Option Amendment Agreement
Exhibit
(d)(5)
This Option Amendment Agreement (this
“Agreement”) is entered into and
effective as of the date of the last signature below by and
between HCC Insurance Holdings, Inc., a Delaware corporation
(“HCC”), and
(“Employee”),
an employee of HCC.
WHEREAS, HCC has granted to Employee, and Employee continues to
hold, certain options to purchase shares of HCC common stock at
exercise prices below the fair market value of the HCC common
stock on the respective actual measurement dates for such
options for tax purposes (the “Eligible
Options”), which exercise prices and fair market
values are set forth on Exhibit A hereto;
WHEREAS, under Section 409A
(“Section 409A”) of the Internal
Revenue Code of 1986, as amended, options granted with an
exercise price less than the fair market value of the underlying
stock on the actual measurement date for such options, to the
extent they were not vested as of December 31, 2004, will
be subject to adverse income taxation unless such options are
amended to exempt them from Section 409A;
WHEREAS, each portion of an Eligible Option that (i) was
unvested as of December 31, 2004 and (ii) remains
outstanding and unexercised on the date hereof (such portion to
constitute an “Eligible Portion”) is not
in compliance with Section 409A; and
WHEREAS, Employee wishes to avoid the adverse income tax
consequences arising from Section 409A, and HCC is willing
to amend the terms of the Eligible Options as set forth in this
Agreement to exempt such Eligible Options from Section 409A;
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, HCC and Employee
hereby agree as follows:
1. Increase in Exercise Price of Eligible
Options. Each Eligible Option held by
Employee is hereby amended to increase the exercise price of
such Eligible Option to the fair market value of the HCC common
stock on the actual measurement date of such option for tax
purposes, in each case as set forth on Exhibit A
hereto. Except for the increased exercise price per share, each
Eligible Option held by Employee will continue to remain subject
to the same terms and conditions as in effect for that option
immediately prior to the date hereof (it being understood that,
because each Eligible Option was originally granted with an
exercise price below the fair market value of the HCC common
stock on the actual measurement date, no Eligible Option will
qualify as an incentive stock option for tax purposes,
regardless of whether it was designated as such at the time of
grant). Accordingly, each amended Eligible Option will vest in
accordance with the same vesting schedule measured from the same
vesting commencement date, and it will have the same exercise
period, option term and other conditions currently in effect for
that option and each will be a non-qualified option.
2. Amendment; Waiver. This
Agreement may be amended, modified or supplemented by the
parties hereto only by a written instrument signed by HCC and
Employee. The terms and conditions of this Agreement may be
waived only by a written instrument signed by the party waiving
compliance.
3. Governing Law. This Agreement
shall be governed by, and construed and enforced in accordance
with, the substantive laws of the State of Delaware, without
regard to its principles of conflicts of laws.
4. Entire Agreement, Assignment,
etc. This Agreement supersedes all prior
written and oral negotiations, discussions, communications,
understandings, arrangements and agreements between the parties
with respect to the subject matter hereof. This Agreement
constitutes the entire agreement between the parties with
respect to the subject matter hereof. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. This
Agreement is personal to Employee and shall not be assignable by
Employee, by operation of law or otherwise.
5. Counterparts. This Agreement
may be executed in one or more counterparts, all of which
together shall constitute one and the same Agreement.
In Witness Whereof, the parties have caused this Agreement to be
executed as an agreement under seal as of the date of the last
signature below.
HCC INSURANCE HOLDINGS, INC.
By:
Title:
Printed
Name:
Name:
Date
Signed:
Signed:
EMPLOYEE:
Printed
Name:
Name:
Date
Signed:
Signed: