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THE CHUBB CORPORATION
LONG-TERM STOCK INCENTIVE PLAN (1996)
SECTION 1. PURPOSE
The purposes of The Chubb Corporation Long-Term Stock Incentive Plan (the
"Plan") are to promote the interests of The Chubb Corporation and its
shareholders by (i) attracting and retaining executive personnel and other key
employees of outstanding ability; (ii) motivating executive personnel and other
key employees, by means of performance-related incentives, to achieve
longer-range performance goals; and (iii) enabling such employees to participate
in the long-term growth and financial success of The Chubb Corporation.
SECTION 2. DEFINITIONS
"Affiliate" shall mean any corporation or other entity which is not a
Subsidiary but as to which the Corporation possesses a direct or indirect
ownership interest and has representation on the board of directors or any
similar governing body.
"Award" shall mean a grant or award under Section 6 through 9, inclusive,
of the Plan, as evidenced in a written document delivered to a Participant as
provided on Section 10(b).
"Board of Directors" shall mean the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean the Organization & Compensation Committee of the
Board of Directors.
"Common Stock" or "Stock" shall mean the Common Stock, $1.00 par value, of
the Corporation.
"Corporation" shall mean The Chubb Corporation.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due the
Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant's estate.
"Employee" shall mean (i) an officer or employee of the Employer and (ii)
an advisor or consultant to the Employer. For purposes of this Plan, for persons
described in clause (ii) above, employment and termination of employment shall
mean the maintenance of, or termination of, as the case may be, such person's
relationship as an advisor or consultant to the Employer.
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"Employer" shall mean the Corporation and any Subsidiary or Affiliate.
"Fair Market Value" shall mean the average of the highest and lowest sales
prices reported for consolidated trading of issues listed on the New York Stock
Exchange on the date in question, or, if the Stock shall not have been traded on
such date, the average of such highest and lowest sales prices on the first day
prior thereto on which the Stock was so traded.
"Fiscal Year" shall mean the fiscal year of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6
which is intended to meet the requirements of Section 422 of the Code.
"Nonstatutory Stock Option" shall mean a stock option granted under Section
6 which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonstatutory Stock
Option and shall include a Restoration Option.
"Participant" shall mean an Employee who is selected by the Committee to
receive an Award under the Plan.
"Payment Value" shall mean the dollar amount assigned to a Performance
Share which shall be equal to the Fair Market Value of the Common Stock on the
day of the Committee's determination under Section 8(c)(1) with respect to the
applicable Performance Cycle.
"Performance Cycle" or "Cycle" shall mean the period of years selected by
the Committee during which the performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
"Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
"Performance Share" shall mean an award granted pursuant to Section 8 of
the Plan expressed as a share of Common Stock.
"Prior Plans" shall mean The Chubb Corporation Long-Term Stock Incentive
Plan (1992), Long-Term Stock Incentive Plan (1989) and the Stock Option Plan
(1984).
"Restoration Option" shall mean a stock option granted pursuant to Section
6(d).
"Restricted Period" shall mean the period of years selected by the
Committee during which a grant of Restricted Stock or Restricted Stock Units may
be forfeited to the Corporation.
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"Restricted Stock" shall mean shares of Common Stock contingently granted
to a Participant under Section 9 of the Plan.
"Restricted Stock Unit" shall mean a fixed or variable dollar denominated
unit contingently awarded under Section 9 of the Plan.
"Stock Appreciation Right" shall mean a right granted under Section 7.
"Subsidiary" shall mean any business entity in which the Corporation
possesses directly or indirectly fifty percent (50%) or more of the total
combined voting power.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to interpret the terms and provisions of
the Plan. The Committee may delegate to one or more executive officers of the
Corporation the power to make Awards to Participants who are not executive
officers or directors of the Corporation provided the Committee shall fix the
maximum amount of such Awards for the group and a maximum for any one
Participant. The Committee's decisions shall be binding upon all persons,
including the Corporation, stockholders, an Employer, Employees, Participants
and Designated Beneficiaries.
SECTION 4. ELIGIBILITY
All Employees who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Corporation are eligible to be Participants in the Plan.
SECTION 5. MAXIMUM AMOUNT AVAILABLE FOR AWARDS
(a) The maximum number of shares of Stock in respect of which Awards may be
made under the Plan shall be 4,365,000 shares of Common Stock plus up to an
additional 2,635,000 shares of Common Stock to the extent shares of Common Stock
are reacquired by the Corporation, including shares purchased in the open
market, after April 23, 1996. Not more than 1,750,000 shares may be awarded as
Restricted Stock, Restricted Stock Units or Performance Shares and not more than
4,365,000 shares may be awarded as incentive stock options. Subject to the
foregoing, Shares of Common Stock may be made available from the authorized but
unissued shares of the Corporation or from shares reacquired by the Corporation,
including shares purchased in the open market. In the event that (i) an Option
of Stock Appreciation Right under the Plan or the Prior Plans is settled for
cash or expires or is terminated unexercised as to any shares of Common Stock
covered thereby, or (ii) any Award under the Plan or the Prior Plans in respect
of shares is cancelled or forfeited for any reason without the delivery of
shares of Common Stock, such shares shall thereafter be again available for
award pursuant to the Plan. In the event that any Option or other Award granted
is exercised through the delivery of shares of Common Stock, the number of
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shares of Common Stock available for Awards under the Plan shall be increased by
the number of shares so surrendered.
(b) No Employee may be granted under the Plan in any calendar year Options
or Stock Appreciation Rights on more than 150,000 shares of Common Stock and no
Employee may be granted in any calendar year more than 40,000 Performance Shares
of Restricted Stock or Restricted Stock Units.
(c) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under this Plan, then the Committee
shall, in its sole discretion, and in such manner as the Committee may deem
equitable, adjust any or all of (1) the number and kind of shares which
thereafter may be awarded or optioned and sold or made the subject of Stock
Appreciation Rights under the Plan, (2) the number and kind of shares subject to
outstanding Options and other Awards, and (3) the grant, exercise or conversion
price with respect to any of the foregoing and/or, if deemed appropriate, make
provision for a cash payment to a Participant or a person who has an outstanding
Option or other Award provided, however, that the number of shares subject to
any Option or other Award shall always be a whole number.
SECTION 6. STOCK OPTIONS
(a) Grants. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options shall be
granted, the number of shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the exercise of the
Option including but not limited to, whether, an to what extent and under what
circumstances amounts payable upon exercise of an Option shall be deferred at
the election of the holder of such Option. The Committee shall have the
authority to grant Incentive Stock Options, or to grant Nonstatutory Stock
Options, or to grant both types of options. In the case of Incentive Stock
Options, the terms and conditions of such grants shall be subject to and comply
with such rules as may be prescribed by Section 422 of the Code, as from time to
time amended, and any implementing regulations.
(b) Option Price. The Committee shall establish the option price at the
time each Option is granted, which price shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant.
(c) Exercise. (1) Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award or thereafter; provided, however,
that in no event may any Option granted hereunder be exercisable after the
expiration of ten years from the date of such grant. The Committee may impose
such conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
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(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Corporation. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee, by exchanging shares of Common Stock
owned for at least six months by the optionee (which are not the subject of any
pledge or other security interest), or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Common Stock so tendered to the Corporation, valued as
of the date of such tender, is at least equal to such option price.
(d) Restoration Options. In the event that any Participant delivers shares
of Common Stock in payment of the exercise price of any Option granted hereunder
in accordance with Section 6(c)(2), the Committee shall have the authority to
grant or provide for the automatic grant of a Restoration Option to such
Participant. The grant of a Restoration Option shall be subject to the
satisfaction of such conditions or criteria as the Committee in its sole
discretion shall establish from time to time. A Restoration Option shall entitle
the holder thereof to purchase a number of shares of Common Stock equal to the
number of such shares so delivered upon exercise of the original Option and, in
the discretion of the Committee, the number of shares, if any, tendered to the
Corporation to satisfy any withholding tax liability arising in connection with
the exercise of the original Option. A Restoration Option shall have a per share
exercise price of not less than 100% of the per share Fair Market Value of the
Common Stock on the date of grant of such Restoration Option, a term not longer
than the remaining term of the original Option at the time of exercise thereof,
and such other terms and conditions as the Committee in its sole discretion
shall determine.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may, with sole and complete authority, grant Stock
Appreciation Rights in tandem with an Option, in addition to an Option, or
freestanding and unrelated to an Option. Stock Appreciation Rights granted in
tandem with or in addition to an Option may be granted either at the same time
as the Option or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant, shall not be exercisable after
the expiration of ten years from the date of grant and shall have an exercise
price of not less than 100% of the Fair Market Value of the Common Stock on the
date of grant.
(b) A Stock Appreciation Right shall entitle the Participant to receive
from the Corporation an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the exercise of the Stock Appreciation Right over the
grant price thereof, provided that the Committee may for administrative
convenience determine that, for any Stock Appreciation Right which is not
related to an Incentive Stock Option which Stock Appreciation Right can only be
exercised during limited periods of time in order to satisfy the conditions of
certain rules of the Securities and Exchange Commission, the exercise of any
such Stock Appreciation Right for cash during such limited period shall be
deemed to occur for all purposes hereunder on the day during such limited period
on which the Fair Market Value of the Stock is the highest. Any such
determination by the Committee may be changed by the Committee from time to time
and may govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights
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thereafter granted. The Committee shall determine upon the exercise of a Stock
Appreciation Right whether such Stock Appreciation Right shall be settled in
cash, shares of Common Stock or a combination of cash and shares of Common
Stock.
SECTION 8. PERFORMANCE SHARES
(a) The Committee shall have sole and complete authority to determine the
Employees who shall receive Performance Shares and the number of such shares for
each Performance Cycle, and to determine the duration of each Performance Cycle
and the value of each Performance Share. There may be more than one Performance
Cycle in existence at any one time, and the duration of Performance Cycles may
differ from each other.
(b) The Committee shall establish Performance Goals for each Cycle based on
any one or more of the following: the operating earnings, net earnings, return
on equity, income, market share, shareholder return, combined ratio, level of
expenses or growth in revenue. During any Cycle, the Committee may adjust the
Performance Goal for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Corporation, changes in applicable tax
laws or accounting principles, or such other factors as the Committee may
determine.
(c) (1) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established Performance
Goals.
(2) Payment Values of earned Performance Shares shall be distributed
to the Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph (1), above.
The Committee shall determine whether Payment Values are to be distributed in
the form of cash and/or shares of Common Stock.
SECTION 9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom shares of Restricted
Stock and Restricted Stock Units shall be granted, the number of shares of
Restricted Stock and the number of Restricted Stock Units to be granted to each
Participant, the duration of the Restricted Period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Corporation, and the other terms and conditions of such Awards.
The Restricted Period shall consist of at least one year (which may be shortened
or waived by the Committee at any time in its discretion) with respect to one or
more Participants or Awards outstanding. In its discretion, the Committee may
establish performance conditions with respect to awards of Restricted Stock and
Restricted Stock Units based on one or more of the same items listed in Section
8(b) in respect of Performance Shares during a performance period selected by
the Committee.
(b) Shares of Restricted Stock and Restricted Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as herein
provided, during the Restricted
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Period. Certificates issued in respect of shares of Restricted Stock shall be
registered in the name of the Participant and deposited by such Participant,
together with a stock power endorsed in blank, with the Corporation. At the
expiration of the Restricted Period, the Corporation shall deliver such
certificates to the Participant or the Participant's legal representative.
Payment for Restricted Stock Units shall be made to the Corporation in cash
and/or shares of Common Stock, as determined at the sole discretion of the
Committee.
SECTION 10. GENERAL PROVISIONS
(a) Withholding. The Employer shall have the right to deduct from all
amounts paid to a Participant in cash (whether under this Plan or otherwise) any
taxes required by law to be withheld in respect of Awards under this Plan. In
the case of payments of Awards in the form of Common Stock, at the Committee's
discretion the Participant may be required to pay to the Employer the amount of
any taxes required to be withheld with respect to such Common Stock or, in lieu
thereof, the Employer shall have the right to retain (or the Participant may be
offered the opportunity to elect to tender) the number of shares of Common Stock
whose Fair Market Value equals the amount required to be withheld.
(b) Awards. Each Award hereunder shall be evidenced in writing, delivered
to the Participant and shall specify the terms and conditions thereof and any
rules applicable thereto, including but not limited to the effect on such Award
of the death, retirement or other termination of employment of the Participant
and the effect thereon, if any, of a change in control of the Corporation.
(c) Nontransferability. (i) Except as provided in (ii) below, no Award
shall be assignable or transferable, and no right or interest of any Participant
shall be subject to any lien, obligation or liability of the Participant, except
by will or the laws of descent and distribution.
(ii) Notwithstanding subparagraph (i) above, the Committee may determine
that an Award may be transferred pursuant to a qualified domestic relations
order, as determined by the Committee or its designee or that an Option may be
transferred by an Employee to one or more members of the Employee's immediate
family, to a partnership of which the only partners are members of the
Employee's immediate family, or to a trust established by the Employee for the
benefit of one or more members of the Employee's immediate family. For this
purpose immediate family means the Employee's spouse, parents, children,
grandchildren and the spouses of such parents, children and grandchildren. A
transferee described in this subparagraph may not further transfer an Option. An
Option transferred pursuant to this subparagraph shall remain subject to all of
the applicable provisions of the Plan and the written option agreement.
(d) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Employer. Further, the
Employer expressly reserves the right at any time to dismiss a Participant free
from any liability, or any claim under the Plan, except as provided herein or in
any agreement entered into with respect to an Award.
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(e) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she has become the holder thereof. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of such Restricted Stock.
(f) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of New York.
(g) Effective Date. Subject to the approval of the stockholders of the
Corporation, the Plan shall be effective on April 23, 1996. No Options or Awards
may be granted under the Plan after December 31, 2001; provided, however, that
the authority for grant of Restoration Options hereunder in accordance with
Section 6(d) shall continue, subject to the provisions of Section 5, as long as
any Option granted hereunder remains outstanding.
(h) Amendment of Plan. The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive relief
under Section 16(b) of the Securities Exchange Act of 1934 with which the
Committee has determined it is necessary to desirable to have the Corporation
comply. Notwithstanding anything to the contrary contained herein, the Committee
may amend the Plan in such manner as may be necessary so as to have the Plan
conform with the local rules and regulations.
(i) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to payment or
exercise in any manner not inconsistent with the terms of the Plan, including
without limitation, (i) to change the date or dates as of which (A) an Option or
Stock Appreciation Right becomes exercisable; (B) a Performance Share is deemed
earned; (C) Restricted Stock becomes nonforfeitable; or (ii) to cancel and
reissue an Award under such different terms and conditions as it determines
appropriate, except that an outstanding stock option shall not be amended to
reduce its original exercise price other than in connection with a transaction
described in Section 5(c).
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THE CHUBB CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (1996)
1. PURPOSE
The purpose of The Chubb Corporation Stock Option Plan for Non-Employee
Directors (1992) (the "Plan") is to increase the proprietary and vested interest
of the non-employee directors of The Chubb Corporation (the "Corporation") in
the growth and performance of the Corporation by granting such directors options
to purchase shares of Common Stock, $1.00 par value per share (the "Stock"), of
the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the Corporation's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options under the Plan, the number of shares of Stock subject to any
such options, the purchase price thereunder or the timing of grants of options
under the Plan. The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Secretary of the
Corporation shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of New York.
3. ELIGIBILITY
The class of individuals eligible for grant of options and Restoration
Options under the Plan shall be Eligible Directors, as defined below. Eligible
Director shall mean a director of the Corporation who is not an employee of the
Corporation or its subsidiaries and has not, within one year immediately
preceding the determination of such director's eligibility, received any award
under any plan of the Corporation or its subsidiaries that entitles the
participants therein to acquire stock, stock options or stock appreciation
rights of the Corporation or its subsidiaries (other than any other plan under
which participants' entitlements are governed by provisions meeting the
requirements of Rule 16b-3(c)(2)(ii) promulgated under the Securities Exchange
Act of 1934). Any holder of an option granted hereunder shall hereinafter be
referred to as a "Participant".
STOCK OPTION PLAN FOR AMENDED 9/11/98
NON-EMPLOYEE DIRECTORS-TCC
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4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, an aggregate of 300,000
shares of Stock shall be available for issuance upon the exercise of options and
Restoration Options, as described in Section 6, granted under the Plan. The
shares of Stock deliverable upon the exercise of options and Restoration Options
may be made available from authorized but unissued shares or shares reacquired
by the Corporation, including shares purchased in the open market or in private
transactions. If any option or Restoration Option granted under the Plan shall
terminate for any reason without having been exercised, the shares subject to,
but not delivered under, such option shall be available for other options and
Restoration Options.
5. GRANT, TERMS AND CONDITIONS OF OPTIONS
Each individual who is an Eligible Director will be granted an option to
purchase 2,000 shares of Stock as of the date of each Annual Shareholders
Meeting following the effectiveness of the Plan at which such individual is
elected or reelected to the office of director. The options granted will be
nonstatutory stock options not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and shall have the
following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each option shall be 100% of the Fair Market Value per share of
the Stock on the date the option is granted. For purposes of this Plan,
Fair Market Value shall be the average of the highest and lowest per share
sales prices as reported for consolidated trading of issues listed on the
New York Stock Exchange on the date in question, or, if the Stock shall not
have traded on such date, the average of the highest and lowest per share
sales prices on the first date prior thereto on which the Stock was so
traded.
(b) Payment. Options may be exercised only upon payment of the
purchase price thereof in full. Such payment shall be made in cash or in
Stock, which shall have a Fair Market Value (determined in accordance with
the rules of paragraph (a), above) at least equal to the aggregate exercise
price of the shares being purchased, or a combination of cash and Stock.
(c) Exercisability and Term of Options. Options shall be exercisable
in whole or in part at all times during the period beginning on the date of
grant until terminated, as provided in paragraph (d), below.
(d) Termination of Service as Eligible Director.
(i) Except as provided in subparagraph (ii) of this paragraph
(d), all outstanding options held by a Participant shall be
automatically cancelled upon such Participant's termination of service
as an Eligible Director.
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NON-EMPLOYEE DIRECTORS-TCC
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(ii) Upon termination of a Participant's service as an Eligible
Director by reason of such Participant's voluntary mid-term
resignation, declining to stand for reelection (whether as a result of
the Corporation's mandatory retirement program or otherwise), becoming
an employee of the Corporation or a subsidiary thereof or becoming
disabled (as defined in the Corporation's pension plan), all
out-standing options held by such Participate on the date of such
termination shall expire five years from the date upon which the
Participant ceases to be an Eligible Director. In the event of the
death of a Participant (whether before or after termination of service
as an Eligible Director), all outstanding options held by such
Participant (and not previously cancelled or expired) on the date of
such death shall be fully exercisable by the Participant's legal
representative within one year after the date of death (without regard
to the expiration date of the option specified in accordance with the
preceding sentence).
(e) Non-transferability.
(i) Except as provided in (ii) below, no option shall be
assignable or transferable, no right or interest of any Participant
shall be subject to any lien, obligation or liability of the
Participant, except by will or the laws of descent and distribution,
and during the lifetime of the Participant to whom an option is
granted, it may be exercised only by the Participant or by the
Participant's legal guardian or legal representative. Notwithstanding
the above, options may be transferred pursuant to a qualified domestic
relations order.
(ii) Notwithstanding subparagraph (i) above, the Board may
determine that an option may be transferred by a Participant to one or
more members of the Participant's immediate family, to a partnership
of which the only partners are members of the Participant's immediate
family, or to a trust established by the Participant for the benefit
of one or more members of the Participant's immediate family. For this
purpose immediate family means the Participant's spouse, parents,
children, grandchildren and the spouses of such parents, children and
grandchildren. A transferee described in this subparagraph may not
further transfer an option. Subject to such conditions that may be
determined by the Board or a person or persons designated by the
Board, an option transferred pursuant to this subparagraph shall
remain subject to all of the applicable provisions of the Plan and the
written option agreement.
(f) Listing and Registration. Each option and Restoration Option shall
be subject to the requirement that if at any time the Board shall
determine, in its discretion, that the listing, registration or
qualification of the Stock subject to such option upon any securities
exchange or under any state or federal law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such option or the issue or
purchase of shares thereunder, no such option may
STOCK OPTION PLAN FOR AMENDED 9/11/98
NON-EMPLOYEE DIRECTORS-TCC
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be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any condition not acceptable to the Board.
(g) Option Agreement. Each option and Restoration Option granted
hereunder shall be evidenced by an agreement with the Corporation which
shall contain the terms and provisions set forth herein and shall otherwise
be consistent with the provisions of the Plan.
6. GRANT, TERMS AND CONDITIONS OF RESTORATION OPTIONS
In the event that, within seven years of the date of grant of an option
granted hereunder (the "original option"), an Eligible Director delivers shares
of the Stock in payment of the exercise price of the original option in
accordance with Section 5(b), such Eligible Director shall be granted a
Restoration Option, subject to the satisfaction of the conditions and criteria
set forth below. Restoration Options will be nonstatutory options not intended
to qualify under Section 422 of the Code and shall have the following terms and
provisions:
(a) Number of Shares. A Restoration Option shall entitle the holder
thereof to purchase a number of shares of Stock equal to the number of such
shares delivered upon exercise of the original option.
(b) Price. A Restoration Option shall have a per share exercise price
of 100% of the per share Fair Market Value, determined in accordance with
Section 5(a), of the Stock on the date of grant of such Restoration Option.
(c) Conditions. Notwithstanding any other provision of this Section 6,
no Restoration Option shall be granted if (i) the per share Fair Market
Value of the Stock is not at least 125% of the exercise price of the
original option, (ii) the original option is a Restoration Option or (iii)
the exercising Participant is not an Eligible Director on the date of
exercise.
(d) Other Provisions. Restoration Options shall be subject to all the
other terms and conditions set forth in Section 5, except as expressly set
forth and as modified in this Section 6.
7. ADJUSTMENT OF AND CHANGES IN STOCK
In the event of a stock split, stock dividend, subdivision or combination
of the Stock or other change in corporate structure affecting the Stock, the
number of shares of Stock authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares of Stock subject
to any outstanding option or Restoration Option shall be increased or decreased
proportionately, as the case may be, with appropriate corresponding adjustment
in the purchase price per share of Stock thereunder.
STOCK OPTION PLAN FOR AMENDED 9/11/98
NON-EMPLOYEE DIRECTORS-TCC
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8. MERGERS, SALES AND CHANGE OF CONTROL
In the case of (i) any merger, consolidation or combination of the
Corporation with or into another corporation (other than a merger, consolidation
or combination in which the Corporation is the continuing corporation and which
does not result in its outstanding Stock being converted into or exchanged for
different securities, cash or other property, or any combination thereof) or a
sale of all or substantially all of the assets of the Corporation or (ii) a
Change in Control (as defined below) of the Corporation, the holder of each
option (including for purposes of this Section any Restoration Option) then
outstanding immediately prior to such Change in Control shall (unless the Board
determines otherwise) have the right to receive on the date or effective date of
such event an amount equal to the excess of the Fair Market Value on such date
of (a) the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a share
of Stock, in the cases covered by clause (i) above, or in the case of a sale of
assets referred to in such clause (i), a share of Stock, or (b) the final tender
offer price in the case of a tender offer resulting in a Change in Control or
(c) the value of the Stock covered by the option as determined by the Board, in
the case of Change in Control by reason of any other event, over the exercise
price of such option, multiplied by the number of shares of Stock subject to
such option. Unless otherwise determined by the Board, such amount will be
payable fully in cash.
Any determination by the Board made pursuant to this Section 8 will be made
as to all outstanding options and shall be made (a) in cases covered by clause
(i) above, prior to the occurrence of such event, (b) in the event of a tender
or exchange offer, prior to the purchase of any Stock pursuant thereto by the
offeror and (c) in the case of a Change in Control by reason of any other event,
just prior to or as soon as practicable after such Change in Control.
A "Change in Control" shall be deemed to have occurred if (a) any person,
or any two or more persons acting as a group, and all affiliates of such person
or persons, shall own beneficially 25% or more of the Stock outstanding, or (b)
if following (i) a tender or exchange offer for voting securities of the
Corporation (other than any such offer made by the Corporation), or (ii) a proxy
contest for the election of directors of the Corporation, the persons who were
directors of the Corporation immediately before the initiation of such event (or
directors who were appointed by such directors) cease to constitute a majority
of the Board of Directors of the Corporation upon the completion of such tender
or exchange offer or proxy contest or within one year after such completion.
9. NO RIGHTS OF SHAREHOLDERS
Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Corporation in
respect of any shares purchasable upon the exercise of any option or Restoration
Option, in whole or in part, unless and until certificates for such shares shall
have been issued.
STOCK OPTION PLAN FOR AMENDED 9/11/98
NON-EMPLOYEE DIRECTORS-TCC
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10. PLAN AMENDMENTS
The Plan may be amended by the Board, as it shall deem advisable or to
conform to any change in any law or regulation applicable thereto; provided,
that the Board may not, without the authorization and approval of shareholders:
(i) increase the number of shares which may be purchased pursuant to options or
Restoration Options hereunder, either individually or in the aggregate, except
as permitted by Section 7, (ii) change the requirements of Sections 5(a) and
6(b) that option grants be priced at Fair Market Value, except as permitted by
Section 7, (iii) modify in any respect the class of individuals who constitute
Eligible Directors; or (iv) materially increase the benefits accruing to
Participants hereunder. The provisions of Sections 3, 5 and 6 may not be amended
more often than once every six months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act, or the rules under either
such statute.
11. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on the day after the Corporation's Annual
Shareholders Meeting at which the Plan is approved by Shareholders. The Plan
shall terminate on the day following the fifth Annual Shareholders Meeting at
which Directors are elected succeeding the Annual Shareholders Meeting at which
the Plan was approved by Shareholders, unless the Plan is extended or terminated
at an earlier date by Shareholders; provided, however, that grants of
Restoration Options pursuant to Section 6 shall continue until the seventh
anniversary of such fifth Annual Shareholders' Meeting.
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STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS - TCC AMENDED 9/11/98
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THE CHUBB CORPORATION
LONG-TERM STOCK INCENTIVE PLAN (1992)
SECTION 1. PURPOSE
The purposes of The Chubb Corporation Long-Term Stock Incentive Plan (1992)
(the "Plan") are to promote the interests of The Chubb Corporation and its
shareholders by (i) attracting and retaining executive personnel and other key
employees of outstanding ability; (ii) motivating executive personnel and other
key employees, by means of performance-related incentives, to achieve
longer-range performance goals; and (iii) enabling such employees to participate
in the long-term growth and financial success of The Chubb Corporation.
SECTION 2. DEFINITIONS
"Affiliate" shall mean any corporation or other entity which is not a
Subsidiary but as to which the Corporation possesses a direct or indirect
ownership interest and has representation on the board of directors or any
similar governing body.
"Award" shall mean a grant or award under Section 6 through 11, inclusive,
of the Plan, as evidenced in a written document delivered to a Participant as
provided on Section 12(b).
"Board of Directors" shall mean the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean the Organization & Compensation Committee of the
Board of Directors.
"Common Stock" or "Stock" shall mean the Common Stock, $1.00 par value, of
the Corporation.
"Corporation" shall mean The Chubb Corporation.
"Debenture" shall mean a convertible debenture awarded under Section 10 of
the Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due the
Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant's estate.
"Employee" shall mean any key employee of the Employer.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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"Employer" shall mean the Corporation and any Subsidiary or Affiliate.
"Fair Market Value" shall mean the average of the highest and lowest sales
prices reported for consolidated trading of issues listed on the New York Stock
Exchange on the date in question, or, if the Stock shall not have been traded on
such date, the average of such highest and lowest sales prices on the first day
prior thereto on which the Stock was so traded.
"Fiscal Year" shall mean the fiscal year of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6
which is intended to meet the requirements of Section 422 of the Code.
"Nonstatutory Stock Option" shall mean a stock option granted under Section
6 which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonstatutory Stock
Option and shall include a Restoration Option.
"Participant" shall mean an Employee who is selected by the Committee to
receive an Award under the Plan.
"Payment Value" shall mean the dollar amount assigned to a Performance
Share which shall be equal to the Fair Market Value of the Common Stock on the
day of the Committee's determination under Section 8(c)(1) with respect to the
applicable Performance Cycle.
"Performance Cycle" or "Cycle" shall mean the period of years selected by
the Committee during which the performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
"Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
"Performance Share" shall mean an award granted pursuant to Section 8 of
the Plan expressed as a share of Common Stock.
"Restricted Period" shall mean the period of years selected by the
Committee during which a grant of Restricted Stock or Restricted Stock Units may
be forfeited to the Corporation.
"Restricted Stock" shall mean shares of Common Stock contingently granted
to a Participant under Section 9 of the Plan.
"Restoration Option" shall mean a stock option granted pursuant to Section
6(d).
"Restricted Stock Unit" shall mean a fixed or variable dollar denominated
unit contingently
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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awarded under Section 9 of the Plan.
"Stock Appreciation Right" shall mean a right granted under Section 7.
"Stock Unit Award" shall mean an award of Common Stock or units granted
under Section 11.
"Subsidiary" shall mean any business entity in which the Corporation
possesses directly or indirectly fifty percent (50%) or more of the total
combined voting power.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to interpret the terms and provisions of
the Plan. The Committee may delegate to one or more executive officers of the
Corporation the power to make Awards to Participants who are not executive
officers or directors of the Corporation provided the Committee shall fix the
maximum amount of such Awards for the group and a maximum for any one
Participant. The Committee's decisions shall be binding upon all persons,
including the Corporation, stockholders, an Employer, Employees, Participants
and Designated Beneficiaries.
SECTION 4. ELIGIBILITY
All Employees who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Corporation are eligible to be Participants in the Plan.
SECTION 5. MAXIMUM AMOUNT AVAILABLE FOR AWARDS
(a) The maximum number of shares of Stock in respect of which Awards may be
made under the Plan shall be a total of 4,400,000 shares of Common Stock, of
which not more than 1,760,000 may be awarded as Restricted Stock. Shares of
Common Stock may be made available from the authorized but unissued shares of
the Corporation or from shares reacquired by the Corporation, including shares
purchased in the open market. In the event that (i) an Option or Stock
Appreciation Right is settled for cash or expires or is terminated unexercised
as to any shares of Common Stock covered thereby, or (ii) any Award in respect
of shares is cancelled or forfeited for any reason under the Plan without the
delivery of shares of Common Stock, such shares shall thereafter be again
available for award pursuant to the Plan. In the event that any Option or other
Award granted hereunder is exercised through the delivery of shares of Common
Stock, the number of shares of Common Stock available for Awards under the Plan
shall be increased by the number of shares so surrendered, to the extent
permissible under Rule 16b-3, as promulgated under the Securities Exchange Act
of 1934 and as interpreted from time to time by the Securities and Exchange
Commission or its staff.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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(b) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under this Plan, then the Committee
shall, in its sole discretion, and in such manner as the Committee may deem
equitable, adjust any or all of (1) the number and kind of shares which
thereafter may be awarded or optioned and sold or made the subject of Stock
Appreciation Rights under the Plan, (2) the number and kind of shares subject to
outstanding Options and other Awards, and (3) the grant, exercise or conversion
price with respect to any of the foregoing and/or, if deemed appropriate, make
provision for a cash payment to a Participant or a person who has an outstanding
Option or other Award provided, however, that the number of shares subject to
any Option or other Award shall always be a whole number.
SECTION 6. STOCK OPTIONS
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options shall be
granted, the number of shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the exercise of the
Option. The Committee shall have the authority to grant Incentive Stock Options,
or to grant Nonstatutory Stock Options, or to grant both types of options. In
the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by Section
422 of the Code, as from time to time amended, and any implementing regulations.
(b) Option Price. The Committee shall establish the option price at the
time each Option is granted, which price shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant.
(c) Exercise. (1) Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award or thereafter; provided, however,
that in no event may any Option granted hereunder be exercisable after the
expiration of ten years from the date of such grant. The Committee may impose
such conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Corporation. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee, by exchanging shares of Common Stock
owned by the optionee (which are not the subject of any pledge or other security
interest), or by a combination of the foregoing, provided that the combined
value of all cash and cash equivalents and the Fair Market Value of any such
Common Stock so tendered to the Corporation, valued as of the date of such
tender, is at least equal to such option price.
(d) Restoration Options. In the event that any Participant delivers shares
of Common Stock
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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in payment of the exercise price of any Option granted hereunder in accordance
with Section 6(c)(2), the Committee shall have the authority to grant or provide
for the automatic grant of a Restoration Option to such Participant. The grant
of a Restoration Option shall be subject to the satisfaction of such conditions
or criteria as the Committee in its sole discretion shall establish from time to
time. A Restoration Option shall entitle the holder thereof to purchase a number
of shares of Common Stock equal to the number of such shares so delivered upon
exercise of the original Option and, in the discretion of the Committee, the
number of shares, if any, tendered to the Corporation to satisfy any withholding
tax liability arising in connection with the exercise of the original Option. A
Restoration Option shall have a per share exercise price of not less than 100%
of the per share Fair Market Value of the Common Stock on the date of grant of
such Restoration Option, a term not longer than the remaining term of the
original Option at the time of exercise thereof, and such other terms and
conditions as the Committee in its sole discretion shall determine.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may, with sole and complete authority, grant Stock
Appreciation Rights in tandem with an Option, in addition to an Option, or
freestanding and unrelated to an Option. Stock Appreciation Rights granted in
tandem with or in addition to an Option may be granted either at the same time
as the Option or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant, shall not be exercisable after
the expiration of ten years from the date of grant and shall have an exercise
price of not less than 100% of the Fair Market Value of the Common Stock on the
date of grant.
(b) A Stock Appreciation Right shall entitle the Participant to receive
from the Corporation an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the exercise of the Stock Appreciation Right over the
grant price thereof, provided that the Committee may for administrative
convenience determine that, for any Stock Appreciation Right which is not
related to an Incentive Stock Option which Stock Appreciation Right can only be
exercised during limited periods of time in order to satisfy the conditions of
certain rules of the Securities and Exchange Commission, the exercise of any
such Stock Appreciation Right for cash during such limited period shall be
deemed to occur for all purposes hereunder on the day during such limited period
on which the Fair Market Value of the Stock is the highest. Any such
determination by the Committee may be changed by the Committee from time to time
and may govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights thereafter granted. The
Committee shall determine upon the exercise of a Stock Appreciation Right
whether such Stock Appreciation Right shall be settled in cash, shares of Common
Stock or a combination of cash and shares of Common Stock.
SECTION 8. PERFORMANCE SHARES
(a) The Committee shall have sole and complete authority to determine the
Employees who shall receive Performance Shares and the number of such shares for
each Performance Cycle, and to determine the duration of each Performance Cycle
and the value of each Performance Share. There may be more than one Performance
Cycle in existence at any one time, and the duration of Performance Cycles may
differ from each other.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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(b) The Committee shall establish Performance Goals for each Cycle on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time select. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Corporation, changes in applicable tax
laws or accounting principles, or such other factors as the Committee may
determine.
(c) (1) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established Performance
Goals.
(2) Payment Values of earned Performance Shares shall be distributed
to the Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under paragraph (1), above.
The Committee shall determine whether Payment Values are to be distributed in
the form of cash and/or shares of Common Stock.
SECTION 9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom shares of Restricted
Stock and Restricted Stock Units shall be granted, the number of shares of
Restricted Stock and the number of Restricted Stock Units to be granted to each
Participant, the duration of the Restricted Period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Corporation, and the other terms and conditions of such Awards.
The Restricted Period shall consist of at least one year (which may be shortened
or waived by the Committee at any time in its discretion) with respect to one or
more Participants or Awards outstanding.
(b) Shares of Restricted Stock and Restricted Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as herein
provided, during the Restricted Period. Certificates issued in respect of shares
of Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in blank,
with the Corporation. At the expiration of the Restricted Period, the
Corporation shall deliver such certificates to the Participant or the
Participant's legal representative. Payment for Restricted Stock Units shall be
made to the Corporation in cash and/or shares of Common Stock, as determined at
the sole discretion of the Committee.
SECTION 10. DEBENTURES
(a) The Committee may award, to any Participant, Debentures on such terms
and conditions as the Committee shall determine.
(b) The Debentures are to be issued pursuant to a signed written agreement
containing such terms and conditions as the Committee may determine.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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(c) (1) Each Debenture will have a maturity date of the earliest of (i)
such date as the Committee shall determine at the time of award, or (ii) such
date as the Corporation redeems a series of Debentures or pre-pays an individual
Debenture. The Debentures shall be issued in such denominations and will accrue
interest, from the date of issuance, at such rate, which may be fixed or
variable, as may be set by the Committee at the time of award.
(2) Debentures will be convertible into fully paid and non-assessable
shares of Common Stock or such other type of securities, which may immediately
be convertible into Common Stock, as the Committee shall determine at the time
of award, to the extent the terms and conditions of the award and the Plan are
met, but in no event later than the due date. Any such securities, including
Common Stock, into which the Debenture is convertible, may be subject to such
conditions and restrictions as the Committee shall determine. The conversion
rate of a Debenture shall be set by reference to the Fair Market Value of the
Common Stock, book value or such other value as the Committee determines.
SECTION 11. OTHER STOCK BASED AWARDS
(a) In addition to granting Options, Stock Appreciation Rights, Performance
Shares, Restricted Stock, Restricted Stock Units and Debentures, the Committee
shall have authority to grant to Participants Stock Unit Awards which can be in
the form of Common Stock or units, the value of which is based, in whole or in
part, on the value of Common Stock. Subject to the provisions of the Plan,
including Section 11(b) below, Stock Unit Awards shall be subject to such terms,
restrictions, conditions, vesting requirements and payment rules (all of which
are sometimes hereinafter collectively referred to as "rules") as the Committee
may determine in its sole and complete discretion at the time of grant. The
rules need not be identical for each Stock Unit Award.
(b) In the sole and complete discretion of the Committee, a Stock Unit
Award may be granted subject to the following rules:
(1) Any shares of Common Stock which are part of a Stock Unit Award
may not be assigned, sold, transferred, pledged or otherwise encumbered
prior to the date on which the shares are issued or, if later, the date
provided by the Committee at the time of grant of the Stock Unit Award.
(2) Stock Unit Awards may provide for the payment of cash
consideration by the person to whom such Award is granted or provide that
the Award, and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash consideration,
provided that for any Common Stock to be purchased in connection with a
Stock Unit Award the purchase price shall be not less than 100% of the Fair
Market Value of such Common Stock on the date such Award is granted.
(3) Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of grant.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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(4) Stock Unit Awards may provide for deferred payment schedules
and/or vesting over a specified period of employment.
(5) In such circumstances as the Committee may deem advisable, the
Committee may waive or otherwise remove, in whole or in part, any
restriction or limitation to which a Stock Unit Award was made subject at
the time of grant.
(c) In the sole and complete discretion of the Committee, an Award, whether
made as a Stock Unit Award under this Section 11 or as an Award granted pursuant
to Sections 6 through 10, may provide the Participant with (i) dividends or
dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award.
SECTION 12. GENERAL PROVISIONS
(a) Withholding. The Employer shall have the right to deduct from all
amounts paid to a Participant in cash (whether under this Plan or otherwise) any
taxes required by law to be withheld in respect of Awards under this Plan. In
the case of payments of Awards in the form of Common Stock, at the Committee's
discretion the Participant may be required to pay to the Employer the amount of
any taxes required to be withheld with respect to such Common Stock or, in lieu
thereof, the Employer shall have the right to retain (or the Participant may be
offered the opportunity to elect to tender) the number of shares of Common Stock
whose Fair Market Value equals the amount required to be withheld.
(b) Awards. Each Award hereunder shall be evidenced in writing, delivered
to the Participant and shall specify the terms and conditions thereof and any
rules applicable thereto, including but not limited to the effect on such Award
of the death, retirement or other termination of employment of the Participant
and the effect thereon, if any, of a change in control of the Corporation.
(c) Nontransferability.
(1) Except as provided in (2) below, no Award shall be assignable or
transferable, and no right or interest of any Participant shall be subject
to any lien, obligation or liability of the Participant, except by will or
the laws of descent and distribution.
(2) Notwithstanding subparagraph (1) above, a Nonstatutory Option held
by an officer of The Chubb Corporation and Chubb & Son, a division of
Federal Insurance Company at or above the level of Executive Vice President
or such other key senior executives of the Corporation and its subsidiaries
as the Chairman may designate that is outstanding on November 10, 1998 may
be transferred by an Employee to one or more members of the Employee's
immediate family, to a partnership of which the only partners are members
of the Employee's immediate family, or to a trust established by the
Employee for the benefit of one or more members of the employee's immediate
family. For this purpose immediate family means the Employee's spouse,
parents, children, grandchildren
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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and the spouses of such parents, children and grandchildren. A transferee
described in this subparagraph may not further transfer an Option. An
Option transferred pursuant to this subparagraph shall remain subject to
all of the applicable provisions of the Plan and the written option
agreement.
(d) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Employer. Further, the
Employer expressly reserves the right at any time to dismiss a Participant free
from any liability, or any claim under the Plan, except as provided herein or in
any agreement entered into with respect to an Award.
(e) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she has become the holder thereof. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of such Restricted Stock.
(f) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of New York.
(g) Effective Date. Subject to the approval of the stockholders of the
Corporation, the Plan shall be effective on April 28, 1992. No Options or Awards
may be granted under the Plan after December 31, 1996; provided, however, that
the authority for grant of Restoration Options hereunder in accordance with
Section 6(d) shall continue, subject to the provisions of Section 5, as long as
any Option granted hereunder remains outstanding.
(h) Amendment of Plan. The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive relief
under Section 16(b) of the Securities Exchange Act of 1934. Notwithstanding
anything to the contrary contained herein, the Committee may amend the Plan in
such manner as may be necessary so as to have the Plan conform with the local
rules and regulations.
(i) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to payment or
exercise in any manner not inconsistent with the terms of the Plan, including
without limitation, (i) to change the date or dates as of which (A) an Option or
Stock Appreciation Right becomes exercisable; (B) a Performance Share is deemed
earned; (C) Restricted Stock becomes nonforfeitable; or (D) a Debenture becomes
convertible, or (ii) to cancel and reissue an Award under such different terms
and conditions as it determines appropriate.
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LONG-TERM STOCK INCENTIVE PLAN - TCC AMEND. EFF. 11/10/98
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THE CHUBB CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (1992)
1. PURPOSE
The purpose of The Chubb Corporation Stock Option Plan for Non-Employee
Directors (1992) (the "Plan") is to increase the proprietary and vested interest
of the non-employee directors of The Chubb Corporation (the "Corporation") in
the growth and performance of the Corporation by granting such directors options
to purchase shares of Common Stock, $1.00 par value per share (the "Stock"), of
the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the Corporation's Board of Directors
(the "Board"). Subject to the provisions of the Plan, the Board shall be
authorized to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options under the Plan, the number of shares of Stock subject to any
such options, the purchase price thereunder or the timing of grants of options
under the Plan. The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Secretary of the
Corporation shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of New York.
3. ELIGIBILITY
The class of individuals eligible for grant of options and Restoration
Options under the Plan shall be Eligible Directors, as defined below. Eligible
Director shall mean a director of the Corporation who is not an employee of the
Corporation or its subsidiaries and has not, within one year immediately
preceding the determination of such director's eligibility, received any award
under any plan of the Corporation or its subsidiaries that entitles the
participants therein to acquire stock, stock options or stock appreciation
rights of the Corporation or its subsidiaries (other than any other plan under
which participants' entitlements are governed by provisions meeting the
requirements of Rule 16b-3(c)(2)(ii) promulgated under the Securities Exchange
Act of 1934). Any holder of an option granted hereunder shall hereafter be
referred to as a "Participant".
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, an aggregate of 300,000
shares of Stock shall be available for issuance upon the exercise of options and
Restoration Options, as described
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 1
25
in Section 6, granted under the Plan. The shares of Stock deliverable upon the
exercise of options and Restoration Options maybe made available from authorized
but unissued shares or shares reacquired by the Corporation, including shares
purchased in the open market or in private transactions. If any option or
Restoration Option granted under the Plan shall terminate for any reason without
having been exercised, the shares subject to, but not delivered under, such
option shall be available for other options and Restoration Options.
5. GRANT, TERMS AND CONDITIONS OF OPTIONS
Each individual who is an Eligible Director will be granted an option to
purchase 2,000 shares of Stock as of the date of each Annual Shareholders
Meeting following the effectiveness of the Plan at which such individual is
elected or reelected to the office of director. The options granted will be
nonstatutory stock options not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and shall have the
following terms and conditions.
(a) Price. The purchase price per share of Stock deliverable
upon the exercise of each option shall be 100% of the Fair Market Value
per share of the Stock on the date the option is granted. For purposes
of this Plan, Fair Market Value shall be the average of the highest and
lowest per share sales prices as reported for consolidated trading of
issues listed on the New York Stock Exchange on the date in question,
or, if the Stock shall not have traded on such date, the average of the
highest and lowest per share sales prices on the first date prior
thereto on which the Stock was so traded.
(b) Payment. Options may be exercised only upon payment of the
purchase price thereof in full. Such payment shall be made in cash or
in Stock, which shall have a Fair Market Value (determined in
accordance with the rules of paragraph (a) above) at least equal to the
aggregate exercise price of the shares being purchased, or a
combination of cash and Stock.
(c) Exercisability and Term of Options. Options shall be
exercisable in whole or in part at all times during the period
beginning on the date of grant until terminated, as provided in
paragraph (d), below.
(d) Termination of Service as Eligible Director.
(i) Except as provided in subparagraph (ii) of this
paragraph (d), all outstanding options held by a Participant
shall be automatically cancelled upon such Participant's
termination of service as an Eligible Director.
(ii) Upon termination of a Participant's service as
an Eligible Director by reason of such Participant's voluntary
mid-term resignation, declining to stand for reelection
(whether as a result of the Corporation's mandatory retirement
program or otherwise), becoming an employee of the Corporation
or a subsidiary thereof or becoming disabled (as defined in
the Corporation's pension plan), all outstanding options held
by such Participant on the date of such termination shall
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 2
26
expire five years from the date upon which the Participant
ceases to be an Eligible Director. In the event of the death
of a Participant (whether before or after termination of
service as an Eligible Director), all outstanding options held
by such Participant (and not previously cancelled or expired)
on the date of such death shall be fully exercisable by the
Participant's legal representative within one year after the
date of death (without regard to the expiration date of the
option specified in accordance with the preceding sentence).
(e) Non-transferability.
(i) Except as provided in (ii) below, no option shall
be assignable or transferable, no right or interest of any
Participant shall be subject to any lien, obligation or
liability of the Participant, except by will or the laws of
descent and distribution, and during the lifetime of the
Participant to whom an option is granted, it may be exercised
only by the Participant or by the Participant's legal guardian
or legal representative. Notwithstanding the above, options
may be transferred pursuant to a qualified domestic relations
order.
(ii) Notwithstanding subparagraph (i) above, the
Board may determine that an option may be transferred by a
Participant to one or more members of the Participant's
immediate family, to a partnership of which the only partners
are members of the Participant's immediate family, or to a
trust established by the Participant for the benefit of one or
more members of the Participant's immediate family. For this
purpose immediate family means the Participant's spouse,
parents, children, grandchildren and the spouses of such
parents, children and grandchildren. A transferee described in
this subparagraph may not further transfer an option. Subject
to such conditions that may be determined by the Board or a
person or persons designated by the Board, an option
transferred pursuant to this subparagraph shall remain subject
to all of the applicable provisions of the Plan and the
written option agreement.
(f) Listing and Registration. Each option and Restoration
Option shall be subject to the requirement that if at any time the
Board shall determine, in its discretion, that the listing,
registration or qualification of the Stock subject to such option upon
any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the granting of
such option or the issue or purchase of shares thereunder, no such
option may be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the Board.
(g) Option Agreement. Each option and Restoration Option
granted hereunder shall be evidenced by an agreement with the
Corporation which shall contain the terms and provisions set forth
herein and shall otherwise be consistent with the provisions of the
Plan.
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 3
27
6. GRANT, TERMS AND CONDITIONS OF RESTORATION OPTIONS
In the event that, within seven years of the date of grant of an option granted
hereunder (the "original option"), an Eligible Director delivers shares of the
Stock in payment of the exercise price of the original option in accordance with
Section 5(b), such Eligible Director shall be granted a Restoration Option,
subject to the satisfaction of the conditions and criteria set forth below.
Restoration Options will be nonstatutory options not intended to qualify under
Section 422 of the code and shall have the following terms and provisions:
(a) Number of Shares. A Restoration Option shall entitle the
holder thereof to purchase a number of shares of Stock equal to the
number of such shares delivered upon exercise of the original option.
(b) Price. A Restoration Option shall have a per share
exercise price of 100% of the per share Fair Market Value, determined
in accordance with Section 5(a), of the Stock on the date of grant of
such Restoration Option.
(c) Conditions. Notwithstanding any other provision of this
Section 6, no Restoration Option shall be granted if (i) the per share
Fair Market Value of the Stock is not at least 125% of the exercise
price of the original option, (ii) the original option is a Restoration
Option or (iii) the exercising Participant is not an Eligible Director
on the date of exercise.
(d) Other Provisions. Restoration Options shall be subject to
all other terms and conditions set forth in Section 5, except as
expressly set forth and as modified in this Section 6.
7. ADJUSTMENT OF AND CHANGES IN STOCK
In the event of a stock split, stock dividend, subdivision or combination of the
Stock or other change in corporate structure affecting the Stock, the number of
shares of Stock authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares of Stock subject
to any outstanding option or Restoration Option shall be increased or decreased
proportionately, as the case may be, with appropriate corresponding adjustment
in the purchase price per share of Stock thereunder.
8. MERGERS, SALES AND CHANGE IN CONTROL
In the case of (i) any merger, consolidation or combination of the Corporation
with or into another corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing corporation and which
does not result in its outstanding Stock being converted into or exchanged for
different securities, cash or other property, or any combination thereof) or a
sale of all or substantially all of the assets of the Corporation or (ii) a
Change in Control (as defined below) of the Corporation, the holder of each
option (including for purposes of this Section any Restoration Option) then
outstanding immediately prior to such Change in Control
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 4
28
shall (unless the Board determines otherwise) have the right to receive on the
date or effective date of such event an amount equal to the excess of the Fair
Market Value on such date of (a) the securities, cash or other property, or
combination thereof, receivable upon such merger, consolidation or combination
in respect of a share of Stock, in the cases covered by clause (i) above, or in
the case of a sale of assets referred to in such clause (i), a share of Stock,
or (b) the final tender offer price in the case of a tender offer resulting in a
Change in Control or (c) the value of the Stock covered by the option as
determined by the Board, in the case of Change in Control by reason of any other
event, over the exercise price of such option, multiplied by the number of
shares of Stock subject to such option. Such amount will be payable fully in
cash.
Any determination by the Board made pursuant to this Section 8 will be made as
to all outstanding options and shall be made (a) in cases covered by clause (i)
above, prior to the occurrence of such event, (b) in the event of a tender or
exchange offer, prior to the purchase of any Stock pursuant thereto by the
offeror and (c) in the case of a Change in Control by reason of any other event,
just prior to or as soon as practicable after such Change in Control.
A "Change in Control" shall be deemed to have occurred if (a) any person, or any
two or more persons acting as a group, and all affiliates of such person or
persons, shall own beneficially 25% or more of the Stock outstanding, or (b) if
following (i) a tender or exchange offer for voting securities of the
Corporation (other than any such offer made by the Corporation), or (ii) a proxy
contest for the election of directors of the Corporation, the persons who were
directors of the Corporation immediately before the initiation of such event (or
directors who were appointed by such directors) cease to constitute a majority
of the Board of Directors of the Corporation upon the completion of such tender
or exchange offer or proxy contest or within one year after such completion.
9. NO RIGHTS OF SHAREHOLDERS
Neither a Participant nor a Participant's legal representative shall be, or have
any of the rights and privileges of, a shareholder of the Corporation in respect
of any shares purchasable upon the exercise of any option or Restoration Option,
in whole or in part, unless and until certificates for such shares shall have
been issued.
10. PLAN AMENDMENTS
The Plan may be amended by the Board, as it shall deem advisable or to conform
to any change in any law or regulation applicable thereto; provided, that the
Board may not, without the authorization and approval of shareholders: (i)
increase the number of shares which may be purchased pursuant to options or
Restoration Options hereunder, either individually or in the aggregate, except
as permitted by Section 7, (ii) change the requirements of Sections 5(a) and
6(b) that option grants be priced at Fair Market Value, except as permitted by
Section 7, (iii) modify in any respect the class of individuals who constitute
Eligible Directors; or (iv) materially increase the benefits accruing to
Participants hereunder. The provisions of Sections 3, 5 and 6 may not be amended
more often than once every six months, other than to comport with changes
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 5
29
in the Code, the Employee Retirement Income Security Act, or the rules under
either such statute.
11. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall be come effective on the day after the Corporation's Annual
Shareholders Meeting at which the Plan is approved by Shareholders. The Plan
shall terminate on the day following the fifth Annual Shareholders Meeting at
which Directors are elected succeeding the Annual Shareholders Meeting at which
the Plan was approved by Shareholders, unless the Plan is extended or terminated
at an earlier date by Shareholders; provided, however, that grants of
Restoration Options pursuant to Section 6 shall continue until the seventh
anniversary of such fifth Annual Shareholders' meeting.
The Chubb Corporation
Stock Option Plan For Non-Employee Directors (1992) (Amended 11/10/98) Page 6
30
THE CHUBB CORPORATION
DEFERRED COMPENSATION PLAN
FOR DIRECTORS
------------------------
Section 1. Effective Date
The effective date of the Plan is July 1, 1987.
Section 2. Eligibility
Any Director of The Chubb Corporation (the "Company") or any Director of a
participating subsidiary of the Company who is also a Director of the Company,
who is not an officer or employee of the Company or a subsidiary thereof is
eligible to participate in the Plan. A subsidiary shall become a participating
subsidiary upon adoption of this Plan by the Board of Directors and by obtaining
the consent to such adoption from the Board of Directors of the Company.
Section 3. Deferred Compensation Accounts
There shall be established for each participant a deferred compensation account
or accounts in the participant's name.
Section 4. Amount of Deferral
A participant may elect to defer receipt for any Plan Year of all compensation
payable to the participant in the form of stipends and/or meeting fees for
serving on the Board of Directors of the Company and Committees of the Board of
Directors as well as compensation payable to the participant in the form of
stipends and/or meeting fees for serving on the Board of Directors and
Committees of the Board of Directors of participating subsidiaries of the
Company.
Section 5. Investment of Deferred Amounts
a) General. A participant may designate, in increments of 10%, what part of
the compensation to be deferred or compensation already deferred that
should be allocated to a cash account, a market value account and a
shareholder's equity value account or any combination of such accounts.
With the exception of allocations to a shareholder's equity account (which
must be made in accordance with Section 5(d), any change in such
designation may be made no later than the 15th day of each March, June,
September and December during the deferral period to
Page 1 of 4 Amended Eff. November 10, 1998
31
be effective on the date next following such notification that compensation
would have been paid in accordance with the Company's normal practice, or
as applicable, the participating subsidiary's normal practice, but for the
election to defer.
b) Cash Account. The amount, if any, allocated to the participant's deferred
compensation cash account shall be credited with interest, to be compounded
quarterly, calculated prospectively at a rate equal to the prime rate of
Citibank, N.A. in effect on the first day of each January, April, July and
October during the deferral period.
c) Market Value Account. The amount, if any, allocated to the participant's
deferred compensation market value account on each date compensation would
have been paid in accordance with the Company's normal practice, or as
applicable, the participating subsidiary's normal practice, but for the
election to defer shall be expressed in units, the number of which shall be
equal to such amount divided by the closing price of shares of the
Company's Common Stock on the New York Stock Exchange (hereinafter referred
to as "Market Value") on such date or on the trading day next preceding
such date if such date is not a trading day. On each date that the Company
pays a regular cash dividend on shares of its Common Stock outstanding, the
participant's account shall be credited with a number of units equal to the
amount of such dividend per share multiplied by the number of units in the
participant's account on such date divided by the Market Value on such
dividend date or on the trading day next preceding such date if the
dividend payment date is not a trading day. The value of the units in the
participant's market value account on any given date shall be determined by
reference to the Market Value on such date. Any amount allocated to a
market value account may not thereafter be reallocated to any other
account.
d) Shareholder's Equity Account. At any time during the period commencing
January 1 and ending March 15 of any calendar year, the participant may
elect to allocate on April 1 of such year to a deferred compensation
shareholder's equity account compensation payable on April 1 of such year
which he has previously elected to defer or amounts in the participant's
cash account on such date (in increments of 10%) of such compensation or
cash account balance. The amounts so allocated shall be expressed in units,
the number of which shall be equal to such amount divided by the
shareholder's equity per share as reported in the Company's Annual Report
to Shareholders for the year just ended. Any amount allocated to a
shareholder's equity account may not thereafter be reallocated to any other
account.
On each date that the Company pays a regular cash dividend on shares of its
Common Share outstanding, the participant's shareholder's equity account
shall be credited with a number of units equal to the amount of such
dividend per share multiplied by the number of units in the participant's
shareholder's equity account on such date divided by the Market Value on
such dividend date or on the trading day next preceding such date if the
dividend payment date is not a trading day. The value of the units in the
participant's shareholder's equity account on any given date shall be
determined by reference to the shareholder's equity at the close of the
most recent fiscal year.
e) Recapitalization. The number of units in the participant's market value and
shareholder's equity accounts shall be proportionally adjusted for any
increase or decrease in the number of
Page 2 of 4 Amended Eff. November 10, 1998
32
issued shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or other capital adjustment, or the payment of a
stock dividend or other increase or decrease in such shares effected
without receipt of consideration by the Company, or any distribution or
spin-off of assets (other than cash) to the shareholders of the Company.
Section 6. Period of Deferral
A participant may elect to defer receipt of compensation either (a) until a
specified year I the future or (b) until the participant's termination of
service as a Director of the Company. If alternative (a) is elected, actual
payment will be made or will commence within ninety days after the beginning of
the year specified. If alternative (b) is elected, payment will be made or will
commence within ninety days after termination of services as a Director of the
Company.
Section 7. Form of Payment
A participant may elect to receive the compensation deferred under the plan in
either (a) a lump sum of (b) a number of annual installments as specified by the
participants. All amounts shall be paid in cash except that the market value
account shall be paid in shares of the Company's Common Stock (other than any
fractional share which shall be paid in cash).
Section 8. Death or Disability Prior to Receipt
In the event that a participant dies or becomes totally and permanently disabled
prior to receipt of any or all of the amounts payable to the participant
pursuant to the Plan, any amounts remaining in the participant's deferred
compensation account shall be paid to his estate or personal representative in a
lump sum within ninety (90) days following the Company's notification of the
participant's death or disability.
Section 9. Time of Election of Deferral
The Plan Year shall be the period from July 1, 1987 to December 31, 1987 and
effective January 1, 1988, the period commencing January 1 and ending December
31 of each year.
An election to defer compensation may be made by a nominee for election as a
Director prior to, or concurrently with the nominee's election for, the term for
which the nominee is being elected, and may be made by a person then currently
serving as a Director for the next succeeding Plan Year no later than the
preceding December 15th (or June 15, 1987 for the Plan Year beginning July 1,
1987).
Section 10. Manner of Electing Deferral
A participant may elect to defer stipend and/or meeting fee compensation by
giving written notice to the Secretary of the Company on a form provided by the
Company, which notice shall include the accounts to which such deferred amounts
are to be allocated and the percentage (in
Page 3 of 4 Amended Eff. November 10, 1998
33
increments of 10%) of such amounts to be allocated to each account, the period
of deferral, and the form of payment, including the number of installments.
Section 11. Effect of Election
An election to defer compensation shall be irrevocable once the Plan Year to
which it applies has commenced. An election covering more than one Plan Year may
be revoked or modified with respect to Plan Years not yet begun by notifying the
Secretary of the Company in writing at least fifteen (15) days prior to the
commencement of such Plan Year. Notwithstanding anything in the Plan to the
contrary, a participant's deferred compensation accounts may be reduced from
time to time in connection with the purchase of life insurance on the life of
the participant pursuant to the Company's Estate Enhancement Program. Such
reduction shall be in accordance with rules promulgated from time to time by the
administrators identified in Section 15 and any such life insurance contract
shall contain such terms as such administrators shall determine.
Section 12. Participant's Rights Unsecured
The right of any participant to receive future payments under the provisions of
the Plan shall be an unsecured claim against the general assets of the Company,
or as applicable, the participant subsidiary.
Section 13. Statement of Accounts
Statements will be sent to each participant by April 1st of each year as to the
value of the participant's deferred compensation accounts as of the end of the
preceding December.
Section 14. Assignability
No right to receive payments hereunder shall be transferable or assignable by a
participant, except by will or by the laws of descent and distribution. The
participant may not sell, assign, transfer, pledge or otherwise encumber any
interest in the participant's deferred compensation account and any attempt to
do so shall be void against, and shall not be recognized by, the Company or
participating subsidiaries.
Section 15. Administration
The Plan shall be administered by the Secretary and the General Counsel of the
Company, who together shall have the authority to adopt rules and regulations
for carrying out the Plan and interpret, construe and implement the provisions
of the Plan.
Section 16. Amendment
The Plan may at any time or from time to time be amended, modified or terminated
by the Company. No amendment, modification or termination shall, without the
consent of the participant, adversely affect accruals in such participant's
deferred compensation account or accounts at the time of such amendment,
modification or termination.
Page 4 of 4 Amended Eff. November 10, 1998
34
The Chubb Corporation
Executive Deferred Compensation Plan
1. STATEMENT OF PURPOSE
The purpose of The Chubb Corporation Executive Deferred Compensation Plan
(the "Plan") is to aid The Chubb Corporation and its subsidiaries in
attracting and retaining key employees by providing a non-qualified
compensation deferral vehicle.
2. DEFINITIONS
2.01 BENEFICIARY - "Beneficiary" means the person or persons designated as
such in accordance with Section 8.
2.02 BOARD OF DIRECTORS - "Board of Directors" means the Board of Directors
of The Chubb Corporation.
2.03 BOND INDEX ACCOUNT - "Bond Index Account" means an investment option
providing for a return based upon the hypothetical investment of the
Deferral Amount, or a portion thereof, in the Vanguard Bond Index
Fund-Total Bond Market Portfolio.
2.04 CALENDAR QUARTER - "Calendar Quarter" means any of the four calendar
quarters in a full calendar year (e.g. January, February & March
comprise the first calendar quarter).
2.05 COMMITTEE - "Committee" means the Organization & Compensation
Committee of the Board of Directors of The Chubb Corporation that will
administer the Plan pursuant to the provisions of Section 3 of the
Plan.
2.06 COMPANY - "Company" means The Chubb Corporation and, for purposes of
Section 2.27 and such other purposes as determined by the Committee,
shall include any subsidiary of The Chubb Corporation.
2.07 COMPENSATION - "Compensation" means the Participant's salary, annual
incentive bonus, or other items deemed Compensation by the Committee
for purposes of this Plan.
November 1998
-1-
35
===============================================================================
The Chubb Corporation Executive Deferred Compensation Plan
2.08 CYCLE - "Cycle" means the twelve month pay-in period for each
deferral. The first Cycle shall begin on January 1, 1999 and end on
December 31, 1999. The following Cycles shall begin on January 1 of
each year and end on December 31 of such year.
2.09 DECLINING BALANCE INSTALLMENTS - "Declining Balance Installments"
means a series of annual payments such that each payment is determined
by taking that portion of the Participant's Deferred Compensation
Account in the Bond Index Account or the Equity Index Account as of
the Distribution Date and dividing by the number of years of
distributions remaining.
2.1 DEFERRAL AMOUNT - "Deferral Amount" means the total amount of Elective
Deferred Compensation and/or Non-Elective Deferred Compensation with
respect to a Participant.
2.2 DEFERRED COMPENSATION ACCOUNT - "Deferred Compensation Account" means
the account maintained on the books of account of the Company for a
Participant pursuant to Section 6.
2.3 DISABILITY - "Disability" means the Participant is eligible to receive
benefits under a long term disability plan maintained by the Company.
2.4 DISTRIBUTION DATE - "Distribution Date" means the date on which the
Company makes distributions from the Participant's Deferred
Compensation Account(s).
2.5 EFFECTIVE DATE - "Effective Date" means the date on which this Plan is
effective, November 10, 1998.
2.6 ELECTION FORM - "Election Form" means the form or forms attached to
this Plan and filed with the Committee by the Participant in order to
participate in the Plan. The terms and conditions specified in the
Election Form(s) are incorporated by reference herein and form a part
of the Plan.
2.7 ELECTIVE DEFERRED COMPENSATION - "Elective Deferred Compensation"
means the total amount elected to be deferred by an Eligible Employee
on his/her Election Form, subject to approval by the Committee.
November 1998
-2-
36
===============================================================================
The Chubb Corporation Executive Deferred Compensation Plan
2.8 ELIGIBLE EMPLOYEE - "Eligible Employee" means any employee of The
Chubb Corporation or the Chubb & Son division of Federal Insurance
Company who is a Senior Vice President or higher assigned to pay band
7 or higher, or such other key executives of the Company as may be
designated by the Chairman of The Chubb Corporation.
2.9 EQUITY INDEX ACCOUNT - "Equity Index Account" means an investment
option providing for a return based upon the hypothetical investment
of the Deferral Amount, or a portion thereof, in the Fidelity Spartan
U.S. Equity Index Fund.
2.10 INVESTMENT ALLOCATION CHANGE FORM - "Investment Allocation Change
Form" means the form attached to this Plan and filed with the
Committee by the Participant in order to request a change in the
allocation of the Participant's Deferred Compensation Account(s) among
the Bond Index Account, Equity Index Account and the Stable Value
Account. The terms and conditions specified in the Investment
Allocation Change Form are incorporated by reference herein and form a
part of the Plan.
2.11 INVESTMENT FUNDS - "Investment Funds" means those mutual funds,
investment indexes or other measures of performance identified by the
Committee, which shall be used to determine the returns on the
Participants' Deferred Compensation Accounts. The initial investment
funds shall be the Bond Index Account, the Equity Index Account and
the Stable Value Account. The Investment Funds may be changed by the
Committee from time to time, at the sole discretion of the Committee.
2.12 NON-ELECTIVE DEFERRED COMPENSATION - "Non-Elective Deferred
Compensation" means the amount awarded to a Participant by the
Committee pursuant to Section 4.02.
2.13 PARTICIPANT - "Participant" means an Eligible Employee participating
in the Plan in accordance with the provisions of Section 4.
2.14 PLAN YEAR - "Plan Year" means the twelve month period beginning on the
first day of the first Cycle in which the Eligible Employee elects to
participate in the Plan. The initial Plan Year will commence on
January 1,
November 1998
-3-
37
===============================================================================
The Chubb Corporation Executive Deferred Compensation Plan
1999 and end on December 31, 1999. Each later Plan year will begin on
January 1 and end on December 31.
2.15 RELATED EMPLOYMENT - "Related Employment" means the employment of a
Participant by an employer that is not the Company provided (i) such
employment is undertaken by the Participant at the request of the
Company; (ii) immediately prior to undertaking such employment, the
Participant was an employee of the Company, or was engaged in Related
Employment as herein defined; and (iii) such employment is recognized
by the Committee, in its sole discretion, as Related Employment.
2.16 STABLE VALUE ACCOUNT - "Stable Value Account" means an investment
option providing for a return based on the hypothetical investment of
the Deferral Amount, or a portion thereof, in the Stable Value
Portfolio of the Chubb Capital Accumulation Plan.
2.17 SUBSTANTIALLY EQUAL INSTALLMENTS - "Substantially Equal Installments"
means a series of annual payments, such that equal payments over the
remaining payment period would exactly amortize the Participant's
Deferred Compensation Account balance in the Stable Value Account as
of the Distribution Date if the investment return remained constant at
the return credited as of the Valuation Date immediately preceding the
Distribution Date for the remainder of the payment period.
2.18 TERMINATION OF EMPLOYMENT - "Termination of Employment" means the end
of a Participant's employment with the Company for any reason other
than Disability, Related Employment, or the termination of a
Participant's Related Employment if the Participant returns to the
Company.
2.19 VALUATION DATE - "Valuation Date" means the date on which the value of
a Participant's Deferred Compensation Account is determined for each
Calendar Quarter as provided in Section 6 hereof. Unless and until
changed by the Committee, the Valuation Dates within each Cycle shall
be the last day of each of the four Calendar Quarters of the calendar
year. If a Participant requests a Liquidating Distribution under
Section 7.06, then, for such Participant's Deferred Compensation
Account, the Valuation Date for the Plan Year in which the Liquidating
November 1998
-4-
38
===============================================================================
The Chubb Corporation Executive Deferred Compensation Plan
Distribution is requested shall be the last day of the Calendar
Quarter in which the Participant submits the request.
2.20 VESTED PARTICIPANT - "Vested Participant" means a Participant who
would be eligible immediately for normal or early retirement under the
qualified pension plan maintained by the Company.
3. ADMINISTRATION OF THE PLAN
3.01 PLAN ADMINISTRATOR. The Committee, subject to Section 3.02, shall be
the sole administrator of the Plan, and will administer the Plan. The
Committee shall have the power to formulate additional details and
regulations for carrying out this Plan. The Committee also shall be
empowered to make any and all determinations not authorized
specifically herein that may be necessary or desirable for the
effective administration of the Plan. The Committee is authorized to
engage such accountants, consultants and other service providers
necessary to assist in the administration of the Plan. Any decision or
interpretation of any provision of this Plan adopted by the Committee
shall be final and conclusive.
3.02 DELEGATION OF DUTIES. The Committee may delegate any or all of its
duties as to the administration of this Plan to other individuals or
groups of individuals within the Company, as it deems appropriate.
4. PARTICIPATION
4.01 ELECTIVE PARTICIPATION
a. Any Eligible Employee may elect to participate in the Plan for a
given Cycle by filing a completed Election Form for the Cycle
with the Manager of Compensation and Benefits. With regard to an
election to participate:
i. The Election Form must be filed with the Manager of
Compensation and Benefits prior to the commencement of the
Cycle to which the Election Form pertains, or at such
earlier time as determined by the Committee. Provided,
however, with respect to a deferral of salary, the Committee
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The Chubb Corporation Executive Deferred Compensation Plan
may allow an Election Form for a Cycle to be filed after the
commencement of the Cycle with respect to salary to be paid
after the Election Form is filed.
ii. The minimum deferral for a Cycle shall be $5,000.
iii. A Participant may elect to receive payment of amounts
deferred during a Cycle upon Termination of Employment, or
in a specified year which shall be no earlier than in the
third Plan Year following the Plan Year in which such
amounts are deferred. Further, a Participant may elect to
receive payment in a lump sum or in up to fifteen (15)
annual installments.
b. A Participant's election to defer future Compensation is
irrevocable upon the filing of his/her Election Form with the
Manager of Compensation and Benefits, provided, however, that an
election to defer salary may be terminated with respect to
amounts not yet earned by mutual agreement in writing between the
Participant and the Committee. Such termination, if approved,
shall be effective immediately.
4.02 NON-ELECTIVE PARTICIPATION. The Committee can, in its sole discretion,
award to an Eligible Employee Non-Elective Deferred Compensation.
Unless otherwise specified by the Committee, the Participant shall
determine the timing and form of payment of any Non-Elective Deferred
Compensation at the time it is awarded, provided that the Participant
may not elect to receive payment in a specific year which is prior to
the third Plan Year following the Plan Year during which the amount is
awarded.
5. VESTING OF DEFERRED COMPENSATION ACCOUNT
A Participant's interest in his/her Deferred Compensation Account shall
vest immediately.
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The Chubb Corporation Executive Deferred Compensation Plan
6. ACCOUNTS AND VALUATIONS
6.01 DEFERRED COMPENSATION ACCOUNTS. A separate Deferred Compensation
Account shall be established and maintained for each Participant for
each Cycle. Deferred amounts will be credited to a Participant's
account on the first day of the month following the time at which the
amount would otherwise have been paid. Any Non-Elective Deferred
Compensation awarded to a Participant shall be credited to the
Participant's Deferred Compensation Account on such date as specified
by the Committee.
6.02 INVESTMENT ALLOCATION OF DEFERRED COMPENSATION ACCOUNT. The
Participant's Deferral Amount shall be deemed to be invested in the
Investment Funds in accordance with the Participant's election.
6.03 INVESTMENT RETURN CREDITED. That portion of the Participant's Deferred
Compensation Account in the Bond Index Account, Equity Index Account
or Stable Value Account shall be credited quarterly with an investment
return based on the investment return (gain or loss) of the fund in
which the Deferral Amount is deemed to be hypothetically invested.
6.04 TIMING OF CREDITING OF INVESTMENT RETURN. That portion of the
Participant's Deferred Compensation Account in the Bond Index Account,
Equity Index Account or Stable Value Account shall be revalued and
credited with investment return as of each Valuation Date. As of each
Valuation Date, the value of that portion of the Participant's
Deferred Compensation Account in any such account shall consist of the
balance of such account as of the immediately preceding Valuation
Date, plus the amount of any transfers from another account since the
preceding Valuation Date, minus the amount of all distributions and
transfers to another account, if any, made from such account since the
preceding Valuation Date. As of each Valuation Date, investment return
shall be credited on that portion of the Participant's Deferred
Compensation Account in the Bond Index Account, Equity Index Account
or Stable Value Account since the immediately preceding Valuation Date
after adjustment for any transfers thereto or distributions or
transfers therefrom. With respect to any Elective Deferred
Compensation or Non-Elective Deferred
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The Chubb Corporation Executive Deferred Compensation Plan
Compensation deferred and credited to a Participant's account since
the immediately preceding Valuation Date, investment return (or loss)
credited on the Valuation Date shall be credited from the time the
amount is credited to the Participant's account pursuant to Section
6.01.
6.05 CHANGE OF INVESTMENT ALLOCATION BY A PARTICIPANT. A Participant may
make different investment allocations for each Cycle, and may change a
Cycle's investment allocation once a year. Any change will be
effective as of April 1 of the next year if the Participant submits an
Investment Allocation Change Form to the Manager of Compensation and
Benefits by December 1 of any Plan year.
6.06 CHANGE OF INVESTMENT FUNDS BY COMMITTEE. The Committee may change the
Investment Funds from time to time. In the event of any such change,
all Participants shall be given notice of the change at least thirty
(30) days before the change is to be effective. In addition, each
Participant shall be given the opportunity to change his or her
allocation of Investment Funds for his or her Deferred Compensation
Account as of the effective date for the change; this change shall be
in addition to any change permitted under 6.05.
The Committee's decision to change the Investment Funds shall not in
any manner alter the returns on the Participants' Deferred
Compensation Accounts prior to the effective date of the change.
6.07 NATURE OF ACCOUNT ENTRIES. The establishment and maintenance of
Participants' Deferred Compensation Accounts and the crediting of
gains and losses pursuant to this Section 6, shall be merely
bookkeeping entries and shall not be construed as giving any person
any interest in any specific assets of the Company or of any
subsidiary of the Company or any trust created by the Company,
including any mutual funds or other investment funds owned by the
Company or any such subsidiary or trust. The hypothetical investment
of the Participants' Deferred Compensation Accounts in the Investment
Funds shall be for bookkeeping purposes only, and shall not require
the establishment of actual corresponding
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The Chubb Corporation Executive Deferred Compensation Plan
funds by the Committee or the Company. Benefits accrued under this
Plan shall constitute an unsecured general obligation of the Company.
7. BENEFITS
7.01 NORMAL BENEFIT
a. A Participant's Deferred Compensation Account shall be paid to
the Participant in accordance with the terms of the Participant's
Election Form, subject to the terms and conditions specified in
the Election Form. If a Participant elects to receive payment of
that portion of his/her Deferred Compensation Account in the
Stable Value Account in installments, subject to a maximum of
fifteen (15) installments, payments shall be made in
Substantially Equal Installments. If a Participant elects to
receive payment of that portion of his/her Deferred Compensation
Account in the Bond Index Account or Equity Index Account in
installments, subject to a maximum of fifteen (15) installments,
payments shall be made in Declining Balance Installments.
b. Notwithstanding the provisions of Section 7.01a, and
notwithstanding any contrary election made by the Participant on
his/her Election Form, if a Participant has a Termination of
Employment, and if the Participant does not qualify as a Vested
Participant at the time of his/her Termination of Employment, the
Participant's Deferred Compensation Account balance will be paid
to the Participant in a lump sum in the year following the
Participant's Termination of Employment. However, upon the
written request of the Participant, the Committee, in its sole
discretion, may allow payments to be made to the Participant in
up to five (5) annual installments.
c. In the event of a Participant's death prior to receiving any
payments with respect to a Deferral Amount for a Cycle, the
Participant's designated Beneficiary will receive an amount equal
to the Participant's Deferred Compensation Account for such
Cycle, and such amount shall be paid in a single sum or annual
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The Chubb Corporation Executive Deferred Compensation Plan
installments (not to exceed 10) in accordance with the
Participant's election. However, the Committee may, in its sole
discretion, pay the Participant's remaining account balance in a
single sum if so requested by the Participant's Beneficiary. If
the Participant's designated Beneficiary survives the Participant
but dies before receiving a complete distribution of the
Participant's account, the remaining account balance shall be
paid to the estate of such Beneficiary in a lump sum.
d. If a Participant dies after beginning to receive payments with
respect to a Deferral Amount for a Cycle, the Participant's
designated Beneficiary will receive an amount equal to the
Participant's remaining account balance for such Cycle. Such
remaining account balance shall continue to be paid in accordance
with the Participant's election. However, the Committee may, in
its sole discretion, pay the Participant's remaining account
balance in a single sum if so requested by the Participant's
Beneficiary. If the Participant's designated Beneficiary survives
the Participant but dies before receiving a complete distribution
of the Participant's account, the remaining account balance shall
be paid to the estate of such Beneficiary in a lump sum.
7.02 HARDSHIP BENEFIT. In the event that the Committee, upon written
petition of the Participant, determines in its sole discretion, that
the Participant has suffered an unforeseeable financial emergency, the
Company may pay to the Participant, as soon as is practicable
following such determination, an amount necessary to meet the
emergency, not in excess of the Deferred Compensation Account credited
to the Participant. The Deferred Compensation Account of the
Participant thereafter shall be reduced to reflect the payment of a
Hardship Benefit.
7.03 REQUEST TO COMMITTEE FOR DELAY IN PAYMENT. A Participant shall have no
right to modify in any way the schedule for the distribution of
amounts from his/her Deferred Compensation Account that the
Participant has specified in his/her Election Form. However, upon a
written request submitted by the Participant to the Committee, the
Committee may, in its
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The Chubb Corporation Executive Deferred Compensation Plan
sole discretion, with respect to the Deferred Compensation Account for
each Cycle:
a. Postpone one time the date on which payment shall commence; and
b. Increase one time the number of installments to a number not to
exceed fifteen (15).
Any such request(s) must be made at least ninety (90) days prior to
the earlier of (1) the beginning of the Plan Year in which the
Participant has elected for distributions to commence, or (2) the
Participant's Termination of Employment.
7.04 TAXES; WITHHOLDING. To the extent required by law, the Company shall
withhold from payments made hereunder an amount equal to at least the
minimum taxes required to be withheld by the federal, or any state or
local, government.
7.05 DATE OF PAYMENTS. Except as otherwise provided in this Plan, payments
under this Plan shall be made (or begin in the case of installments)
on or before the fifteenth (15th) day of February of the calendar year
following receipt of notice by the Committee of an event that entitles
a Participant (or Beneficiary) to payments under the Plan, or at such
other date as may be determined by the Committee. Amounts that become
payable to the estate of a Beneficiary under Sections 7.01c or 7.01d
or pursuant to Section 7.02 or Section 7.06 shall be paid within
fifteen (15) days following the end of the calendar quarter in which a
determination is made that an amount is payable, or at such other date
as may be determined by the Committee.
7.06 LIQUIDATING DISTRIBUTION. Notwithstanding any provisions of the Plan
or the Participant's Election Form to the contrary, following the
receipt of a written request from a Participant for a Liquidating
Distribution, the Company shall pay to the Participant the
Participant's Liquidating Distribution Account Balance in a lump sum.
"Liquidating Distribution" shall mean a distribution requested by the
Participant in writing directed
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The Chubb Corporation Executive Deferred Compensation Plan
to the Committee and specifically referencing this section.
"Liquidating Distribution Account Balance" shall mean all of the
Deferred Compensation Accounts under the Plan in which the Participant
has an undistributed balance, decreased by a forfeiture penalty equal
to ten percent (10%) of the value of the Participant's Deferred
Compensation Account(s). A Liquidating Distribution shall be paid to a
Participant on or before the fifteenth (15th) day of the month
following the end of the calendar quarter during which the Participant
requests the Liquidating Distribution.
Notwithstanding any provisions of the Plan or the Participant's
Election Form to the contrary, if the Participant requesting the
Liquidating Distribution is, at the time of the request, an active
employee of the Company, then the Participant, for a period of one (1)
Plan Year following the Plan Year during which the request for the
Liquidating Distribution is made, shall be ineligible to participate
in the Plan with respect to any Compensation not yet deferred.
7.07 ALLOCATION OF DISTRIBUTIONS. If a distribution of a portion of an
account for a Cycle is made to a Participant or Beneficiary, and the
amounts for such Cycle are invested in more than one Investment Fund,
then a portion of such distribution shall be deemed to have been made
from each Investment Fund on a prorata basis, based on the values of
the Investment Funds as of the Valuation Date immediately preceding
the distribution.
8. BENEFICIARY DESIGNATION
At any time prior to complete distribution of the benefits due to a
Participant under the Plan, he/she shall have the right to designate,
change, and/or cancel, any person(s) or entity as his/her Beneficiary
(either primary or contingent) to whom payment under this Plan shall be
made in the event of his/her death. Each Beneficiary designation shall
become effective only when filed in writing with the Committee during the
Participant's lifetime on a form provided by the Committee. The filing of a
new beneficiary designation form will cancel all previously filed
beneficiary designations relating to such Cycle or Cycles.
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The Chubb Corporation Executive Deferred Compensation Plan
Further, any finalized divorce of a Participant subsequent to the date of
filing of a beneficiary designation form in favor of Participant's spouse
shall revoke such designation.
If a Participant fails to designate a Beneficiary as provided above, or if
his/her beneficiary designation is revoked by divorce or otherwise without
execution of a new designation, or if all designated Beneficiaries
predecease the Participant, then the distribution of such benefits shall be
made to the Participant's estate in a lump sum. If the Participant's
designated Beneficiary survives the Participant but dies before receiving a
complete distribution of the Participant's account, the remaining account
balance shall be paid to the estate of such Beneficiary in a lump sum.
9. AMENDMENT AND TERMINATION OF PLAN
9.01 AMENDMENT. The Board of Directors may amend the Plan at any time in
whole or in part, provided, however, that, except as provided in 9.02,
no amendment shall be effective to decrease the benefits under the
Plan payable to any Participant or Beneficiary with respect to any
Elective or Non-Elective Deferred Compensation deferred prior to the
date of the amendment. Written notice of any amendments shall be given
to each Participant in the Plan.
9.02 TERMINATION OF PLAN
a. COMPANY'S RIGHT TO TERMINATE. The Board of Directors may
terminate the Plan at any time.
b. PAYMENTS UPON TERMINATION. Upon any termination of the Plan under
this section, Compensation shall cease to be deferred
prospectively, and, with respect to Compensation deferred
previously, the Company will pay to the Participant (or the
Participant's Beneficiary, if after the Participant's death), in
a lump-sum, the value of his/her Deferred Compensation Account.
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The Chubb Corporation Executive Deferred Compensation Plan
10. MISCELLANEOUS
10.01 UNSECURED GENERAL CREDITOR. Participants and their beneficiaries,
heirs, successors and assignees shall have no legal or equitable
rights, interests, or other claims in any property or assets of the
Company, nor shall they be beneficiaries of, or have any rights,
claims, or interests in any life insurance policies, annuity
contracts, or the policies therefrom owned or that may be acquired by
the Company ("policies"). Such policies or other assets of the Company
shall not be held in any way as collateral security for the fulfilling
of the obligations of the Company under this Plan. Any and all of the
Company's assets and policies shall be and will remain general,
unpledged, unrestricted assets of the Company. The Company's
obligation under the Plan shall be that of an unfunded and unsecured
promise of the Company to pay money in the future.
10.02 GRANTOR TRUST. Although the Company is responsible for the payment of
all benefits under the Plan, the Company, in its sole discretion, may
contribute funds as it deems appropriate to a grantor trust for the
purpose of paying benefits under this Plan. Such trust may be
irrevocable, but assets of the trust shall be subject to the claims of
creditors of the Company. To the extent any benefits provided under
the Plan actually are paid from the trust, the Company shall have no
further obligation with respect thereto, but to the extent not so
paid, such benefits shall remain the obligation of, and shall be paid
by, the Company. Participants shall have the status of unsecured
creditors on any legal claim for benefits under the Plan, and shall
have no security interest in any such grantor trust.
10.03 SUCCESSORS AND MERGERS, CONSOLIDATIONS OR CHANGE IN CONTROL. The
terms and conditions of this Plan shall inure to the benefit of the
Participants and shall bind the Company, its successors, assignees,
and personal representatives. If substantially all of the stock or
assets of the Company are acquired by another entity, or if the
Company is merged into, or consolidated with, another entity, then the
obligations created hereunder shall be obligations of the acquirer or
successor entity.
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The Chubb Corporation Executive Deferred Compensation Plan
10.04 NON-ASSIGNABILITY. Neither a Participant, nor any other person, shall
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, or convey in
advance of the actual receipt, any amounts payable hereunder, or any
part thereof. All rights to payments expressly are declared to be
unassignable and nontransferable. No part of the amounts payable,
prior to actual payment, shall be subject to seizure or sequestration
for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant, or any other person, nor shall they
be transferable by operation of law in the event of a Participant's,
or any other person's, bankruptcy or insolvency.
10.05 EMPLOYMENT OR FUTURE ELIGIBILITY TO PARTICIPATE NOT GUARANTEED.
Nothing contained in this Plan, nor any action taken hereunder, shall
be construed as a contract of employment, or as giving any Eligible
Employee any right to be retained in the employ of the Company.
Designation as an Eligible Employee may be revoked at any time by the
Board of Directors with respect to any Compensation not yet deferred.
10.06 PROTECTIVE PROVISIONS. A Participant will cooperate with the Company
by furnishing any and all information requested by the Company in
order to facilitate the payment of benefits hereunder, including
taking such physical examinations as the Company reasonably may deem
necessary and taking such other relevant action as may be requested by
the Company. If a Participant refuses to cooperate, the Participant's
election to defer any Compensation which has not yet been deferred
shall become null and void, and the Participant shall not be eligible
to make any further deferral elections under the Plan.
10.07 GENDER, SINGULAR AND PLURAL. All pronouns, and any variations
thereof, shall be deemed to refer to the masculine, feminine, or
neuter, as the identity of the person(s) or entity(s) may require. As
the context may require, the singular may be read as the plural and
the plural as the singular.
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The Chubb Corporation Executive Deferred Compensation Plan
10.08 CAPTIONS. The captions to the articles, sections, and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.09 APPLICABLE LAW. This Plan shall be governed and construed in
accordance with the laws of the State of New York.
10.10 VALIDITY. In the event any provision of this Plan is found to be
invalid, void, or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provision of this Plan.
10.11 NOTICE. Any notice or filing required or permitted to be given to the
Committee shall be sufficient if in writing and hand delivered, or
sent by registered or certified mail, to the principal office of the
Company at 15 Mountain View Road, Warren, NJ 07059, directed to the
attention of the Manager of Compensation and Benefits. Such notice
shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Any notice to the Participant shall be
addressed to the Participant at the Participant's residence address as
maintained in the Company's records. Any party may change the address
for such party here set forth by giving notice of such change to the
other parties pursuant to this Section.
November 1998
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[CHUBB CORPORATION LETTERHEAD]
November 11, 1998
Mr. Thomas F. Motamed
14 Timberline Road
Hohokus, New Jersey 07423
Dear Tom:
In order to induce you to remain in the employ of The Chubb Corporation
(the "Company") and in consideration of your continuing in the Company's employ,
the Company agrees to provide the severance benefits specified below on the
terms and subject to the conditions stated. However, in the absence of a Change
in Control of the Company, as defined below, nothing in this Agreement shall
affect the Company's normal right to terminate your employment or your right to
leave its employ.
1. Change in Control. For purposes of this Agreement a Change in Control
will be deemed to have occurred
(A) if following (i) a tender or exchange offer for voting securities
of the Company, (ii) a proxy contest for the election of Directors of the
Company or (iii) a merger or consolidation or sale of all or substantially
all of the business or assets of the Company, the Directors of the Company
immediately prior to the initiation of such event cease to constitute a
majority of the Board of Directors of the Company upon the occurrence of
such event or within one year after such event, or
(B) if any "person" or "group" (as defined under the beneficial
ownership rules of Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934 and Rule 13d-3 thereunder) acquires ownership or
control, or power to control, 25% or more of the outstanding voting
securities of the Company without prior approval or ratification by a
majority of the Company's Directors in office at the time of such event.
2. Conditions to Severance Benefits. The benefits provided for in Section 5
shall be payable or accrue to you if (a) a Change in Control has occurred and
(b) your employment with the Company has terminated within two years after the
Change in Control, other than termination by reason of (i) your death, (ii) your
retirement at normal retirement age ("Retirement") under the Company's pension
plan as in effect immediately prior to the Change in Control, (iii) your
voluntary termination other than for Good Reason, (iv) your retirement for
Disability or (v) your discharge for Cause.
51
Mr. Thomas F. Motamed
November 11, 1998
Page 2
Termination by you of your employment for "Good Reason" shall mean
termination by you of your employment, subsequent to a Change in Control,
because of:
(A) the assignment to you, without your express written consent, of
any duties inconsistent with your positions, duties, responsibilities,
authority and status with the Company and its principal subsidiaries
immediately prior to such Change in Control, or a change in your reporting
responsibilities, titles or offices as in effect immediately prior to the
Change in Control, or any removal of you from or any failure to re-elect
you to any of such positions, except in connection with the termination of
your employment for Cause, Disability, Retirement, as a result of your
death or by you without Good Reason;
(B) a reduction by the Company in your base salary as in effect at the
time of such Change in Control;
(C) a failure by the Company to continue (or to replace with
equivalent plans) the Performance Share Plan, the Annual Incentive
Compensation Plan or any other Bonus Plan in which you participated for the
year immediately preceding such Change in Control (the "Bonus Plans") which
are in effect at the time of such Change in Control or a failure by the
Company to continue you as a participant in such Bonus Plans (or equivalent
plans) on a basis which would entitle you to receive under such Bonus Plans
(or equivalent plans) amounts at least equal to the average amounts you
received pursuant to such Bonus Plans for the three years preceding such
Change in Control;
(D) the Company's requiring you to maintain your principal office or
conduct your principal activities anywhere other than at the Company's
principal executive offices in the New York Metropolitan area, including
Somerset County, New Jersey;
(E) the failure by the Company to continue in effect (or to replace
with equivalent plans) the Company's Capital Accumulation Plan or any other
compensation plan, any stock ownership plan, stock purchase plan, stock
option plan, life insurance plan, health and accident plan, financial
services plan, hospital-medical plan, dental plan, or disability plan in
which you are participating or eligible to participate at the time of such
Change in Control, or the taking of any action by the Company which would
adversely affect your participation in or materially reduce your benefits
under any such plans (or equivalent plans) or deprive you of any material
fringe benefit enjoyed or to be enjoyed by you at the time of such Change
in Control;
(F) the failure by the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as contemplated in
Section 7 hereof;
(G) any purported termination of your employment which is not effected
pursuant to a Notice of Termination satisfying the applicable requirements
with respect to such Notice; or
52
Mr. Thomas F. Motamed
November 11, 1998
Page 3
(H) a determination made by you in good faith, whether before or after
the date you are eligible for early retirement under the Company's pension
plan, that as a result of such Change in Control you are not able to
discharge your duties effectively; or
(I) any termination of this Agreement pursuant to Section 6 prior to
the expiration of two years from the occurrence of the Change in Control.
Termination of your employment for "Cause" shall mean termination because
of (A) the willful and continued failure by you substantially to perform your
duties with the Company and its principal subsidiaries (other than any such
failure resulting from your incapacity due to physical or mental illness), after
a demand for substantial performance is delivered to you by the Chief Executive
Officer of the Company, which specifically identifies the manner in which such
executive believes that you have not substantially performed your duties, or (B)
the willful engaging by you in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in or not opposed to the best interests of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a Notice of Termination from the Chief Executive Officer of the Company
after reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board of Directors, and a finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
clauses (A) or (B) of the first sentence of this paragraph and specifying the
particulars thereof in detail.
Termination of your employment for Disability shall mean termination in
accordance with the provisions of the Company's Long Term Disability Plan as in
effect immediately preceding the Change in Control.
3. Notice of Termination. Any purported termination of your employment
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated. No purported termination of your employment by the
Company shall be effective if it is not effected pursuant to a Notice of
Termination satisfying the requirements of this Section 3.
4. Date of Termination. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day period) and (B) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
53
Mr. Thomas F. Motamed
November 11, 1998
Page 4
5. Severance Benefits. Subject to the conditions in Section 2, on
termination of your employment you shall be entitled to the following benefits:
(A) You shall be entitled to an amount (the "Severance Compensation")
equal to 2 times the sum of (i) one year's salary at the annual rate in
effect at the time of the Change in Control and (ii) the average for the
three calendar years preceding such Change in Control of your bonuses under
the Annual Incentive Compensation Plan (1984) (or successor plan),
provided, however, that your Severance Compensation shall not be greater
than the amount you would have received as salary and such bonuses from the
Company had you remained in the employ of the Company from the Date of
Termination until your normal retirement date under the Company's pension
plan (on the assumption that your salary would remain at the same annual
rate as in effect at the time of Change in Control and that your annual
bonuses would be the average for the three calendar years preceding such
Change in Control of such bonuses). The Severance Compensation will be
payable in full on the Date of Termination.
(B) The Company shall also pay to you an amount equal to all legal
fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce or retain
any right or benefit provided by this Agreement);
(C) The Company shall maintain in full force and effect, for your
continued benefit until the earlier of (a) two years after the Date of
Termination or, (b) your commencement of full time employment with a new
employer, all life insurance, hospital-medical, dental, health and
accident, and disability plans in which you were entitled to participate
immediately prior to such Change in Control, provided that your continued
participation is possible under the general terms and provisions of such
plans and programs. In the event that your participation in any such plan
or program is barred for any reason whatsoever, the Company shall arrange
to provide you with benefits substantially similar to those which you are
entitled to receive under such plan or program;
(D) You shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by you as the result of employment by
another employer after the Date of Termination or otherwise.
6. Term of Agreement. This Agreement shall have an initial term of two (2)
years from the date hereof and shall be automatically extended at the expiration
of said two-year period for successive two (2) year periods unless the Company
gives you one year's prior written notice that it is terminating this Agreement
at the expiration of the then current two year period.
54
Mr. Thomas F. Motamed
November 11, 1998
Page 5
7. Successors; Binding Agreement.
(A) The Company will require any purchaser of all or substantially all
of the business or assets of the Company, by agreement in form and
substance satisfactory to you to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such purchase had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business or assets as aforesaid which executes and
delivers the agreement provided for in this Section 7(A) or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law.
(B) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators,
successors, heirs, distributees, divisees and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no such designee, to
your estate.
8. Notices. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the
Chairman of the Company, with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and such officer as may be specifically designated by the
Board of Directors of the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement; provided,
however, that this Agreement shall not supersede or in any way affect the
rights, duties or obligations you may have under any other written agreement
with the Company. This Agreement shall be governed by, and construed in
accordance with, the laws (other than principles of conflicts of laws) of the
State of New York.
10. Validity. The invalidity or unenforceability of any provision of this
Agreement in any respect shall not affect the validity or enforceability of such
provision in any other respect or of any other provision of this Agreement, all
of which shall remain in full force and effect.
55
Mr. Thomas F. Motamed
November 11, 1998
Page 6
If the foregoing correctly sets forth our understanding on the subject
matter hereof, kindly sign and return to the Company the enclosed copy hereof,
which will thereupon become our binding agreement.
Sincerely,
THE CHUBB CORPORATION
By /s/ Dean R. O'Hare
--------------------------------------
Dean R. O'Hare
Chairman
Agreed to this 16th day
of November, 1998
/s/ Thomas F. Motamed
- --------------------------------------
Thomas F. Motamed