Exhibit 10.6
XL CAPITAL LTD
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the date of the ____
day of __________, 200_, by and between XL Capital Ltd, a Cayman Islands
corporation (the "Company"), and ______________ (the "Employee");
WITNESSETH:
WHEREAS, the Board of Directors of the Company is of the opinion
that the interest of the Company will be advanced by granting an incentive to
employees and by encouraging and enabling them to acquire stock ownership in the
Company and assuring a close identity of their interests with those of the
Company; and
WHEREAS, pursuant to the provisions of the 1991 Performance
Incentive Program (the "Program") of the Company, the Committee (as defined in
the Program) has authorized and directed the execution and delivery of this
Agreement in the name of and on behalf of the Company;
NOW THEREFORE, the parties hereto agree as follows:
a. Subject and pursuant to all terms and conditions stated in
this Agreement and in the Program, which is incorporated by reference into this
Agreement and made a part hereof as though herein fully set forth, the Company
hereby grants on the date set forth above to the Employee the right and option
to purchase all or any part of the aggregate number of shares set forth below of
Ordinary Shares of the Company, to be issued or transferred as provided in the
Program at the option price per share set forth below. This option is intended
to be an incentive stock option as defined in Section 422 of the Code. However,
the option will qualify as an incentive stock option only to the extent that the
aggregate fair market value (determined on the date of grant) of the shares
(together with shares under other incentive stock options granted by the Company
to the Employee) for which the incentive stock options first become exercisable
in any calendar year does not exceed US$100,000. Should the fair market value
exceed US$100,000, the options to the extent of such excess shall be regarded as
Nonstatutory Stock Options.
Option to purchase ______________ shares, for _____________ per
share.
One-fourth of such options shall become exercisable on each of
the first four anniversaries of the date of grant; PROVIDED, HOWEVER, that the
option shall be immediately exercisable in full (i) in the event of a Change of
Control, (ii) upon termination of the Employee's employment due to his or her
death, Disability or Retirement, or (iii) upon termination of the Employee's
employment by the Company by reason of the Employee's Redundancy.
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"Redundancy" shall mean termination of employment by the Company due to its need
to reduce the size of its workforce, including due to closure of a business or a
particular workplace or change in business process. Whether a termination of
employment is due to "Redundancy" shall be determined in good faith by the
Committee in its sole and absolute discretion, such determination being final
and binding on all parties hereto and all persons claiming through, in the name
of or on behalf of such parties. The portion of the option, if any, that is not
exercisable immediately following termination of the Employee's employment shall
be immediately forfeited.
b. The option herein granted may be exercised in whole or in part
by the Employee giving notice of exercise to the Program administrator
designated from time to time by the Company stating the number of shares with
respect to which the option is being exercised. Such notice shall be in the form
prescribed by the Company from time to time. Such exercise shall be effective
upon (1) receipt of such written notice by the Program administrator and (2)
payment in full of the option price.
c. The Employee agrees (1) not to disclose any trade or secret
data or any other confidential information acquired during employment by the
Company or a subsidiary of the Company, during employment or after the
termination of employment or retirement, (2) to abide by all the terms and
conditions of the Program and such other terms and conditions as may be imposed
by the Committee, and (3) not to interfere with the employment of any other
employee of the Company or a subsidiary of the Company. d. The options granted
under this Agreement shall expire upon the first of the following events to
occur:
(i) The tenth anniversary of the Agreement;
(ii) The third anniversary of the death or Disability of the Employee;
(iii) Unless otherwise provided in an Employment Agreement between the
Employee and the Company, the third anniversary of termination of
the Employee's employment by the Company not for Cause (including
termination of the Employee's employment by the Company by reason
of the Employee's Redundancy) within two years following a Change
of Control (the "Post-Change Period");
(iv) Ninety days following termination of the Employee's employment by
the Company not for Cause (including termination of the
Employee's employment by the Company by reason of the Employee's
Redundancy) outside a Post-Change Period;
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(v) The last date of employment of the Employee if employment is
terminated by the Company for Cause; or
(vi) Thirty days after the last date of employment of the Employee if
employment terminates other than due to the Employee's Retirement
and other than as set forth in (ii), (iii), (iv) or (v) of this
paragraph d. For the avoidance of doubt, if an Employee's
employment terminates due to the Employee's Retirement, the
option shall remain exercisable until the tenth anniversary of
this Agreement.
"Cause" shall mean:
(A) conviction of the Employee of a felony involving moral
turpitude or dishonesty;
(B) the Employee, in carrying out his or her duties for the
Company, has been guilty of (1) gross neglect or (2) willful misconduct;
PROVIDED, HOWEVER, that any act or failure to act by the Employee shall not
constitute Cause for this purpose if such act or failure to act was committed,
or omitted, by the Employee in good faith and in a manner reasonably believed to
be in the overall best interests of the Company. The determination of whether
the Employee acted in good faith and that he or she reasonably believed his or
her action to be in the Company's overall best interest will be in the
reasonable judgment of the General Counsel of the Company or, if the General
Counsel shall have an actual or potential conflict of interest, the Committee;
or
(C) the Employee's continued willful refusal to obey any
appropriate policy or requirement duly adopted by the Company and the
continuance of such refusal after receipt of notice.
e. The Employee acknowledges that when the Employee is required
to recognize income for any tax purposes as the result of the exercise of an
option to purchase shares pursuant to this Agreement, that such income may be
subjected to the withholding of tax by the Company. The Employee agrees that the
Company may either withhold an appropriate amount from any compensation or any
other payment of any kind then payable or which may become payable to the
Employee, or the Company may require the Employee to make a cash payment to the
Company equal to the amount of withholding required in the opinion of the
Company. In the event the Employee does not make such payment when requested,
the Company may refuse to issue or cause to be delivered any shares under this
Agreement entered into pursuant to the Program until such payment has been made
or
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arrangements for such payment satisfactory to the Company have been made. In
addition, such withholding tax obligations may be satisfied by withholding
Shares upon exercise of the option; provided that the amount of tax withholding
to be satisfied by withholding Shares shall be limited to the minimum amount of
taxes, including employment taxes, required to be withheld under applicable law.
f. The Employee shall have no rights as a shareholder with
respect to any Ordinary Shares subject to this option prior to the date of
exercise of the option by such Employee.
g. This option may not be assigned or otherwise transferred in
any manner other than by will or the laws of descent and distribution, and it
may be exercised during the lifetime of the Employee only by the Employee.
h. This Agreement shall be binding upon and inure to the benefit
of the Company and the Employee and their respective heirs, representatives and
successors.
i. The Employee, by execution of this Agreement, acknowledges
receipt of the option granted on the date shown above, as well as a copy of the
Program and the Program Prospectus.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, all as of the date of grant set forth above.
ATTEST: XL CAPITAL LTD
_______________________ By:________________________
WITNESS:
_______________________ ___________________________
[Name of Employee]