     WHEREAS, all acts and things necessary to make this First Supplemental Indenture a valid,
binding and legal agreement according to its terms have been done and performed, and the execution
of this First Supplemental Indenture has in all respects been duly authorized.

     NOW, THEREFORE, in consideration of the premises contained herein and in the Indenture and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Trustee hereby agree for the equal and proportionate benefit of
the respective holders from time to time of the Notes, as follows:

     Section 1. Pursuant to Section 15.01 of the Indenture, the Company hereby agrees that until
the Designated Event Repurchase Date set forth in the Company Repurchase Notice dated September 17,
2007, a Holder may convert its Notes into cash in an amount per $1,000 principal amount equal to
$1,218.83, and thereafter, at any time during which the conditions of Article 15 of the Indenture
are met, a holder may convert its Notes into cash in an amount per $1,000 principal amount equal to
$991.28, and the parties hereto further agree that:

     (a) Paragraph (a) of Section 15.01 of the Indenture up to (but not including) the beginning
of subsection (i) of that same paragraph (a) is hereby amended to read as follows:

     “Subject to and upon compliance with the provisions of this Indenture, on or prior to the
Trading Day immediately preceding the Maturity Date, the holder of any Note not previously redeemed
or repurchased shall have the right, at such holder’s option, to convert the principal amount of
the Note, or any portion of such principal amount which is a multiple of $1,000, into cash at the
Conversion Rate in effect at such time, by surrender of the Note so to be converted in whole or in
part, together with any required funds, under the circumstances and in the manner described in this
Article 15; provided, however, that at any time prior to the close of business on the Trading Day
preceding January 1, 2014, holders may convert their Notes only upon occurrence of one of the
following events:”

	 	(b)	 	Section 15.04 of the Indenture is hereby amended to read in its entirety as
follows:

     “Until the Designated Event Repurchase Date set forth in the Company Repurchase Notice dated
September 17, 2007, the Conversion Rate shall be 34.8238 per $1,000 principal amount of the Notes.
After the Designated Event Repurchase Date set forth in the Company Repurchase Notice dated
September 17, 2007, the Conversion Rate shall be $991.28 per $1,000 principal amount of the Notes.”

	 	(c)	 	The fourteenth paragraph of the Reverse of the Notes is hereby amended to read:

     “Subject to and in compliance with the provisions of the Indenture, on or prior to the Trading
Day immediately preceding January 1, 2014, the holder hereof has the right, at its option, to
convert each $1,000 principal amount of this Note into cash which is equal to the Conversion Rate,
subject to adjustment from time to time as provided in the Indenture, upon surrender of this Note
(if in certificated form) with the form entitled

 

 

“Conversion Notice” on the reverse hereof duly completed and manually signed, to the Company
at the office or agency of the Company maintained for that purpose in accordance with the terms of
the Indenture, or at the option of such holder, the Corporate Trust Office, together with any funds
required pursuant to the terms of the Indenture, and, unless the shares issuable on conversion, if
any, are to be issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by, the holder or by such
holder’s duly authorized attorney; provided, however, that at any time prior to the close of
business on the trading Day preceding January 1, 2014, holders may convert their Notes only upon
the occurrence of specified events set forth in the Indenture. Until the Designated Event
Repurchase Date set forth in the Company Repurchase Notice dated September 17, 2007, the Conversion
Rate shall be 34.8238 per $1,000 principal amount of the Notes. After the Designated Event
Repurchase Date set forth in the Company Repurchase Notice dated September 17, 2007, the Conversion
Rate shall be $991.28 per $1,000 principal amount of the Notes. The Company will notify the holder
thereof of any event triggering the right to convert the Notes prior to January 1, 2014, as
specified above in accordance with the Indenture. In order to exercise the conversion right with
respect to any interest in a Global Note, the holder must complete the appropriate instruction form
pursuant to the Depositary’s book-entry conversion program, deliver by book-entry delivery an
interest in such Global Note, furnish appropriate endorsements and transfer documents if required
by the Company or the Trustee or conversion agent, and pay the funds, if any, required pursuant to
the terms of the Indenture.”

     Section 2. In case any provision in this First Supplemental Indenture shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

     Section 3. Nothing in this First Supplemental Indenture, express or implied, shall give to any
person, other than the parties hereto and their successors under the Indenture and the holders of
the Notes, any benefit or any legal or equitable right, remedy or claim under the Indenture.

     Section 4. Unless otherwise defined in this First Supplemental Indenture, all terms used in
this First Supplemental Indenture shall have the meanings assigned to them in the Indenture.

     Section 5. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     Section 6. This First Supplemental Indenture amends and supplements the Indenture and shall be
a part and subject to all the terms thereof. Except as amended and supplemented hereby, the
Indenture and all documents executed in connection therewith shall continue in full force and
effect and shall remain enforceable and binding in accordance with their respective terms.

     Section 7. This First Supplemental Indenture may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

     Section 8. The parties hereto will execute and deliver such further instruments and do such
further acts and things as may be reasonably required to carry out the intent and purpose of this
First Supplemental Indenture.

     Section 9. All agreements of the Company in this First Supplemental Indenture shall bind its
successor. All agreements of the Trustee in this First Supplemental Indenture shall bind its
successor.

     Section 10. If any provision of this First Supplemental Indenture limits, qualifies or
conflicts with another provision which is required to be included in this First Supplemental
Indenture by the Trust Indenture Act of 1939, as amended, the required provision shall control.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be
duly executed as of the day and year first above written.

	 	 	 	 	 
	 	PIONEER COMPANIES, INC.

 	 
	 	By:  	/s/ George H. Pain
 	 
	 	 	Name:  	George H. Pain 	 
	 	 	Title:  	Vice President and Secretary 	 
	 
	 	WELL FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 	 
	 	By:  	/s/ Tim Mowdy
 	 
	 	 	Name:  	Tim Mowdy 	 
	 	 	Title:  	Vice Presidentexv10w1

 

EXHIBIT
10.1

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR FRANK J. BRAMANTI

 

 

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR FRANK J. BRAMANTI

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 - DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 - ELIGIBILITY
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 3 - CONTRIBUTIONS
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 4 - ADJUSTMENT OF ACCOUNT
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 5 - PAYMENT OF BENEFITS
	 	 	5	 
	 
	 	 	 	 
	ARTICLE 6 - ADMINISTRATION OF THE PLAN
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 7 - CLAIM REVIEW PROCEDURE
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 8 - LIMITATION OF RIGHTS
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 9 - FUNDING AND ASSIGNMENT
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 10 - AMENDMENT OR TERMINATION OF THE PLAN
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 11 - GENERAL AND MISCELLANEOUS
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 12 - COMPLIANCE WITH CODE SECTION 409A
	 	 	13	 

 

 

HCC INSURANCE HOLDINGS, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR FRANK J. BRAMANTI

PREAMBLE

     WHEREAS, the Company desires to establish a nonqualified deferred compensation plan for the
exclusive benefit of Frank J. Bramanti, who, as of the Effective Date, is the Chief Executive
Officer of the Company (the “Participant”), to allow the Company to pay a portion of the
Participant’s compensation on a deferred basis by making Contributions to the Plan on his behalf as
provided by section 3(a)(2) of that certain Employment Agreement entered into on April 12, 2007
but effective as of January 1, 2007, 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 establishes the HCC Insurance Holdings, Inc. Nonqualified
Deferred Compensation Plan for Frank J. Bramanti, effective as of the Effective Date.

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 Section 3.1 or Section 3.2 or, with respect to
Contributions credited under Section 3.3, 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
1.19, such term shall mean all persons with whom the Company would be considered a 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

 

     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 April 30, 2007.

     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 “Participant” is defined in the above Preamble.

     1.16 “Plan” shall mean this HCC Insurance Holdings, Inc. Nonqualified Deferred
Compensation Plan for Frank J. Bramanti, as amended from time to time.

2

 

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

     1.18 “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.

     1.19 “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.

     1.20 “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.

     1.21 “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).

     1.22 “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.

ARTICLE 3

CONTRIBUTIONS

     3.1 Initial Contribution. As of the Effective Date, the Company shall credit the
Participant’s Account with an amount equal to $333,333.33.

     3.2 Required Monthly Contributions. The Company shall credit the Participant’s
Account with an amount equal to $83,333.33 as of the Valuation Date for each month during the

3

 

period beginning on May 1, 2007 and ending on the earliest to occur of (a) the Participant’s
Separation from Service; (b) the termination of the Employment Agreement; and (c) December 31,
2010; provided that such accrual for the month containing the last day of such period shall be
prorated by multiplying $83,333.33 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 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.

     4.2 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

4

 

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 shall be effective as of June 1, 2007, provided the
election is received by the Committee on or before May 31, 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 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

5

 

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.

     (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.

6

 

     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 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.

7

 

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;

     (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

8

 

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
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

9

 

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.

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

10

 

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 (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

 

     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.

     (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
$190,000 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 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

12

 

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:

	 	Frank J. Bramanti
	 

	 	13707 Cottrell Court
	 

	 	Houston, Texas 77077
	 

	 	Fax: (281) 558-5461
	 
	 	 
	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(a)(2) 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(a)(2) of the Employment Agreement.

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

13

 

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 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.

14

 

     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 31st day
of August, 2007.

	 	 	 	 	 	 	 
	 	 	COMPANY	 	 
	 
	 	 	 	 	 	 
	 	 	HCC INSURANCE HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Title:
	 	/s/ John N. Molbeck, Jr.
 

President & COO
	 	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	/s/ James L. Simmons
	 	 
	(Title)
	 	 
	Corporate Secretary
	 	 
	 
	 	 
	[CORPORATE SEAL]
	 	 

16

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