Exhibit 10.3

 

THE CHUBB CORPORATION
LONG-TERM STOCK
INCENTIVE PLAN (2004)

 

Performance Share Award Agreement

 

This PERFORMANCE SHARE AWARD AGREEMENT, dated as of March 3, 2005, is by and
between The Chubb Corporation (the “Corporation”) and [              ] (the
“Participant”), pursuant to The Chubb Corporation Long-Term Stock Incentive Plan
(2004) (the “Plan”).  Capitalized terms that are not defined herein shall have
the same meanings given to such terms in the Plan.  If any provision of this
Agreement conflicts with any provision of the Plan (as either may be interpreted
from time to time by the Committee), the Plan shall control.

 

WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized
the grant to the Participant of Performance Shares in accordance with the terms
and conditions of this Agreement; and

 

WHEREAS, the Participant and the Corporation desire to enter into this Agreement
to evidence and confirm the grant of such Performance Shares on the terms and
conditions set forth herein.

 

NOW THEREFORE, the Participant and the Corporation agree as follows:

 

1.                                                                                     
GRANT OF PERFORMANCE SHARES.  PURSUANT TO THE PROVISIONS OF THE PLAN, THE
CORPORATION ON THE DATE SET FORTH ABOVE (THE “GRANT DATE”) HAS GRANTED AND
HEREBY EVIDENCES THE GRANT TO THE PARTICIPANT, SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH HEREIN AND IN THE PLAN, OF AN AWARD OF [            ] 
PERFORMANCE SHARES (THE “AWARD”).

 

2.                                       PAYMENT OF EARNED PERFORMANCE SHARES.

 

(A)                                                  SETTLEMENT OF PERFORMANCE
SHARES.  SUBJECT TO THE PROVISIONS OF THIS SECTION 2, SECTION 4 AND SECTION 5,
THE PAYMENT VALUE OF EACH PERFORMANCE SHARE COVERED BY THE AWARD WHICH THE
COMMITTEE DETERMINES, IN WRITING, TO BE EARNED PURSUANT TO SECTION 3 SHALL BE
PAID BY THE CORPORATION ON A DATE (THE “VESTING DATE”) AS SOON AS
ADMINISTRATIVELY PRACTICABLE AFTER (BUT NO LATER THAN 2½ MONTHS AFTER THE
CALENDAR YEAR END COINCIDENT WITH) THE END OF THE PERFORMANCE CYCLE DESCRIBED IN
SECTION 3(A).  PAYMENTS HEREUNDER SHALL BE MADE IN CASH, SHARES OF STOCK, OR A
COMBINATION THEREOF, AS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION. 
NOTWITHSTANDING THE AFOREMENTIONED, THE VESTING DATE SHALL BE THE LAST DAY OF
THE PERFORMANCE CYCLE IF (I) THE PARTICIPANT EXPERIENCES A QUALIFIED TERMINATION
OF EMPLOYMENT ON OR AFTER DECEMBER 31, 2005 OR (II) THE COMMITTEE DETERMINES, IN
ITS DISCRETION, PURSUANT TO SECTION 4(B), THAT THE PARTICIPANT WILL NOT

 

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forfeit his or her rights to Performance Shares upon his or her termination of
employment for other reasons; in either case, provided the Committee determines,
in writing, that Performance Shares are to be awarded hereunder.

 

(B)                                                 VOLUNTARY DEFERRAL. 
NOTWITHSTANDING THE PROVISIONS OF SECTION 2(A), THE PARTICIPANT MAY ELECT, BY
ELECTION FILED WITH THE CORPORATION UNDER ITS KEY EMPLOYEE DEFERRED COMPENSATION
PLAN (2005) (OR ANY SUCCESSOR PLAN OR PROGRAM), AND ON A FORM ACCEPTABLE TO THE
COMMITTEE, NOT LATER THAN JUNE 30, 2007 AND SUBJECT TO SUCH TERMS AND CONDITIONS
AS THE COMMITTEE MAY SPECIFY, TO HAVE ANY PAYMENT THAT MAY BECOME DUE IN RESPECT
OF PERFORMANCE SHARES COVERED BY THE AWARD DEFERRED UNTIL SUCH LATER TIME AS
SHALL BE SPECIFIED IN SUCH ELECTION (OR, IF APPLICABLE, THE DATE DETERMINED
PURSUANT TO SECTION 2(C)).

 

(C)                                                  MANDATORY DEFERRAL OF
PAYMENT OF EARNED PERFORMANCE SHARES.  NOTWITHSTANDING ANYTHING CONTAINED IN
SECTION 2(A) OR 2(B) TO THE CONTRARY (UNLESS THE PAYMENT DATE ELECTED PURSUANT
TO SECTION 2(B) IS LATER THAN THE PAYMENT DATE SPECIFIED HEREIN, IN WHICH CASE
SECTION 2(B) SHALL CONTROL), IF THE CORPORATION’S ENDING AVERAGE VALUE IS LESS
THAN THE CORPORATION’S BEGINNING AVERAGE VALUE (AS SUCH TERMS ARE DEFINED IN
SECTION 3(C)), NO SETTLEMENT SHALL BE MADE IN RESPECT OF ANY PERFORMANCE SHARES
EARNED IN ACCORDANCE WITH SECTION 3 UNTIL THE EARLIER OF (I) THE FIRST DATE ON
OR BEFORE MARCH 10, 2009 ON WHICH THE AVERAGE OF THE AVERAGES OF THE HIGHEST AND
LOWEST SALES PRICES OF THE STOCK REPORTED FOR CONSOLIDATED TRADING OF ISSUES
LISTED ON THE NEW YORK STOCK EXCHANGE FOR THE 15 TRADING DAYS PRIOR TO SUCH DATE
EXCEEDS THE BEGINNING AVERAGE VALUE AND (II) THE FIRST DATE ON WHICH THE
PARTICIPANT HAS BOTH REACHED AGE 60 AND TERMINATED EMPLOYMENT WITH THE
CORPORATION AND ALL OTHER MEMBERS OF THE CORPORATION’S CONTROLLED GROUP OF
ENTITIES.  ONCE EITHER OF THE CONDITIONS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE HAS BEEN SATISFIED, SETTLEMENT SHALL OCCUR AS SOON AS PRACTICABLE
THEREAFTER (AND IN THE CASE OF CONDITION (I), NOT LATER THAN MARCH 15, 2009) IN
CASH, SHARES OF STOCK OR A COMBINATION THEREOF, AS DETERMINED BY THE COMMITTEE
IN ITS SOLE DISCRETION.  IF THE PARTICIPANT EXPERIENCES A QUALIFIED TERMINATION
OF EMPLOYMENT ON OR AFTER DECEMBER 31, 2005, OR IF THE COMMITTEE DETERMINES, IN
ITS DISCRETION PURSUANT TO SECTION 4(B), THAT THE PARTICIPANT WILL NOT FORFEIT
HIS OR HER RIGHTS TO PERFORMANCE SHARES UPON HIS OR HER TERMINATION OF
EMPLOYMENT FOR OTHER REASONS, SETTLEMENT SHALL NOT OCCUR UNTIL THE FIRST DATE ON
WHICH THE PARTICIPANT HAS ATTAINED AGE 60 (OR, IN THE CASE OF THE PARTICIPANT’S
DEATH, WOULD HAVE ATTAINED AGE 60).  IF A PARTICIPANT TERMINATES EMPLOYMENT
AFTER REACHING AGE 60, IS A “SPECIFIED EMPLOYEE” (AS THAT TERM IS DEFINED IN
SECTION 409A(A)(2)(B)(I) OF THE CODE) AT THE TIME HE OR SHE TERMINATES
EMPLOYMENT, AND IS SCHEDULED TO HAVE HIS OR HER PERFORMANCE SHARES SETTLED
PURSUANT TO CONDITION (II), NO SETTLEMENT SHALL BE MADE UNTIL AT LEAST SIX
MONTHS AFTER SUCH TERMINATION OF EMPLOYMENT, OR THE PARTICIPANT’S DEATH, IF
EARLIER.

 

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3.                                       VESTING CRITERIA APPLICABLE TO
PERFORMANCE SHARES.

 

(A)                                                  PERFORMANCE CYCLE.  THE
PERFORMANCE CYCLE FOR THIS AWARD SHALL COMMENCE ON MAY 1, 2005, AND SHALL END ON
DECEMBER 31, 2007.

 

(B)                                                 PERFORMANCE GOAL.  THE
PERFORMANCE GOAL FOR THE PERFORMANCE CYCLE IS THE TOTAL RETURN PER SHARE OF
STOCK TO THE CORPORATION’S SHAREHOLDERS, INCLUSIVE OF DIVIDENDS PAID (REGARDLESS
OF WHETHER PAID IN CASH OR PROPERTY, WHICH DIVIDENDS SHALL BE DEEMED REINVESTED
IN STOCK), DURING THE PERFORMANCE CYCLE IN COMPARISON TO THE TOTAL RETURN PER
SHARE OF STOCK, INCLUSIVE OF DIVIDENDS PAID (REGARDLESS OF WHETHER PAID IN CASH
OR PROPERTY, WHICH DIVIDENDS SHALL BE DEEMED REINVESTED IN STOCK), ACHIEVED BY
THE COMPANIES (I) WHICH ARE IN THE STANDARD & POORS 500 INDEX (THE “S&P 500”) ON
THE DATE THE PERFORMANCE CYCLE BEGINS AND (II) WHICH CONTINUE TO FILE PUBLIC
REPORTS PURSUANT TO THE ACT FOR THE ENTIRETY OF THE PERFORMANCE CYCLE (SUCH
COMPANIES, THE “COMPARISON COMPANIES”).  FOR THE AVOIDANCE OF DOUBT, A COMPANY
INCLUDED IN THE S&P 500 ON THE DATE THE PERFORMANCE CYCLE COMMENCES THAT IS NOT
INCLUDED IN THE S&P 500 AT THE CONCLUSION OF THE PERFORMANCE CYCLE WILL BE A
COMPARISON COMPANY AS LONG AS IT FILES PUBLIC REPORTS PURSUANT TO THE ACT FOR
THE ENTIRE PERFORMANCE CYCLE (AND ANY COMPANY FIRST INCLUDED IN THE S&P 500
AFTER THE START OF THE PERFORMANCE CYCLE WOULD NOT BE A COMPARISON COMPANY).

 

(C)                                                  COMPARISON OF TOTAL
SHAREHOLDER RETURN.  EXCEPT AS PROVIDED IN SECTION 5, THE PERFORMANCE SHARES
COVERED BY THE AWARD SHALL BE DEEMED EARNED BASED ON WHERE THE CORPORATION’S
TOTAL SHAREHOLDER RETURN DURING THE PERFORMANCE CYCLE RANKS IN RELATION TO THE
TOTAL SHAREHOLDER RETURNS OF THE COMPARISON COMPANIES DURING SUCH PERIOD.  FOR
PURPOSES OF CALCULATING THE TOTAL SHAREHOLDER RETURN OF THE CORPORATION AND THE
COMPARISON COMPANIES DURING THE PERFORMANCE CYCLE, THE VALUE OF EACH SUCH
COMPANY’S STOCK AT THE BEGINNING AND END OF THE PERFORMANCE CYCLE SHALL BE
ESTABLISHED BASED ON THE AVERAGE OF THE AVERAGES OF THE HIGH AND LOW TRADING
PRICES OF THE APPLICABLE STOCK ON THE PRINCIPAL EXCHANGE ON WHICH THE STOCK
TRADES FOR THE 15 TRADING DAYS OCCURRING IMMEDIATELY PRIOR TO THE BEGINNING OR
END OF THE PERFORMANCE CYCLE, AS THE CASE MAY BE.  SUCH AVERAGES FOR EACH SUCH
COMPANY (INCLUDING THE CORPORATION) SHALL BE REFERRED TO HEREIN AS THE
“BEGINNING AVERAGE VALUE” AND THE “ENDING AVERAGE VALUE.”  AS SOON AS
PRACTICABLE AFTER THE COMPLETION OF THE PERFORMANCE CYCLE, THE TOTAL SHAREHOLDER
RETURNS OF THE COMPARISON COMPANIES WILL BE CALCULATED AND RANKED FROM HIGHEST
TO LOWEST.  THE CORPORATION’S TOTAL SHAREHOLDER RETURN WILL THEN BE RANKED IN
TERMS OF WHICH PERCENTILE IT WOULD HAVE PLACED IN AMONG THE COMPARISON
COMPANIES.  IN CALCULATING THE TOTAL SHAREHOLDER RETURN WITH RESPECT TO EITHER
THE CORPORATION OR ANY OF THE COMPARISON COMPANIES, THE COMMITTEE SHALL MAKE OR
SHALL CAUSE TO BE MADE SUCH APPROPRIATE ADJUSTMENTS TO THE CALCULATION OF TOTAL
SHAREHOLDER RETURN FOR SUCH ENTITY (INCLUDING, WITHOUT

 

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limitation, adjusting the Beginning Average Value) as shall be necessary or
appropriate to avoid an artificial increase or decrease in such return as a
result of a stock split (including a reverse stock split), recapitalization or
other similar event affecting the capital structure of such entity that does not
involve the issuance of the entity’s securities in exchange for money, property
or other consideration.

 

(D)                                                 PERCENTAGE OF PERFORMANCE
SHARES EARNED.  THE EXTENT TO WHICH PERFORMANCE SHARES SHALL BECOME EARNED ON
THE VESTING DATE DESCRIBED IN SECTION 2(A) SHALL BE DETERMINED ACCORDING TO THE
FOLLOWING SCHEDULE:

 

Relative
Performance
Level Percentile

 

Percent of
Performance
Shares Earned

 

85th or higher

 

200

%

50th

 

100

%

25th

 

50

%

Under 25th

 

0

%

 

TO THE EXTENT THAT THE CORPORATION’S TOTAL SHAREHOLDER RETURN RANKS IN A
PERCENTILE BETWEEN THE 25TH AND THE 50TH PERCENTILE, OR BETWEEN THE 50TH AND THE
85TH PERCENTILE, OF COMPARATIVE PERFORMANCE, THEN THE NUMBER OF PERFORMANCE
SHARES EARNED ON THE VESTING DATE SHALL BE DETERMINED BY MULTIPLYING THE
RELATIVE PERCENTILE OF COMPARATIVE PERFORMANCE ACHIEVED BY THE CORPORATION BY
TWO (E.G., IF THE CORPORATION’S TOTAL SHAREHOLDER RETURN WOULD HAVE PLACED IN
THE 40TH PERCENTILE, THEN 80% OF THE PERFORMANCE SHARES COVERED BY THE AWARD
BECOME EARNED ON THE VESTING DATE; IF THE CORPORATION’S TOTAL SHAREHOLDER RETURN
WOULD HAVE PLACED IN THE 75TH PERCENTILE, THEN 150% OF THE PERFORMANCE SHARES
COVERED BY THE AWARD BECOME EARNED ON THE VESTING DATE).

 

4.                                       TERMINATION OF EMPLOYMENT.  EXCEPT AS
PROVIDED IN THIS SECTION 4 OR IN SECTION 5, THE PARTICIPANT SHALL NOT HAVE ANY
RIGHT TO ANY PAYMENT HEREUNDER UNLESS THE PARTICIPANT IS EMPLOYED BY THE
CORPORATION OR A SUBSIDIARY ON THE DATE THE PERFORMANCE SHARES SUBJECT TO THIS
AWARD ARE SETTLED PURSUANT TO SECTION 2(A) (OR WOULD HAVE BEEN SETTLED WITHOUT
REGARD TO ANY OTHER PROVISION OF SECTION 2).

 

(A)                                  QUALIFYING TERMINATION OF EMPLOYMENT.  IF
THE PARTICIPANT’S EMPLOYMENT TERMINATES BY REASON OF A QUALIFYING TERMINATION OF
EMPLOYMENT ON OR AFTER DECEMBER 31, 2005, THE PARTICIPANT SHALL BE ENTITLED TO
RECEIVE THE SAME PAYMENT VALUES (WITHOUT PRO-RATION) IN RESPECT OF THE
PERFORMANCE SHARES COVERED BY THE AWARD AS WOULD HAVE BEEN PAYABLE, AND AT THE
SAME TIME AND

 

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SUBJECT TO THE SAME CONDITIONS, HAD HIS OR HER EMPLOYMENT CONTINUED UNTIL THE
END OF THE PERFORMANCE CYCLE.

 

(B)                                 TERMINATION FOR ANY OTHER REASON.  UNLESS
OTHERWISE DETERMINED BY THE COMMITTEE, IF THE PARTICIPANT’S EMPLOYMENT IS
TERMINATED PRIOR TO THE DATE ON WHICH THE PERFORMANCE SHARES SUBJECT TO THIS
AWARD ARE SETTLED PURSUANT TO SECTION 2(A) (OR WOULD HAVE BEEN SETTLED WITHOUT
REGARD TO ANY OTHER PROVISION OF SECTION 2) FOR ANY REASON OTHER THAN A
QUALIFYING TERMINATION OF EMPLOYMENT OCCURRING ON OR AFTER DECEMBER 31, 2005,
ALL OF THE PARTICIPANT’S RIGHTS TO PERFORMANCE SHARES COVERED BY THE AWARD SHALL
BE IMMEDIATELY FORFEITED AND CANCELED WITHOUT FURTHER ACTION BY THE CORPORATION
OR THE PARTICIPANT AS OF THE DATE OF SUCH TERMINATION OF EMPLOYMENT. 
NOTWITHSTANDING THE PRECEDING SENTENCE, THE PARTICIPANT’S PERFORMANCE SHARES
SHALL BE IMMEDIATELY FORFEITED AND CANCELLED WITHOUT FURTHER ACTION BY THE
CORPORATION OR THE PARTICIPANT UPON THE PARTICIPANT’S TERMINATION OF EMPLOYMENT
FOR CAUSE.

 

(C)                                  TRANSFERS BETWEEN THE CORPORATION AND
SUBSIDIARIES; LEAVES, OTHER ABSENCES AND SUSPENSION.  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.  ANY
QUESTION REGARDING WHETHER A PARTICIPANT’S EMPLOYMENT HAS TERMINATED IN
CONNECTION WITH A LEAVE OF ABSENCE OR OTHER ABSENCE FROM ACTIVE EMPLOYMENT SHALL
BE DETERMINED BY THE COMMITTEE, IN ITS SOLE DISCRETION, TAKING INTO ACCOUNT THE
PROVISIONS OF APPLICABLE LAW AND THE CORPORATION’S GENERALLY APPLICABLE
EMPLOYMENT POLICIES AND PRACTICES.  THE COMMITTEE MAY ALSO SUSPEND THE OPERATION
OF THE TERMINATION OF EMPLOYMENT PROVISIONS OF THIS AGREEMENT FOR SUCH PERIOD
AND UPON SUCH TERMS AND CONDITIONS AS IT MAY DEEM NECESSARY OR APPROPRIATE TO
FURTHER THE INTERESTS OF THE CORPORATION.

 

(D)                                 TERMINATION PURSUANT TO A CHANGE IN
CONTROL.  NOTWITHSTANDING THE PROVISIONS OF SECTION 4(B), IF THE PARTICIPANT’S
EMPLOYMENT IS INVOLUNTARILY TERMINATED OTHER THAN FOR CAUSE OR IF THE
PARTICIPANT TERMINATES EMPLOYMENT DUE TO DEATH OR DISABILITY, IN ALL SUCH CASES
ON OR AFTER THE DATE THE CORPORATION’S SHAREHOLDERS APPROVE A CHANGE IN CONTROL
PURSUANT TO SUBSECTIONS (III) OR (IV) OF SUCH DEFINITION BUT PRIOR TO THE
CONSUMMATION OF SUCH CHANGE IN CONTROL, THE PARTICIPANT SHALL BE TREATED AS
HAVING CONTINUED EMPLOYMENT THROUGH, AND TERMINATED EMPLOYMENT IMMEDIATELY
AFTER, SUCH CHANGE IN CONTROL.

 

5.                                       CHANGE IN CONTROL.  NOTWITHSTANDING
ANYTHING IN SECTION 2 OR 3 TO THE CONTRARY, IN THE EVENT A CHANGE IN CONTROL
OCCURS, PERFORMANCE SHARES COVERED BY THE AWARD NOT PREVIOUSLY FORFEITED
PURSUANT TO SECTION 4 SHALL BE TREATED IN ACCORDANCE WITH SECTION 9 OF THE PLAN,
IN WHICH CASE THE PERFORMANCE SHARES COVERED BY THE AWARD SHALL BECOME EARNED
AND PAYABLE AS PROVIDED IN SECTIONS 9(A)(II) AND 9(A)(III) OF THE PLAN OR, IF
APPLICABLE, BE HONORED, ASSUMED OR SUBSTITUTED FOR IN ACCORDANCE WITH
SECTION 9(B) OF THE PLAN.

 

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6.                                       ADJUSTMENT IN CAPITALIZATION.  IN THE
EVENT THAT THE COMMITTEE SHALL DETERMINE THAT ANY STOCK DIVIDEND, STOCK SPLIT,
SHARE COMBINATION, EXTRAORDINARY CASH DIVIDEND, RECAPITALIZATION,
REORGANIZATION, MERGER, CONSOLIDATION, SPLIT-UP, SPIN-OFF, COMBINATION, EXCHANGE
OF SHARES, WARRANTS OR RIGHTS OFFERING TO PURCHASE STOCK AT A PRICE
SUBSTANTIALLY BELOW FAIR MARKET VALUE, OR OTHER SIMILAR CORPORATE EVENT AFFECTS
THE STOCK SUCH THAT AN ADJUSTMENT IS REQUIRED IN ORDER TO PRESERVE, OR TO
PREVENT THE ENLARGEMENT OF, 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 PERFORMANCE SHARES SUBJECT TO THIS AWARD
AND/OR, IF DEEMED APPROPRIATE, MAKE PROVISION FOR A CASH PAYMENT TO THE PERSON
HOLDING THIS AWARD, PROVIDED, HOWEVER, THAT, UNLESS THE COMMITTEE DETERMINES
OTHERWISE, THE NUMBER OF PERFORMANCE SHARES SUBJECT TO THIS AWARD SHALL ALWAYS
BE A WHOLE NUMBER.

 

7.                                       RESTRICTIONS ON TRANSFER.  PERFORMANCE
SHARES MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED, PLEDGED OR OTHERWISE TRANSFERRED
OR ENCUMBERED IN ANY MANNER EXCEPT (I) BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION OR (II) TO A “PERMITTED TRANSFEREE” (AS DEFINED IN SECTION 11(B) OF
THE PLAN) WITH THE PERMISSION OF, AND SUBJECT TO SUCH CONDITIONS AS MAY BE
IMPOSED BY, THE COMMITTEE.

 

8.                                       NO RIGHTS AS A SHAREHOLDER.  UNTIL
SHARES OF STOCK ARE ISSUED, IF AT ALL, IN SATISFACTION OF THE CORPORATION’S
OBLIGATIONS UNDER THIS AWARD, IN THE TIME AND MANNER SPECIFIED IN SECTION 2 OR
5, THE PARTICIPANT SHALL HAVE NO RIGHTS AS A SHAREHOLDER.

 

9.                                       NOTICE.  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.

 

10.                                 RESTRICTIVE COVENANTS.  AS A CONDITION TO
THE RECEIPT OF THE AWARD MADE HEREBY, THE PARTICIPANT AGREES TO BE BOUND BY THE
TERMS AND CONDITIONS HEREOF AND OF THE PLAN, INCLUDING THE FOLLOWING RESTRICTIVE
COVENANTS:

 

(A)                                  NON-DISCLOSURE.  A PARTICIPANT SHALL NOT,
WITHOUT PRIOR WRITTEN AUTHORIZATION FROM THE CORPORATION, DISCLOSE TO ANYONE
OUTSIDE THE CORPORATION, OR USE (OTHER THAN IN THE CORPORATION’S OR ANY OF THE
SUBSIDIARIES’ BUSINESS), ANY CONFIDENTIAL INFORMATION OR MATERIAL RELATING TO
THE BUSINESS OF THE CORPORATION OR ANY OF THE SUBSIDIARIES THAT IS ACQUIRED BY
THE PARTICIPANT EITHER DURING OR AFTER EMPLOYMENT WITH THE CORPORATION OR ANY OF
THE SUBSIDIARIES.

 

(B)                                 NON-SOLICITATION.  A PARTICIPANT SHALL NOT
DURING HIS OR HER EMPLOYMENT WITH THE CORPORATION OR ANY OF THE SUBSIDIARIES AND
FOR A PERIOD OF ONE YEAR FOLLOWING ANY TERMINATION OF SUCH EMPLOYMENT
RELATIONSHIP, DIRECTLY OR INDIRECTLY, SOLICIT, PERSUADE, ENCOURAGE OR INDUCE ANY
INDIVIDUAL EMPLOYED BY THE

 

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CORPORATION OR ANY OF THE SUBSIDIARIES DURING THE ABOVE-REFERENCED TIME PERIODS
TO BECOME EMPLOYED BY OR ASSOCIATED WITH ANY PERSON OR ENTITY OTHER THAN THE
CORPORATION OR ANY OF THE SUBSIDIARIES, WHICH EMPLOYS THE PARTICIPANT OR FOR
WHICH THE 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 THE PARTICIPANT’S BEHALF.

 

(C)                                  INVENTIONS.  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 THE SUBSIDIARIES, RELATING IN ANY
MANNER TO THE ACTUAL OR ANTICIPATED BUSINESS, RESEARCH OR DEVELOPMENT WORK OF
THE CORPORATION OR ANY OF THE SUBSIDIARIES AND SHALL DO ANYTHING REASONABLY
NECESSARY TO ENABLE THE CORPORATION OR ANY OF THE SUBSIDIARIES TO SECURE A
PATENT, COPYRIGHT OR ANY OTHER INTELLECTUAL PROPERTY RIGHTS WHERE APPROPRIATE IN
THE UNITED STATES AND IN FOREIGN COUNTRIES.

 

(D)                                 RELIEF WITH RESPECT TO VIOLATIONS OF
COVENANTS.  FAILURE TO COMPLY WITH THE PROVISIONS OF THIS SECTION 10 AT ANY
POINT BEFORE PAYMENT IN RESPECT OF EARNED PERFORMANCE SHARES COVERED BY THE
AWARD IS MADE PURSUANT TO THE PROVISIONS OF SECTION 2 OR 5 SHALL CAUSE ALL
PERFORMANCE SHARES COVERED BY THE AWARD TO BE CANCELLED AND RESCINDED WITHOUT
ANY PAYMENT THEREFOR.  IN THE EVENT THAT ALL OR ANY PORTION OF THE PERFORMANCE
SHARES COVERED BY THIS AWARD SHALL HAVE BEEN SETTLED IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT WITHIN SIX MONTHS OF THE DATE ON WHICH ANY BREACH BY THE
PARTICIPANT OF ANY OF THE PROVISIONS OF THIS SECTION 10 SHALL HAVE FIRST
OCCURRED, THE COMMITTEE MAY REQUIRE THAT THE PARTICIPANT REPAY (WITH INTEREST OR
APPRECIATION (IF ANY), AS APPLICABLE, DETERMINED UP TO THE DATE PAYMENT IS
MADE), AND THE PARTICIPANT SHALL PROMPTLY REPAY, TO THE CORPORATION THE VALUE OF
ANY CASH OR PROPERTY (INCLUDING THE FAIR MARKET VALUE OF ANY STOCK) CONVEYED TO
THE PARTICIPANT WITHIN SUCH PERIOD IN RESPECT OF SUCH PERFORMANCE SHARES. 
ADDITIONALLY, THE PARTICIPANT AGREES THAT THE CORPORATION SHALL BE ENTITLED TO
AN INJUNCTION, RESTRAINING ORDER OR SUCH OTHER EQUITABLE RELIEF RESTRAINING THE
PARTICIPANT FROM COMMITTING ANY VIOLATION OF THE COVENANTS OR OBLIGATIONS
CONTAINED IN THIS SECTION 10.  THESE RESCISSION RIGHTS AND INJUNCTIVE REMEDIES
ARE CUMULATIVE AND ARE IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES THE
CORPORATION MAY HAVE AT LAW OR IN EQUITY.  THE PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE COVENANTS AND OBLIGATIONS IN THIS SECTION 10 RELATE TO SPECIAL,
UNIQUE AND EXTRAORDINARY MATTERS AND THAT A VIOLATION OR THREATENED VIOLATION OF
ANY OF THE TERMS OF SUCH COVENANTS OR OBLIGATIONS WILL CAUSE THE CORPORATION AND
THE SUBSIDIARIES IRREPARABLE INJURY FOR WHICH ADEQUATE REMEDIES ARE NOT
AVAILABLE AT LAW.

 

(E)                                  REFORMATION.  THE PARTICIPANT AGREES THAT
THE PROVISIONS OF THIS SECTION 10 ARE NECESSARY AND REASONABLE TO PROTECT THE
CORPORATION IN THE CONDUCT

 

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OF ITS BUSINESS.  IF ANY RESTRICTION CONTAINED IN THIS SECTION 10 SHALL BE
DEEMED TO BE INVALID, ILLEGAL OR UNENFORCEABLE BY REASON OF THE EXTENT, DURATION
OR GEOGRAPHICAL SCOPE HEREOF, OR OTHERWISE, THEN THE COURT MAKING SUCH
DETERMINATION SHALL HAVE THE RIGHT TO REDUCE SUCH EXTENT, DURATION, GEOGRAPHICAL
SCOPE OR OTHER PROVISIONS HEREOF, AND IN ITS REDUCED FORM SUCH RESTRICTION SHALL
THEN BE ENFORCEABLE IN THE MANNER CONTEMPLATED HEREBY.

 

11.                                 WITHHOLDING.  THE CORPORATION SHALL HAVE THE
RIGHT TO DEDUCT FROM ALL AMOUNTS PAID TO THE PARTICIPANT IN CASH IN RESPECT OF
PERFORMANCE SHARES COVERED BY THE AWARD ANY AMOUNT OF TAXES REQUIRED BY LAW TO
BE WITHHELD AS MAY BE NECESSARY IN THE OPINION OF THE CORPORATION TO SATISFY TAX
WITHHOLDING REQUIRED UNDER THE LAWS OF ANY COUNTRY, STATE, PROVINCE, CITY OR
OTHER JURISDICTION.  IN THE CASE OF ANY PAYMENTS OF PERFORMANCE SHARES COVERED
BY THE AWARD IN THE FORM OF STOCK, AT THE COMMITTEE’S DISCRETION, THE
PARTICIPANT SHALL BE REQUIRED TO EITHER PAY TO THE CORPORATION THE AMOUNT OF ANY
TAXES REQUIRED TO BE WITHHELD WITH RESPECT TO SUCH STOCK OR, IN LIEU THEREOF,
THE CORPORATION SHALL HAVE THE RIGHT TO RETAIN (OR THE PARTICIPANT MAY BE
OFFERED THE OPPORTUNITY TO ELECT TO TENDER) THE NUMBER OF SHARES OF STOCK WHOSE
FAIR MARKET VALUE EQUALS SUCH AMOUNT REQUIRED TO BE WITHHELD.

 

12.                                 COMMITTEE DISCRETION; DELEGATION. 
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, THE
COMMITTEE MAY TAKE ANY ACTION THAT IS AUTHORIZED UNDER THE TERMS OF THE PLAN
THAT IS NOT CONTRARY TO THE EXPRESS TERMS HEREOF, INCLUDING PERMITTING THE
PARTICIPANT TO RECEIVE (UPON SUCH TERMS AND CONDITIONS AS THE COMMITTEE SHALL
DETERMINE) ALL OR A PORTION OF THE PERFORMANCE SHARES COVERED BY THE AWARD, UP
TO THE MAXIMUM AMOUNT THAT WOULD HAVE BEEN PAYABLE, DESPITE THE TERMINATION OF
THE PARTICIPANT’S EMPLOYMENT PRIOR TO THE SETTLEMENT DATE SPECIFIED PURSUANT TO
SECTION 2(A).  NOTHING IN THIS AGREEMENT SHALL LIMIT OR IN ANY WAY RESTRICT THE
POWER OF THE COMMITTEE, CONSISTENT WITH THE TERMS OF THE PLAN, TO DELEGATE ANY
OF THE POWERS RESERVED TO IT HEREUNDER TO SUCH PERSON OR PERSONS AS IT SHALL
DESIGNATE FROM TIME TO TIME.

 

13.                                 NO RIGHT TO CONTINUED EMPLOYMENT.  NEITHER
THE EXECUTION AND DELIVERY HEREOF NOR THE GRANTING OF THE AWARD SHALL CONSTITUTE
OR BE EVIDENCE OF ANY AGREEMENT OR UNDERSTANDING, EXPRESS OR IMPLIED, ON THE
PART OF THE CORPORATION OR ANY OF THE SUBSIDIARIES TO EMPLOY OR CONTINUE THE
EMPLOYMENT OF THE PARTICIPANT FOR ANY PERIOD.

 

14.                                 GOVERNING LAW.  THE AWARD AND THE LEGAL
RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW JERSEY (WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAW).

 

15.                                 SIGNATURE IN COUNTERPART.  THIS AGREEMENT
MAY BE SIGNED IN COUNTERPARTS, EACH OF WHICH SHALL BE AN ORIGINAL, WITH THE SAME
EFFECT AS IF THE SIGNATURE THERETO AND HERETO WERE UPON THE SAME INSTRUMENT.

 

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16.                                 BINDING EFFECT; BENEFITS. THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE CORPORATION AND THE
PARTICIPANT AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS.  NOTHING IN
THIS AGREEMENT, EXPRESS OR IMPLIED, IS INTENDED OR SHALL BE CONSTRUED TO GIVE
ANY PERSON OTHER THAN THE CORPORATION OR THE PARTICIPANT OR THEIR RESPECTIVE
SUCCESSORS OR ASSIGNS ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR IN
RESPECT OF ANY AGREEMENT OR ANY PROVISION CONTAINED HEREIN.

 

17.                                 AMENDMENT.  THIS AGREEMENT MAY NOT BE
ALTERED, MODIFIED OR AMENDED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY THE
CORPORATION AND THE PARTICIPANT.

 

18.                                 SECTIONS AND OTHER HEADINGS.  THE
SECTION AND OTHER HEADINGS CONTAINED IN THIS AGREEMENT ARE FOR REFERENCE
PURPOSES ONLY AND SHALL NOT AFFECT THE MEANING OR INTERPRETATION OF THIS
AGREEMENT.

 

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IN WITNESS WHEREOF, the Corporation, by its duly authorized officer, and the
Participant have executed this Agreement in duplicate as of the day and year
first above written.

 

 

 

THE CHUBB CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Secretary

 

 

 

 

By:

 

 

 

Participant

 

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