Exhibit 10.1

EXECUTION COPY

EMPLOYMENT AGREEMENT

     AGREEMENT by and between The Chubb Corporation (the “Company”), and John D.
Finnegan (the “Executive”) dated as of the 21st day of January, 2003.

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined
that it is in the best interests of the Company and its shareholders to employ
the Executive as the Company’s President and Chief Executive Officer and to have
the Executive become a member of the Board;

     WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment; and

     WHEREAS, the Executive desires to enter into this Agreement and to accept
such employment, subject to the terms and provisions of this Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
“Party” and together the “Parties”) agree as follows:

          1. Effective Date. The “Effective Date” shall mean December 1, 2002.

          2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company subject
to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary thereof (the “Initial Term”),
provided that, commencing on December 1, 2003, the employment period shall be
extended each day by one day to create a new two-year term until, at any time on
or after such date, the Company or the Executive delivers a written notice (a
“Notice of Non-Renewal”) to the other Party that the employment period shall
expire at the end of such two-year term (the Initial Term as so extended, the
“Employment Period”).

          3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive shall serve as the President and Chief
Executive Officer of the Company and shall be responsible for the general
management of the Company, with such authority, duties and responsibilities as
are commensurate with such positions and as may be consistent with such
positions (taking into account the duties and responsibilities of the
non-executive Chairman of the Board, if any), reporting directly to the Board,
and (B) the Executive’s principal location of employment shall be at the
principal headquarters of the Company; provided, that the Executive may be
required under reasonable business circumstances to travel outside of such
location in connection with performing his duties under this Agreement. In
addition, the Company shall cause the Executive to be appointed as a member of
the Board as of the Effective Date, and following such date, the Executive shall
remain on the Board, subject to Section 4(g), and shall perform his duties as a
director of the Company conscientiously and faithfully.

 

--------------------------------------------------------------------------------

 

               (ii) The Executive agrees that during the Employment Period, he
shall devote substantially all of his business time, energies and talents to
serving as the Company’s President and Chief Executive Officer, perform his
duties conscientiously and faithfully subject to the reasonable and lawful
directions of the Board, and in accordance with each of the Company’s corporate
governance and ethics guidelines, conflict of interests policies and code of
conduct (collectively, the “Company Policies”) applicable to all Company
employees or senior executives generally and copies of which have been or will
be provided to the Executive within a reasonable period of time following the
adoption of the particular Company Policy. During the Employment Period, it
shall not be a violation of this Agreement for the Executive, subject to the
requirements of Section 8, to (A) serve on corporate, civic or charitable boards
or committees; provided, that, the Parties agree that the Executive shall not
serve on any corporate boards (other than as provided in this Agreement) prior
to December 1, 2003, (B) deliver lectures or fulfill speaking engagements and
(C) manage personal investments, so long as such activities do not materially
inhibit or interfere with the performance of the Executive’s responsibilities as
the President and Chief Executive Officer or as a director of the Company in
accordance with this Agreement.

          (b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annualized base salary (“Annual Base Salary”) of not
less than $1,200,000, payable pursuant to the Company’s normal payroll
practices. During the Employment Period, the current Annual Base Salary shall be
reviewed for increase only (and once increased shall never be decreased) at such
time as the salaries of senior officers of the Company are reviewed generally,
provided that, the Executive’s first such review shall occur no earlier than
calendar year 2004. The Executive and the Company shall in good faith attempt to
mitigate any loss of the Company’s tax deduction under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”), with respect to the
Executive’s Annual Base Salary.

               (ii) Annual Bonus. For each fiscal year completed during the
Employment Period, the Executive shall be eligible to receive an annual cash
bonus (“Annual Bonus”) based upon performance targets that are established by
the compensation committee of the Board, provided that, the Executive’s target
Annual Bonus shall be at least 125% of his Annual Base Salary (the “Target
Bonus”) and his maximum Annual Bonus shall be at least 250% of his Annual Base
Salary. Notwithstanding the foregoing, with respect to fiscal year 2002, the
Executive shall receive an Annual Bonus equal to the product of (A) the Target
Bonus and (B) 1/12, and with respect to fiscal year 2003, the Executive shall
receive an Annual Bonus at least equal to the Target Bonus. The Executive and
the Company shall in good faith attempt to mitigate any loss of the Company’s
tax deduction under Section 162(m) of the Code with respect to the Executive’s
Annual Bonus.

               (iii) Retirement Benefits.

            A. General. The Executive shall become a participant in any
qualified or nonqualified retirement plans maintained by the Company, including
but not limited to the Pension Plan, the Pension Excess Plan, the Chubb Capital
Accumulation Plan (“CCAP”), the Excess CCAP, the Employee Stock Ownership Plan
(“ESOP”), and the Excess ESOP, in each case, as amended from time to time, in
accordance with the eligibility conditions set forth in each such plan. The
Executive shall become a

2

--------------------------------------------------------------------------------

 

  participant in any retirement plan that is available to senior executives of
the Company. In addition, the Executive shall receive a Pension SERP, CCAP SERP
and ESOP SERP, as described herein.

            B. Pension SERP. The Executive shall be entitled to an annual
supplemental pension benefit from the Company equal to 6% of the Executive’s
“Final Average Compensation” (as defined below) for each full year (with
fractional credit for partial years) that the Executive serves as an employee of
the Company, up to a maximum of 60% of the Executive’s Final Average
Compensation. This annual benefit shall be reduced by (1) any amounts payable to
the Executive under the Pension Plan and the Pension Excess Plan or any other
additional, successor or replacement pension plan of the Company, (2) any
pension benefits payable to the Executive by the entity that employed the
Executive as of November 3, 2002 (the “Previous Employer”) or any of its
affiliates, and (3) the Executive’s primary Social Security benefit as
determined by the Company. For purposes of determining the discount (if any) for
early commencement of payments, the column in Table I of Section 3.2 of the
Pension Plan under the heading “At Least 25 Years” shall be applied to the gross
SERP benefit prior to the application of any offsets. For purposes of
determining Pension SERP benefits payable in the form of a joint and survivor
annuity, the factors contained in Table A (“Subsidized”) of the Pension Plan
shall be used. “Final Average Compensation” shall mean the annualized average of
the Executive’s “SERP Compensation” (as hereinafter defined) during the
highest-paid five calendar years out of the last ten calendar years of the
Executive’s employment with the Company, or the final 60 months of the
Executive’s employment with the Company if higher, or if the Executive has been
employed by the Company less than 60 months, the total number of months of the
Executive’s employment. “SERP Compensation” shall mean the sum of (x) the
Executive’s Annual Base Salary paid under Section 3(b)(i), (y) Annual Bonus paid
under Section 3(b)(ii) and (z) profit-sharing payments made under the Profit
Sharing Plan, disregarding in each case any amount deferred for any reason. The
Pension SERP benefit shall be payable in accordance with the payment option
elected by the Executive, in accordance with the election procedures set forth
in the Pension Excess Plan. Except as specifically provided in this Agreement,
the other terms and conditions of the Pension SERP shall be governed by the
terms of the Pension Excess Plan as if the benefits under the Pension SERP were
paid from the Pension Excess Plan.

            C. CCAP SERP. The Executive shall be entitled to a lump sum benefit,
within 30 days after the Date of Termination (as defined in Section 4(f)), equal
to (a) the amount of the Company matching contribution that would have been
credited to the Executive under the CCAP and Excess CCAP if the Executive were
eligible to receive such matching contributions during the period from the
Effective Date until the date that the Executive first becomes eligible to
receive company matching contributions under the CCAP and Excess CCAP,
accumulated with interest at the rate of five percent per year for the period
beginning on the date the Executive would have been credited for such amount
under the CCAP and Excess CCAP and ending on the Date of Termination, plus
(b) the amount, if any, that the Executive forfeits under the CCAP and Excess
CCAP as the result of a termination of his employment (other than as described
in clause (E) below) prior to his becoming 100% vested in the benefits payable
under such plans, plus (c) an additional amount (if any) representing the
benefits that the Executive would have received, accumulated with interest at
the rate of five percent per year for the period

3

--------------------------------------------------------------------------------

 

  beginning on the date the Executive would have accrued the benefit and ending
on the Date of Termination, had, for all purposes of determining the Executive’s
benefits under the CCAP and Excess CCAP, the Executive been deemed to have
27 years of service with the Company as of the Effective Date, provided that the
payments in this clause (c) shall not be duplicative of the payments in clauses
(a) and (b) above.

            D. ESOP SERP. The Executive shall be entitled to a lump sum benefit,
within 30 days after the Date of Termination, equal to (a) the amount of money
that would have been credited to the Executive under the ESOP and Excess ESOP if
the Executive were eligible for those plans, during the period from the
Effective Date until the date that the Executive first becomes eligible to join
the ESOP and Excess ESOP, accumulated with interest at the rate of five percent
per year for the period beginning on the date the Executive would have been
credited for such amount under the ESOP and Excess ESOP and ending on the Date
of Termination, plus (b) the amount, if any, that the Executive forfeits under
the ESOP and Excess ESOP as the result of a termination of his employment (other
than as described in clause (E) below) prior to his becoming 100% vested in the
benefits payable under such plans, plus (c) an additional amount (if any)
representing the benefits that the Executive would have received, accumulated
with interest at the rate of five percent per year for the period beginning on
the date the Executive would have accrued the benefit and ending on the Date of
Termination, had, for all purposes of determining the Executive’s benefits under
the ESOP and Excess ESOP, the Executive been deemed to have 27 years of service
with the Company as of the Effective Date (other than for purposes of
determining the Executive’s eligibility to diversify his ESOP and Excess ESOP
accounts), provided that the payments in this clause (c) shall not be
duplicative of the payments in clauses (a) and (b) above.

            E. Certain Terminations During Initial Term. In the event that,
prior to the end of the Initial Term, the Executive (i) resigns without Good
Reason (as defined in Section 4(c)) or (ii) is terminated for Cause (as defined
in Section 4(b)), the Executive shall not be entitled to receive any of the
Pension SERP, CCAP SERP and ESOP SERP, as described above, and the Company shall
not be obligated to pay such benefits to the Executive.

               (iv) Cash Payment. As compensation for the forfeiture of the
following awards from the Previous Employer: (x) 11/12 times the Executive’s
2002 annual bonus under the Previous Employer’s Annual Incentive Plan, (y) the
Executive’s 2002 Leadership Challenge Grant and (z) the Executive’s 2000-2002
performance stock payout, a cash payment will be made to the Executive equal to
the value of such forfeited incentives within 10 days of substantiation of the
value of such incentives based on extrapolation from amounts earned by other
executives under such programs as set forth in the Previous Employer’s annual
proxy statement and/or such other sources that reasonably demonstrate to the
Company that such amounts would have been earned by the Executive had he
remained employed by the Previous Employer through the date payment of such
forfeited incentives would have been made, provided that, the aggregate amounts
payable pursuant to this Section 3(b)(iv) shall be subject to a maximum of
$3,000,000, provided, further, that any amounts payable by or on behalf of the
Previous Employer with respect to, or in cancellation of, the foregoing
incentives shall reduce

4

--------------------------------------------------------------------------------

 

(but not below zero) on a dollar-for-dollar basis the amounts payable pursuant
to this Section 3(b)(iv).

               (v) Make Whole Stock Option. As compensation for the forfeiture
of the 560,099 options to purchase the Previous Employer’s common stock (the
“Previous Employer Options”), as disclosed previously to the Company, the
Company shall grant to the Executive as of the date immediately following the
Effective Date (the “Grant Date”) a stock option (the “Replacement Option”)
under The Chubb Corporation Long-Term Stock Incentive Plan (the “Plan”) with a
Black-Scholes value equal to the Black-Scholes value of the Previous Employer’s
Options as of the last trading date prior to the Grant Date. The Black-Scholes
values to be calculated under this Section 3(b)(v) shall be determined as soon
as reasonably practicable following the last trading date prior to the Grant
Date in a manner consistent with the methodology used by Mercer Human Resources
Consulting (the “Firm”) for valuing stock options granted to employees of its
publicly-traded clients during the year 2002 through the Grant Date. The
Replacement Option shall have a ten-year term and shall vest and become
exercisable in three equal installments on the first anniversary of the Grant
Date, the second anniversary of the Grant Date and the third anniversary of the
Effective Date, provided that, the Executive remains in the employ of the
Company through each such date. The exercise price per share of the Replacement
Option shall be the average of the highest and lowest sales prices of the
Company’s common stock, par value $1.00 per share (the “Common Stock”) reported
for consolidated trading on the New York Stock Exchange as of the date on which
the award is granted, or, if the Common 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 Common Stock was so traded (the “Fair Market Value”).
Except as specifically set forth herein, the Replacement Option shall have the
same terms and conditions as similar grants made by the Company to senior
executives generally in 2002, as such terms are set forth in the award agreement
attached as Exhibit A. Any amounts payable by or on behalf of the Previous
Employer with respect to, or in the cancellation of, the Previous Employer
Options (or any reduction in the actual number of the forfeited stock options
from the Previous Employer to less than 560,099) shall reduce (but not below
zero) on a dollar-for-dollar basis the Black-Scholes value of the Replacement
Option.

               (vi) Make Whole Restricted Stock. As compensation for the
forfeiture of performance awards for the 2001-2003 and 2002-2004 award cycles at
the Previous Employer, the Company shall grant to the Executive on the Grant
Date a number of restricted shares of Common Stock under the Plan with a Fair
Market Value of $3.6 million as of the Grant Date (the “Restricted Stock”). The
restrictions with respect to the Restricted Stock shall lapse 50% per year
beginning on the first anniversary of the Effective Date, provided that, the
Executive remains in the employ of the Company through each such date. Except as
specifically set forth herein, the Restricted Stock shall have the same terms
and conditions as similar grants made by the Company to senior executives
generally in 2002 as such terms are set forth in the award agreement attached as
Exhibit B. Any amounts payable by or on behalf of the Previous Employer with
respect to, or in cancellation of, the Previous Employer’s performance awards
referenced in this Section 3(b)(vi) shall reduce (but not below zero) on a
dollar-for-dollar basis the Fair Market Value of the Restricted Stock to be
granted to the Executive.

5

--------------------------------------------------------------------------------

 

               (vii) Stock Option Award. As of the Grant Date, the Executive
shall be granted an option to purchase a number of shares of Common Stock under
the Plan, and such option shall have a Black-Scholes value equal to $6,000,000
(the “Option”). The Black-Scholes value to be calculated under this Section
3(b)(vii) shall be determined on or as soon as reasonably practicable following
the Grant Date in a manner consistent with the methodology used by the Firm for
valuing stock options granted to employees of its publicly traded clients during
the year 2002 through the Grant Date. Except as specifically set forth herein,
the Option shall have the same terms and conditions as similar grants that have
been made by the Company to senior executives generally in 2002, as such terms
are set forth in the award agreement attached as Exhibit C. One-half of the
Black-Scholes value of the Option (i.e., $3 million) shall be granted to the
Executive in the form of an option to purchase shares with an exercise price per
share equal to the Fair Market Value and the other half of the Black-Scholes
value of the Option (i.e., $3 million) shall be granted to the Executive in the
form of an option to purchase shares with an exercise price per share equal to
the product of (A) 1.25 and (B) the Fair Market Value.

               (viii) Performance Share Award. The Executive shall be granted at
such time in calendar year 2003 as such awards are granted to the Company’s
senior executives generally a performance share award with respect to the 2003 –
2005 performance award period with respect to shares of Common Stock having a
target Fair Market Value on the date of grant equal to $1,800,000, subject to
the terms and conditions applicable to the Company’s senior executives
generally.

               (ix) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate in all welfare, perquisites, fringe benefit,
and other benefit plans, practices, policies and programs, as may be in effect
from time to time, for senior executives of the Company generally. The fringe
benefits and perquisites described in the preceding sentence shall include:
appropriate use of Company aircraft (for business travel only); long-term
disability benefits as provided to other senior executives, but with an annual
benefit of not less than 60% of the Executive’s current Annual Base Salary; for
Executive’s automobile benefit, use of a Company-provided car and driver (for
business use only and in lieu of any car stipend); club dues and membership
(including initiation fees) at one country club; annual financial counseling as
provided to other senior executives; and death benefits under group life plans
or supplemental plans with a benefit of no less than five times the Executive’s
current Annual Base Salary. In addition, following the Executive’s retirement or
any termination of his employment, the Executive shall be entitled to retiree
health benefits pursuant to the retiree health plans, practices, programs and
policies of the Company (or under programs providing the same benefits), and for
purposes of determining the amount of the Executive’s contributions and benefits
under such plans, practices, programs and policies, the Executive shall be
considered to have 27 years of service with the Company as of the Effective Date
(and shall be considered to have been hired before January 1, 1999 for purposes
of determining his eligibility for Company-subsidized benefits) (the
“Executive’s Retiree Health Benefits”), provided, that the Executive shall not
be entitled to the Executive’s Retiree Health Benefits in the event that prior
to the end of the Initial Term (i) the Executive resigns without Good Reason (as
defined below) or (ii) is terminated for Cause (as defined below). As of the
Effective Date, the Executive shall also become a participant in the Company’s
Profit Sharing Plan, and for all purposes of such plan, shall be considered to
have 27 years of service with the Company as of the Effective Date, provided,
that the Executive shall not be entitled to receive any benefits under such plan
in the event that prior

6

--------------------------------------------------------------------------------

 

to the end of the Initial Term (i) the Executive resigns without Good Reason or
(ii) is terminated for Cause.

               (x) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for business expenses reasonably
incurred by the Executive in accordance with the Company’s policies, as may be
in effect from time to time, for its senior executives generally.

               (xi) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the Company’s policies, as may
be in effect from time to time, for its senior executives generally, provided
that for purposes of determining the Executive’s vacation benefits, the
Executive shall be considered to have 27 years of service with the Company as of
the Effective Date.

               (xii) Change-in-Control Benefits.

            A. The Executive shall receive the change-in-control benefits
provided to senior executives of the Company generally (it being understood that
in lieu of the executive severance agreement provided to other senior executives
of the Company, the Executive shall receive the Change in Control Employment
Agreement (“CIC Agreement”) entered into simultaneously with this Agreement)
under the Company’s compensation plans (including vesting of any equity awards
in the manner provided to other senior executives of the Company generally). In
addition, anything in this Agreement to the contrary notwithstanding, at all
times during the Employment Period and at all times after the Employment Period,
in the event it shall be determined that any Payment (as defined below) would be
subject to the Excise Tax (as defined below), then the Executive shall be
entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
such that, after payment by the Executive of all taxes (and any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income and employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments. The Company’s obligation to make Gross-Up Payments under this
Section 3(b)(xii) shall not be conditioned upon the Executive’s termination of
employment.

            B. Subject to the provisions of Section 3(b)(xii)(C), all
determinations required to be made under this Section 3(b)(xii), including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized certified public accounting firm
selected by the Company and approved by the Executive, with such approval not
being unreasonably withheld (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment or such earlier time as is requested by the Company. All fees
and expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 3(b)(xii), shall be
paid by the Company to the Executive within 5 days of the receipt of the
Accounting Firm’s

7

--------------------------------------------------------------------------------

 

  determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments that will not
have been made by the Company should have been made (the “Underpayment”),
consistent with the calculations required to be made hereunder. In the event the
Company exhausts its remedies pursuant to Section 3(b)(xii)(C) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

            C. The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive is informed
in writing of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:

            a. give the Company any information reasonably requested by the
Company relating to such claim,

            b. take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

            c. cooperate with the Company in good faith in order effectively to
contest such claim, and

            d. permit the Company to participate in any proceedings relating to
such claim;

  provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax and income and employment tax (including
interest and penalties) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this
Section 3(b)(xii)(C), the Company shall control all proceedings taken in
connection with such contest, and, at its sole discretion, may pursue or forgo
any and all administrative appeals, proceedings, hearings and conferences with
the applicable taxing authority in respect of such claim and may, at its sole
discretion, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim

8

--------------------------------------------------------------------------------

 

  in any permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax and
income and employment tax (including interest or penalties) imposed with respect
to such advance or with respect to any imputed income in connection with such
advance; and provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which the Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

            D. If, after the receipt by the Executive of a Gross-Up Payment or
an amount advanced by the Company pursuant to Section 3(b)(xii)(C), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 3(b)(xii)(C), if applicable) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 3(b)(xii)(C), a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

            E. Notwithstanding any other provision of this Section 3(b)(xii),
the Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.

            F. Definitions. The following terms shall have the following
meanings for purposes of this Section 3(b)(xii):

            a. “Excise Tax” shall mean the excise tax imposed by Section 4999 of
the Code, together with any interest or penalties imposed with respect to such
excise tax.

            b. A “Payment” shall mean any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) by any
member of the Affiliated Group to or for

9

--------------------------------------------------------------------------------

 

  the benefit of the Executive, whether paid or payable pursuant to this
Agreement or otherwise.

            G. Exclusive Gross-Up. In the event that the Executive becomes
entitled to a Gross-Up Payment hereunder, the Executive shall not be entitled to
a Gross-Up Payment under Section 8 of the CIC Agreement.

          (c) Other Entities. The Executive agrees to serve, without additional
compensation, as an officer and director for each of the Company’s subsidiaries,
partnerships, joint ventures, limited liability companies and other affiliates,
including entities in which the Company has a significant investment
(collectively, the Company and such entities, the “Affiliated Group”), as
determined by the Company, provided, that such service does not materially
interfere with the Executive’s performance of his duties and responsibilities as
the President and Chief Executive Officer of the Company. As used in this
Agreement, the term “affiliates” shall include any entity controlled by,
controlling, or under common control with the Company.

          4. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may provide the Executive with
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30-day period after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “Disability” shall mean the inability of
the Executive to perform his duties with the Company on a full-time basis for
six consecutive months as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a licensed physician
mutually selected by (i) the Company or its insurers and (ii) the Executive or
the Executive’s legal representative. If the Parties cannot agree on a licensed
physician, each Party shall select a licensed physician and the two physicians
shall select a third who shall be the approved licensed physician for this
purpose.

          (b) Cause. The Company may terminate the Executive’s employment during
the Employment Period with or without Cause. For purposes of this Agreement,
“Cause” shall mean:

               (i) the Executive’s willful and continued failure to
substantially perform his duties under this Agreement, other than any such
failure resulting from incapacity due to physical or mental illness, which
failure has continued after a written demand for substantial performance, signed
by a duly authorized member of the Board, is delivered to the Executive,
specifying the manner in which the Executive has failed to substantially
perform; or

               (ii) the Executive’s willful engagement in any malfeasance,
fraud, dishonesty or gross misconduct, each of which must (x) be in connection
with his position as the President and Chief Executive Officer of the Company
(or as a director of the Company or an

10

--------------------------------------------------------------------------------

 

officer or director of any member of the Affiliated Group) and (y) materially
damage the Company economically or otherwise; or

               (iii) the Executive’s conviction of, or plea of guilty or nolo
contendere to, a felony; or

               (iv) the Executive’s breach of Section 13(c) of this Agreement
that materially damages or could reasonably be expected to materially damage the
Company economically or otherwise; or

               (v) the Executive’s material breach of Section 8 or Section 13(b)
of this Agreement.

For purposes of this provision, no act or failure to act on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive’s act or omission was in the best interests of the Company. A
termination of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board (not including the Executive) at a meeting of
the Board called and held for such purpose (after at least ten days’ written
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i), (ii), (iii), (iv) or (v) above, and specifying the particulars
thereof in detail.

          (c) Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason. If (x) an event or circumstance set forth in clauses
(i) through (viii) below shall have occurred and the Executive provides the
Company with written notice thereof within a reasonable period of time after the
Executive has knowledge of the occurrence or existence of such event or
circumstance, which notice shall specifically identify the event or circumstance
that the Executive believes constitutes Good Reason, (y) the Company fails to
correct the circumstance or event so identified within 15 days after the receipt
of such notice, and (z) the Executive resigns within 90 days after the date of
delivery of the notice referred to in clause (x) above, the Executive shall be
considered to have resigned for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean, in the absence of the Executive’s express written
consent (and except in consequence of a prior termination of the Executive’s
employment), the occurrence of any of the following:

               (i) a reduction by the Company in the Executive’s highest Annual
Base Salary or a reduction in the Executive’s Target Bonus as a percentage of
the Executive’s Annual Base Salary; or

               (ii) the failure of the Executive to be appointed to any of the
positions described in Section 3(a)(i) or his removal from any such position
(other than pursuant to Section 4(g) or pursuant to a termination of the
Executive’s employment for death, Disability or Cause); or

11

--------------------------------------------------------------------------------

 

               (iii) a material diminution in the Executive’s duties or
responsibilities (other than as a result of the Executive’s physical or mental
incapacity) or the assignment to the Executive of duties or responsibilities
materially inconsistent with the Executive’s position and status as the
President and Chief Executive Officer of the Company; or

               (iv) a material change in the Executive’s reporting relationship
so that the Executive no longer reports solely to the Board in his positions as
President and Chief Executive Officer; or

               (v) a breach by the Company of any of its material obligations to
the Executive under this Agreement; or

               (vi) the Company requiring the Executive’s principal location of
employment to be at any office or location more than 50 miles from the current
principal headquarters of the Company in Warren, New Jersey (other than to the
extent agreed to or requested by the Executive); or

               (vii) a breach by the Company of Section 10 or Section 13(a) of
this Agreement; or

               (viii) any failure by the Company to comply with and satisfy
Section 9(b) of this Agreement.

          (d) Voluntary Termination. The Executive may voluntarily terminate his
employment without Good Reason (other than due to death, Disability or
retirement), and such termination shall not be deemed to be a breach of this
Agreement.

          (e) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other Party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a “Notice of Termination” means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

          (f) Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive’s employment is terminated by the Company other than
for Cause or Disability, or if the Executive voluntarily resigns without Good
Reason, the date on which the terminating Party notifies the other Party of such
termination,

12

--------------------------------------------------------------------------------

 

(iii)  if the Executive’s employment is terminated by reason of death, the date
of death of the Executive, (iv) if the Executive’s employment is terminated by
the Company due to Disability, the Disability Effective Date, or (v) if the
Executive’s employment is terminated by the Executive or the Company as a result
of a Notice of Non-Renewal, the second anniversary of such notice.

          (g) Resignation from All Positions. Notwithstanding any other
provision of this Agreement, upon the termination of the Executive’s employment
for any reason, unless otherwise requested by the Board, the Executive shall
immediately resign from all positions that he holds or has ever held with the
Company and any other member of the Affiliated Group (and with any other
entities with respect to which the Company has requested the Executive to
perform services), including, without limitation, the Board and all boards of
directors of any member of the Affiliated Group. The Executive hereby agrees to
execute any and all documentation to effectuate such resignations upon request
by the Company, but he shall be treated for all purposes as having so resigned
upon termination of his employment, regardless of when or whether he executes
any such documentation.

          5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause; Non-Renewal. If, during the Employment Period, (1) the Company
shall terminate the Executive’s employment other than for Cause, death or
Disability, (2) the Executive shall terminate employment for Good Reason, or
(3) in the event of a Notice of Non-Renewal delivered to the Executive by the
Company:

               (i) the Company shall pay to the Executive in a lump sum in cash
within 30 days (except as specifically provided in Sections 5(a)(i)(A)(3) and
5(a)(i)(A)(4)) after the Date of Termination the aggregate of the following
amounts:

            A. the sum of (1) the Executive’s Annual Base Salary and any accrued
vacation pay through the Date of Termination, (2) the Executive’s business
expenses that are reimbursable pursuant to Section 3(b)(x) but have not been
reimbursed by the Company as of the Date of Termination, (3) the Executive’s
Annual Bonus for the fiscal year immediately preceding the fiscal year in which
the Date of Termination occurs if such bonus has been determined but not paid as
of the Date of Termination (at the time such Annual Bonus would otherwise have
been paid) and (4) the product of (x) the Annual Bonus that the Executive would
have earned, if any, for the fiscal year in which the Date of Termination occurs
if the Executive had been employed by the Company for the full plan year, based
on the Company’s and the Executive’s actual performance payable at the time such
Annual Bonus would otherwise have been paid, and (y) a fraction, the numerator
of which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination, and the denominator of which
is 365, in each case, to the extent not theretofore paid; and

            B. the amount equal to the product of (x) the Severance Multiple (as
defined below) and (y) the sum of (I) the Executive’s Annual Base Salary and
(II) the average Annual Bonus paid to the Executive in respect of the last three
completed fiscal years immediately prior to the Date of Termination or such
lesser number of completed fiscal years that the Executive was employed by the
Company as of the Date of

13

--------------------------------------------------------------------------------

 

  Termination, provided that, such amount in clause (II) shall not be less than
the Target Bonus if the Date of Termination occurs during fiscal year 2002 or
2003; and

               (ii) any stock options, restricted stock, performance shares and
any other stock-based long-term incentive compensation award held by the
Executive (whether granted under this Agreement or otherwise) shall vest
immediately (with option exercisability continuing until the first to occur of
the fifth anniversary of the Date of Termination or the end of the scheduled
option term); and

               (iii) the Executive shall be treated for purposes of accrual of
benefits (age and service) under the SERP, as if the Executive had remained an
active employee of the Company following the Date of Termination for a number of
years equal to the Severance Multiple, provided that, for purposes of this
Section 5(a)(iii) only, in the event that the Date of Termination occurs within
2.5 years after the Effective Date, the Executive’s aggregate number of years of
service under the Pension SERP shall be no less than five years, and if the Date
of Termination occurs in 2003 or in 2004, but prior to the determination of the
Executive’s Annual Bonus for 2003, the Executive’s compensation for purposes of
determining the Executive’s “Final Average Compensation” under the Pension SERP
shall include the Target Bonus with respect to year 2003; and

               (iv) for a number of years (full and partial) after the
Executive’s Date of Termination equal to the Severance Multiple (the
“Continuation Period”), the Company shall continue health and other welfare
benefits to the Executive and, if applicable, the Executive’s family at least
equal to those that would have been provided to them in accordance with the
plans, programs, practices and policies of the Company if the Executive’s
employment had not been terminated; provided, that the Executive continues to
make all required contributions; provided, however, that, if the Executive
becomes re-employed with another employer and is eligible to receive such
benefits under another employer-provided plan, the health and other welfare
benefits described herein shall no longer be provided by the Company. Following
the Continuation Period, the Executive shall be entitled to the Executive’s
Retiree Health Benefits; and

               (v) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement (other than
any severance plan, program, policy or practice or contract or agreement) of the
Company and its affiliates (such amounts and benefits, the “Other Benefits”) in
accordance with the terms and normal procedures of each such plan, program,
policy or practice, based on accrued benefits through the Date of Termination.

Notwithstanding anything contained herein to the contrary, the Executive shall
be entitled to receive from the Company a full tax gross-up with respect to any
excise tax imposed on him under Section 4999 of the Code with respect to any
payments or benefits from the Company or any member of its Affiliated Group as
provided for under Section 3(b)(xii). Except with respect to payments and
benefits under Sections 5(a)(i)(A)(1), 5(a)(i)(A)(2) and 5(a)(v), all payments
and benefits to be provided under this Section 5(a) shall be subject to the
Executive’s execution and non-revocation of a release substantially in the form
attached hereto as Exhibit D.

14

--------------------------------------------------------------------------------

 

For purposes of a termination set forth in Section 5(a)(1) or 5(a)(2), the
“Severance Multiple” shall mean 2.5. In the event of a termination of employment
set forth in Section 5(a)(3), the Severance Multiple shall be 2.5 if the
Executive’s Date of Termination as a result of the Company providing the
Executive with a Notice of Non-Renewal (the “Non-Renewal Termination Date”) is
prior to the Executive’s attainment of age 58; if the Non-Renewal Termination
Date is prior to the Executive’s attainment of age 59 and on or after the
Executive’s attainment of age 58, the Severance Multiple shall mean 2.0; in the
event that the Non-Renewal Termination Date is prior to the Executive’s
attainment of age 60 and on or after the Executive’s attainment of age 59, the
Severance Multiple shall mean 1.5; in the event that the Non-Renewal Termination
Date is prior to the Executive’s attainment of age 61 and on or after the
Executive’s attainment of age 60, the Severance Multiple shall mean 1.0; and in
the event that the Non-Renewal Termination Date is prior to the Executive’s
attainment of age 62 and on or after the Executive’s attainment of age 61, the
Severance Multiple shall mean 0.5. If the Non-Renewal Termination Date is on or
after the Executive’s attainment of age 62, the Severance Multiple shall mean
0.0.

The Parties agree that any amounts due under this Section 5(a) are in the nature
of severance payments considered to be reasonable by the Company and are not in
the nature of a penalty.

          (b) Cause; Other than for Good Reason. If the Executive’s employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period (including by providing to the Company
a Notice of Non-Renewal), this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay or provide to the
Executive the Executive’s Retiree Health Benefits (subject to the provisions of
Section 3(b)(ix)), an amount equal to the amount set forth in clauses (1) and
(2) of Section 5(a)(i)(A) above, and the timely payment or provision of the
Other Benefits, in each case to the extent theretofore unpaid.

          (c) Death. If the Executive’s employment is terminated by reason of
the Executive’s death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive’s legal representatives
under this Agreement, other than the obligation to pay or provide to the
Executive’s beneficiaries the Executive’s Retiree Health Benefits (if
applicable), an amount equal to the amount set forth in clauses (1), (2),
(3) and (4) of Section 5(a)(i)(A) above, and the timely payment or provision of
the Other Benefits, including any applicable life insurance benefits.

          (d) Disability. If the Executive’s employment is terminated by reason
of the Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than the
obligation to pay or provide to the Executive the Executive’s Retiree Health
Benefits, an amount equal to the amount set forth in clauses (1), (2), (3) and
(4) of Section 5(a)(i)(A) above, and the timely payment or provision of Other
Benefits, including any applicable disability benefits.

          6. Non-Exclusivity of Rights. Except as specifically provided
otherwise, nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided by the Company, or any of its subsidiaries for which the Executive is
otherwise eligible, nor, subject to Section 12(f), shall

15

--------------------------------------------------------------------------------

 

anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or its subsidiaries; provided,
that, the Executive shall not receive severance benefits or excise tax gross-up
under both this Agreement and the CIC Agreement, and the CIC Agreement shall
supercede this Agreement during the period the CIC Agreement is applicable.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.

          7. Full Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced as a result of a mitigation duty whether or not the
Executive obtains other employment. In the event of any dispute between the
Company and the Executive under this Agreement during or after termination of
the Executive’s employment, the Company agrees to pay, to the full extent
permitted by law, all professional fees, costs and expenses which the Executive
may reasonably incur as a result of any such contest. The Company shall pay
directly all professional fees and expenses reasonably incurred by the Executive
in connection with the negotiation and preparation of this Agreement, subject to
a maximum of $100,000.

          8. Covenants.

          (a) Confidential Information. The Executive shall hold in a fiduciary
capacity for benefit of the Affiliated Group, all secret or confidential
information, knowledge or data relating to the Affiliated Group and its
businesses (including, without limitation, any proprietary and not publicly
available information concerning any processes, methods, trade secrets, research
or secret data, costs, names of users or purchasers of their respective products
or services, business methods, operating procedures or programs or methods of
promotion and sale) that the Executive has obtained or obtains during the
Executive’s employment by the Affiliated Group that is not public knowledge
(other than as a result of the Executive’s violation of this Section 8(a))
(“Confidential Information”). For the purposes of this Section 8(a), information
shall not be deemed to be publicly available merely because it is embraced by
general disclosures or because individual features or combinations thereof are
publicly available. The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive’s employment
with the Affiliated Group, except with prior written consent of the Company, or
as otherwise required by law or legal process or as such disclosure or use may
be required in the course of the Executive performing his duties and
responsibilities as the President and Chief Executive Officer of the Company.
Notwithstanding the foregoing provisions, if the Executive is required to
disclose any such confidential or proprietary information pursuant to applicable
law or a subpoena or court order, the Executive shall promptly notify the
Company in writing of any such requirement so that the Company or the
appropriate member of the Affiliated Group may seek an appropriate protective
order or other appropriate remedy or waive compliance with the provisions
hereof. The Executive shall reasonably cooperate with the

16

--------------------------------------------------------------------------------

 

Affiliated Group to obtain such a protective order or other remedy. If such
order or other remedy is not obtained prior to the time the Executive is
required to make the disclosure, or the Company waives compliance with the
provisions hereof, the Executive shall disclose only that portion of the
confidential or proprietary information which he is advised by counsel that he
is legally required to so disclose. All records, files, memoranda, reports,
customer lists, drawings, plans, documents and the like that the Executive uses,
prepares or comes into contact with during the course of the Executive’s
employment shall remain the sole property of the Company and/or the Affiliated
Group, as applicable, and shall be turned over to the Company upon termination
of the Executive’s employment.

          (b) Non-Recruitment of Affiliated Group Employees. The Executive shall
not, at any time during the Restricted Period (as defined in this Section 8(b)),
without the prior written consent of the Company, directly or indirectly,
contact, solicit, recruit, or employ (whether as an employee, officer, director,
agent, consultant or independent contractor) any person who is or was at any
time during the previous twelve months an employee, representative, officer or
director of any member of the Affiliated Group. Further, during the Restricted
Period, the Executive shall not take any action that could reasonably be
expected to have the effect of encouraging or inducing any employee,
representative, officer or director of any member of the Affiliated Group to
cease their relationship with any member of the Affiliated Group for any reason,
except for terminations of employment in the ordinary course of business. This
Section 8(b) shall not apply to recruitment of employees for the Affiliated
Group and shall not apply to the Executive’s personal administrative staff who
perform secretarial-type functions. The “Restricted Period” shall mean the
period of Executive’s employment with the Company and its subsidiaries and the
additional period ending on the second anniversary of the Date of Termination.

          (c) No Competition — Solicitation of Business. During the Restricted
Period, the Executive shall not, either directly or indirectly, compete with the
business of the Company by (i) becoming an officer, agent, employee, partner or
director of any other corporation, partnership or other entity, or otherwise
render services to or assist or hold an interest (except as a less than
1-percent shareholder of a publicly traded company), in any Competitive Business
(as defined below), or (ii) soliciting, servicing, or accepting the business of
(A) any active customer of any member of the Affiliated Group, or (B) any person
or entity who is or was at any time during the previous twelve months a customer
of any member of the Affiliated Group. “Competitive Business” shall mean any
person or entity (including any joint venture, partnership, firm, corporation,
or limited liability company) that engages in (1) the property and casualty
insurance business, including commercial insurance, personal insurance,
specialty insurance, surety, excess and surplus lines and/or reinsurance,
(2) the accident and health insurance business other than if incident to
providing life insurance, (3) any of the businesses in which Chubb Financial
Solutions is engaged during the Restricted Period, (4) the insurance agency or
brokerage business, and/or (5) any other significant business of the Company or
any of its subsidiaries as of the Date of Termination, provided that a business
set forth in clauses (1) through (4) shall not be considered a “Competitive
Business” in the event that, as of the Date of Termination, such business (i) is
not a business of the Company or any of its subsidiaries or (ii) is no longer a
business of the Company or any of its subsidiaries.

17

--------------------------------------------------------------------------------

 

          (d) Remedies. The Executive acknowledges and agrees that the terms of
Section 8: (i) are reasonable in light of all of the circumstances, (ii) are
sufficiently limited to protect the legitimate interests of the Company and its
subsidiaries, (iii) impose no undue hardship on the Executive and (iv) are not
injurious to the public. The Executive further acknowledges and agrees that
(x) the Executive’s breach of the provisions of Section 8 will cause the Company
irreparable harm, which cannot be adequately compensated by money damages, and
(y) if the Company elects to prevent the Executive from breaching such
provisions by obtaining an injunction against the Executive, there is a
reasonable probability of the Company’s eventual success on the merits. The
Executive consents and agrees that if the Executive commits any such breach or
threatens to commit any breach, the Company shall be entitled to temporary and
permanent injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of proof of actual
damage, in addition to, and not in lieu of, such other remedies as may be
available to the Company for such breach, including the recovery of money
damages. The Parties further acknowledge and agree that the provisions of
Section 12(a) below are accurate and necessary because (A) this Agreement is
entered into in the State of New Jersey, (B) as of the Effective Date, New
Jersey will have a substantial relationship to the Parties and to this
transaction, (C) as of the Effective Date, New Jersey will be the headquarters
state of the Company, which has operations nationwide and has a compelling
interest in having its employees treated uniformly within the United States,
(D) the use of New Jersey law provides certainty to the Parties in any covenant
litigation in the United States, and (E) enforcement of the provision of this
Section 8 would not violate any fundamental public policy of New Jersey or any
other jurisdiction. If any of the provisions of Section 8 are determined to be
wholly or partially unenforceable, the Executive hereby agrees that this
Agreement or any provision hereof may be reformed so that it is enforceable to
the maximum extent permitted by law. If any of the provisions of this Section 8
are determined to be wholly or partially unenforceable in any jurisdiction, such
determination shall not be a bar to or in any way diminish the Company’s right
to enforce any such covenant in any other jurisdiction.

          9. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

          (b) No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or liquidation of all or
substantially all or a substantial portion of the assets of the Company;
provided, however, that the assignee or transferee is the successor to all or
substantially all or a substantial portion of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company shall cause any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all or a
substantial portion of its business and/or assets to assume expressly and agree
to perform this Agreement within 15 days after such succession in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. A breach of this Section 9(b) shall be
deemed to be Good Reason under Section

18

--------------------------------------------------------------------------------

 

4(c)(viii). As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

          10. Financial Representation. The Company represents to the Executive
that, as of the Effective Date, all financial statements for each quarter and
fiscal year since January 1, 1999 (as filed in the Company’s Forms 10-K and 10-Q
reports) fairly present in all material respects the financial condition and
results of operations of the Company in conformity with GAAP as of the
applicable reporting dates, except as reported in the notes and year-end
adjustments to those financial statements.

          11. Indemnification. The Company shall indemnify the Executive as an
officer, director and employee of the Company and any member of the Affiliated
Group and in the same amounts to the maximum extent permitted under Article
Twelfth of the Company’s Restated Certificate of Incorporation, the Company’s
by-laws and applicable law. The Company shall maintain directors’ and officers’
liability insurance coverage during the Executive’s employment and thereafter
for the duration of any period of limitations during which any action, if any,
may be brought against the Executive for his service as an officer, director or
employee of the Company and any member of the Affiliated Group and in the same
amounts, and on the same terms and conditions as applicable to other former
senior executives and directors of the Company.

          12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey, without
reference to principles of conflict of laws. The Parties hereto irrevocably
agree to submit to the jurisdiction and venue of the courts of the State of New
Jersey, in any action or proceeding brought with respect to or in connection
with this Agreement. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
Parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other Party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

          If to the Executive:           At the most recent address on file for
the Executive at the Company.           With a copy to:           Stewart
Reifler, Esq.     Vedder, Price, Kaufman & Kammholz     805 Third Avenue     New
York, New York 10022

19

--------------------------------------------------------------------------------

 

          If to the Company:           The Chubb Corporation     15 Mountain
View Road     Warren, New Jersey 07059           Attention: General Counsel    
      With a copy to:           Michael S. Katzke, Esq.     Wachtell, Lipton,
Rosen & Katz     51 West 52nd Street     New York, New York 10019           or
to such other address as either Party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (d) Notwithstanding any other provision of this Agreement, the Company
may withhold from any amounts payable or benefits provided under this Agreement
any Federal, state, and local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.

          (e) The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.

          (f) From and after the Effective Date, this Agreement shall supersede
any other employment, severance or change-in-control agreement between the
Parties with respect to the subject matter hereof, including without limitation
the Term Sheet dated as of November 3, 2002, but not including the CIC
Agreement.

          13. Representations. (a) The Company hereby represents and warrants to
the Executive that it is fully authorized and empowered to enter into this
Agreement and to perform its obligations hereunder and that the performance of
its obligations under this Agreement will not violate any agreement between it
and any other person, firm or organization.

          (b) The Executive hereby represents and warrants to the Company that
(i) the Executive is not party to any contract, understanding, agreement or
policy, whether or not written, with the Previous Employer or otherwise, that
would be breached by the Executive’s entering into, or performing services
under, this Agreement, (ii) to the Executive’s knowledge, the letter provided to
the Company prior to the date hereof by the Executive from the Previous

20

--------------------------------------------------------------------------------

 

Employer, dated November 25, 2002 (the “Letter”), completely and accurately
reflects the compensation and benefits from the Previous Employer (A) to which
the Executive is entitled and (B) that will be forfeited by the Executive, as a
result of the Executive’s termination of employment with the Previous Employer,
and (iii) to the Executive’s knowledge, except as set forth in the Letter, no
severance or termination payments or benefits have been provided or will be
provided by the Previous Employer or any of its affiliates to the Executive. In
the event that the Executive receives or learns that he will receive any
material severance or termination payments or benefits other than as reflected
in the Letter, the Executive agrees to inform the Company in writing within
30 days of the receipt or knowledge of such severance or termination payments or
benefits.

          (c) The Executive further represents that he has disclosed to the
Company in writing all material (i) threatened claims that (x) are unresolved
and still outstanding as of the Effective Date and (y) have been received by the
Executive in writing during the 24 months prior to the Effective Date, (ii)
existing claims, and (iii) pending claims, in each case, against him of which he
is aware, if any, as a result of his employment with the Previous Employer or
his membership on any boards of directors which could be reasonably expected to
be materially damaging to the Executive monetarily, reputationally or otherwise.

21

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name and on its behalf, all as
of the day and year first above written.

  /s/ John D. Finnegan

--------------------------------------------------------------------------------

 

  JOHN D. FINNEGAN  

  THE CHUBB CORPORATION

  By: /s/ Lawrence M. Small

--------------------------------------------------------------------------------

  Title: Chair, Organization and Compensation Cmte

--------------------------------------------------------------------------------

22

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Employee Stock Option Award
Nonstatutory
EXHIBIT A

1.   Pursuant to the provisions of The Chubb Corporation Long-Term Stock
Incentive Plan (2000) (the “Plan”), The Chubb Corporation (the “Corporation”) on
the date set forth below granted and hereby evidences the grant, subject to the
terms and conditions set forth herein and in the Plan, the option (the “Option”)
to purchase from the Corporation 250,920 shares of Common Stock, $1.00 par
value, of the Corporation, at the purchase price of $58.425 per share, the
Option to be exercisable as hereinafter provided. The option is intended to be a
nonstatutory stock option which does not qualify as an incentive stock option
within the meaning of section 422 of the Internal Revenue Code of 1986 as
amended. All capital terms used herein which are not otherwise defined herein
shall have the meaning specified in the Plan.   2.   Subject to the terms and
conditions hereof and of the Plan, the Option shall become exercisable in three
equal installments of 83,640 shares on the first, second and third anniversaries
of December 2, 2002, provided that the Optionee remains in the employ of the
Corporation through each such date.       Any exercise of the Option shall be
made by giving the Corporation or its designee written notice of exercise
specifying the number of shares to be purchased and specifying whether, and to
what extent, the option is being exercised. The notice of exercise shall be
accompanied by tender to the Corporation of the full purchase price of said
shares and the related amount of income taxes required to be withheld by the
Corporation, unless the Optionee has elected to have shares withheld to satisfy
such income tax withholding in accordance with the rules promulgated by the
Committee. Payment of the purchase price of the shares shall be made in cash,
check, shares of Common Stock of the Corporation, or a combination of the
foregoing provided, however, that the Committee may, in its sole discretion,
prohibit or limit the use of shares of Common Stock of the Corporation as part
or full payment of the purchase price.   3.   Without limiting the generality of
paragraph 1 hereof, it is understood and agreed that the Option is subject to
the following conditions:

  (a)   The Option shall not in any event be exercisable after the close of
business on December 1, 2012;     (b)   The Option shall not be transferred
except by will or the laws of descent and distribution and, during the lifetime
of the Optionee, shall be exercised only by the Optionee or by the Optionee’s
guardian or legal representative unless the Committee determines that permitting
such an exercise by a guardian or legal representative will violate any
applicable federal or state law; and     (c)   Neither the Optionee nor any
legal representative, legatee, or distributes of the Optionee shall be deemed to
be a holder of or possess any shareholder rights with respect to any shares
subject to the Option prior to the issuance of such shares upon exercise of the
Option.

(Page 1 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Employee Stock Option Award
Nonstatutory

  (d)   The grant of the Option should be considered extraordinary, and is not
part of the Optionee’s regular compensation. The granting of options may be
terminated at any time, and this current grant does not confer any right or
expectation that awards will be made to the Optionee in the future.

4.   Restoration Options. (a) Subject to the conditions of paragraph 4(b) below,
in the event the Optionee exercises the Option, in whole or in part, and pays
the purchase price by delivering shares of Common Stock, the Optionee shall
automatically be granted on the date of such exercise a Restoration Option. Such
Restoration Option shall be a Nonstatutory Stock Option for the number of shares
so tendered plus, if applicable, any shares of Common Sock tendered to satisfy
withholding tax liability arising in connection with such exercise, shall have a
purchase price per share equal to the Fair Market Value of a share of Common
Stock on the date of such exercise, shall be exercisable from the date of grant
of such Restoration Option until the earlier of (i) the expiration date
specified in paragraph 3(a) above or the time provided in paragraph 7(a), (b) or
(c) below, as applicable, and shall be reflected in a Restoration Option Award
furnished to the Optionee as soon as practicable after the date of such
exercise.       (b) Paragraph 4(a) shall not be applicable (i) to an exercise of
the Option after December 2, 2009, (ii) to an exercise of the Option when the
Fair Market Value of a share of Common Stock is not at least $73.03, (iii) to an
exercise of the Option at any time after the Optionee has terminated employment
with the Corporation for any reason, or (iv) if the Committee determines that
paragraph 4(a) shall not be applicable.   5.   The granting of the Option shall
not constitute nor be evidence of any agreement or understanding, express or
implied, on the part of the Corporation or any of its Subsidiaries to employ or
continue the employment of the Optionee for any period.   6.   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 the Option, 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, subject to the Option and (2) the
exercise price with respect to the Option and/or, if deemed appropriate, make
provision for a cash payment to the person holding the Option provided, however,
that the number of shares subject to the Option shall always be a whole number.

(Page 2 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Employee Stock Option Award
Nonstatutory

7.   Termination of Employment.

  (a)   Except as provided in subparagraph (b) and subparagraph (c) of this
paragraph 7, the Option shall be automatically cancelled upon the Optionee’s
termination of employment.     (b)   Upon termination of the Optionee’s
employment for retirement on or after Optionee’s Normal Retirement Date or
Earliest Retirement Age under the Corporation’s Pension Plan, or by reason of
the disability (as defined in such Pension Plan) of the Optionee, or for any
reason with the consent of the Committee, the Option if outstanding for one year
prior to such termination date shall be fully exercisable by the Optionee after
the date of such termination through the expiration date of the Option specified
in accordance with paragraph 3 (a), above. In the event of death of the Optionee
(whether before or after termination of employment), the Option if outstanding
for one year prior to such death (if not previously cancelled) shall be fully
exercisable by the Optionee’s legal representative through the expiration date
of the Option specified in accordance with paragraph 3 (a) above.     (c)   Upon
termination of the Participant’s employment that would give rise to benefits
under Section 5(a) of the Employment Agreement by and between the Corporation
and the Participant effective as of December 1, 2002, the Option shall vest in
accordance with the terms therein.     (d)   Transfer from the Corporation to a
Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to
another shall not be considered a termination of employment. Nor shall it be
considered a termination of employment if the Optionee is placed on a military
or sick leave or such other leave of absence which is considered as continuing
intact the employment relationship.

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 business or assets of the Corporation or (ii) a Change in Control (as
defined below) of the Corporation, the Option if then outstanding shall become
exercisable in full.       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 Common Stock outstanding, or (b) following (i) a tender or exchange offer
for voting securities of the Corporation, or (ii) a proxy contest for the
election of directors of the Corporation, the persons who were directors of the

(Page 3 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Employee Stock Option Award
Nonstatutory

    Corporation immediately before the initiation of such event cease to
constitute a majority of the Board of Directors of the Corporation upon the
completion of such tender or exchange offer to proxy contest or within one year
after such completion.   9.   Any notice to be given hereunder to the
Corporation, other than with respect to option exercises, shall be addressed to
The Chubb Corporation, attention Secretary, 15 Mountain View Road, P.O. Box
1615, Warren, New Jersey 07061-1615, and any notice given hereunder to the
Optionee shall be addressed to him at this address as shown on the records of
the Corporation.   10.   The Optionee agrees to be bound by the terms and
conditions hereof and of the Plan.   11.   Governing Law. The Option and the
legal relations between the parties shall be governed by and construed in
accordance with the internal laws of the State of New York.

                  THE CHUBB CORPORATION               By:   /s/ Henry G. Gulick
       

--------------------------------------------------------------------------------

        Secretary               Date:   December 2, 2002        

--------------------------------------------------------------------------------

(Page 4 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Restricted Stock Award

EXHIBIT B

1.   Pursuant to the provisions of The Chubb Corporation Long-Term Stock
Incentive Plan (2000) (the “Plan”), The Chubb Corporation (the “Corporation”) on
the date set forth below granted and hereby evidences the grant to John D.
Finnegan (the “Participant”), subject to the terms and conditions set forth
herein and in the Plan, a Restricted Stock Award (the “Award”) of 61,617 shares
of Restricted Stock (“Restricted Shares”). All capitalized terms used herein
which are not otherwise defined herein shall have the meaning specified in the
Plan.   2.   It is understood and agreed that the grant of Restricted Shares
evidenced hereby is subject to the following conditions:

  (a)   Except as provided in paragraph 4 and 5, the Restriction Period for
shares pursuant to this Award shall be as follows: for 30,809 shares granted
under this Award, December 2, 2003; for 30,808 shares granted under this Award,
December 2, 2004. Certificates evidencing the Restricted Shares shall be issued
by the Corporation and registered in the name of the Participant on the stock
transfer books of the Corporation but during the Restriction Period, such
certificates shall bear all appropriate legend, such legend to be removed only
if, and when, the Restriction Period ends as provided herein. As a condition to
receiving this Award, Participant shall deliver to the Corporation the attached
stock power duly endorsed in blank. Notwithstanding the above, the Participant
shall be entitled to exercise all rights, except the rights specifically
prohibited by paragraph 2(c), otherwise held by an owner of a share of Common
Stock, including the right to receive free of restrictions all cash dividends
paid on such Common Stock.     (b)   In order to comply with any applicable
securities laws, the Corporation may require the Participant (i) to furnish
evidence satisfactory to the Corporation (including a written and signed
representation letter) to the effect that all Restricted Shares were acquired
for investment only and not for resale or distribution and (ii) to agree that
all Restricted Shares shall only be sold by the Participant following
registration under the Securities Act of 1933 or pursuant to an exemption
therefrom.     (c)   During the Restriction Period, the Restricted Shares may
not be sold, hypothecated, pledged or otherwise transferred in any manner except
by will or the laws of descent and distribution or as otherwise specifically
permitted herein.

3.   The Award shall not constitute nor be evidence of any agreement or
understanding, express or implied, on the part of the Corporation or any of its
Subsidiaries to employ or continue the employment of the Participant for any
period.   4.   Termination of Employment.

  (a)   Except as provided in subparagraph (b) and subparagraph (c) of this
paragraph 4, the Restricted Shares shall be automatically forfeited upon the
Participant’s

(Page 1 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Restricted Stock Award

      termination of employment during the Restriction Period. Upon any
forfeiture of Restricted Shares hereunder, ownership of such shares shall be
transferred to the Corporation and the Participant shall cease to have any
ownership interest in such shares as of the date of such forfeiture.     (b)  
Upon termination of the Participant’s employment for retirement on or after
Participant’s Normal Retirement Date under the Corporation’s Pension Plan, or by
reason of death or disability (as defined in such Pension Plan) of the
Participant or for any reason with the consent of the Committee, there shall be
distributed to the Participant (or the Participant’s Designated Beneficiary in
the case of the Participant’s death) the number of Restricted Shares equal to
the number of Restricted Shares times a fraction the numerator of which is the
number of full calendar months from December 2, 2002 to the date of such
termination of employment and the denominator of which is 24, and all other
Restricted Shares shall be forfeited, provided, however, that the Committee may
determine that the Participant (or the Designated Beneficiary) is entitled to
receive a greater number of Restricted Shares up to but not exceeding the number
of Restricted Shares which would have been distributed had the Participant
continued to be employed until December 2, 2004.     (c)   Upon termination of
the Participant’s employment that would give rise to benefits under Section 5(a)
of the Employment Agreement by and between the Corporation and the Participant
effective as of December 1, 2002, the Restricted Shares shall vest in accordance
with the terms therein.     (d)   Transfer from the Corporation to a Subsidiary,
from a Subsidiary to the Corporation, or from one Subsidiary to another shall
not be considered a termination of employment. Nor shall it be considered a
termination of employment if the Participant is placed on a military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the later of the date when the leave equals ninety days or
the date when a Participant’s right to reemployment shall no longer be
guaranteed either by law or by contract.

5.   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 business or
assets of the Corporation or (ii) a Change in Control (as defined below) of the
Corporation, which occurs on or after December 2, 2003 (any such event described
in (i) or (ii) which occurs on or after December 2, 2003 being hereinafter
referred to as a “Change Event”), Restricted Shares not previously forfeited
pursuant to paragraph 4 shall become vested and nonforfeitable.

(Page 2 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Restricted Stock Award

    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 Common Stock outstanding, or
(b) following (i) a tender or exchange offer for voting securities of 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 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.   6.   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 Award, then the Committee shall, in its sole
discretion, and in such manner as the Committee may deem equitable, adjust any
or all of the number and kind of shares (or other property) subject to this
Award and/or, if deemed appropriate, make provision for a cash payment to the
person holding this Award provided, however, that the number of Restricted
Shares subject to this Award shall always be a whole number.   7.   Any notice
given hereunder to the Corporation shall be addressed to The Chubb Corporation,
attention Secretary, 15 Mountain View Road, P.O. Box 1615, Warren, New Jersey
07061-1615, and any notice given hereunder to the Participant shall be addressed
to the Participant at the Participant’s address as shown on the records of the
Corporation.   8.   The Participant agrees to be bound by the terms and
conditions hereof and of the Plan.   9.   Cancellation and Rescission of
Restricted Stock Award. The Committee may also cancel any Restricted Stock Award
at any time, and the Corporation shall have the additional rights set forth
below in this paragraph 9, if the Participant is not in compliance with all
applicable provisions of this Award agreement and the Plan including the
following conditions:

  (a)   A Participant shall not, without prior written authorization from the
Corporation, disclose to anyone outside the Corporation, or use in other than
the Corporation’s or any of its Subsidiaries’ business, any confidential
information or material relating to the business of the Corporation or any of
the Corporation’s Subsidiaries that is acquired by the Participant either during
or after employment with the Corporation or any of the Corporation’s
Subsidiaries.     (b)   A Participant shall not during his or her employment
with the Corporation or any of its Subsidiaries and for a period of one (1) year
following any termination of such employment relationship directly or indirectly
solicit, persuade, encourage or induce any individual employed by the
Corporation or any of its Subsidiaries during the above-referenced time periods
to become employed by or associated

(Page 3 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2000)   Restricted Stock Award

      with any person or entity other than the Corporation or any of its
Subsidiaries which employs Participant or for which Participant serves as an
officer, director, shareholder, partner or consultant, or with any firm related
to any such person or entity or to permit any other person or entity to do so on
Participant’s behalf.     (c)   A Participant shall disclose promptly and assign
to the Corporation all right, title, and interest in any invention or idea,
patentable or not, made or conceived by the Participant during employment by the
Corporation or any of its Subsidiaries, relating in any manner to the actual or
anticipated business, research or development work of the Corporation or any of
its Subsidiaries and shall do anything reasonably necessary to enable the
Corporation or any of its Subsidiaries to secure a patent, copyright or any
other intellectual property rights where appropriate in the United States and in
foreign countries.     (d)   Failure to comply with the provisions of this
paragraph 9 prior to, or during the six months after, the end of the Restriction
Period pursuant to the Restricted Stock Award shall cause the Restricted Stock
Award to be rescinded. The Corporation shall notify the Participant in writing
of any such rescission within two years after the end of the Restricted Period
provided, however, that the Corporation may, in its discretion, in any
individual case provide for waiver in whole or in part of compliance with the
provisions of this paragraph 9. Within ten days after receiving such a notice
from the Corporation, the Participant shall pay to the Corporation the amount of
any gain realized or payment received as a result of the vesting of the
Restricted Stock Award. Such payment shall be made either in cash and/or by
returning to the Corporation the number of shares of Stock that the Participant
received in connection with the rescinded Restricted Stock Award.

10.   Governing Law. The Award and the legal relations between the parties shall
be governed by and construed in accordance with the internal laws of the State
of New York.

                  THE CHUBB CORPORATION               By:   /s/ Henry G. Gulick
       

--------------------------------------------------------------------------------

        Secretary               Date:   December 2, 2002        

--------------------------------------------------------------------------------

(Page 4 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION   Employee Stock Option Award LONG-TERM STOCK  
Nonstatutory INCENTIVE PLAN (2000)   EXHIBIT C

1.   Pursuant to the provisions of The Chubb Corporation Long-Term Stock
Incentive Plan (2000) (the “Plan”), The Chubb Corporation (the “Corporation”) on
the date set forth below granted and hereby evidences the grant, subject to the
terms and conditions set forth herein and in the Plan, the option (the “Option”)
to purchase from the Corporation 133,618 shares of Common Stock, $1.00 par
value, of the Corporation, at the purchase price of $58.425 per share, the
Option to be exercisable as hereinafter provided. The option is intended to be a
nonstatutory stock option which does not qualify as an incentive stock option
within the meaning of section 422 of the Internal Revenue Code of 1986 as
amended. All capital terms used herein which are not otherwise defined herein
shall have the meaning specified in the Plan.   2.   Subject to the terms and
conditions hereof and of the Plan, the Option shall become exercisable in two
equal installments of 66,809 shares on the first and second anniversaries of
December 2, 2002, provided that the Optionee remains in the employ of the
Corporation through each such date.       Any exercise of the Option shall be
made by giving the Corporation or its designee written notice of exercise
specifying the number of shares to be purchased and specifying whether, and to
what extent, the option is being exercised. The notice of exercise shall be
accompanied by tender to the Corporation of the full purchase price of said
shares and the related amount of income taxes required to be withheld by the
Corporation, unless the Optionee has elected to have shares withheld to satisfy
such income tax withholding in accordance with the rules promulgated by the
Committee. Payment of the purchase price of the shares shall be made in cash,
check, shares of Common Stock of the Corporation, or a combination of the
foregoing provided, however, that the Committee may, in its sole discretion,
prohibit or limit the use of shares of Common Stock of the Corporation as part
or full payment of the purchase price.   3.   Without limiting the generality of
paragraph 1 hereof, it is understood and agreed that the Option is subject to
the following conditions:

  (a)   The Option shall not in any event be exercisable after the close of
business on December 1, 2012;     (b)   The Option shall not be transferred
except by will or the laws of descent and distribution and, during the lifetime
of the Optionee, shall be exercised only by the Optionee or by the Optionee’s
guardian or legal representative unless the Committee determines that permitting
such an exercise by a guardian or legal representative will violate any
applicable federal or state law; and     (c)   Neither the Optionee nor any
legal representative, legatee, or distributes of the Optionee shall be deemed to
be a holder of or possess any shareholder rights with respect to any shares
subject to the Option prior to the issuance of such shares upon exercise of the
Option.

(Page 1 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION   Employee Stock Option Award LONG-TERM STOCK  
Nonstatutory INCENTIVE PLAN (2000)  

  (d)   The grant of the Option should be considered extraordinary, and is not
part of the Optionee’s regular compensation. The granting of options may be
terminated at any time, and this current grant does not confer any right or
expectation that awards will be made to the Optionee in the future.

4.   Restoration Options. (a) Subject to the conditions of paragraph 4(b) below,
in the event the Optionee exercises the Option, in whole or in part, and pays
the purchase price by delivering shares of Common Stock, the Optionee shall
automatically be granted on the date of such exercise a Restoration Option. Such
Restoration Option shall be a Nonstatutory Stock Option for the number of shares
so tendered plus, if applicable, any shares of Common Sock tendered to satisfy
withholding tax liability arising in connection with such exercise, shall have a
purchase price per share equal to the Fair Market Value of a share of Common
Stock on the date of such exercise, shall be exercisable from the date of grant
of such Restoration Option until the earlier of (i) the expiration date
specified in paragraph 3(a) above (ii) or the time provided in paragraph 7(a),
(b) or (c) below, as applicable, and shall be reflected in a Restoration Option
Award furnished to the Optionee as soon as practicable after the date of such
exercise.

  (b) Paragraph 4(a) shall not be applicable (i) to an exercise of the Option
after December 2, 2009, (ii) to an exercise of the Option when the Fair Market
Value of a share of Common Stock is not at least $73.03, (iii) to an exercise of
the Option at any time after the Optionee has terminated employment with the
Corporation for any reason, or (iv) if the Committee determines that paragraph
4(a) shall not be applicable.

5.   The granting of the Option shall not constitute nor be evidence of any
agreement or understanding, express or implied, on the part of the Corporation
or any of its Subsidiaries to employ or continue the employment of the Optionee
for any period.

6.   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 the Option, 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, subject to
the Option and (2) the exercise price with respect to the Option and/or, if
deemed appropriate, make provision for a cash payment to the person holding the
Option provided, however, that the number of shares subject to the Option shall
always be a whole number.   7.   Termination of Employment.

  (a)   Except as provided in subparagraph (b) and subparagraph (c) of this
paragraph 7, the Option shall be automatically cancelled upon the Optionee’s
termination of employment.

(Page 2 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION   Employee Stock Option Award LONG-TERM STOCK  
Nonstatutory INCENTIVE PLAN (2000)  

  (b)   Upon termination of the Optionee’s employment for retirement on or after
Optionee’s Normal Retirement Date or Earliest Retirement Age under the
Corporation’s Pension Plan, or by reason of the disability (as defined in such
Pension Plan) of the Optionee, or for any reason with the consent of the
Committee, the Option if outstanding for one year prior to such termination date
shall be fully exercisable by the Optionee after the date of such termination
through the expiration date of the Option specified in accordance with paragraph
3 (a), above. In the event of death of the Optionee (whether before or after
termination of employment), the Option if outstanding for one year prior to such
death (if not previously cancelled) shall be fully exercisable by the Optionee’s
legal representative through the expiration date of the Option specified in
accordance with paragraph 3 (a) above.     (c)   Upon termination of the
Participant’s employment that would give rise to benefits under Section 5(a) of
the Employment Agreement by and between the Corporation and the Participant
effective as of December 1, 2002, the Option shall vest in accordance with the
terms therein.     (d)   Transfer from the Corporation to a Subsidiary, from a
Subsidiary to the Corporation, or from one Subsidiary to another shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment if the Optionee is placed on a military or sick leave or such
other leave of absence which is considered as continuing intact the employment
relationship.

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 business or assets of the Corporation or (ii) a Change in Control (as
defined below) of the Corporation, the Option if then outstanding shall become
exercisable in full.       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 Common Stock outstanding, or (b) following (i) a tender or exchange offer
for voting securities of 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 cease to constitute
a majority of the Board of Directors of the Corporation upon the completion of
such tender or exchange offer to proxy contest or within one year after such
completion.   9.   Any notice to be given hereunder to the Corporation, other
than with respect to option exercises, shall be addressed to The Chubb
Corporation, attention Secretary, 15 Mountain View Road, P.O. Box 1615, Warren,
New Jersey 07061-1615, and any notice given

(Page 3 of 4)

--------------------------------------------------------------------------------

 

      THE CHUBB CORPORATION   Employee Stock Option Award LONG-TERM STOCK  
Nonstatutory INCENTIVE PLAN (2000)  

    hereunder to the Optionee shall be addressed to him at this address as shown
on the records of the Corporation.   10.   The Optionee agrees to be bound by
the terms and conditions hereof and of the Plan.   11.   Governing Law. The
Option and the legal relations between the parties shall be governed by and
construed in accordance with the internal laws of the State of New York.

              THE CHUBB CORPORATION               By:   /s/ Henry G. Gulick    
   

--------------------------------------------------------------------------------

Secretary               Date:   December 2, 2002

--------------------------------------------------------------------------------

(Page 4 of 4)

--------------------------------------------------------------------------------

 

EXHIBIT D

Form of Release

     (a)  In consideration for the payment of the severance described in the
Executive employment agreement with the Company (the “Employment Agreement”),
dated as of January 9, 2003, the Executive for himself, and for his heirs,
administrators, representatives, executors, successors and assigns (collectively
“Releasers”) does hereby irrevocably and unconditionally release, acquit and
forever discharge the Company, its subsidiaries, affiliates and divisions and
their respective, current and former, trustees, officers, directors, partners,
shareholders, agents, employees, consultants, independent contractors and
representatives, including without limitation all persons acting by, through
under or in concert with any of them (collectively, “Releasees”), and each of
them from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, remedies, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether
in law or equity and whether arising under federal, state or local law and in
particular including any claim for discrimination based upon race, color,
ethnicity, sex, age (including the Age Discrimination in Employment Act of
1967), national origin, religion, disability, or any other unlawful criterion or
circumstance, which the Executive and Releasers had, now have, or may have in
the future against each or any of the Releasees, including under the New Jersey
Law Against Discrimination, the New Jersey Conscientious Employee Protection
Act, the Employment Agreement, and the Change in Control Employment Agreement
(collectively “Executive/Releaser Actions”) from the beginning of the world
until the date hereof.

     (b)  The Executive acknowledges that: (i) this entire Release is written in
a manner calculated to be understood by him; (ii) he has been advised to consult
with an attorney before executing this Release; (iii) he was given a period of
twenty-one days within which to consider this Release; and (iv) to the extent he
executes this Release before the expiration of the twenty-one day period, he
does so knowingly and voluntarily and only after consulting his attorney. The
Executive shall have the right to cancel and revoke this Release by delivering
notice to the Company pursuant to the notice provision of Section 12 of the
Employment Agreement prior to the expiration of the seven-day period following
the date hereof, and the severance benefits under the Employment Agreement shall
not become effective, and no payments or benefits shall be made or provided
thereunder, until the day after the expiration of such seven-day period (the
“Revocation Date”). Upon such revocation, this Release and the severance
provisions of the Employment Agreement shall be null and void and of no further
force or effect.

     (c)  Notwithstanding anything herein to the contrary, the sole matters to
which the Release do not apply are: (i) the Executive’s rights of
indemnification and directors and officers liability insurance coverage to which
he was entitled immediately prior to            with regard to his service as an
officer of the Company (including, without limitation, under Section 11 of the
Employment Agreement); (ii) the Executive’s rights under any tax-qualified
pension or claims for accrued vested benefits under any other employee benefit
plan, policy or arrangement maintained by the Company or under COBRA; or
(iii) the Executive’s rights under Sections 3(b)(xii), 5, 7, 9 and 11 of the
Employment Agreement which are intended to survive termination of employment.

--------------------------------------------------------------------------------

 

     (d)  This Release is the complete understanding between the Executive and
the Company in respect of the subject matter of this Release and supersedes all
prior agreements relating to the same subject matter. The Executive has not
relied upon any representations, promises or agreements of any kind except those
set forth herein in signing this Release.

     (e)  In the event that any provision of this Release should be held to be
invalid or unenforceable, each and all of the other provisions of this Release
shall remain in full force and effect. If any provision of this Release is found
to be invalid or unenforceable, such provision shall be modified as necessary to
permit this Release to be upheld and enforced to the maximum extent permitted by
law.

     (f)  This Release is to be governed and enforced under the laws of the
State of New Jersey (except to the extent that New Jersey conflicts of law rules
would call for the application of the law of another jurisdiction).

     (g)  This Release inures to the benefit of the Company and its successors
and assigns.

 

--------------------------------------------------------------------------------

EXECUTIVE