Exhibit 10.7


 


THE
CHUBB CORPORATION

LONG-TERM STOCK

INCENTIVE PLAN (2004)


 


Non-statutory
Stock Option Award Agreement


 


This NON-STATUTORY STOCK OPTION 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 Non-statutory Stock Options 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 Non-statutory Stock Options on the terms and conditions set forth
herein.


 


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


 


1.                                       Grant
of Options; Exercise Price.  Pursuant
to the provisions of the Plan, on the date set forth above (the “Grant Date”),
the Corporation has granted and hereby evidences the grant to the Participant,
subject to the terms and conditions set forth herein and in the Plan, of
options to purchase from the Corporation [         ]
shares of Stock (the “Option”). 
The exercise price for each share of Stock covered by the Option shall
be equal to [$       ], which was the Fair
Market Value of the Stock on the Grant Date. 
Upon any exercise of the Options, the Corporation shall cause a book
entry account maintained for the Participant to be credited for the number of
shares of Stock to be issued to the Participant (or shall evidence the issuance
of Stock by such other reasonable method as the Committee may determine in its
sole discretion).


 


2.                                       Exercisability.  Except as provided in Sections 5 and 6, and
subject to the Participant’s continued employment with the Corporation or a
Subsidiary through the applicable vesting date, the Options shall become vested
and exercisable in accordance with the following schedule:


 


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  Date

  	
   

  	
  Options Vested &
  Exercisable

  
	
   

  	
   

  	
   

  
	
  1st anniversary of Grant Date

  	
   

  	
  1/3 of the
  Options

  
	
   

  	
   

  	
   

  
	
  2nd anniversary of Grant Date

  	
   

  	
  1/3 of the
  Options

  
	
   

  	
   

  	
   

  
	
  3rd anniversary of Grant Date

  	
   

  	
  1/3 of the
  Options

  



 


Once vested in accordance with the provisions of this
Agreement, Options may be exercised at any time, and from time to time, prior
to the date such Options terminate as determined under Section 3(a) or
5.  Options may only be exercised with
respect to full shares of Stock and no fractional shares of Stock shall be
issued.  Any exercise of the Option shall
be made by giving the Corporation or its designee written notice of exercise
specifying the number of shares of Stock to be purchased.  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 taxes required 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 with respect to the
Stock deliverable hereunder, unless the Participant has elected to have shares
of Stock withheld to satisfy such tax withholding in accordance with the rules
promulgated by the Committee.  Payment of
the purchase price of the shares of Stock shall be made in cash, check, shares
of Stock owned by the Participant for at least six months which are not the
subject of any pledge or other security interest, in a combination of the
foregoing, or by any other method or procedure as shall be permitted by the
Plan or the Committee provided, however, that the Committee may,
in its sole discretion, prohibit or limit the use of shares of Stock as part or
full payment of the purchase price and any related tax withholding obligation.


 


3.                                       Conditions
Applicable to Options.  It is
understood and agreed that the Option is subject to the following conditions:


 


(a)                                  Normal
Termination of Options.  The Options
shall not in any event be exercisable on or after and shall be forfeited as of the
tenth anniversary of the Grant Date.


 


(b)                                 Restrictions
on Transfer.   The Options 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.


 


(c)                                  No
Rights as Shareholder.  Neither the
Participant nor any legal representative, legatee, distributee or Permitted
Transferee shall be deemed to be a holder of or possess any shareholder rights
with respect to any shares of Stock


 


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subject to the Option
prior to the issuance of such shares upon exercise of the Option.


 


(d)                                 No
Right to Compensation or Future Options. 
The grant of the Option shall be considered extraordinary, and is not
part of the Participant’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 (including Options)
will be made to the Participant in the future.


 


4.                                       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
shares subject to this Option, the exercise price with respect to shares of
Stock covered by the Option and/or, if deemed appropriate, make provision for a
cash payment to the person holding this Option, provided, however,
that the number of shares subject to this Option shall always be a whole
number.


 


5.                                       Termination
of Employment.


 


(a)                                  Qualifying
Termination of Employment.  If the
Participant’s employment terminates by reason of a Qualifying Termination of
Employment on or after the first anniversary of the Grant Date, all of the
Options granted hereunder shall become vested and the Participant may
exercise the Options until the normal termination date specified in Section 3(a).


 


(b)                                 Termination
for any Other Reason.  If the
Participant’s employment terminates for any reason other than a Qualifying
Termination of Employment on or after the first anniversary of the Grant Date,
any Options not exercised on or prior to the date of termination (including,
without limitation, any portion of the Options that are not then exercisable)
shall be forfeited and cancelled without further action by the Corporation or
the Participant as of the date of such termination of employment.


 


(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 


 


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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 5(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.


 


6.                                       Change
in Control.  Notwithstanding anything
in Section 2 to the contrary, in the event a Change in Control occurs,
Options not previously forfeited pursuant to Sections 3 or 5 shall be treated
as provided for in Section 9 of the Plan, in which case the Options shall
all become vested and exercisable immediately prior to the Change in Control
and shall be payable as provided in Sections 9(a)(i) 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.


 


7.                                       Notice.  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
Participant shall be addressed to the Participant at the Participant’s address
as shown on the records of the Corporation.


 


8.                                       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.


 


9.                                       Committee
Discretion; Delegation. 
Notwithstanding anything contained in this Agreement to the contrary,
the Committee, in its sole discretion and in accordance with the terms of the
Plan, may take any action that is authorized under the terms of the Plan that is
not contrary to the express terms hereof, including accelerating the vesting
and exercisability of Options, at such times (including, without limitation,
upon or in connection with the Participant’s termination of employment) and
upon such terms and conditions as the Committee shall determine.  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.


 


10.                                 Governing
Law.  The Option 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).


 


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11.                                 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.


 


12.                                 Binding
Effect; Benefits.  The Participant
agrees to be bound by the terms and conditions hereof and of the Plan.  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.


 


13.                                 Amendment.  This Agreement may not be altered, modified
or amended except by a written instrument signed by the Corporation and the
Participant.


 


14.                                 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.


 


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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