Document:

exv10w29

Exhibit 10.29

RESTRICTED STOCK AWARD AGREEMENT

UNDER THE HCC INSURANCE HOLDINGS, INC.

2008 FLEXIBLE INCENTIVE PLAN

     This Restricted Stock Award Agreement (the “Agreement”) is entered into effective as
of the date of grant set forth on the signature page below (the “Grant Date”) by and
between HCC Insurance Holdings, Inc., a Delaware corporation (the “Company”), and the
undersigned employee of the Company or its Subsidiary (“Employee”). Capitalized terms used
herein and not otherwise defined herein (including the Definitions Appendix to this
Agreement) shall have the meaning specified in the HCC Insurance Holdings, Inc. 2008
Flexible Incentive Plan, as amended (the “Plan”).

     WHEREAS, under the terms of the Plan the Committee may grant awards of shares of
Restricted Stock to Participants in the Plan; and

     WHEREAS, Employee is an eligible Participant in the Plan; and

     WHEREAS, the Committee has approved an award of shares of Restricted Stock to Employee
on the terms and conditions hereof and subject to the restrictions set forth herein as an
incentive for Employee’s performance of services for the Company and/or its Subsidiaries;

     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. Grant of Restricted Shares. As of the Grant Date, the Company hereby grants and
conveys to Employee the number of shares of Restricted Stock specified on the signature
page of this Agreement (the “Restricted Shares”). The Restricted Shares shall constitute
performance-based Restricted Stock under the Plan and the Company intends for the
Restricted Shares to qualify for the “performance-based compensation” exception under Code
Section 162(m).

     (a) All of the Restricted Shares shall be subject to the terms and provisions
of the Plan, which are incorporated herein by this reference. Except to the extent
expressly provided by the Plan, in the event of any conflict between the terms and
provisions of this Agreement and those of the Plan, the terms and provisions of the
Plan, including those with respect to the powers of the Committee, shall prevail
and be controlling.

     (b) The Restricted Shares shall be registered in Employee’s name as of the
Grant Date through a book entry credit in the records of the Company’s transfer
agent, but shall be restricted as described herein during the period prior to the
vesting of such shares in accordance with Section 3 (the “Restriction Period”).
During the Restriction Period, any certificates representing the Restricted Shares shall carry a legend
evidencing the restrictions of this Agreement. The terms of any such legend shall
be determined by the Committee in its sole discretion.

     (c) If, from time to time during the Restriction Period, there is any stock
dividend, stock split, reorganization, recapitalization, merger, or other event
described in Section 14 of the Plan, any and all new, substituted, additional, or
other securities to which Employee is entitled by reason of his ownership of the
Restricted Shares shall be

 

 

considered “Restricted Shares” for purposes of this Agreement and shall be subject to the
restrictions described in Section 2 during the Restriction Period.

     (d) Subject to the restrictions set forth in Section 2, Employee shall have
all the rights of a stockholder with respect to the Restricted Shares, including
any applicable voting and dividend rights.

     2. Restrictions.

     (a) During the Restriction Period, Employee shall not sell, transfer, pledge,
assign, alienate, hypothecate, or otherwise encumber or dispose of the Restricted
Shares other than by will or the laws of descent and distribution. Any attempt to
do so contrary to the foregoing shall be null and void.

     (b) Except as specifically provided in Section 3, if the employment of
Employee with the Company is terminated, voluntarily or involuntarily, prior to the
end of the Restriction Period, all of the unvested Restricted Shares shall be
forfeited and returned to the Company without the payment of any consideration, and
Employee shall have no rights with respect to such forfeited Restricted Shares.
For purposes of this Agreement, Employee shall be considered to be an employee of
the Company for so long as Employee is a common law employee of the Company or any
Subsidiary, and Employee’s employment relationship with an entity that was a
Subsidiary shall be deemed to have terminated as of the date on which such entity
ceased to be a Subsidiary (even if Employee does not experience a common law
termination of employment at such time).

     3. Vesting. The Restricted Shares granted hereunder shall vest, and the restrictions
imposed pursuant to Section 2 shall lapse, on the Performance Vesting Date as follows:

     (a) If the Company Growth Rate is equal to or greater than one hundred twenty
percent (120%) of the Peer Group Growth Rate, then one hundred percent (100%) of
the Restricted Shares shall vest on the Performance Vesting Date, provided that
Employee is continuously employed by the Company or a Subsidiary through the Performance Vesting Date.

     (b) If the Company Growth Rate is equal to, and not less than, one hundred
percent (100%) of the Peer Group Growth Rate, then thirty-three and one-third
percent (33-1/3%) of the Restricted Shares (rounded up to the next highest share)
shall vest on the Performance Vesting Date, provided that Employee is continuously
employed by the Company or a Subsidiary through the Performance Vesting Date.

     (c) If the Company Growth Rate exceeds one hundred percent (100%), but is less
than one hundred twenty percent (120%), of the Peer Group Growth Rate, then, in
addition to the Restricted Shares that become vested pursuant to subparagraph (b)
above, for each whole one percentage point (1%) (as rounded down to the whole
percentage point) that the Company Growth Rate is above one hundred percent (100%)
of the Peer Group Growth Rate, then 3.35% of the total Restricted Shares (rounded
up to the next highest share but not in excess of 100% of the Restricted Shares)
shall vest on the Performance Vesting Date, provided that Employee is continuously
employed by the Company or a Subsidiary through the Performance Vesting Date.

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     (d) If the Company Growth Rate is less than one hundred percent (100%) of the
Peer Group Growth Rate, then none of the Restricted Shares shall vest on the
Performance Vesting Date or at any other time, and all of the Restricted Shares
shall be forfeited effective as of the end of the Performance Period.

     (e) Notwithstanding subsections (a) through (d) above, if Employee either dies
or terminates employment with the Company due to Employee’s Disability prior to the
end of the Performance Period, then a pro-rata portion, if any, of the Restricted
Shares, as computed based on the number of days that Employee was actually employed
by the Company or a Subsidiary during the Performance Period until the termination
date as divided by the number of days in the entire Performance Period, shall vest
on the Performance Vesting Date in accordance with the terms of subsection (a), (b), (c) or (d) above, as applicable, based on the achieved Company Growth Rate as
compared to the achieved Peer Group Growth Rate for the entire Performance Period
even though Employee was not employed for such entire period.

     (f) Notwithstanding subsections (a) through (d) above, one hundred percent
(100%) of the Restricted Shares shall immediately vest on the effective date of a
Change in Control of the Company without regard to the Company Growth Rate, Peer
Group Growth Rate, or the Performance Period, but only if Employee is still
employed by the Company or its Subsidiary on the effective date of the Change in
Control.

Except as provided in this Section 3, the Restricted Shares shall not vest.

     4. Delivery of Share Certificates; Compliance with Securities Laws. Upon the vesting
of any Restricted Shares granted hereunder, the Company shall direct its transfer agent to
record such shares as unrestricted or to deliver to Employee certificates evidencing such shares. If certificates are delivered to Employee, such certificates shall not bear the
legend referenced in Section 1(b). Nothing herein shall obligate the Company to register
the Restricted Shares pursuant to any applicable securities law or to take any other
affirmative action in order to cause the issuance or transfer of the Restricted Shares to
comply with any law or regulation of any governmental authority. Employee will enter into
such written representations and agreements as the Company may reasonably request to comply
with any securities law. The Company shall not be required to issue any shares prior to:
(a) the obtaining of any approval from any governmental agency which the Company determines
to be necessary or advisable; and (b) the Employee’s payment to the Company of any federal,
state or local tax or other withholding owed by Employee as a result of vesting of the
Restricted Shares.

     5. Tax or Legal Consequences; Tax Withholding.

     (a) Employee shall be responsible for his own tax liability that arises as the
result of this Agreement. Employee acknowledges and understands that (i) he may
make an election under Section 83(b) of the Code within 30 days after the Grant
Date and (ii) the Company provides no legal or tax advice to Employee and advises
him to consult with a qualified attorney or tax advisor.

     (b) Employee shall pay to the Company, or make arrangements satisfactory to
the Company regarding payment to the Company of, the aggregate amount of any
federal, state, and local taxes, and any other taxes that the Company is required
to

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withhold in connection with the Restricted Shares. The Company shall have the right to
deduct any such taxes from any amounts paid to Employee by the Company or any Subsidiary or
to withhold the appropriate number of unrestricted shares upon vesting of the Restricted
Shares to satisfy such withholding requirements.

     6. Confidential Information. The purpose of the Plan is to attract, retain and reward
employees; to increase employees’ stock ownership and identification with the Company’s
interests; to provide incentive for remaining with and enhancing the value of the Company
and its Subsidiaries over the long-term; and to protect the Company’s Confidential Information (defined below). During Employee’s employment with the Company, the Company
agrees to provide Employee with new Confidential Information to which the Employee has not
previously had access and of which Employee has not had previous knowledge. “Confidential Information” includes information about the Company’s business, proprietary, and technical information not known to others that could have economic
value to others if improperly disclosed. Confidential Information thus includes, without
limitation, any information the Company discloses to Employee, either directly or
indirectly, in writing, orally or by inspection of tangible objects, including without
limitation, information and technical data contained in the Company’s manuals, booklets,
publications, materials and equipment of every kind and character, as well as documents,
prototypes, samples, prospects, inventions, trade secrets, product ideas, technical
information, know-how, processes, plans (including without limitation, marketing plans and
strategies), specifications, designs, methods of operations, techniques, technology,
formulas, software, improvements, financial and marketing information, pricing, premium and
quote information, forecasts, research, and the identity of any customers and consultants.
In exchange for the Company’s promises to provide Employee with the Confidential
Information under this Agreement, Employee agrees that Employee shall not, either during
the period of Employee’s employment with the Company or at any time thereafter, disclose to
anyone, including, without limitation, any person, firm, corporation, or other entity, or
publish, or use for any purpose, any Confidential Information, except as properly required
in the ordinary course of the Company’s business or as the Company specifically directs and
authorizes.

     7. Notices. Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the party for whom it is intended at
such address as may from time to time be designated by the party in a notice mailed or
delivered to the other party. Unless and until some other address is so designated, all
notices or communications by Employee to the Company shall be mailed or delivered to the
Company, care of its General Counsel, at 13403 Northwest Freeway, Houston, Texas
77040-6094, and all notices or communications by the Company to Employee shall be mailed or
delivered to Employee’s address specified on the signature page to this Agreement.

     8. Amendments and Waivers. Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the Company and Employee, or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in exercising any
right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege. To the maximum extent permitted by law, (a) no
waiver that may be given by a party shall be applicable except in the specific instance for
which it was given and (b) no notice to or

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demand on one party shall be deemed to be a waiver of any obligation of such party or the right of
the party giving such notice or demand to take further action without notice or demand.

     9. No Right to Continued Service. This Agreement does not confer upon Employee any
right to remain in the employ of the Company or any Subsidiary, nor shall it interfere in
any way with the right of the Company and its Subsidiaries to terminate or change the
conditions of his employment at any time.

     10. Dividend and Voting Rights. Subject to the restrictions contained in this
Agreement, Employee shall have the rights of a stockholder with respect to the Restricted
Shares, including the right to vote all such Restricted Shares, including the unvested
Restricted Shares, and to receive all dividends, paid or delivered thereon, from and after
the date hereof. In the event of forfeiture of the Restricted Shares pursuant to Section 2 or 3, Employee shall have no further rights with respect to such Restricted Shares. The
forfeiture of the Restricted Shares pursuant to Section 2 or 3 hereof shall not create any
obligation to repay cash dividends received as to such Restricted Shares, nor shall such
forfeiture invalidate any votes given by Employee with respect to such Restricted Shares
prior to forfeiture.

     11. Successors and Assigns; Binding Effect. This Agreement, and the rights and
obligations of the parties hereunder, may not be assigned by any party hereto other than by
will or the laws of descent and distribution. All of the terms and provisions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective executors, heirs, personal representatives, successors, and permitted assigns.

     12. Entire Agreement. This Agreement, along with the Plan and any other written
agreement between the parties specifically incorporated herein by reference, sets forth the
entire understanding of the parties hereto with respect to the grant of the Restricted
Shares to Employee. Any and all previous agreements, promises, representations and
understandings between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement.

     13. Interpretation. The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a corresponding
meaning. The terms “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement. When a reference is made in this Agreement to a
Section, such reference is to a Section of this Agreement unless otherwise specified. The
terms “include”, “includes”, and “including” when used in this Agreement shall be deemed to
be followed by the words “without limitation”, unless otherwise specified. A reference to
any party to this Agreement or any other agreement or document shall include such party’s
predecessors, successors, and permitted assigns. Reference to any law means such law as
amended, modified, codified, replaced, or reenacted, and all rules and regulations
promulgated thereunder. All captions contained in this Agreement are for convenience of reference only, do not form a part of this Agreement, and shall not
affect in any way the meaning or interpretation of this Agreement. The parties have
participated jointly in the negotiation and drafting of this Agreement; therefore any rule
of construction or interpretation otherwise requiring this Agreement to be construed or

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interpreted against any party by virtue of the authorship of this Agreement shall not apply to the
construction and interpretation hereof.

     14. Employee Acknowledgment. Employee acknowledges that (a) he is knowledgeable and
sophisticated as to business matters, including the subject matter of this Agreement, (b)
he has read this Agreement and understands its terms and conditions, (c) he has had ample
opportunity to discuss this Agreement with his legal counsel and tax advisors prior to
execution, and (d) no strict rules of construction shall apply for or against the drafter
or any other Party. It is the desire of the Parties hereto that this Agreement be enforced
to the maximum extent permitted by law, and should any provision contained herein be held
invalid or otherwise unenforceable by a court of competent jurisdiction, the Parties hereby
agree and confirm that such provision shall be reformed to create a valid and enforceable
provision to the maximum extent permitted by law.

     15. Compliance with Code Section 409A. The Restricted Shares awarded under this
Agreement are not intended to be subject to Code Section 409A, including the authoritative
guidance issued thereunder, and shall be interpreted and administered to be exempt from the
application of Section 409A.

     Notwithstanding any provision of this Agreement to the contrary, if any payment or
other benefit provided herein would be subject to additional taxes and interest under Code
Section 409A because the timing of such payment is not delayed as provided in Section 409A
for a “specified employee” (within the meaning of Section 409A), then if Employee is a
“specified employee,” any such payment that the Employee would otherwise be entitled to
receive during the first six months following his separation from service from the Company
shall be accumulated and paid, within ten (10) days after the date that is six months
following Employee’s date of separation from service from the Company, or such earlier date
upon which such amount can be paid under Section 409A without being subject to such
additional taxes and interest such as, for example, upon Employee’s death.

     16. Survival of Certain Provisions. Wherever appropriate to the intention of the
Parties, the respective rights and obligations of the Parties hereunder shall survive any
termination or expiration of this Agreement.

     17. Severability. Any provision of this Agreement which is invalid or unenforceable
in any applicable jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

     18. Governing Law and Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflicts of laws
principles thereof. To the maximum extent practicable, this Agreement calls for
performance and shall be performable at the offices of the Company in Houston, Harris
County, Texas and venue for any dispute arising hereunder shall lie exclusively in the
state and/or federal courts of Harris County, Texas, and the Southern District of Texas,
Houston Division, respectively. The parties hereby waive any objection that such venue or
forum is inconvenient.

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     19. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. The parties agree that the delivery of this Agreement may
be effected by means of an exchange of facsimile signatures which shall be deemed original
signatures thereof.

     20. EXPIRATION OF AGREEMENT. IF THIS AGREEMENT IS NOT SIGNED AND RETURNED TO THE
COMPANY WITHIN 30 DAYS AFTER THE GRANT DATE, THIS AGREEMENT AND THE RESTRICTED STOCK AWARD
PROVIDED FOR HEREIN SHALL BE NULL AND VOID, IN ITS ENTIRETY, AS OF THE GRANT DATE.

[SIGNATURE PAGE TO RESTRICTED STOCK AWARD AGREEMENT]

[Signature page follows.]

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DEFINITIONS APPENDIX

     “Book Value” means, as of a specified date, the book value of one issued and
outstanding share of the common stock of the Company or the Peer Company, as is applicable
depending on which such entity’s Book Value is being computed, with this Book Value being
determined as follows: (i) the total value of such entity’s stockholders’ equity (as shown
in such entity’s audited consolidated balance sheet), including dividends declared but
excluding any Cumulative Effect of Accounting Change (either positive or negative) (both as
shown in such entity’s audited consolidated statement of changes in stockholders’ equity);
divided by (ii) the total number of shares of common stock that are issued and outstanding
on the date for which Book Value is being computed (as disclosed in the footnotes to such
entity’s audited consolidated financial statements), with all financial statements prepared
in accordance with GAAP.

     “Cause” shall mean any of the following:

	 	(i)	 	Material dishonesty by Employee which is not the result of an inadvertent or innocent
mistake of Employee with respect to the Company or any of its Subsidiaries;
	 
	 	(ii)	 	Willful misfeasance or nonfeasance of duty by Employee;
	 
	 	(iii)	 	Material violation by Employee of any material term of his then-current employment
agreement with the Company; or
	 
	 	(iv)	 	Conviction of Employee of any felony, any crime involving moral turpitude, or any
crime (other than a vehicular offense not involving DUI or personal injury) which in some
material fashion results in the injury of the Company’s and any of its Subsidiaries’
reputation, business, or business relationships.

     Employee may not be terminated for Cause unless and until there has been delivered to
Employee written notice from the Board supplying the particulars of Employee’s acts or
omissions that the Board believes constitute Cause, a reasonable period of time (not less
than 30 days) has been given to Employee after such notice to either cure the same or to
meet with the Board, with his attorney if so desired by Employee, and following which the
Board reaffirms that Employee has been terminated for Cause as of the date set forth in the
final notice to Employee.

     “Certification Date” means a date following the end of the Performance Period, which
shall occur no later than ten (10) calendar days after the Form 10-K is filed for the
fiscal year ending December 31, 2012 for the Company or Peer Company, as applicable, with
the Securities and Exchange Commission, on which Certification Date the Committee shall
determine the Company Growth Rate and the Peer Group Growth Rate and certify, in writing,
(i) whether and to what extent the Company Growth Rate had been achieved in relation to the
Peer Group Growth Rate for the Performance Period, and (ii) the number of Restricted
Shares, if any, that became vested in accordance with Section 3 of the Agreement solely as
the result of achievement of the designated performance goal.

     “Company Growth Rate” means the Growth Rate of the Company for the Performance Period.

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     “Cumulative Effect of Accounting Change” means an adjustment, either positive or
negative, to the opening balance of stockholders’ equity based on (i) the retrospective
adjustment of the financial statements to either adopt a new accounting standard or to
revise the application of an accounting standard, or (ii) the restatement of previously
issued financial statements, all as disclosed in the audited consolidated financial
statements of the Company or the Peer Company, as applicable, with all such determinations
being made in accordance with GAAP.

     “Disability” means the inability of Employee to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. Employee shall be considered to
have a Disability for purposes of this Agreement (i) if he is determined to be totally
disabled by the Social Security Administration or (ii) if he is determined to be disabled
under the Company’s long-term disability plan in which Employee participates and if such
plan defines “disability” in a manner that is consistent with the immediately preceding
sentence.

     “GAAP” means then-current “generally accepted accounting principles” as promulgated by
the Financial Accounting Standards Board.

     “Good Reason” means any of the following (without Employee’s express written consent):

	 	(i)	 	A material diminution in Employee’s authority, duties or responsibilities;
	 
	 	(ii)	 	A material diminution in Employee’s Base Salary (as defined in Employee’s then-current
employment agreement with the Company);
	 
	 	(iii)	 	A relocation of the Company’s principal executive offices, or Employee’s relocation
to any place other than the principal executive offices, exceeding a distance of fifty (50)
miles from the Company’s current executive office located in Houston, Texas, except for
reasonably required travel by Employee on the Company’s business;
	 
	 	(iv)	 	Any material breach by the Company of any provision of his then-current employment
agreement with the Company; or
	 
	 	(v)	 	The termination or replacement of Employee as CEO of the Company, including after a
Change of Control.

     However, Good Reason shall exist with respect to a matter specified above only if such
matter is not corrected by the Company within thirty (30) days after the Company’s receipt
of written notice of such matter from Employee. Any such notice from Employee must be
provided within thirty (30) days after the initial existence of the specified event. In no
event shall a termination of employment by Employee occurring more than ninety (90) days
following the initial date of an event described above be a termination for Good Reason due
to such event.

     “Growth Rate” means the compound annual growth rate of Book Value during the
Performance Period, determined as follows: [((the Book Value at the end of the Performance
Period, divided by the Book Value at the beginning of the Performance Period), raised to
the power of one (1) divided by the number of whole years in the Performance Period (i.e.,
one-third

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(1/3)), minus one (1)), multiplied by one hundred percent (100%)]. For illustrative purposes,
assuming that the Book Value at the beginning of the Performance Period is $27.00 per share and at
the end of the Performance Period is $42.00 per share, then the Growth Rate is [(($42.00 / $27.00) ^ (1/3) — 1) x 100%] = 15.87%. However, if the Book Value at the end of the Performance
Period is $35.00 per share, then the Growth Rate is [(($35.00 / $27.00) ^ (1/3) — 1) x 100%] =
9.04%. The Growth Rate targets are deemed to be objective performance goals under Code Section
162(m) for purposes of both the Plan and this Agreement. The Growth Rate of the Company and each
Peer Company shall be determined by using only the audited GAAP consolidated financial statements
as most recently reported by the Company or Peer Company, as applicable, on its Form 10-K that is
filed with the Securities and Exchange Commission.

     “Parties” means, collectively, the Company and the Employee. (“Party” means either
the Company or the Employee).

     “Peer Company” means each of the following companies in the insurance industry:

	 	(i)	 	The Travelers Companies, Inc. (TRV);
	 
	 	(ii)	 	American Financial Group Inc. (AFG);
	 
	 	(iii)	 	Argo Group International Holdings, Ltd. (AGII);
	 
	 	(iv)	 	The Chubb Corporation (CB);
	 
	 	(v)	 	Markel Corp. (MLK);
	 
	 	(vi)	 	W.R. Berkley Corporation (WRB);
	 
	 	(vii)	 	Navigators Group, Inc. (NAVG);
	 
	 	(viii)	 	RLI Corp. (RLI); and
	 
	 	(ix)	 	Old Republic International Corp. (ORI).

No additional companies may be added as a Peer Company during the Performance Period (including a
non-Peer Company that may acquire a Peer Company). The Company is not a Peer Company.

     “Peer Group Growth Rate” means the median value of the Growth Rate for each of the
Peer Companies for the Performance Period, which shall be determined based on the following
factors: the calculation of the Growth Rate for each included Peer Company; the ranking of
the Growth Rates of the Peer Companies from highest to lowest; and the selection of the
Growth Rate of the Peer Company that ranks as the middle value within the Peer Group, if
there is an odd number of Peer Companies in the Peer Group. If there is an even number of
Peer Companies in the Peer Group, the median value is calculated as the sum of the Growth
Rates for the two middle Peer Companies divided by two. For example, if there are eight
Peer Companies, the median represents the Growth Rate of the fourth and fifth ranked Peer
Companies divided by two. When calculating the Peer Group Growth Rate for the Performance
Period, a Peer Company (and the Growth Rate of such Peer Company) will or will not be
included in calculating the aggregate Peer Group Growth Rate, as follows: (i) if a Peer
Company merges with or acquires

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another Peer Company, only the successor or surviving entity following such merger or acquisition
shall be included as a Peer Company; (ii) if a Peer Company merges with or is acquired by a person
or entity that is not a Peer Company, the Peer Company shall not be included unless the Peer
Company is the successor or surviving entity; and (iii) if the Peer Company has a liquidation or dissolution of its entire business during the Performance Period,
such Peer Company shall not be included.

     “Performance Period” means the three (3) year performance period beginning on January
1, 2010 and ending on December 31, 2012. The Growth Rate is determined based on the entire
3-year Performance Period.

     “Performance Vesting Date” means (i) May 31, 2013, provided that the Certification
Date shall have occurred on or prior to such date; or (ii) the Certification Date, if
later.

A-4exv10w30

Exhibit 10.30

RESTRICTED STOCK AWARD AGREEMENT

UNDER THE HCC INSURANCE HOLDINGS, INC.

2008 FLEXIBLE INCENTIVE PLAN

     This Restricted Stock Award Agreement (this “Agreement”) is entered into effective as
of the date of grant set forth on the signature page below (the “Grant Date”) by and
between HCC Insurance Holdings, Inc., a Delaware corporation (the “Company”), and the
undersigned employee of the Company or its Subsidiary (the “Employee”). Capitalized terms
used herein and not otherwise defined herein (including in the Definitions Appendix) shall
have the meaning specified in the HCC Insurance Holdings, Inc. 2008 Flexible Incentive
Plan, as amended and restated and as it may be further amended (the “Plan”).

     WHEREAS, under the terms of the Plan the Committee may grant awards of Restricted Stock to
Participants in the Plan;

     WHEREAS, Employee is an eligible Participant in the Plan; and

     WHEREAS, the Committee has approved an award of Restricted Stock to Employee on the
terms and conditions hereof and subject to the restrictions set forth herein as an
incentive for Employee’s performance of services for the Company and/or its Subsidiaries;

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

     1. Grant of Restricted Shares. As of the Grant Date, the Company hereby grants and
conveys to Employee the number of Shares of Restricted Stock specified on the signature
page of this Agreement (the “Restricted Shares”).

          (a) The Restricted Shares shall be subject to the terms of the Plan, which
terms are incorporated herein by this reference. Except to the extent expressly
provided by the Plan, in the event of any conflict between the terms of this
Agreement and those of the Plan, the terms of the Plan, including those with
respect to the powers of the Committee, shall prevail and be controlling.

          (b) The Restricted Shares shall be registered in Employee’s name as of the
Grant Date through a book entry credit in the records of the Company’s transfer
agent, but shall be restricted as described herein during the period prior to the
vesting of such Shares in accordance with Section 3 (the “First Restriction Period”). During the First Restriction Period, any certificates representing the
Restricted Shares shall carry a legend evidencing the restrictions of this
Agreement. The terms of any such legend shall be determined by the Committee in
its sole discretion.

          (c) Subject to the restrictions set forth in Section 2, Employee shall have
all the rights of a stockholder with respect to the Restricted Shares, including
any applicable voting and dividend rights.

 

 

     2. Restrictions.

          (a) During the First Restriction Period, Employee shall not sell, transfer,
pledge, assign, alienate, hypothecate, or otherwise encumber or dispose of the
Restricted Shares other than by will or the laws of descent and distribution.
During the Second Restriction Period pursuant to Section 7, Employee shall not
sell, transfer, pledge, assign, alienate, hypothecate, or otherwise encumber or
dispose of the Restricted Shares other than by will or the laws of descent and
distribution, except as permitted under Section 7. In either case during the First
Restriction Period or the Second Restriction Period, any attempt to do so contrary
to the foregoing provisions of this Section 2(a) shall be null and void.

          (b) Except as specifically provided otherwise in Section 3, if Employee
terminates employment with the Company prior to the end of the First Restriction
Period, the unvested Restricted Shares shall be forfeited and returned to the
Company without the payment of any consideration, and Employee shall have no rights
with respect to such forfeited Shares.

     3. Vesting. The Restricted Shares granted hereunder shall fully vest, and the
restrictions imposed pursuant to Section 2 shall lapse, immediately prior to the first to
occur of the following events:

          (a) the fifth (5th) anniversary of the Grant Date;

          (b) the date of Employee’s death;

          (c) the date Employee terminates employment with the Company due to Employee’s
Disability;

          (d) the date Employee’s employment with the Company is terminated by the
Company due to an Involuntary Termination Without Cause (as defined in the
Definitions Appendix); or

          (e) the date of a Change in Control of the Company.

     4. Employment. For all purposes of this Agreement, the Employee shall be considered
to be an employee of the Company for so long as Employee is a common law employee of the
Company or any Subsidiary, and Employee’s employment relationship with an entity which was
a Subsidiary shall be deemed to have terminated as of the date on which such entity ceased
to be a Subsidiary (even if Employee does not experience a common law termination of
employment at such time). References in this Agreement to the Company also include any
Subsidiary that employs the Employee.

     5. Delivery of Share Certificates; Compliance with Securities Laws. Subject to
Section 7 if applicable, upon the vesting of any Restricted Shares granted hereunder, the
Company shall direct its transfer agent to record such Shares as unrestricted or to deliver
to Employee certificates evidencing such Restricted Shares. Nothing herein shall obligate
the Company to register the Restricted Shares pursuant to any applicable securities law or
to take any other affirmative action in order to cause the issuance or transfer of the
Restricted Shares to comply with any law or regulation of any governmental authority. The
Company shall not be required to issue any Shares prior to: (a) the obtaining of any
approval from any governmental agency which the Company determines to be necessary or
advisable; and (b) the Employee’s

2

 

payment to the Company of any federal, state or local tax or other withholding owed by Employee as
a result of vesting of the Restricted Shares. In the event that Section 7 is applicable, the
Company shall direct its transfer agent to reflect the restrictions on transfer during the Second
Restriction Period and custody of the Shares shall not be delivered to Employee unless and until
such restrictions lapse under Section 7.

     6. Tax Consequences; Tax Withholding.

          (a) It is anticipated hereunder that the Restricted Shares shall become
taxable income to Employee upon the vesting date under Section 3. Employee shall
be responsible for his own tax liability that arises as the result of this
Agreement. Employee acknowledges and understands that (1) he may make an election
under Section 83(b) of the Code within 30 days after the Grant Date and (2) the
Company does not provide any legal or tax advice to him.

          (b) Employee shall pay to the Company, or make arrangements satisfactory to
the Company regarding payment to the Company of, the aggregate amount of any
federal, state, and local income, employment, Social Security, Medicare, and other
taxes that the Company is required to withhold in connection with the Restricted
Shares. The Company shall have the right to deduct any such taxes from any amounts
paid to Employee by the Company or any Subsidiary or to withhold the appropriate
number of Shares upon vesting of the Restricted Shares to satisfy such withholding
requirements.

     7. Forfeiture Event Following Vesting. If the Restricted Shares should become vested
upon the fifth anniversary of the Grant Date (pursuant to Section 3(a) above), such
Restricted Shares shall remain subject to additional set of restrictions under this Section
7 for a period of five (5) consecutive years following the vesting date (the “Second Restriction Period”). During the Second Restriction Period, the Employee must own at least
the number of Shares of the Company’s Common Stock (counting, for this purpose, the
Restricted Shares), as designated by the Committee for Employee’s executive position with
the Company (the “Minimum Stockholding Obligation”). Employee shall not be
permitted to sell, transfer or encumber any of the Restricted Shares, without the
prior consent of the Committee, if any such action would reduce the number of Shares
(including the Restricted Shares) held by Employee below the Minimum Stockholding
Obligation.

          If Employee’s employment with the Company and all of its Subsidiaries should
terminate during the Second Restriction Period for any reason except due to his
Bona Fide Retirement, death, Disability, Involuntary Termination Without Cause, or
Termination For Good Reason, as determined by the Committee, then Employee shall
forfeit all the Shares that resulted from the prior vesting of the Restricted
Shares under Section 3(a), net of all prior tax withholdings incurred upon vesting
(including any withholding of Shares upon vesting), and such forfeited Restricted
Shares shall not be transferred or delivered to Employee (the “Share Forfeiture
Obligation”). Any such forfeited Shares shall be returned to the Share pool under
the Plan.

          If Employee’s employment with the Company and all of its Subsidiaries should
terminate during the Second Restriction Period due to his Bona Fide Retirement,
death, Disability, Involuntary Termination Without Cause, or Termination For Good
Reason, as determined by the Committee, then the Restricted Shares shall be
transferred and delivered to Employee pursuant to Section 5, free of any
restrictions (except as provided in the definition of

3

 

Bona Fide Retirement for two years following the termination date), within thirty (30) days from
such termination date.

          For purposes of this Section 7, the following terms are defined in the
Definitions Appendix to this Agreement: (1) Bona Fide Retirement, (2) Involuntary
Termination Without Cause, and (3) Termination For Good Reason.

          In the event of a Change in Control during the Second Restriction Period, the
Minimum Stockholding Obligation and the Share Forfeiture Obligation shall
automatically expire, and be of no force or effect, immediately upon the occurrence
of the Change in Control. All Restricted Shares shall be transferred and delivered
to Employee pursuant to Section 5, free of any and all restrictions, within ten
(10) days from the occurrence of a Change in Control.

     8. Changes in Stock. If, from time to time during either the First Restriction Period
or the Second Restriction Period (together, the “Restriction Period”), there is any stock
dividend, stock split, reorganization, recapitalization, merger, or other event described
in Section 14 of the Plan, any and all new, substituted, additional, or other securities to
which Employee is entitled by reason of his ownership of the Restricted Shares shall be
considered the “Restricted Shares” for purposes of this Agreement and shall be subject to the applicable
restrictions, as described in this Agreement, during the applicable Restriction Period.

     9. Confidential Information. The purpose of the Plan is to attract, retain and reward
employees; to increase employees’ stock ownership and identification with the Company’s
interests; to provide incentive for remaining with and enhancing the value of the Company
and its Subsidiaries over the long-term; and to protect the Company’s Confidential
Information (defined below). During Employee’s employment with the Company, the Company
agrees to provide Employee with new Confidential Information to which the Employee has not
previously had access and of which Employee has not had previous knowledge. “Confidential
Information” includes information about the Company’s business, proprietary, and technical
information not known to others that could have economic value to others if improperly
disclosed. Confidential Information thus includes, without limitation, any information the
Company discloses to Employee, either directly or indirectly, in writing, orally or by
inspection of tangible objects, including without limitation, information and technical
data contained in the Company’s manuals, booklets, publications, materials and equipment of
every kind and character, as well as documents, prototypes, samples, prospects, inventions,
trade secrets, product ideas, technical information, know-how, processes, plans (including
without limitation, marketing plans and strategies), specifications, designs, methods of
operations, techniques, technology, formulas, software, improvements, financial and
marketing information, pricing, premium and quote information, forecasts, research, and the
identity of any customers and consultants. In exchange for the Company’s promises to
provide Employee with the Confidential Information under this Agreement, Employee agrees
that Employee shall not, either during the period of Employee’s employment with the Company
or at any time thereafter, disclose to anyone, including, without limitation, any person,
firm, corporation, or other entity, or publish, or use for any purpose, any Confidential
Information, except as properly required in the ordinary course of the Company’s business
or as the Company specifically directs and authorizes.

     10. Notices. Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the Party for whom it is intended at
such address as may from time to time be designated by him in a notice mailed or delivered
to the other Party. Unless and until some other address is so designated, all notices or
communications by

4

 

Employee to the Company shall be mailed or delivered to the Company, c/o General Counsel, at 13403
Northwest Freeway, Houston, Texas 77040-6094, and all notices or communications by the Company to
Employee shall be mailed or delivered to Employee’s address specified on the signature page to this
Agreement.

     11. Amendments and Waivers. Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by the Company and Employee, or in the case of a
waiver, by the Party against whom the waiver is to be effective. No failure or delay by
any Party in exercising any right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. To the maximum extent
permitted by law, (a) no waiver that may be given by a Party shall be applicable except in
the specific instance for which it was given and (b) no notice to or demand on one Party
shall be deemed to be a waiver of any obligation of such Party or the right of the Party
giving such notice or demand to take further action without notice or demand.

     12. No Right to Continued Service. This Agreement does not confer upon Employee any
right to remain in the employ of the Company or any Subsidiary, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate or change the
conditions of his employment at any time.

     13. Confidentiality of Agreement. The Employee agrees that, as partial consideration
for the granting of the Restricted Shares, the Employee will keep confidential all
information and knowledge which the Employee has relating to the manner and amount of the
Employee’s participation in the Plan and under the terms of this Agreement; provided,
however, that such information may be given in confidence to the Employee’s spouse, to a
financial institution to the extent that such information is necessary in order to secure a
loan, or to Employee’s legal or tax advisors.

     14. Effect of Payment. Any payment or any issuance or transfer of Shares to or on
behalf of the Employee in accordance with the provisions hereof, shall, to the extent
thereof, be in full satisfaction of all claims of such person under this Agreement or the
Plan. The Committee may require the Employee, as a condition precedent to such payment, to
execute a release and receipt therefor in such form as it shall determine.

     15. Agreement to Offset. By accepting this Agreement, the Employee consents to a
deduction from any amounts the Company (and the Subsidiaries) owe the Employee from time to
time (including amounts owed to the Employee as wages or other compensation, fringe
benefits, or vacation pay) to the extent of any unpaid amount that Employee owes to the
Company under Section 7 hereof. Without regard to whether the Company elects to make any
set off in whole or in part, if the Company does not recover by means of set off the full
amount owed to it by the Employee, the Employee agrees to pay immediately the unpaid
balance to the Company.

     16. Successors and Assigns; Binding Effect. This Agreement, and the rights and
obligations of the Parties hereunder, may not be assigned by either Party other than by
will or the laws of descent and distribution. All of the terms and provisions of this
Agreement shall inure to the benefit of and be binding upon the Parties and their
respective executors, heirs, personal representatives, successors, and permitted assigns.

5

 

     17. Entire Agreement. This Agreement, along with the Plan and any other written
agreement between the Parties specifically incorporated herein by reference, sets forth the
entire understanding of the Parties hereto with respect to the grant of the Restricted
Shares to Employee. Any and all previous agreements and understandings between or among
the Parties regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.

     18. Interpretation. The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a corresponding
meaning. The terms “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement. When a reference is made in this Agreement to a
Section, such reference is to a Section of this Agreement unless otherwise specified. The
word “include”, “includes”, and “including” when used in this Agreement shall be deemed to
be followed by the words “without limitation”, unless otherwise specified. A reference to
any Party to this Agreement or any other agreement or document shall include such Party’s
predecessors, successors, and permitted assigns. Reference to any law means such law as
amended, modified, codified, replaced, or reenacted, and all rules and regulations
promulgated thereunder. All captions contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement, and shall not affect in any way the
meaning or interpretation of this Agreement. The Parties have participated jointly in the
negotiation and drafting of this Agreement; therefore any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted against
any Party by virtue of the authorship of this Agreement shall not apply to the construction
and interpretation hereof. The Committee shall have authority to construe this Agreement,
to prescribe rules and regulations relating to this Agreement, and to correct any defect,
supply any omission or reconcile any inconsistency in this Agreement. All determinations
of the Committee under this Agreement shall be made in its sole and absolute discretion.

     19. Severability. Any provision of this Agreement that is invalid or unenforceable in
any applicable jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     20. Employee Acknowledgment. Employee acknowledges that (a) he is knowledgeable and
sophisticated as to business matters, including the subject matter of this Agreement, (b)
he has read this Agreement and understands its terms and conditions, (c) he has had ample
opportunity to discuss this Agreement
with his legal counsel prior to execution, and (d) no strict rules of construction
shall apply for or against the drafter or any other Party. It is the desire of the Parties
hereto that this Agreement be enforced to the maximum extent permitted by law, and should
any provision contained herein be held invalid or otherwise unenforceable by a court of
competent jurisdiction, the Parties hereby agree and confirm that such provision shall be
reformed to create a valid and enforceable provision to the maximum extent permitted by
law.

     21. Compliance with Code Section 409A. The Restricted Shares awarded under this
Agreement are not intended to be subject to Code Section 409A, including the authoritative
guidance issued thereunder, and shall be interpreted and administered to be exempt from the
application of Section 409A.

6

 

          Notwithstanding any provision of this Agreement to the contrary, if any
payment or other benefit provided herein would be subject to additional taxes and
interest under Code Section 409A because the timing of such payment is not delayed
as provided in Section 409A for a “specified employee” (within the meaning of
Section 409A), then if Employee is a “specified employee,” any such payment that
the Employee would otherwise be entitled to receive during the first six months
following his separation from service from the Company shall be accumulated and
paid, within ten (10) days after the date that is six months following Employee’s
date of separation from service from the Company, or such earlier date upon which
such amount can be paid under Section 409A without being subject to such additional
taxes and interest such as, for example, upon Employee’s death.

     22. Survival of Certain Provisions. Wherever appropriate to the intention of the
Parties, the respective rights and obligations of the Parties hereunder shall survive any
termination or expiration of this Agreement.

     23. Governing Law and Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflicts of laws
principles thereof. To the maximum extent practicable this Agreement calls for performance
and shall be performable at the offices of the Company in Houston, Harris County, Texas.
Venue for any dispute arising hereunder shall lie exclusively in the state and/or federal
courts of Harris County, Texas and the Southern District of Texas, Houston Division,
respectively, and the Parties hereby waive any objection that such location is
inconvenient.

     24. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. The Parties agree that the delivery of this Agreement may
be effected by means of an exchange of facsimile signatures which shall be deemed original
signatures thereof.

     25. EXPIRATION OF AGREEMENT. IF THIS AGREEMENT IS NOT SIGNED AND RETURNED TO THE
COMPANY WITHIN 30 DAYS AFTER THE GRANT DATE, THIS AGREEMENT AND THE RESTRICTED STOCK AWARD
PROVIDED FOR HEREIN SHALL BE NULL AND VOID.

[SIGNATURE PAGE TO RESTRICTED STOCK AWARD AGREEMENT]

7

 

DEFINITIONS APPENDIX TO AGREEMENT

     “Bona Fide Retirement” means that the Employee has voluntarily terminated employment
with the Company and its Subsidiaries during the Second Restriction Period for a reason
other than (i) to take full-time, or substantially full-time, employment with any other
employer, person or entity (in whatever capacity) within twenty-four (24) months from his
termination of employment date, or (ii) at any time, Employee engages in any activity in
competition with any activity of the Company or any Subsidiary, or inimical, contrary or
harmful to the interests of the Company or any Subsidiary without the consent of the
Company, in each case as determined by the Committee in the exercise of its discretion
(each a “Prohibited Activity”), including without limitation, the following Prohibited
Activities:

          (a) conduct related to the Employee’s employment for which either criminal or
civil penalties may be sought against the Employee;

          (b) violation of the policies of the Company, including, without limitation,
the Company’s insider trading policy;

          (c) disclosing or misusing any confidential information or material concerning
the Company;

          (d) participating in a hostile takeover attempt;

          (e) directly or indirectly owning, managing, operating, controlling,
investing, or acquiring an interest in, or otherwise engaging or participating
(whether alone or with any other person or entity as a proprietor, partner,
stockholder, member, director, officer, employee, joint venturer, investor,
consultant, agent, sales representative, broker or other participant) in any
Competitive Business (as hereafter defined) operating in, or soliciting business
from, the Company’s Market (as hereafter defined), without regard to whether (1)
the Competitive Business has its office or other business facilities within the
Company’s Market, (2) any of the activities of the Employee referred to above occur
or are performed within the Company’s Market, or (3) the Employee resides, or
reports to an office or other place of business, within the Company’s Market;

          (f) making any statement (orally or in writing) about the Company and/or any
Subsidiary or any service or product of the Company
and/or a Subsidiary which is false and may reasonably be expected to be
detrimental to the Company and/or the Subsidiary;

          (g) (1) directly or indirectly diverting or attempting to divert business with
respect to which the Employee had contact or special knowledge from the Company
and/or the Subsidiaries; (2) calling on, soliciting, or attempting to solicit any
business with respect to which the Employee had contact or special knowledge away
from the Company and/or the Subsidiaries; or (3) otherwise dealing with any account
or customer of the Company and/or the Subsidiaries with respect to any products or
services provided by the Company and/or the Subsidiaries during the period when the
Employee was employed by the Company or the Subsidiaries if the Employee had
contact or special knowledge with respect to the account or customer and the
product or service;

          (h) requesting, inducing, or attempting to induce anywhere in the world any
customer, distributor, broker, agent, or supplier of the Company and/or any of the
Subsidiaries or

A-1

 

any other person or entity doing business with the Company and/or any of the Subsidiaries, to
limit, curtail, or cancel its business with the Company and/or the Subsidiaries or not to do
business with the Company and/or the Subsidiaries; provided the Employee had contact with or
special knowledge of such customer, distributor, broker, agent, supplier, or other person or entity
during the period when the Employee was employed by the Company and/or the Subsidiaries; or

          (i) requesting, inducing, or attempting to induce anywhere in the world any
employee, consultant, advisor, or agent of the Company and/or any Subsidiary to
terminate or limit his or her relationship with the Company and/or the Subsidiary
or not to enter into any such relationship.

     Employee specifically recognizes and affirms that the terms and conditions of this
definition, including the above-listed Prohibited Activities, are material terms of this
Agreement without which the Company would not have entered into this Agreement.

     The determination of whether the voluntary termination of Employee is for a Bona Fide
Retirement shall be made by the Committee in the exercise of its discretion.
Notwithstanding any other provision of this Agreement to the contrary, if Employee
terminates for Bona Fide Retirement, the covenants and agreements provided in Section 7 of
this Agreement shall be extended, and remain fully effective and enforceable, for an
additional period of two (2) years from the termination date.

     “Company’s Market” means any geographic region in which the Employee conducted or
developed any business on behalf of the Company and/or the Subsidiaries while the Employee
was employed by the Company and/or the Subsidiaries.

     “Competitive Business” means any person or entity engaged in a business that produces
any of the products or performs any of the services comprising, in whole or in part, the
business of the Company and the Subsidiaries and any predecessors or successors of either
being conducted during the term of this Agreement and/or on the date of the Employee’s
termination of employment with the Company and the Subsidiaries.

     “Involuntary Termination Without Cause” means the involuntary termination of the
Employee’s employment with the Company for any reason other than:

          material dishonesty which is not the result of an inadvertent or innocent
mistake of the Employee with respect to the Company or any of its Subsidiaries;

          willful misfeasance or nonfeasance of duty by the Employee intended to injure
or have the effect of injuring in a material fashion the reputation, business, or
business relationships of the Company or any of its Subsidiaries;

          a material violation by Employee of any material term of his written
employment agreement (if any) with the Company or any Subsidiary as determined in
the sole discretion of the Committee; or

          the Employee’s conviction of any felony, any crime involving moral turpitude,
or any crime (other than a vehicular offense not involving DUI or personal injury)
which in some material fashion results in the injury of the Company’s or any
Subsidiary’s reputation, business, or business relationships.

A-2

 

          Involuntary Termination Without Cause Shall not include “Termination for Good Reason”.

          In addition, Employee shall incur an Involuntary Termination Without Cause if
Employee is transferred to or employed by an entity other than the Company or a
Subsidiary in connection with a divestiture, spinoff, outsourcing, or similar
business transaction, even if Employee does not experience a common law termination
of employment in connection with such event or transaction.

     “Parties” means, collectively, the Company and the Employee. (“Party” means either
the Company or the Employee).

     “Termination For Good Reason” means the termination of the Employee’s employment with
the Company within ninety (90) days after the occurrence of any of the following events
(without the Employee’s express written consent):

          (a) A material diminution in the Employee’s base salary;

          (b) A material diminution in Employee’s responsibilities or reporting duties;

          (c) Employee’s involuntary relocation to any place, other than the executive
offices as a result of the Company relocating its executive offices, exceeding a
distance of 50 miles from the place of Employee’s normal place of employment,
except for reasonably required travel by Employee on the Company’s business; or

          (d) Any material breach by the Company of any material provision of this
Agreement or his employment agreement with the Company (if any).

     However, Good Reason shall exist with respect to any above-specified matter only if
such matter is not corrected, or begun to be corrected, by the Company within thirty (30)
days after the Company’s receipt of written notice of such matter from Employee. Any such
notice from Employee must be provided within thirty (30) days after the initial existence
of the specified event. In no event shall a termination by Employee occurring more than
ninety (90) days following the initial date of an event described above be considered a
Termination For Good Reason due to such event, regardless of whether that event is
corrected.

A-3

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