Exhibit 10.1

ACE LIMITED

EXECUTIVE SEVERANCE PLAN

As Adopted Effective March 29, 2006

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ACE LIMITED

EXECUTIVE SEVERANCE PLAN

Table of Contents

 

Section 1

  

Definitions

  

2

Section 2

  

Purpose of Plan

  

6

Section 3

  

Eligibility and Participation

  

6

Section 4

  

Administration

  

7

Section 5

  

Separation Due to Death

  

8

Section 6

  

Separation Due to Disability

  

9

Section 7

  

Separation Due to Retirement

  

10

Section 8

  

Separation for Cause or Quit

  

10

Section 9

  

Separation without Cause

  

11

Section 10

  

Change in Control

  

13

Section 11

  

Participant Obligations

  

14

Section 12

  

Claims

  

16

Section 13

  

Taxes

  

17

Section 14

  

Term of Plan; Amendment and Termination of Plan

  

17

Section 15

  

Miscellaneous

  

18

 

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ACE LIMITED

EXECUTIVE SEVERANCE PLAN

 

1.0 DEFINITIONS

The following terms shall have the following meanings unless the context
indicates otherwise:

 

1.1 “Affiliate” of a person or other entity shall mean a person or other entity
that directly or indirectly controls, is controlled by, or is under common
control with the person or other entity specified.

 

1.2 “Beneficiary” shall mean a beneficiary designated in writing by a
Participant to receive any Separation Benefits in accordance with Sections 5
through 10 below. If no beneficiary is designated by the Participant, then the
Participant’s estate shall be deemed to be the Participant’s Beneficiary.

 

1.3 “Board” shall mean the Board of Directors of the Company.

 

1.4 “Bonus” shall mean the 3-year average of the annual bonuses paid or payable
to the Participant with respect to the 3 most recently completed fiscal years
immediately preceding the Separation Date, with such amount increased (if
applicable) to take into account any elective or mandatory deferrals. For a
Participant who has not been employed by the Company with respect to the 3 most
recently completed fiscal years immediately preceding the Separation Date, the
average annual bonus amount shall be calculated based on the number of full
fiscal years of employment. For a Participant who has not been employed long
enough to receive an annual bonus with respect to 1 completed fiscal year, the
annual bonus amount shall be equal to the Participant’s annual target bonus.

 

1.5 “Cause” shall mean – unless otherwise defined in an employment agreement
between the Participant and the Company or Subsidiary – the occurrence of any of
the following:

 

  (1) a conviction of the Participant with respect to a (i) felony or (ii) a
misdemeanor involving moral turpitude; or

 

  (2) willful misconduct or gross negligence by the Participant resulting, in
either case, in harm to the Company or any Subsidiary; or

 

  (3) failure by the Participant to carry out the lawful and reasonable
directions of the Board or the Participant’s immediate supervisor, as the case
may be; or

 

  (4) refusal to cooperate or non-cooperation by the Participant with any
governmental regulatory authority; or

 

  (5) fraud, embezzlement, theft or dishonesty by the Participant against the
Company or any Subsidiary or a material violation by the Participant of a policy
or procedure of the Company, resulting, in any case, in harm to the Company or
any Subsidiary.

 

1.6 “CEO” shall mean the Executive serving as the chief executive officer of the
Company at the relevant time.

 

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1.7 “Change in Control” shall mean the occurrence of any of the following
events:

 

  (1) any “person,” as such term is used in Sections 3(a)(9) and 13(d) of the
Exchange Act, becomes a “beneficial owner,” as such term is used in Rule 13d-3
promulgated under the Exchange Act, of 50% or more of the Voting Stock (as
defined below) of the Company; or

 

  (2) the majority of the Board consists of individuals other than Incumbent
Directors; provided that any person becoming a director subsequent to the
Effective Date whose election or nomination for election was supported by
three-quarters of the directors who then comprised the Incumbent Directors shall
be considered to be an Incumbent Director; or

 

  (3) the Company adopts any plan of liquidation providing for the distribution
of all or substantially all of its assets; or

 

  (4) all or substantially all of the assets or business of the Company is
disposed of pursuant to a merger, consolidation or other transaction (unless the
shareholders of the Company immediately prior to such merger, consolidation or
other transaction beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Voting Stock of the Company, all of the Voting
Stock or other ownership interests of the entity or entities, if any, that
succeed to the business of the Company); or

 

  (5) the Company combines with another company and is the surviving corporation
but, immediately after the combination, the shareholders of the Company
immediately prior to the combination hold, directly or indirectly, 50% or less
of the Voting Stock of the combined company (there being excluded from the
number of shares held by such shareholders, but not from the Voting Stock of the
combined company, any shares received by Affiliates of such other company in
exchange for stock of such other company).

 

1.8 “Change-in-Control Date” shall mean the date that a Change in Control first
occurs.

 

1.9 “Change-in-Control Health Continuation Period” shall mean the period
commencing on the Separation Date and continuing until the end of the applicable
period as shown on Schedule A and which is to be used if the Participant’s
Separation is without Cause or for Good Reason in connection with a Change in
Control.

 

1.10 “Change-in-Control Non-competition Period” shall mean the period commencing
on the date the Executive becomes a Participant and continuing until the end of
the applicable period as shown on Schedule A and which is to be used if the
Participant’s Separation is without Cause or for Good Reason in connection with
a Change in Control.

 

1.11 “Change-in-Control Non-solicitation Period” shall mean the period
commencing on the date the Executive becomes a Participant and continuing until
the end of the applicable period as shown on Schedule A and which is to be used
if the Participant’s Separation is without Cause or for Good Reason in
connection with a Change in Control.

 

1.12 “Change-in-Control Severance Multiple” shall mean the multiplier that shall
be used to determine cash Separation Benefits paid to a Participant as shown on
Schedule A and which is to be used if the Participant’s Separation is without
Cause or for Good Reason in connection with a Change in Control.

 

1.13 “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time.

 

1.14 “Committee” shall mean the Board’s Compensation Committee as constituted
from time to time.

 

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1.15 “Company” shall mean ACE Limited, a Cayman Islands corporation, including
any successor entity or any successor to the assets of the Company that has
assumed the Plan.

 

1.16 “Competitive Activity” shall mean the Participant’s engaging in an activity
– whether as an employee, consultant, principal, member, agent, officer,
director, partner or shareholder (except as a less than 1% shareholder of a
publicly traded company) – that is competitive with any business of the Company
or any Subsidiary conducted by the Company or such Subsidiary at any time during
the Standard Non-competition Period or the Change-in-Control Non-competition
Period (as applicable); provided, however, that the Participant may be employed
by or otherwise associated with:

(i) a business of which a subsidiary, division, segment, unit, etc. is in
competition with the Company or any Subsidiary but as to which such subsidiary,
division, segment, unit, etc. the Participant has absolutely no direct or
indirect responsibilities or involvement, or

(ii) a company where the Competitive Activity is:

 

  (A) from the perspective of such company, de minimis with respect to the
business of such company and its affiliates, and

 

  (B) from the perspective of the Company or any Subsidiary, not in material
competition with the Company or any Subsidiary.

 

1.17 “Disability” shall mean a disability as determined in accordance with the
Company’s (or the applicable Subsidiary’s) long-term disability plan or program
in effect on the date that the disability first occurs, or if no such plan or
program is in effect on the date that the disability first occurs, then a
disability as defined under Code Section 22(e)(3).

 

1.18 “Effective Date” shall mean the date the Board adopts the Plan.

 

1.19 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

1.20 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.

 

1.21 “Executive” shall mean a regular full-time employee of the Company or any
Subsidiary with executive, managerial or similar duties and responsibilities.

 

1.22 “Good Reason” shall mean – unless otherwise defined in an in-force
employment agreement between the Participant and the Company or Subsidiary – the
occurrence of any of the following within the 60-day period preceding a
Separation Date without the Participant’s prior written consent:

 

  (1) a material adverse diminution of the Participant’s titles, authority,
duties or responsibilities, or the assignment to the Participant of titles,
authority, duties or responsibilities that are materially inconsistent with his
or her titles, authority, duties and/or responsibilities in a manner materially
adverse to the Participant; or

 

  (2) a reduction in the Participant’s base salary or annual bonus opportunity
(other than any reduction applicable to all similarly situated Executives
generally); or

 

  (3) a failure of the Company to obtain the assumption in writing of its
obligations under the Plan by any successor to all or substantially all of the
assets of the Company within 45 days after a merger, consolidation, sale or
similar transaction that qualifies as a Change in Control.

 

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1.23 “Incumbent Directors” shall mean the members of the Board as of the
Effective Date.

 

1.24 “Participant” shall mean an Executive who has been designated to
participate in the Plan in accordance with Section 3 below and who is
participating in the Plan on the Separation Date.

 

1.25 “Plan” shall mean the ACE Limited Executive Severance Plan.

 

1.26 “Quit” shall mean termination of a Participant’s employment by the
Participant other than due to death, Disability or Retirement.

 

1.27 “Retirement” shall mean that the Participant has retired and is or will be
receiving benefits under the Company’s primary qualified pension plan.

 

1.28 “Salary” shall mean the highest annual base salary paid to the Participant
during the 12-month period immediately preceding the earlier of (i) the
Separation Date or (ii) the Change-in-Control Date, with such amount increased
(if applicable) to take into account any elective or mandatory deferrals.

 

1.29 “Separated Participant” shall mean a Participant whose employment with the
Company and/or any of its Subsidiaries has been terminated.

 

1.30 “Separation” shall mean a termination of the Participant’s employment:

 

  (1) due to the death of the Participant; or

 

  (2) by the Company or by the Participant due to Disability; or

 

  (3) by the Participant as a Retirement; or

 

  (4) by the Company for Cause or by the Participant without Good Reason; or

 

  (5) by the Company without Cause or by the Participant for Good Reason.

 

1.31 “Separation Benefits” shall mean the compensation and benefits payable or
provided to a Separated Participant under the Plan.

 

1.32 “Separation Date” shall mean the date a Participant’s employment with the
Company and/or a Subsidiary is terminated.

 

1.33 “Standard Health Continuation Period” shall mean the period commencing on
the Separation Date and continuing until the end of the applicable period as
shown on Schedule A and which is to be used if the Participant’s Separation is
without Cause and is NOT in connection with a Change in Control.

 

1.34 “Standard Non-competition Period” shall mean the period commencing on the
date the Executive becomes a Participant and continuing until the end of the
applicable period as shown on Schedule A and which is to be used if the
Participant’s Separation is without Cause and is NOT in connection with a Change
in Control.

 

1.35 “Standard Non-solicitation Period” shall mean the period commencing on the
date the Executive becomes a Participant and continuing until the end of the
applicable period as shown on Schedule A and which is to be used if the
Participant’s Separation is without Cause and is NOT in connection with a Change
in Control.

 

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1.36 “Standard Severance Multiple” shall mean the multiplier that shall be used
to determine cash Separation Benefits paid to a Participant as shown on Schedule
A and which is to be used if the Participant’s Separation is without Cause and
is NOT in connection with a Change in Control.

 

1.37 “Standard Vesting Continuation Period” shall mean the period over which
equity-based compensation will continue to vest/become exercisable commencing on
the Separation Date and continuing until the end of the applicable period as
shown on Schedule A and which is to be used if the Participant’s Separation is
without Cause and is NOT in connection with a Change in Control.

 

1.38 “Subsidiary” shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the Voting Stock or any other business
entity in which the Company directly or indirectly has an ownership interest of
more than 50 percent.

 

1.39 “Voting Stock” shall mean capital stock of any class or classes having
general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.

 

2.0 PURPOSE OF PLAN

 

2.1 Purpose. The purpose of the Plan is:

 

  (a) to provide the terms and conditions relating to an Executive’s separation
from service from the Company and/or any of its Subsidiaries; and

 

  (b) to retain certain highly qualified individuals as Executives; and

 

  (c) to maintain the focus of such Executives on the business of the Company
and to mitigate the distractions caused by the possibility that the Executive’s
employment may be terminated or that the Company may be the target of an
acquisition.

The Plan is intended to qualify as an “employee benefit plan” (as such term is
defined under ERISA Section 3(3)) and, accordingly, the Plan is intended to be
subject to ERISA. In addition, the Plan is intended to qualify as a “top-hat”
plan (as such term is commonly used under the ERISA regulations promulgated by
the U.S. Department of Labor) since it provides benefits only to a select group
of management or highly compensated employees of the Company.

The Plan is NOT intended to provide “nonqualified deferred compensation” as such
term is defined and used under Code Section 409A; accordingly, the Plan is NOT
intended to be subject to Code Section 409A.

 

3.0 ELIGIBILITY AND PARTICIPATION

 

3.1 Eligibility. All Executives of the Company shall be eligible to participate
in the Plan.

 

3.2 Participation. Participants shall consist of the CEO and those Executives
designated by the CEO in his or her sole discretion to participate in the Plan;
provided, however, that the CEO shall not designate an Executive as a new
Participant following a Change-in-Control Date. An Executive who becomes a
Participant shall remain a Participant until the termination of the Plan in
accordance with Section 14 below.

 

3.3 Committee Approval; Participant Agreement. Notwithstanding anything
contained in the Plan to the contrary, all Participants designated by the CEO in
accordance with Section 3.2 above shall not become Participants until such
designation has been approved in writing by the Committee and such Executive has
agreed in writing to be a Participant.

 

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4.0 ADMINISTRATION

 

4.1 Responsibility. The Committee shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in accordance
with its terms.

 

4.2 Authority of the Committee. The Committee shall have the maximum
discretionary authority permitted by law that may be necessary to enable it to
discharge its responsibilities with respect to the Plan, including but not
limited to the following:

 

  (a) to determine eligibility for participation in the Plan;

 

  (b) to approve Participants designated by the CEO;

 

  (c) to determine or calculate a Participant’s Separation Benefits;

 

  (d) to correct any defect, supply any omission, or reconcile any inconsistency
in the Plan in such manner and to such extent as it shall deem appropriate in
its sole discretion to carry the same into effect;

 

  (e) to issue administrative guidelines as an aid to administer the Plan and
make changes in such guidelines as it from time to time deems proper;

 

  (f) to make rules for carrying out and administering the Plan and make changes
in such rules as it from time to time deems proper;

 

  (g) to the extent permitted under the Plan, grant waivers of Plan terms,
conditions, restrictions, and limitations;

 

  (h) to make reasonable determinations as to a Participant’s eligibility for
benefits under the Plan, including determinations as to Cause and Good Reason;
and

 

  (i) to take any and all other actions it deems necessary or advisable for the
proper operation or administration of the Plan.

 

4.3 Action by the Committee. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a meeting, by a
writing or writings signed by all of the members of the Committee. In addition,
the Committee may authorize any one or more of its members to execute and
deliver documents on behalf of the Committee.

 

4.4 Delegation of Authority. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may deem
advisable; provided, however, that any such delegation shall be in writing. In
addition, the Committee, or any person to whom it has delegated duties as
aforesaid, may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company, or the Subsidiary whose employees have
benefited from the Plan, as determined by the Committee.

 

4.5 Determinations and Interpretations by the Committee. All determinations and
interpretations made by the Committee shall be binding and conclusive to the
maximum extent permitted by law on all Participants and their heirs, successors,
and legal representatives.

 

4.6 Information. The Company shall furnish to the Committee in writing all
information the Committee may deem appropriate for the exercise of its powers
and duties in the administration of the Plan.

 

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Such information may include, but shall not be limited to, the full names of all
Participants, their earnings and their dates of birth, employment, retirement or
death. Such information shall be conclusive for all purposes of the Plan, and
the Committee shall be entitled to rely thereon without any investigation
thereof.

 

4.7 Liability. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act hereunder,
except in circumstances involving his or her bad faith, gross negligence or
willful misconduct, or for any act or failure to act hereunder by any other
member or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated.

 

4.8 Indemnification. The Company shall indemnify members of the Committee and
any agent of the Committee who is an employee of the Company, against any and
all liabilities or expenses to which they may be subjected by reason of any act
or failure to act with respect to their duties on behalf of the Plan, except in
circumstances involving such person’s bad faith, gross negligence or willful
misconduct.

 

5.0 SEPARATION DUE TO DEATH

 

5.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date of the Participant’s death, and
the Separated Participant shall be entitled to receive the Separation Benefits
provided under this Section 5.

 

5.2 Accrued Obligations. Unless otherwise provided in any written plan, program,
agreement or arrangement between the Company and a Participant, the Company
shall pay to the Separated Participant during the 30-day period immediately
following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus earned but unpaid bonus for prior
years’ service, plus unreimbursed expenses, plus any and all other Company
obligations that are accrued and due and owing to the Separated Participant.

 

5.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall have no obligation to pay to the Separated Participant any cash
Separation Benefits.

 

5.4 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
any and all long-term incentive arrangements shall vest, be exercisable and/or
become payable in accordance with the terms and conditions of the long-term
incentive compensation plan and award agreement.

 

5.5 Pension-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, all
benefits under all pension-benefit arrangements, including deferred compensation
arrangements, shall be paid in accordance with the terms and conditions of the
applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

5.6 Welfare-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, the
dependents of the deceased Separated Participant shall be entitled to receive
continued health coverage in accordance with rules and provisions under the
Consolidated Omnibus Budget Reconciliation Act of 1985. Unless otherwise
provided for in any written agreement between the Company and a Separated
Participant, or as otherwise agreed to by the Committee in its sole discretion,
all other welfare benefits shall cease as of the Separation Date.

 

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5.7 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, all Separation Benefits under this Section 5 shall be paid to the
Separated Participant’s Beneficiary.

 

5.8 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 5.

 

6.0 SEPARATION DUE TO DISABILITY

 

6.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date the Participant or the Company
(and/or any of its Subsidiaries) terminates such employment due to a Disability,
and the Separated Participant shall be entitled to receive the Separation
Benefits provided under this Section 6.

 

6.2 Accrued Obligations. Unless otherwise provided in any written plan, program,
agreement or arrangement between the Company and a Participant, the Company
shall pay to the Separated Participant during the 30-day period immediately
following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus earned but unpaid bonus for prior
years’ service, plus unreimbursed expenses, plus any and all other Company
obligations that are accrued and due and owing to the Separated Participant.

 

6.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall have no obligation to pay to the Separated Participant any cash
Separation Benefits.

 

6.4 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
any and all long-term incentive arrangements shall vest, be exercisable and/or
become payable in accordance with the terms and conditions of the long-term
incentive compensation plan and award agreement.

 

6.5 Pension-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, all
benefits under all pension-benefit arrangements, including deferred compensation
arrangements, shall be paid in accordance with the terms and conditions of the
applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

6.6 Welfare-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, the
Separated Participant and his or her dependents shall be entitled to receive
continued health coverage in accordance with rules and provisions under the
Consolidated Omnibus Budget Reconciliation Act of 1985. Unless otherwise
provided for in any written plan, program, agreement or arrangement between the
Company and a Separated Participant, or as otherwise agreed to by the Committee
in its sole discretion, all other welfare benefits shall cease as of the
Separation Date due to Disability.

 

6.7 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, in the event of the Separated Participant’s death, all Separation
Benefits that would have been paid to the Separated Participant under this
Section 6 but for his or her death, shall be paid to the Separated Participant’s
Beneficiary.

 

6.8 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 6.

 

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7.0 SEPARATION DUE TO RETIREMENT

 

7.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date the Participant terminates his
or her employment with the Company and/or any of its Subsidiaries due to a
Retirement, and the Separated Participant shall be entitled to receive the
Separation Benefits provided under this Section 7.

 

7.2 Accrued Obligations. Unless otherwise provided in any written plan, program,
agreement or arrangement between the Company and the Participant, the Company
shall pay to the Separated Participant during the 30-day period immediately
following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus earned but unpaid bonus for prior
years’ service, plus un-reimbursed expenses, plus any and all other Company
obligations that are accrued and due and owing to the Separated Participant.

 

7.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall have no obligation to pay to the Separated Participant any cash
Separation Benefits.

 

7.4 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
any and all long-term incentive arrangements shall vest, be exercisable and/or
become payable in accordance with the terms and conditions of the long-term
incentive compensation plan and award agreement.

 

7.5 Pension-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, all
benefits under all pension-benefit arrangements, including deferred compensation
arrangements, shall be paid in accordance with the terms and conditions of the
applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

7.6 Welfare-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, the
Separated Participant and his or her dependents shall be entitled to receive
continued health coverage in accordance with rules and provisions under the
Consolidated Omnibus Budget Reconciliation Act of 1985. Unless otherwise
provided for in any written plan, program, agreement or arrangement between the
Company and a Separated Participant, or as otherwise agreed to by the Committee
in its sole discretion, all other welfare benefits shall cease as of the
Separation Date.

 

7.7 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, in the event of the Separated Participant’s death, all Separation
Benefits that would have been paid to the Separated Participant under this
Section 7 but for his or her death, shall be paid to the Separated Participant’s
Beneficiary.

 

7.8 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 7.

 

8.0 SEPARATION FOR CAUSE OR QUIT

 

8.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date that:

 

  (a) the Company and/or any of its Subsidiaries terminate(s) the Participant’s
employment for Cause; or

 

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  (b) the Participant Quits;

and the Separated Participant shall be entitled to receive the Separation
Benefits provided under this Section 8. If the Participant’s Quits, then such
Participant shall notify the Company in writing at least 30 days prior to the
Separation Date.

 

8.2 Accrued Obligations. Unless otherwise provided in any written plan, program,
agreement or arrangement between the Company and the Participant, the Company
shall pay to the Separated Participant during the 30-day period immediately
following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus unreimbursed expenses, plus any and
all other Company obligations that are accrued and due and owing to the
Separated Participant.

 

8.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall have no obligation to pay to the Separated Participant any cash
Separation Benefits.

 

8.4 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
any and all long-term incentive arrangements shall immediately be forfeited as
of the Separation Date.

 

8.5 Pension-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, all
benefits under all pension-benefit arrangements, including deferred compensation
arrangements, shall be immediately forfeited by the Separated Participant as of
the Separation Date.

 

8.6 Welfare-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, the
Separated Participant and his or her dependents shall be entitled to receive
continued health coverage in accordance with rules and provisions under the
Consolidated Omnibus Budget Reconciliation Act of 1985. Unless otherwise
provided for in any written plan, program, agreement or arrangement between the
Company and a Separated Participant, or as otherwise agreed to by the Committee
in its sole discretion, all other welfare benefits shall cease as of the
Separation Date.

 

8.7 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, in the event of the Separated Participant’s death, all Separation
Benefits that would have been paid to the Separated Participant under this
Section 8 but for his or her death, shall be paid to the Separated Participant’s
Beneficiary.

 

8.8 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 8.

 

9.0 SEPARATION WITHOUT CAUSE

 

9.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date that the Company and/or any of
its Subsidiaries terminate(s) the Participant’s employment with the Company
and/or any of its Subsidiaries without Cause (other than due to death, a
Disability or a Retirement); and the Separated Participant shall be entitled to
receive the Separation Benefits provided under this Section 9.

 

11

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9.2 Accrued Obligations. Unless otherwise provided in any written plan, program,
agreement or arrangement between the Company and the Participant, the Company
shall pay to the Separated Participant during the 30-day period immediately
following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus earned but unpaid bonus for prior
years’ service, plus unreimbursed expenses, plus any and all other Company
obligations that are accrued and due and owing to the Separated Participant.

 

9.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall pay to the Separated Participant during the 30-day period
immediately following the Separation Date, a lump sum cash payment equal to the
sum of:

 

  (a) a pro rata annual bonus with respect to the year in which the Separation
Date occurs, plus

 

  (b) the product of (x) the Standard Severance Multiple times (y) the sum of
the Separated Participant’s (A) Salary plus (B) Bonus.

 

9.4 Equity-Based Compensation. Notwithstanding anything contained in any written
plan, program, agreement or arrangement between the Company and the Participant:

 

  (a) any and all unvested shares of restricted stock or restricted stock units
(whether time-based or performance-based) held by the Participant on the
Separation Date shall continue to vest over the Standard Vesting Continuation
Period, and

 

  (b) any and all unvested stock options (whether incentive stock options or
nonqualified stock options, whether time-based or performance-based) shall
continue to vest/become exercisable over the Standard Vesting Continuation
Period, and any and all stock options held by the Participant on the Separation
Date (including those stock options that vest/become exercisable under this
Section 9.4) shall remain exercisable until the earlier of (i) the 3rd
anniversary of the Separation Date or (ii) the stock option’s originally
scheduled expiration date.

 

9.5 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
all long-term incentive arrangements (other than equity-based compensation)
shall forfeit, vest and/or be paid in accordance with the terms and conditions
of the applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

9.6 Pension-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, all
benefits under all pension-benefit arrangements, including deferred compensation
arrangements, shall be paid in accordance with the terms and conditions of the
applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

9.7 Welfare-Benefit Arrangements. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and a Participant, the
Company shall provide a Separated Participant with continued health coverage
during the Standard Health Continuation Period. Unless otherwise provided for in
any written plan, program, agreement or arrangement between the Company and a
Separated Participant, or as otherwise agreed to by the Committee in its sole
discretion, all other welfare benefits shall cease as of the Separation Date.
Following the end of the applicable Standard Heath Continuation Period, the
Separated Participant and his or her dependents shall be entitled to receive
continued health coverage in accordance with rules and provisions under the
Consolidated Omnibus Budget Reconciliation Act of 1985.

 

12

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9.8 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, in the event of the Separated Participant’s death, all Separation
Benefits that would have been paid to the Separated Participant under this
Section 9 but for his or her death, shall be paid to the Separated Participant’s
Beneficiary.

 

9.9 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 9.

 

10.0 CHANGE IN CONTROL

 

10.1 Separation Event. The Participant’s employment with the Company and/or any
of its Subsidiaries shall terminate on the date that the Company and/or any of
its Subsidiaries terminate(s) the Participant’s employment with the Company
and/or any of its Subsidiaries without Cause (other than due to death, a
Disability or a Retirement) or on the date that the Participant terminates his
or her employment for Good Reason during the period commencing on the 180th day
immediately preceding a Change-in-Control Date and ending on the 2nd anniversary
of such Change-in-Control Date; and the Separated Participant shall be entitled
to receive the Separation Benefits provided under this Section 10.

 

10.2 Accrued Obligations. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall pay to the Separated Participant during the 30-day period
immediately following the Separation Date, a lump sum cash payment equal to the
Participant’s earned but unpaid Salary, plus earned but unpaid bonus for prior
years’ service, plus unreimbursed expenses, plus any and all other Company
obligations that are accrued and due and owing to the Separated Participant.

 

10.3 Cash Separation Benefits. Unless otherwise provided in any written plan,
program, agreement or arrangement between the Company and the Participant, the
Company shall pay to the Separated Participant during the 30-day period
immediately following the Separation Date, a lump sum cash payment equal to the
sum of:

 

  (a) a pro rata annual bonus with respect to the year in which the Separation
Date occurs, plus

 

  (b) the product of (x) the Change-in-Control Severance Multiple times (y) the
sum of the Separated Participant’s (A) Salary plus (B) Bonus.

 

10.4 Equity-Based Compensation. Notwithstanding anything contained in any
written plan, program, agreement or arrangement between the Company and the
Participant:

 

  (a) any and all unvested shares of restricted stock or restricted stock units
(whether time-based or performance-based) held by the Participant (or, if the
Separation Date had occurred within the 180-day period immediately preceding the
Change-in-Control Date, held by the Separated Participant) on the
Change-in-Control Date shall immediately vest on the Change-in-Control Date, and

 

  (b) any and all unvested stock options (whether incentive stock options or
nonqualified stock options, whether time-based or performance-based) held by the
Participant (or, if the Separation Date had occurred within the 180-day period
immediately preceding the Change-in-Control Date, held by the Separated
Participant) on the Change-in-Control Date shall immediately vest/become
exercisable on the Change-in-Control Date, and any and all

 

13

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stock options held by the Participant on the Separation Date (including those
stock options that vest/become exercisable under this Section 10.4) shall remain
exercisable until the earlier of (i) the 3rd anniversary of the Separation Date
or (ii) the stock option’s originally scheduled expiration date.

 

10.5 Long-Term Incentive Compensation. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
all long-term incentive arrangements (other than equity-based compensation)
shall forfeit, vest and/or be paid in accordance with the terms and conditions
of the applicable plan, program, agreement or arrangement. Notwithstanding the
preceding sentence, the Committee may accelerate such payment, in its sole
discretion, after having received advice from the Company’s tax counsel that
such acceleration would not violate Code Section 409A or any other provision of
the Code.

 

10.6 Pension-Benefit Arrangements. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
all benefits under all pension-benefit arrangements, including deferred
compensation arrangements, shall be paid in accordance with the terms and
conditions of the applicable plan, program, agreement or arrangement.
Notwithstanding the preceding sentence, the Committee may accelerate such
payment, in its sole discretion, after having received advice from the Company’s
tax counsel that such acceleration would not violate Code Section 409A or any
other provision of the Code.

 

10.7 Welfare-Benefit Arrangements. Unless otherwise provided in any written
plan, program, agreement or arrangement between the Company and a Participant,
the Company shall provide a Separated Participant with continued health coverage
during the Change-in-Control Health Continuation Period. Unless otherwise
provided for in any written plan, program, agreement or arrangement between the
Company and a Separated Participant, or as otherwise agreed to by the Committee
in its sole discretion, all other welfare benefits shall cease as of the
Separation Date. Following the end of the applicable Change-in-Control Heath
Continuation Period, the Separated Participant and his or her dependents shall
be entitled to receive continued health coverage in accordance with rules and
provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985.

 

10.8 Payment of Separation Benefits to Beneficiaries. Unless otherwise provided
in any written plan, program, agreement or arrangement between the Company and a
Participant, in the event of the Separated Participant’s death, all Separation
Benefits that would have been paid to the Separated Participant under this
Section 10 but for his or her death, shall be paid to the Separated
Participant’s Beneficiary.

 

10.9 Other Benefits. Notwithstanding anything contained in the Plan to the
contrary, the Company or the Committee may, in its sole discretion, provide
benefits in addition to the benefits described under this Section 10.

 

10.10 Right of Company to Cure. If the Separation is by the Participant for Good
Reason under this Section 10, then the Company and/or any of its Subsidiaries
shall be given a reasonable period of time to cure the event that constitutes
Good Reason (if curable) before the Separation Date.

 

11.0 PARTICIPANT OBLIGATIONS

 

11.1 Waiver and Release. As a condition precedent for receiving the Separation
Benefits provided under Section 9 or Section 10 above, a Separated Participant
shall execute a waiver and release substantially in the form attached to the
Plan as Exhibit A.

 

11.2 Non-competition. If a Participant’s Separation is (i) without Cause or
(ii) without Cause or for Good Reason in connection with a Change in Control,
then during the Standard Non-competition Period or the Change-in-Control
Non-competition Period, as applicable, a Separated Participant shall not at any
time, directly or indirectly, engage in a Competitive Activity.

 

14

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11.3 Non-solicitation. If a Participant’s Separation is (i) without Cause or
(ii) without Cause or for Good Reason in connection with a Change in Control,
then during the Standard Non-solicitation Period or Change-in-Control
Non-solicitation Period, as applicable, a Separated Participant shall not at any
time, directly or indirectly, whether on behalf of himself or herself or any
other person or entity (x) solicit any client and/or customer of the Company or
any Subsidiary with respect to a Competitive Activity or (y) solicit or employ
any employee of the Company or any Subsidiary for the purpose of causing such
employee to terminate his or her employment with the Company or such Subsidiary.

 

11.4 Confidentiality. At all times prior to and following the Separation Date, a
Participant shall not disclose to anyone or make use of any trade secret or
proprietary or confidential information of the Company, including such trade
secret or proprietary or confidential information of any customer or client or
other entity to which the Company owes an obligation not to disclose such
information, which he or she acquires during his or her employment with the
Company, including but not limited to records kept in the ordinary course of
business, except:

 

  (a) as such disclosure or use may be required or appropriate in connection
with his or her work as an employee of the Company;

 

  (b) when required to do so by a court of law, by any governmental agency
having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him or her to divulge, disclose or make accessible such
information;

 

  (c) as to such confidential information that becomes generally known to the
public or trade without his or her violation of this Section 11.4; or

 

  (d) to the Participant’s spouse and/or his or her personal tax and financial
advisors as reasonably necessary or appropriate to advance the Participant’s
tax, financial and other personal planning (each an “Exempt Person”), provided,
however, that any disclosure or use of any trade secret or proprietary or
confidential information of the Company by an Exempt Person shall be deemed to
be a breach of this Section 11.4 by the Participant.

 

11.5 Non-Disparagement. At all times prior to and following the Separation Date,
a Participant shall not make any statements or express any views that disparage
the business reputation or goodwill of the Company and/or any of its
Subsidiaries.

 

11.6 Resignation as Officer and Director. On or before the Separation Date, the
Separated Participant shall submit to the Company in writing his or her
resignation (as applicable) as (i) an officer of the Company and of all
Subsidiaries and (ii) a member of the Board and of the board of directors of all
Subsidiaries.

 

11.7 Return of Company Property. Immediately following the Separation Date, a
Participant shall immediately return all Company property in his or her
possession, including but not limited to all computer equipment (hardware and
software), telephones, facsimile machines, palm pilots and other communication
devices, credit cards, office keys, security access cards, badges,
identification cards and all copies (including drafts) of any documentation or
information (however stored) relating to the business of the Company, its
customers and clients or its prospective customers and clients.

 

11.8 Cooperation. Following the Separation Date, a Participant shall give his or
her assistance and cooperation willingly, upon reasonable advance notice with
due consideration for his or her other business or personal commitments, in any
matter relating to his or her position with the Company, or his or her expertise
or experience as the Company may reasonably request, including his or

 

15

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her attendance and truthful testimony where deemed appropriate by the Company,
with respect to any investigation or the Company’s defense or prosecution of any
existing or future claims or litigations or other proceeding relating to matters
in which he or she was involved or potentially had knowledge by virtue of his or
her employment with the Company. In no event shall his or her cooperation
materially interfere with his or her services for a subsequent employer or other
similar service recipient. The Company agrees that (i) it shall promptly
reimburse the Separated Participant for his or her reasonable and documented
expenses in connection with his or her rendering assistance and/or cooperation
under this Section 11.8, upon his or her presentation of documentation for such
expenses and (ii) the Separated Participant shall be reasonably compensated for
any continued material services as required under this Section 11.8.

 

11.9 Enforcement of Section 11. If a Separated Participant materially violates
any provision of this Section 11, he or she shall immediately forfeit any right,
title and interest to any Separation Benefits that have not yet been paid or
provided and shall be required to repay to the Company a cash amount equal to
the value of the Separation Benefits that he or she has already received.

 

11.10 Enforcement of Non-competition, Non-solicitation and Confidentiality
Covenants. In addition to Section 11.9 above, if a Separated Participant
violates or threatens to violate Section 11.2, Section 11.3, and/or Section 11.4
above, the Company shall not have an adequate remedy at law. Accordingly, the
Company shall be entitled to such equitable and injunctive relief as may be
available to restrain the Separated Participant and any business, firm,
partnership, individual, corporation or entity participating in the breach or
threatened breach from the violation of the provisions of Section 11.2,
Section 11.3, and/or Section 11.4 above. Nothing in the Plan shall be construed
as prohibiting the Company from pursuing any other remedies available at law or
in equity for breach or threatened breach of Section 11.2, Section 11.3, and/or
Section 11.4 above, including the recovery of damages.

 

12.0 CLAIMS

 

12.1 Claims Procedure. If any Participant or Beneficiary, or his or her legal
representative, has a claim for benefits under the Plan which is not being paid,
such claimant may file a written claim with the Committee setting forth the
amount and nature of the claim, supporting facts, and the claimant’s address.
Written notice of the disposition of a claim by the Committee shall be furnished
to the claimant within 90 days after the claim is filed. In the event of special
circumstances, the Committee may extend the period for determination for up to
an additional 90 days, in which case it shall so advise the claimant. If the
claim is denied, the reasons for the denial shall be specifically set forth in
writing, pertinent provisions of the Plan shall be cited, including an
explanation of the Plan’s claim review procedure, and, if the claim is
perfectible, an explanation as to how the claimant can perfect the claim shall
be provided.

 

12.2 Claims Review Procedure. If a claimant whose claim has been denied wishes
further consideration of his or her claim, he or she may request the Committee
to review his or her claim in a written statement of the claimant’s position
filed with the Committee no later than 60 days after receipt of the written
notification provided for in Section 12.1 above. The Committee shall fully and
fairly review the matter and shall promptly advise the claimant, in writing, of
its decision within the next 60 days. Due to special circumstances, the
Committee may extend the period for determination for up to an additional 60
days.

 

12.3 Dispute Resolution. Any disputes arising under or in connection with the
Plan (other than disputes arising under or in connection with Sections 11.2,
11.3 and/or 11.4 above) shall be resolved by binding arbitration, to be held in
Bermuda or in any other location mutually agreed to by the Company and the
Participant in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.

 

16

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12.4 Reimbursement of Expenses. If there is any dispute between the Company and
a Participant with respect to a claim under the Plan, the Company shall
reimburse such Participant for all reasonable fees, costs and expenses incurred
by such Participant with respect to such disputed claim; provided, however, that
(i) such Participant is the prevailing party with respect to such disputed claim
or (ii) the disputed claim is settled in the Participant’s favor.

 

13.0 TAXES

 

13.1 Withholding Taxes. The Company shall be entitled to withhold from any and
all payments made to a Participant under the Plan all federal, state, local
and/or other taxes or imposts which the Company determines are required to be so
withheld from such payments or by reason of any other payments made to or on
behalf of the Participant or for his or her benefit hereunder.

 

13.2 Golden Parachute Excise Tax Reduction. If a Participant becomes subject to
the excise tax imposed by Code Section 4999, then the Company and the
Participant agree that the aggregate “parachute payment” (as such term is used
under Code Section 280G) shall be reduced to 299.99% of the Participant’s “base
amount” (as such term is used under Code Section 280G) if such reduction would
result in the Participant retaining on an after-tax basis an amount equal to or
greater than the amount that the Participant would have retained on an after-tax
basis had such reduction not occurred. If such reduction occurs under this
Section 13.2, the Participant may select in his or her own discretion what
portion of the parachute payments will be so reduced.

 

13.3 Code Section 409A. The Plan is not intended to be subject to Code
Section 409A. Notwithstanding anything contained in the Plan to the contrary,
the Committee shall have full authority to operate the Plan and to override any
provision in the Plan in order for the Plan to be fully compliant – both in form
and in operation – with Code Section 409A.

 

13.4 No Guarantee of Tax Consequences. No person connected with the Plan in any
capacity, including, but not limited to, the Company and any Subsidiary and
their directors, officers, agents and employees makes any representation,
commitment, or guarantee that any tax treatment, including, but not limited to,
federal, state and local income, estate and gift tax treatment, will be
applicable with respect to amounts payable or provided under the Plan, or paid
to or for the benefit of a Participant under the Plan, or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.

 

14.0 TERM OF PLAN; AMENDMENT AND TERMINATION OF PLAN

 

14.1 Term of Plan. The Plan shall be effective as of the Effective Date and
shall remain in effect until the Board terminates the Plan.

 

14.2 Amendment of Plan. The Plan may be amended by the Board at any time with or
without prior notice; provided, however, that the Plan shall not be amended
during the period commencing on the 180th day immediately preceding a
Change-in-Control Date and ending on the 2nd anniversary of such
Change-in-Control Date without the written consent of each Participant.

 

14.3 Termination of Plan. The Plan may be terminated or suspended by the Board
at any time with or without prior notice; provided, however, that the Plan shall
not be terminated or suspended during the period commencing on the 180th day
immediately preceding a Change-in-Control Date and ending on the 2nd anniversary
of such Change-in-Control Date without the written consent of each Participant.

 

14.4 No Adverse Effect. If the Plan is amended, terminated, or suspended in
accordance with Sections 14.2 or 14.3 above, such action shall not adversely
affect the benefits of anyone who was a Participant (including a Separated
Participant) prior to the date of amendment, termination or suspension.

 

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15.0 MISCELLANEOUS

 

15.1 No Mitigation. A Separated Participant shall be under no obligation to seek
other employment following the Separation Date and there shall be no offset
against amounts due the Separated Participant under the Plan on account of any
compensation attributable to any subsequent employment.

 

15.2 Offset. Separation Benefits shall be reduced by any payment or benefit made
or provided by the Company or any Subsidiary to the Participant pursuant to
(i) any severance plan, program, policy or arrangement of the Company or any
Subsidiary not otherwise referred to in the Plan, (ii) the
termination-of-employment provisions of any employment agreement between the
Company or any Subsidiary and the Participant, and (iii) any federal, state or
local statute, rule, regulation or ordinance.

 

15.3 No Right, Title, or Interest in Company Assets. Participants shall have no
right, title, or interest whatsoever in or to any assets of the Company or any
investments which the Company may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, Beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company.
Subject to this Section 15.3, all payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts; provided, however, that the Company may establish a grantor trust to
provide for the payment of the benefits under the Plan of which the Company is
the grantor within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Code and under which the assets held by such trust will be
subject to the claims of the Company’s general creditors under federal and state
law in the event of the Company’s insolvency.

 

15.4 No Right to Continued Employment. The Participant’s rights, if any, to
continue to serve the Company as an employee shall not be enlarged or otherwise
affected by his or her designation as a Participant under the Plan, and the
Company or the applicable Subsidiary reserves the right to terminate the
employment of any employee at any time. The adoption of the Plan shall not be
deemed to give any employee, or any other individual any right to be selected as
a Participant or to continued employment with the Company or any Subsidiary.

 

15.5 Indemnification. During the Participation Period and – if the Participant
becomes a Separated Participant – following the Separation Date, the Company
shall indemnify the Participant or the Separated Participant, as the case may
be, and hold him or her harmless, to the fullest extent permitted by, and
subject to the limitations of Bermuda law, for all claims against him or her by
third parties by reason of his or her employment with the Company and/or any of
its Subsidiaries, including without limitation, all costs, charges and expenses
(including attorneys’ fees) whatsoever incurred or sustained by the Participant
or Separated Participant, as the case may be, in connection with any action,
suit or proceeding (other than any action, suit or proceeding brought by or in
the name of the Company against the Participant or Separated Participant, as the
case may be) to which he or she may be made a party by reason of being or having
been a director, officer or employee of the Company and/or any of its
Subsidiaries or his or her serving or having served any other enterprise as a
director, officer or employee at the request of the Company.

 

15.6 Other Rights. The Plan shall not affect or impair the rights or obligations
of the Company or a Participant under any other written plan, contract,
arrangement, or pension, profit sharing or other compensation plan.

 

18

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15.7 Governing Law. The Plan shall be governed by and construed in accordance
with the laws of Bermuda without reference to principles of conflict of laws,
except as superseded by ERISA and other applicable federal law.

 

15.8 Severability. If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of the
Plan, with the exception of such invalid or unenforceable provision, shall not
be affected thereby and shall continue in effect and application to its fullest
extent.

 

15.9 Incapacity. If the Committee determines that a Participant or a Beneficiary
is unable to care for his or her affairs because of illness or accident or
because he or she is a minor, any benefit due the Participant or Beneficiary may
be paid to the Participant’s spouse or to any other person deemed by the
Committee to have incurred expense for such Participant (including a duly
appointed guardian, committee or other legal representative), and any such
payment shall be a complete discharge of the Company’s obligation hereunder.

 

15.10 Transferability of Rights. The Company shall have the unrestricted right
to transfer its obligations under the Plan with respect to one or more
Participants to any person, including, but not limited to, any purchaser of all
or any part of the Company’s business. No Participant or Beneficiary shall have
any right to commute, encumber, transfer or otherwise dispose of or alienate any
present or future right or expectancy which the Participant or Beneficiary may
have at any time to receive payments of benefits hereunder, which benefits and
the right thereto are expressly declared to be non-assignable and
nontransferable, except to the extent required by law. Any attempt to transfer
or assign a benefit, or any rights granted hereunder, by a Participant or the
spouse of a Participant shall, in the sole discretion of the Committee (after
consideration of such facts as it deems pertinent), be grounds for terminating
any rights of the Participant or Beneficiary to any portion of the Plan benefits
not previously paid.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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SCHEDULE A

NON-CHANGE-IN-CONTROL SEPARATION BENEFITS

 

Participant

   Standard
Severance
Multiple   

Standard Vesting
Continuation
Period

  

Standard Option Extended
Exercise Period

  

Standard Health
Continuation
Period

  

Standard Non-

Competition
Period

  

Standard

Non-Solicitation Period

                 

Clients/
Customers

  

Employees

CEO

   2x   

24 months

  

Earlier of:

 

•      3rd anniversary of the Separation Date, or

 

•      option’s originally scheduled expiration date

  

24 months

  

12 months

  

24 months

  

24 months

Other Executives

   1x   

12 months

  

Earlier of:

 

•      3rd anniversary of the Separation Date, or

 

•      option’s originally scheduled expiration date

  

12 months

  

12 months

  

12 months

  

12 months

 

CHANGE-IN-CONTROL SEPARATION BENEFITS

 

Participant

  

Change-

in-Control
Severance
Multiple

  

Change-in-

Control Vesting

Continuation
Period

  

Change-in-Control
Option Extended
Exercise Period

  

Change-in-

Control Health

Continuation
Period

  

Change-in-

Control Non-

Competition
Period

  

Change-in-Control
Non-Solicitation Period

                 

Clients/
Customers

  

Employees

CEO

   2.99x   

Not Applicable

(vests on Change

in Control)

  

Earlier of:

 

•      3rd anniversary of the Separation Date, or

 

•      option’s originally scheduled expiration date

  

36 months

  

12 months

  

24 months

  

24 months

Other Executives

   2x   

Not Applicable

(vests on Change

in Control)

  

Earlier of:

 

•      3rd anniversary of the Separation Date, or

 

•      option’s originally scheduled expiration date

  

24 months

  

12 months

  

12 months

  

24 months

 

20

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EXHIBIT A

RELEASE

This RELEASE (“Release”) dated as of this      day of                     ,
20     between ACE Limited, a Cayman Islands corporation (the “Company”), and
                     (the “Employee”).

WHEREAS, the Employee is a participant in the Company’s Executive Severance Plan
(the “Plan”); and

WHEREAS, the Employee’s employment with the Company (has been) (will be)
terminated effective                             ; and

WHEREAS, pursuant to Section      of the Plan, the Employee is entitled to
certain compensation and benefits upon such termination, contingent upon the
execution of this Release;

NOW, THEREFORE, in consideration of the premises and mutual agreements contained
herein and in the Plan, the Company and the Employee agree as follows:

1. The Employee, on [his/her] own behalf and on behalf of [his/her] heirs,
estate and beneficiaries, does hereby release the Company, and any of its
Subsidiaries or affiliates, and each past or present officer, director, agent,
employee, shareholder, and insurer of any such entities, from any and all claims
made, to be made, or which might have been made of whatever nature, whether
known or unknown, from the beginning of time, including those that arose as a
consequence of [his/her] employment with the Company, or arising out of the
severance of such employment relationship, or arising out of any act committed
or omitted during or after the existence of such employment relationship, all up
through and including the date on which this Release is executed, including, but
not limited to, those which were, could have been or could be the subject of an
administrative or judicial proceeding filed by the Employee or on [his/her]
behalf under federal, state or local law, whether by statute, regulation, in
contract or tort, and including, but not limited to, every claim for front pay,
back pay, wages, bonus, fringe benefit, any form of discrimination (including
but not limited to, every claim of race, color, sex, religion, national origin,
disability or age discrimination), wrongful termination, emotional distress,
pain and suffering, breach of contract, compensatory or punitive damages,
interest, attorneys’ fees, reinstatement or reemployment. If any court rules
that such waiver of rights to file, or have filed on [his/her] behalf, any
administrative or judicial charges or complaints is ineffective, the Employee
agrees not to seek or accept any money damages or any other relief upon the
filing of any such administrative or judicial charges or complaints. The
Employee relinquishes any right to future employment with the Company and the
Company shall have the right to refuse to re-employ the Employee without
liability. The Employee acknowledges and agrees that even though claims and
facts in addition to those now known or believed by [him/her] to exist may
subsequently be discovered, it is [his/her] intention to fully settle and
release all claims [he/she] may have against the Company and the persons and
entities described above, whether known, unknown or suspected.

2. The Employee acknowledges that [he/she] has been provided at least 21 days to
review the Release and has been advised to review it with an attorney of
[his/her] choice. In the event the Employee elects to sign this Release prior to
the end of this 21-day period, [he/she] agrees that it is a knowing and
voluntary waiver of [his/her] right to wait the full 21 days. The Employee
further understands that [he/she] has 7 days after the signing hereof to revoke
it by so notifying the Company in writing, such notice to be received by
                     within the 7-day period. The Employee further acknowledges
that [he/she] has carefully read this Release, and knows and understands its
contents and its binding legal effect. The Employee acknowledges that by signing
this Release, [he/she] does so of [his/her] own free will and act and that it is
[his/her] intention that [he/she] be legally bound by its terms.

 

21

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IN WITNESS WHEREOF, the parties have executed this Release on the date first
above written.

 

ACE LIMITED By:  

 

Name:   Title:  

 

[Employee’s Name]

 

22