HCC INSURANCE HOLDINGS INC/DE/
EMPLOYMENT AGREEMENT - STEPHEN L. WAY
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>5
<FILENAME>h03402exv10w15.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - STEPHEN L. WAY
<TEXT>
<PAGE>


                                                                   Exhibit 10.15


                              EMPLOYMENT AGREEMENT


         This EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of
the 1st day of January, 2003 (the "Effective Date"), between HCC INSURANCE
HOLDINGS, INC. ("HCC" or "Company") and STEPHEN L. WAY ("Executive"), sometimes
collectively referred to herein as the "Parties."

                                R E C I T A L S:

         WHEREAS, Executive is to be employed as Chief Executive Officer ("CEO")
and Executive Chairman of the Board of HCC;

         WHEREAS, it is the desire of the Board of Directors of HCC (the
"Board") to (i) directly engage Executive as an officer of HCC and its
subsidiaries; and (ii) directly engage, if elected, the services of Executive as
a director of HCC and its subsidiaries;

         WHEREAS, Executive is desirous of committing himself to serve HCC on
the terms herein provided; and

         WHEREAS, Executive and HCC have previously entered into an Employment
Agreement effective as of January 1, 2000 (the "2000 Contract") which is to be
cancelled, terminated and of no further force or effect, as of the Effective
Date.

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:

         1. TERMINATION OF 2000 CONTRACT AND TERM. Effective as of the Effective
Date, the 2000 Contract shall be cancelled, terminated and of no further force
or effect. The Company hereby agrees to employ Executive as its Chief Executive
Officer and Executive Chairman of the Board, and Executive hereby agrees to
accept such employment, on the terms and conditions set forth herein, for the
period commencing on the Effective Date and expiring as of 11:59 p.m. on
December 31, 2007 (unless sooner terminated or unless renewed as hereinafter set
forth).

         Unless Executive or the Company has given written notice of termination
at least 120 days before the end of any calendar year, at the end of each year
of the term and any extension thereof, this Agreement shall be extended
automatically and without any further action on the part of any party for an
additional one year so that unless so terminated, Executive shall always have a
five-year term remaining on this Agreement. As used herein the "Term" shall mean
the initial five-year term and any subsequent renewal or renewals thereof. In
addition, at Executive's sole election, at any time during the Term, Executive
shall have the right to terminate his position as CEO, but continue as Executive
Chairman of the Board, provided, in such event the Term of this Agreement shall
continue for a period of five (5) years from the date Executive no longer serves
as CEO, with no right to further renewals.


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         2. DUTIES.

                  (A) DUTIES AS EMPLOYEE OF THE COMPANY. Executive shall,
subject to the supervision of the Board of Directors, have general management
and control of HCC in the ordinary course of its business with all such powers
with respect to such management and control as may be reasonably incident to
such responsibilities. During normal business hours, Executive shall devote
substantially all of his time and attention to diligently attending to the
business of the Company. During the Term, and except as shall exist prior to the
date of this Agreement, Executive shall not directly or indirectly render any
services of a business, commercial, or professional nature to any other person,
firm, corporation, or organization, whether for compensation or otherwise,
without the prior consent of the Board of Directors of HCC. However, Executive
shall have the right to engage in such activities as may be appropriate in order
to manage his personal investments so long as such activities do not interfere
or conflict with the performance of his duties to the Company hereunder. The
conduct of such activity shall not be deemed to materially interfere or conflict
with Executive's performance of his duties until Executive has been notified in
writing thereof and given a reasonable period in which to cure same.

                  (B) OTHER DUTIES. At all times during the Term, the Company
shall use its best efforts to cause Executive to be elected a director and to
serve as Executive Chairman of the Board of HCC. Any such failure to use its
best efforts prior to a Change of Control shall be a material breach of this
Agreement for purposes of Section (4)(a)(iv). Executive agrees to serve as a
director and member of HCC and of any of its subsidiaries and in one or more
executive offices of any of HCC's subsidiaries, provided Executive is
indemnified for serving in any and all such capacities in a manner acceptable to
the Company and Executive. Executive agrees that while a full time employee he
shall not be entitled to receive any compensation for serving as a director of
HCC, or in any capacities of HCC's subsidiaries other than the compensation to
be paid to Executive by the Company pursuant to this Agreement. If Executive is
not a full time employee, he shall be compensated as an outside director.

         3. COMPENSATION AND RELATED MATTERS.

                  (A) BASE SALARY AND DEFERRED COMPENSATION

                           (1) Executive shall receive a base salary (the "Base
Salary") paid by the Company at the annual rate of $800,000, during the period
beginning on the Effective Date and for each year of the Term, payable not less
frequently than in substantially equal monthly installments (or such other more
frequent times as executives of HCC normally are paid).

                           (2) In addition to the Base Salary, Executive shall
receive deferred compensation (the "Deferred Compensation") of $400,000 for each
calendar year or portion thereof of the Term. Such Deferred Compensation shall
be credited to Executive on December 31st of each calendar year, or portion
thereof, during the Term and shall earn interest at the rate of the prime
lending rate announced by the Bank of America, N.A. from time-to-time, plus one
(1) percent. The Deferred Compensation shall be paid to Executive in one lump
sum payment at the time Executive terminates his employment with HCC.


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                           (3) If Executive elects to terminate his position as
CEO but remain as Executive Chairman of the Board, the Base Salary set forth in
(i) above shall be reduced from $8000,000 to $500,000 per annum (and all other
terms of this Agreement shall continue to apply).

                  (B) BONUS PAYMENTS. During the Term, Executive shall be
entitled to receive, in addition to the Base Salary, an annual cash bonus
payment in amounts to be determined at the sole discretion of the Compensation
Committee.

                  (C) EXPENSES. During the Term of this Agreement and the
Consulting Period, defined hereunder, Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by him (in accordance
with the policies and procedures established by the Board for the Companys
senior executive officers) in performing services hereunder, provided that
Executive properly accounts therefor in accordance with Company policy.

                  (D) OTHER BENEFITS. Executive shall be entitled to participate
in or receive benefits under any compensation employee benefit plan or other
arrangement made available by the Company now or in the future to its senior
executive officers and key management employees, subject to and on a basis
consistent with the terms, conditions, and overall administration of such plan
or arrangement. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the Base Salary or Defined Compensation payable to Executive pursuant to
subsection (a) of this Section. The Company shall not make any changes in any
employee benefit plans or other arrangements in effect on the date hereof or
subsequently in effect in which Executive currently or in the future
participates (including, without limitation, each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan, stock or unit purchase plan, stock or unit option plan,
life insurance plan, medical insurance plan, disability plan, dental plan,
health and accident plan, or any other similar plan or arrangement) that would
adversely affect Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to substantially all executives of the
Company and does not result in a proportionately greater reduction in the rights
of or benefits to Executive as compared with any other executive of the Company.

                  (E) VACATIONS. Executive shall be entitled to forty (40) paid
vacation days per year during the Term, or such additional number as may be
determined by the Board from time to time. There shall be indefinite carryovers
of unused vacation from year to year. For purposes of this Section, weekends
shall not count as vacation days, and Executive shall also be entitled to all
paid holidays given by the Company to its senior executive officers.

                  (F) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits applicable to a senior executive officer of HCC
in accordance with any practice established by the Compensation Committee.
Notwithstanding, and in addition to, any perquisites to which Executive is
entitled pursuant to the preceding sentence, Executive shall: (i) have the use
of two company vehicles similar to those Executive has been provided prior to
the date of this Agreement and the Company shall pay all expenses related to
Executive's use of such automobiles, including gasoline, insurance, and
maintenance. At the beginning of each calendar year of the Term, HCC


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shall replace the older vehicle (or if both are the same age--one of such
vehicles) with a new vehicle. Executive shall receive ownership to both such
vehicles upon termination of Executive's employment; (ii) be allowed to travel
with his spouse on business utilizing First Class passage under the Company's
corporate account, as Executive determines; (iii) receive reimbursement of
annual country club dues for Executives membership in Lochinvar Country Club,
Shadow Hawk County Club plus one additional country club to be determined by
Executive. In addition, Executive shall have the right to change membership in
any such club and to obtain membership to any other club (at Company's sole
cost) so long as Company is not required to hold membership in, or pay dues for,
more than three (3) such country clubs at any one time. Following termination of
this Agreement, Executive shall be bonused such ownership; (iv) receive all
existing life insurance plus an additional term or life policy in an amount
equal to $5,000,000. Upon Executive's termination, all such life insurance shall
be converted to ordinary life insurance to be owned by Executive or Executive's
designee; (v) be entitled to utilize an office at the Companys executive offices
or, at Executives election, to be reimbursed for the utilization of an office at
Executives home; (vi) be entitled to utilize the services of Company employees
at an estimated aggregate annual cost of $400,000 (which shall be added to
Executives taxable income) during the Term and the Consulting Period; (vii) have
the right to utilize during the Term and the Consulting Period at no cost to
Executive, the use of the Company's airplanes (subject to being taxed on the
basis of a first class ticket for transportation for personal use) and the
pilots and engineers employed by the Company pursuant to the contractual
arrangement in existence as of the Effective Date hereof; and (viii) be entitled
to be reimbursed for all methods of communications used by Executive (including,
without limitation, the installation cost and use of software, telephone,
facsimile machines, etc., other similar equipment, and all upgrades thereof) in
Executives house, aircraft and boat which shall continue through the Term and
the Consulting Period.

         In addition to all other benefits provided for in this Agreement,
Executive shall be entitled to receive medical insurance as currently provided
under the Company's group program, as such may be changed from time to time in
the future, and Executive shall be entitled to continue to be covered by such
group program, or, if not permitted under the terms of the group program, then
the Company shall provide Executive with a medical insurance policy providing
substantially similar benefits as to the group program for the period ending on
the later of: (i) the date of Executive's death; (ii) if Executive is married on
the date of his death, the date of the death of Executive's spouse; or (iii) as
to each minor dependent of Executive, the later of the date that each such
dependent reaches the age of twenty-five or completes college (as defined in the
Company's group program). Executive shall be entitled to receive the medical
benefits defined herein at no cost to the Executive.

         The Company shall pay for Executive's preparation of estate planning
and wealth preservation documents during the course of Executive's employment
with the Company. Such estate planning and wealth preservation documents may be
changed from time to time, at the Company's cost and expense, pursuant to
Executive's changing circumstances.

         During Executive's employment he has been instrumental in designing and
utilizing the Company's Logo, Executive shall, during the Term of this Agreement
be entitled to utilize such Logo in such manner as Executive may determine and,
in the event of a Change of Control, as defined below, such Logo shall belong
exclusively to Executive.


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                  (G) PRORATION. Any payments or benefits payable to Executive
hereunder in respect of any calendar year during which Executive is employed by
the Company for less than the entire year, unless otherwise provided in the
applicable plan or arrangement or herein, shall be prorated in accordance with
the number of days in such calendar year during which he is so employed.
Notwithstanding the foregoing, any payments pursuant to Sections 4(c) or 4(d) of
this Agreement shall not be subject to proration.

         4. TERMINATION.

                  (A) DEFINITIONS.

                           (1) "CAUSE" shall mean:

                                    (i) Material dishonesty which is not the
                  result of an inadvertent or innocent mistake of Executive with
                  respect to the Company or any of its subsidiaries;

                                    (ii) Willful misfeasance or nonfeasance of
                  duty by Executive intended to injure or having the effect of
                  injuring in some material fashion the reputation, business, or
                  business relationships of the Company or any of its
                  subsidiaries or any of their respective officers, directors,
                  or employees;

                                    (iii) Material violation by Executive of any
                  material term of this Agreement; or

                                    (iv) Conviction of Executive of any felony,
                  any crime involving moral turpitude or any crime other than a
                  vehicular offense which could reflect in some material fashion
                  unfavorably upon the Company or any of its subsidiaries.

Executive may not be terminated for Cause unless and until there has been
delivered to Executive written notice from the Board supplying the particulars
of Executive's acts or omissions that the Board believes constitute Cause, a
reasonable period of time (not less than 30 days) has been given to Executive
after such notice to either cure the same or to meet with the Board, with his
attorney if so desired by Executive, and following which the Board by action of
not less than two-thirds of its members furnishes to Executive a written
resolution specifying in detail its findings that Executive has been terminated
for Cause as of the date set forth in the notice to Executive.

                           (2) A "CHANGE OF CONTROL" shall be deemed to have
                  occurred if:

                                    (i) Any "person" or "group" (within the
                  meaning of Sections 13(d) and 14(d)(2) of the Securities
                  Exchange Act of 1934) other than a trustee or other fiduciary
                  holding securities under an employee benefit plan of the
                  Company becomes the "beneficial owner" (as defined in Rule
                  13d-3 under the Securities Exchange Act of 1934), directly or
                  indirectly, of 50% or more of the Company's then outstanding
                  voting common stock; or


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                                    (ii) At any time during the period of three
                  (3) consecutive years (not including any period prior to the
                  date hereof), individuals who at the beginning of such period
                  constituted the Board (and any new director whose election by
                  the Board or whose nomination for election by the Company's
                  shareholders were approved by a vote of at least two-thirds of
                  the directors then still in office who either were directors
                  at the beginning of such period or whose election or
                  nomination for election was previously so approved) cease for
                  any reason to constitute a majority thereof; or

                                    (iii) The shareholders of the Company
                  approve a merger or consolidation of the Company with any
                  other corporation, other than a merger or consolidation (a) in
                  which a majority of the directors of the surviving entity were
                  directors of the Company prior to such consolidation or
                  merger, and (b) which would result in the voting securities of
                  the Company outstanding immediately prior thereto continuing
                  to represent (either by remaining outstanding or by being
                  changed into voting securities of the surviving entity) more
                  than 50% of the combined voting power of the voting securities
                  of the surviving entity outstanding immediately after such
                  merger or consolidation; or

                                    (iv) The shareholders approve a plan of
                  complete liquidation of the Company or an agreement for the
                  sale or disposition by the Company of all or substantially all
                  of the Company's assets.

                           (3) A "DISABILITY" shall mean the absence of
Executive from Executive's duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a result of incapacity due
to mental or physical illness which results in the Executive being unable to
perform the essential functions of his position, with or without reasonable
accommodation.

                           (4) A "GOOD REASON" shall mean any of the following
(without Executive's express written consent):

                                    (i) A material alteration in the nature or
                  status of Executive's title, duties or responsibilities, or
                  the assignment of duties or responsibilities inconsistent with
                  Executive's status, title, duties and responsibilities;

                                    (ii) A failure by the Company to continue in
                  effect any employee benefit plan in which Executive was
                  participating, or the taking of any action by the Company that
                  would adversely affect Executive's participation in, or
                  materially reduce Executive's benefits under, any such
                  employee benefit plan, unless such failure or such taking of
                  any action adversely affects the senior members of corporate
                  management of the Company generally to the same extent;

                                    (iii) A relocation of the Company's
                  principal executive offices, or Executive's relocation to any
                  place other than the principal executive offices,


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                  exceeding a distance of fifty (50) miles from the Company's
                  current executive office located in Houston, Texas, except for
                  reasonably required travel by Executive on the Company's
                  business;

                                    (iv) Any material breach by the Company of
                  any provision of this Agreement; or

                                    (v) Any failure by the Company to obtain the
                  assumption and performance of this Agreement by any successor
                  (by merger, consolidation, or otherwise) or assign of the
                  Company.

However, Good Reason shall exist with respect to an above specified matter only
if such matter is not corrected by the Company within thirty (30) days of its
receipt of written notice of such matter from Executive, and in no event shall a
termination by Executive occurring more than ninety (90) days following the date
of the event described above be a termination for Good Reason due to such event.

                           (5) "TERMINATION DATE" shall mean the date Executive
terminated for any reason pursuant to this Agreement.


                  (B) TERMINATION WITHOUT CAUSE, OR TERMINATION FOR GOOD REASON:
BENEFITS. In the event there is a termination by the Company without Cause, or
if Executive terminates for Good Reason, or if there is a Change of Control (a
"Termination Event"), this Agreement shall terminate except as provided in
Section 6, and Executive shall be entitled to the following severance benefits:

                           (1) Base Salary and Deferred Compensation (as defined
in Section 3(a)), at the rate and payable at Executive's option (or the option
of Executive's estate) within sixty (60) days in a lump sum payment or such
longer period of time as Executive shall determine.

                           (2) To the extent not theretofore paid or provided,
or otherwise set forth herein, the Company shall timely pay or provide to
Executive any other amounts or benefits required to be paid or provided or which
Executive is eligible to receive under any plan, program, policy or practice, or
contract or agreement of the Company and its affiliated companies for the period
of time equal to the remainder of the Term, at its sole expense, and shall
continue to provide (through its own plan and/or individual policies) Executive
(and Executive's dependents) with health benefits no less favorable than the
group health plan benefits provided during such period to any senior executive
officer of the Company or any affiliated company (to the extent any such
coverage or benefits are taxable to Executive by reason of being provided under
a self-insured health plan of the Company or an affiliate, the Company shall
make Executive "whole" for the same on an after-tax basis), provided, however,
such coverage shall be secondary to any group health plan coverage Executive (or
his dependents) receive from another employer, (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits");


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                           (3) If Executive receives any payments whether or not
pursuant to this Agreement which are subject to an excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended, or any similar
tax imposed under federal, state, or local law (collectively, "Excise Taxes"),
the Company shall pay to Executive (on or before the date on which the Company
is required to withhold such Excise Taxes), 1) an additional amount equal to all
Excise Taxes then due and payable, and 2) the amount necessary to defray
Executive's increased (federal, state, and local) tax liability arising due to
payment of the amount specified in this Subsection (4) which shall include any
costs and expenses, including penalties and interest incurred by Executive in
connection with any audit, proceedings, etc. related to the payment of such
Excise Taxes or this payment. For purposes of calculating the amount payable to
Executive under this Section, the federal and state income tax rates used shall
be the highest marginal federal and state rates applicable to ordinary income in
Executive's state of residence, taking into account any federal income tax
deductions or credits available to Executive for state income taxes. The Company
shall cause its independent auditors to calculate such amount and provide
Executive a copy of such calculation at least ten (10) days prior to the date
specified above for payment of such amount. It is the intent of the Parties that
this Subsection (4) shall place Executive in the same net after-tax position
Executive would have been in had no payment been subject to an Excise Tax and,
notwithstanding anything to the contrary, it shall be construed to effectuate
said result;

                           (4) All accrued compensation and unreimbursed
expenses through the Termination Date. Such amounts shall be paid to Executive
in a lump sum in cash within thirty (30) days after the Termination Date; and

                           (5) Executive shall be free to accept other
employment during such period, and there shall be no offset of any employment
compensation earned by Executive in such other employment during such period
against payments due Executive under this Section 4, and there shall be no
offset in any compensation received from such other employment against the Base
Salary set forth above.

                           (6) In addition to all amounts otherwise paid to
Executive pursuant to this Agreement, all amounts that Executive would otherwise
have received during the Consulting Period, including, without limitation, all
perquisites, as set forth in subsection 3(f).

                  (C) TERMINATION IN EVENT OF DEATH: BENEFITS. If Executive's
employment is terminated by reason of Executive's death during the Term of this
Agreement, this Agreement shall terminate except as provided in Section 6
without further obligation to Executive's legal representatives under this
Agreement, other than for payment of all compensation and unreimbursed expenses,
as Executive would have been entitled to during the remaining portion of the
Term and the Consulting Period, the timely payment or provision of Other
Benefits through the date of death, and, if such death occurs on or after
October 1 of any year, such cash or stock bonus as Executive would otherwise
have been awarded in such year if Executives death had not occurred. Such
amounts shall be paid to Executive's estate or beneficiary, as applicable, in a
lump sum in cash within ninety (90) days after the date of death.


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                           (D) TERMINATION IN EVENT OF DISABILITY: BENEFITS. If
Executive's employment is terminated by reason of Executive's Disability during
the Term, except as provided for in Section 6, this Agreement shall terminate
and Executive shall receive payment of all compensation for the Term plus the
Consulting Period, and if such Disability occurs on or after October 1 of any
year, Executive shall be entitled to the same cash or stock bonus in such year
that Executive would have been awarded if such Disability had not occurred.
Executive's compensation shall not be reduced by any long-term disability
coverage Executive actually receives.

                           (E) VOLUNTARY TERMINATION BY EXECUTIVE AND
TERMINATION FOR CAUSE: BENEFITS. Executive may terminate his employment with the
Company without Good Reason by giving written notice of his intent and stating
an effective Termination Date at least ninety (90) days after the date of such
notice; provided, however, that the Company may accelerate such effective date
by paying Executive through the proposed Termination Date and also vesting
awards that would have vested but for this acceleration of the proposed
Termination Date. Upon such a termination by Executive, except as provided in
Section 6, or upon termination for Cause by the Company, this Agreement shall
terminate, and the Company shall pay to Executive all accrued compensation,
unreimbursed expenses and the Other Benefits through the Termination Date. Such
amounts shall be paid to Executive in a lump sum in cash within thirty (30) days
after the date of termination.

                           (F) DIRECTOR POSITIONS. Upon termination of
employment, for any reason Executive shall remain on any and all Board positions
held with the Company and/or any of its subsidiaries and affiliates. At such
time, Executive shall be paid as an outside director.

         5. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. At the
inception of this employment relationship, and continuing on an ongoing basis,
the Company agrees to give Executive access to Confidential Information
(including, without limitation, Confidential Information, as defined below, of
the Company's Affiliates) which the Executive has not had access to or knowledge
of before the execution of this Agreement. At the time this Agreement is made,
the Company agrees to provide Executive with initial and ongoing Specialized
Training, which Executive has not had access to or knowledge of before the
execution of this Agreement. "Specialized Training" includes the training the
Company provides to its employees that is unique to its business and enhances
Executive's ability to perform Executive's job duties effectively. Specialized
Training includes, without limitation, orientation training; sales
methods/techniques training; operation methods training; and computer and
systems training.

         In consideration of all of the foregoing, Executive agrees as follows:

                  (A) NON-COMPETITION DURING EMPLOYMENT. Executive agrees that,
in consideration for the Company's promise to provide Executive with
Confidential Information and Specialized Training, during the Term he will not
compete with the Company by engaging in the conception, design, development,
production, marketing, or servicing of any product or service that is
substantially similar to the products or services which the Company provides,
and that he will not work for, in any capacity, assist, or become affiliated
with as an owner, partner, etc., either directly or indirectly, any individual
or business which offers or performs services, or offers or provides products
substantially similar to the services and products provided by Company.


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                  (B) CONFLICTS OF INTEREST. Executive agrees that during the
Term, he will not engage, either directly or indirectly, in any activity (a
"Conflict of Interest") which might adversely affect the Company or its
affiliates, including ownership of a material interest in any supplier,
contractor, distributor, subcontractor, customer or other entity with which the
Company does business or accepting any material payment, service, loan, gift,
trip, entertainment, or other favor from a supplier, contractor, distributor,
subcontractor, customer or other entity with which the Company does business,
and that Executive will promptly inform the Chairman of the Company as to each
offer received by Executive to engage in any such activity. Executive further
agrees to disclose to the Company any other facts of which Executive becomes
aware which might in Executives good faith judgment reasonably be expected to
involve or give rise to a Conflict of Interest or potential Conflict of
Interest.

                  (C) NON-COMPETITION AFTER TERMINATION. Executive agrees that
Executive shall not, at any time during the period of two (2) years after the
termination of the Term for any reason, within any of the markets in which the
Company has sold products or services or formulated a plan to sell products or
services into a market during the last twelve (12) months of Executive's employ;
engage in or contribute Executive's knowledge to any work which is competitive
with or similar to a product, process, apparatus, service, or development on
which Executive worked or with respect to which Executive had access to
Confidential Information while employed by the Company; provided, however, this
subsection (c) shall not operate to prevent Executive from engaging in retail
insurance or re-insurance activities during such two-year period to the extent
such activities do not compete or permit any other person or entity to compete
with any business the Company or any of its subsidiaries or affiliated companies
were engaged in at the time of such termination. Following the expiration of
said two (2) year period, Executive shall continue to be obligated under the
Confidential Information Section of this Agreement not to use or to disclose
Confidential Information of the Company so long as it shall not be publicly
available. It is understood that the geographical area set forth in this
covenant is divisible so that if this clause is invalid or unenforceable in an
included geographic area, that area is severable and the clause remains in
effect for the remaining included geographic areas in which the clause is valid.

                  (d) NON-SOLICITATION OF CUSTOMERS. Executive further agrees
that for a period of two (2) years after the termination of the Term, he will
not solicit or accept any business from any customer or client or prospective
customer or client with whom Executive dealt or solicited while employed by
Company during the last twelve (12) months of his employment.

                  (e) NON-SOLICITATION OF EMPLOYEES. Executive agrees that for

the duration of the Term, and for a period of two (2) years after the
termination of the Term except for Frank J. Bramanti, L. Edward Tuffley, Byron
Way and Rosemary Gilarade, and Executive's personal service employees, he will
not either directly or indirectly, on his own behalf or on behalf of others,
solicit, attempt to hire, or hire any person employed by Company to work for
Executive or for another entity, firm, corporation, or individual.

                  (f) CONFIDENTIAL INFORMATION. Executive further agrees that he
will not, except as the Company may otherwise consent or direct in writing,
reveal or disclose, sell, use, lecture upon,


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publish or otherwise disclose to any third party any Confidential Information or
proprietary information of the Company, or authorize anyone else to do these
things at any time either during or subsequent to his employment with the
Company. This Section shall continue in full force and effect after termination
of Executive's employment and after the termination of this Agreement.
Executive's obligations under this Section with respect to any specific
Confidential Information and proprietary information shall cease when that
specific portion of the Confidential Information and proprietary information
becomes publicly known, in its entirety and without combining portions of such
information obtained separately. It is understood that such Confidential
Information and proprietary information of the Company include matters that
Executive conceives or develops, as well as matters Executive learns from other
employees of Company. Confidential Information is defined to include
information: (1) disclosed to or known by the Executive as a consequence of or
through his employment with the Company; (2) not generally known outside the
Company; and (3) which relates to any aspect of the Company or its business,
finances, operation plans, budgets, research, or strategic development.
"Confidential Information" includes, but is not limited to the Company's trade
secrets, proprietary information, financial documents, long range plans,
customer lists, employer compensation, marketing strategy, data bases, costing
data, computer software developed by the Company, investments made by the
Company, and any information provided to the Company by a third party under
restrictions against disclosure or use by the Company or others.

                  (g) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings,
records, and other documents and things comprising, containing, describing,
discussing, explaining, or evidencing any Confidential Information, and all
equipment, components, parts, tools, and the like in Executive's custody or
possession that have been obtained or prepared in the course of Executive's
employment with the Company shall be the exclusive property of the Company,
shall not be copied and/or removed from the premises of the Company, except in
pursuit of the business of the Company, and shall be delivered to the Company,
without Executive retaining any copies, upon notification of the termination of
Executive's employment or at any other time requested by the Company. The
Company shall have the right to retain, access, and inspect all property of
Executive of any kind in the office, work area, and on the premises of the
Company upon termination of Executive's employment and at any time during
employment by the Company to ensure compliance with the terms of this Agreement.

                  (h) REAFFIRM OBLIGATIONS. Upon termination of his employment
with the Company, Executive, if requested by Company, shall reaffirm in writing
Executive's recognition of the importance of maintaining the confidentiality of
the Company's Confidential Information and proprietary information, and reaffirm
any other obligations set forth in this Agreement.

                  (i) PRIOR DISCLOSURE. Executive represents and warrants that
he has not used or disclosed any Confidential Information he may have obtained
from Company prior to signing this Agreement, in any way inconsistent with the
provisions of this Agreement.

                  (j) CONFIDENTIAL INFORMATION OF PRIOR COMPANIES. Executive
will not disclose or use during the period of his employment with the Company
any proprietary or Confidential Information or Copyright Works which Executive
may have acquired because of employment with


                                       11
<PAGE>


an employer other than the Company or acquired from any other third party,
whether such information is in Executive's memory or embodied in a writing or
other physical form.

                  (k) BREACH. Executive agrees that any breach of Sections 5(a),
(c), (d), (e) or (f) above cannot be remedied solely by money damages, and that
in addition to any other remedies Company may have, Company is entitled to
obtain injunctive relief against Executive. Nothing herein, however, shall be
construed as limiting Company's right to pursue any other available remedy at
law or in equity, including recovery of damages and termination of this
Agreement and/or any payments that may be due pursuant to this Agreement.

                  (l) RIGHT TO ENTER AGREEMENT. Executive represents and
covenants to Company that he has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or constitute
a default of any other agreement or contract to which he is a party or by which
he is bound.

                  (m) EXTENSION OF POST-EMPLOYMENT RESTRICTIONS. In the event
Executive breaches Sections 5(b), (d), or (e) above, the restrictive time
periods contained in those provisions will be extended by the period of time
Executive was in violation of such provisions.


                  (n) ENFORCEABILITY. The agreements contained in Section 5 are
independent of the other agreements contained herein. Accordingly, failure of
the Company to comply with any of its obligations outside of this Section do not
excuse Executive from complying with the agreements contained herein.

                  (o) SURVIVABILITY. The agreements contained in Sections 5
shall survive the termination of this Agreement for any reason.

         6. CONSULTING AGREEMENT. Effective upon Executives termination of
employment for any reason other than Executives termination by the Company for
Cause, HCC hereby retains Executive as a consultant (an independent contractor
and not as an employee) for a period of five (5) years (the "Consulting
Period"). During the Consulting Period, Executive shall have the sole option to
cease acting as Executive Chairman of the Board and shall thereafter serve as
Non-Executive Chairman of the Board. Termination of the Term shall not effect
the Parties' rights and obligations under this Section 6, subject to the
following: Executive agrees to provide, if requested, 1,000 hours of service
(the "Consulting Services") per year, as required by the Company. Prior to a
Change of Control, the Company shall use its best effort to cause Executive to
continue as a Director and Chairman of the Board during the term of the
Consulting Period. HCC shall pay Executive $450,000 per year of the Consulting
Period, payable quarterly, in advance. Executive may elect to delay payment for
services, but not the services themselves. During such Consulting Period,
Executive shall receive, to the extent permitted by law and the terms of any
existing plan, all of the Company's benefits as if Executive was a full time
employee. In addition, the terms of this Section 6 shall remain in full force
and effect whether or not Executive dies or suffers a Disability pursuant to the
terms hereof during the Consulting Period. Further, if at any time during the
Term of this Agreement Executive shall elect, at his sole option, to cease being
a full time employee, then and in that event, Executive shall become a
consultant pursuant to the terms of this Section. During the Consulting


                                       12
<PAGE>


Period, Executive shall have the right to the same benefits for the same
purposes and to the same extent as were in effect during the term of this
Agreement, provided, however, if Executive ceases to be the Executive Chairman,
Executive shall no longer receive Deferred Compensation.. The Consulting
Services to be provided shall be commensurate with Executive's training,
background, experience and prior duties with the Company. Executive shall
receive such stock options or cash bonuses as the Compensation Committee, in its
sole discretion shall determine. Executive agrees to make himself reasonably
available to provide such Consulting Services during the Consulting Period;
provided, however, the Company agrees that it shall provide reasonable advance
notice to Executive of its expected consulting needs and any request for
Consulting Services hereunder shall not unreasonably interfere with Executive's
other business activities and personal affairs as determined in good faith by
Executive. In addition, Executive shall not be required to perform any requested
Consulting Services which, in Executive's good faith opinion, would cause
Executive to breach any fiduciary duty or contractual obligation Executive may
have to another employer. Further, during the Consulting Period, Executive shall
not be subject to any non-competition provisions except for the two-year period
provided for in Section 5(c). Unless waived by Executive, Executive shall not be
required to perform Consulting Services for more than four (4) days during any
week or for more than eight (8) hours during any day. Executives travel time
shall constitute hours of Consulting Services for purposes of this Section 6.
The Parties contemplate that, when appropriate, the Consulting Services shall be
performed at Executive's office or residence and at the Company's executive
offices in Houston, Texas and may be performed at such other locations only as
they may mutually agree upon. Executive shall be properly reimbursed for all
travel and other expenses reasonably incurred by Executive in rendering the
Consulting Services.

         7. ASSIGNMENT. This Agreement cannot be assigned by Executive. The
Company may assign this Agreement only to a successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and assets of the Company provided such
successor expressly agrees in writing reasonably satisfactory to Executive to
assume and perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession and assignment
had taken place. Failure of the Company to obtain such written agreement prior
to the effectiveness of any such succession shall be a material breach of this
Agreement.

         8. BINDING AGREEMENT. Executive understands that his obligations under
this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.

         9. NOTICES. All notices pursuant to this Agreement shall be in writing
and sent certified mail, return receipt requested, addressed as set forth below,
or by delivering the same in person to such party, or by transmission by
facsimile to the number set forth below (which shall not constitute notice).
Notice deposited in the United States Mail, mailed in the manner described
herein above, shall be effective upon deposit. Notice given in any other manner
shall be effective only if and when received:

         If to Executive:              Stephen L. Way
                                       10 East Bend Lane


                                       13
<PAGE>


                                       Houston, Texas 77007
                                       Fax: (713) 864-2822

         If to Company:                HCC Insurance Holdings, Inc.
                                       13403 Northwest Freeway
                                       Houston, Texas 77040
                                       Fax: (713) 462-2401
                                       Attention: General Counsel

         with a copy (which shall      Arthur S. Berner, Esq.
         not constitute notice) to:    Haynes and Boone, LLP
         1000 Louisiana Street,        Suite 4300
                                       Houston, Texas 77002-5012
                                       Fax: (713) 236-5652

         10. WAIVER. No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or of any breach hereof, shall
be deemed a waiver of such right in the future or of any other right or remedy
available under this Agreement.

         11. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions shall
be deemed severable from the Agreement, and the remaining provisions of the
Agreement will remain unaffected and in full force and effect.

         12. ARBITRATION. In the event any dispute arises out of Executive's
employment with or by the Company, or separation/termination therefrom, whether
as an employee or as a consultant which cannot be resolved by the Parties to
this Agreement, such dispute shall be submitted to final and binding
arbitration. 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 (7) arbitrators will be requested from AAA, and the arbitrator will be
selected using alternate strikes with Executive striking first. The cost of the
arbitration will be shared equally by Executive and Company; provided, however,
the Company shall promptly reimburse Executive for all costs and expenses
incurred in connection with any dispute in an amount up to, but not exceeding
twenty percent (20%) of Executives Base Salary (or, if the dispute arises during
the Consulting Period, Executive's Base Salary as in effect immediately prior to
the beginning of the Consulting Period) unless such termination was for Cause in
which event Executive shall not be entitled to reimbursement unless and until it
is determined he was terminated other than for Cause. 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 Executive's
employment with Company, or separation therefrom. Such arbitration shall be held
in Houston, Texas.

         13. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to Executive's
employment with Company during the time period covered by this Agreement. This
Agreement replaces and supersedes any and all


                                       14
<PAGE>


existing Agreements entered into between Executive and the Company relating
generally to the same subject matter, if any, and shall be binding upon
Executive's heirs, executors, administrators, or other legal representatives or
assigns.

         14. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Executive and
an officer or other authorized executive of Company.

         15. EFFECTIVE DATE. It is understood by Executive that this Agreement
shall be effective when signed by both Company and Executive.

         16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

         17. JURISDICTION AND VENUE. With respect to any litigation regarding
this Agreement, Executive agrees to venue in the state or federal courts in
Harris County, Texas, and agrees to waive and does hereby waive any defenses
and/or arguments based upon improper venue and/or lack of personal jurisdiction.
By entering into this Agreement, Executive agrees to personal jurisdiction in
the state and federal courts in Harris County, Texas.


                [REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]



                                       15
<PAGE>



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


EXECUTIVE                                   COMPANY

                                            HCC INSURANCE HOLDINGS, INC.


 /s/ Stephen L. Way                         By:  /s/ Walter J. Lack
---------------------------------              ---------------------------------
  STEPHEN L. WAY                                  WALTER J. LACK,
                                                  Chairman of the Compensation
                                                  Committee


Date: March 26, 2003                        Date: March 26, 2003
    -----------------------------                ------------------------------










                  [SIGNATURE PAGE OF WAY EMPLOYMENT AGREEMENT]







</TEXT>
</DOCUMENT>
