1
[THE CHUBB CORPORATION LETTERHEAD]
December 6, 1995
Xx. Xxxx X. Xxxxxx
000 Xxx Xxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Dear Xx. Xxxxxx:
In order to induce you to remain in the employ of The Chubb Corporation
(the "Company") and in consideration of your continuing in the Company's employ,
the Company agrees to provide the severance benefits specified below on the
terms and subject to the conditions stated. However, in the absence of a Change
in Control of the Company, as defined below, nothing in this Agreement shall
affect the Company's normal right to terminate your employment or your right to
leave its employ.
1. Change in Control. For purposes of this Agreement a Change in
-----------------
Control will be deemed to have occurred
(A) if following (i) a tender or exchange offer for voting
securities of the Company, (ii) a proxy contest for the election of
Directors of the Company or (iii) a merger or consolidation or sale of
all or substantially all of the business or assets of the Company, the
Directors of the Company immediately prior to the initiation of such
event cease to constitute a majority of the Board of Directors of the
Company upon the occurrence of such event or within one year after such
event, or
(B) if any "person" or "group" (as defined under the beneficial
ownership rules of Sections 12(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934 and Rule 13d3 thereunder) acquires ownership or
control, or power to control, 25% or more of the outstanding voting
securities of the Company without prior approval or ratification by a
majority of the Company's Directors in office at the time of such event.
2. Conditions to Severance Benefits. The benefits provided for in
--------------------------------
Section 5 shall be payable or accrue to you if (a) a Change in Control has
occurred and (b) your employment with the Company has terminated within two
years after the Change in Control, other than termination by reason of
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December 6, 1995
Page 2
(i) your death, (ii) your retirement at normal retirement age ("Retirement")
under the Company's pension plan as in effect immediately prior to the Change in
Control, (iii) your voluntary termination other than for Good Reason, (iv) your
retirement for Disability or (v) your discharge for cause.
Termination by you of your employment for "Good Reason" shall mean
termination by you of your employment, subsequent to a Change in Control,
because of:
(A) the assignment to you, without your express written consent, of
any duties inconsistent with your positions, duties, responsibilities,
authority and status with the Company and its principal subsidiaries
immediately prior to such Change in Control, or a change in your
reporting responsibilities, titles or offices as in effect immediately
prior to the Change in Control, or any removal of you from or any
failure to re-elect you to any of such positions, except in connection
with the termination of your employment for Cause, Disability,
Retirement, as a result of your death or by you without Good Reason;
(B) a reduction by the Company in your base salary as in effect at
the time of such Change in Control;
(C) a failure by the Company to continue (or to replace with
equivalent plans) the Performance Share Plan, the Annual Incentive
Compensation Plan or any other Bonus Plan in which you participated for
the year immediately preceding such Change in Control (the "Bonus
Plans") which are in effect at the time of such Change in Control or a
failure by the Company to continue you as a participant in such Bonus
Plans (or equivalent plans) on a basis which would entitle you to
receive under such Bonus Plans (or equivalent plans) amounts at least
equal to the average amounts you received pursuant to such Bonus Plans
for the three years preceding such Change in Control;
(D) the Company's requiring you to maintain your principal office or
conduct your principal activities anywhere other than at the Company's
principal executive offices in the New York Metropolitan area, including
Somerset County, New Jersey;
(E) the failure by the Company to continue in effect (or to replace
with equivalent plans) the Company's Capital Accumulation Plan
3
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December 6, 1995
Page 3
or any other compensation plan, any stock ownership plan, stock purchase
plan, stock option plan, life insurance plan, health and accident plan,
financial services plan, hospital-medical plan, dental plan, or
disability plan in which you are participating or eligible to
participate at the time of such Change in Control, or the taking of any
action by the Company which would adversely affect your participation in
or materially reduce your benefits under any such plans (or equivalent
plans) or deprive you of any material fringe benefit enjoyed or to be
enjoyed by you at the time of such Change in Control;
(F) the failure by the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as contemplated in
Section 7 hereof;
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the applicable
requirements with respect to such Notice; or
(H) a determination made by you in good faith, whether before or
after the date you are eligible for early retirement under the Company's
pension plan, that as a result of such Change in Control you are not
able to discharge your duties effectively; or
(I) any termination of this Agreement pursuant to Section 6 prior to
the expiration of two years from the occurrence of the Change in
Control.
Termination of your employment for "Cause" shall mean termination
because of (A) the willful and continued failure by you substantially to perform
your duties with the Company and its principal subsidiaries (other than any such
failure resulting from your incapacity due to physical or mental illness), after
a demand for substantial performance is delivered to you by the Chief Executive
Officer of the Company, which specifically identifies the manner in which such
executive believes that you have not substantially performed your duties, or (B)
the willful engaging by you in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in or not opposed to the best interests of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
4
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December 6, 1995
Page 4
copy of a Notice of Termination from the Chief Executive Officer of the Company
after reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board of Directors, and a finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
clauses (A) or (B) of the first sentence of this paragraph and specifying the
particulars thereof in detail.
Termination of your employment for Disability shall mean termination in
accordance with the provisions of the Company's Long Term Disability Plan as in
effect immediately preceding the Change in Control.
3. Notice of Termination. Any purported termination of your employment
---------------------
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. No purported termination of your employment by
the Company shall be effective if it is not effected pursuant to a Notice of
Termination satisfying the requirements of this Section 3.
4. Date of Termination. "Date of Termination" shall mean (A) if your
-------------------
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day period) and (B) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
5. Severance Benefits. Subject to the conditions in Section 2, on
------------------
termination of your employment you shall be entitled to the following benefits:
(A) You shall be entitled to an amount (the "Severance
Compensation") equal to 2 times the sum of (i) one year's salary at the
annual rate in effect at the time of the Change in Control and (ii) the
average for the three calendar years preceding such Change in Control of
your bonuses under the Annual Incentive Compensation Plan (1984) (or
successor plan), provided, however, that your Severance Compensation
shall not be greater than the amount you would have received as salary
and such bonuses from the Company had you remained in the employ of the
Company from the Date of Termination until your normal retirement date
under the Company's pension plan (on the assumption that your salary
5
Xx. Xxxx X. Xxxxxx
December 6, 1995
Page 5
would remain at the same annual rate as in effect at the time of Change
in Control and that your annual bonuses would be the average for the
three calendar years preceding such Change in Control of such bonuses).
The Severance Compensation will be payable in full on the Date of
Termination.
(B) The Company shall also pay to you an amount equal to all legal
fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce or
retain any right or benefit provided by this Agreement);
(C) The Company shall maintain in full force and effect, for your
continued benefit until the earlier of (a) two years after the Date of
Termination or, (b) your commencement of full time employment with a new
employer, all life insurance, hospital-medical, dental, health and
accident, and disability plans in which you were entitled to participate
immediately prior to such Change in Control, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is barred for any reason
whatsoever, the Company shall arrange to provide you with benefits
substantially similar to those which you are entitled to receive under
such plan or program;
(D) You shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by you as the result of employment by
another employer after the Date of Termination or otherwise.
6. Term of Agreement. This Agreement shall have an initial term of two
-----------------
(2) years from the date hereof and shall be automatically extended at the
expiration of said two-year period for successive two (2) year periods unless
the Company gives you one year's prior written notice that it is terminating
this Agreement at the expiration of the then current two year period.
7. Successors: Binding Agreement.
-----------------------------
(A) The Company will require any purchaser of all or substantially
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December 6, 1995
Page 6
all of the business or assets of the Company, by agreement in form and
substance satisfactory to you to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such purchase had taken place. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business or assets as aforesaid which
executes and delivers the agreement provided for in this section 7A or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(B) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, divisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no such designee, to
your estate.
8. Notices. For the purposes of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the
Chairman of the Company, with a copy to the Secretary of the Company, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in this
Agreement; provided, however, that this Agreement shall not supersede or in
-------- -------
7
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December 6, 1995
Page 7
any way affect the rights, duties or obligations you may have under any other
written agreement with the Company. This Agreement shall be governed by, and
construed in accordance with, the laws (other than principles of conflicts of
laws) of the State of New York.
10. Validity. The invalidity or unenforceability of any provision of
this Agreement in any respect shall not affect the validity or enforceability
of such provision in any other respect or of any other provision of this
Agreement, all of which shall remain in full force and effect.
If the foregoing correctly sets forth our understanding on the subject
matter hereof, kindly sign and return to the Company the enclosed copy hereof,
which will thereupon become our binding agreement.
Sincerely,
THE CHUBB CORPORATION
By /s/ XXXX X. X'XXXX
-------------------
Xxxx X. X'Xxxx
Chairman
Agreed to this 8th day
of December, 1995.
/s/ XXXX X. XXXXXX
-------------------
Xxxx X. Xxxxxx
8
[CHUBB CORPORATION LETTERHEAD]
December 6, 1995
Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxx:
In order to induce you to remain in the employ of The Chubb Corporation
(the "Company") and in consideration of your continuing in the Company's employ,
the Company agrees to provide the severance benefits specified below on the
terms and subject to the conditions stated. However, in the absence of a Change
in Control of the Company, as defined below, nothing in this Agreement shall
affect the Company's normal right to terminate your employment or your right to
leave its employ.
1. Change in Control. For purposes of this Agreement a Change in Control
-----------------
will be deemed to have occurred
(A) if following (i) a tender or exchange offer for voting
securities of the Company, (ii) a proxy contest for the election of
Directors of the Company or (iii) a merger or consolidation or sale of
all or substantially all of the business or assets of the Company, the
Directors of the Company immediately prior to the initiation of such
event cease to constitute a majority of the Board of Directors of the
Company upon the occurrence of such event or within one year after such
event, or
(B) if any "person" or "group" (as defined under the beneficial
ownership rules of Sections 12(d) (3) and 14(d) (2) of the Securities
Exchange Act of 1934 and Rule 13d3 thereunder) acquires ownership or
control, or power to control, 25% or more of the outstanding voting
securities of the Company without prior approval or ratification by a
majority of the Company's Directors in office at the time of such event.
2. Conditions to Severance Benefits. The benefits provided for in Section
--------------------------------
5 shall be payable or accrue to you if (a) a Change in Control has occurred and
(b) your employment with the Company has terminated within two years after the
Change in Control, other than termination by reason of (i) your death, (ii) your
retirement at normal retirement age ("Retirement") under the Company's pension
9
Xx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 2
plan as in effect immediately prior to the Change in Control, (iii) your
voluntary termination other than for Good Reason, (iv) your retirement for
Disability or (v) your discharge for cause.
Termination by you of your employment for "Good Reason" shall mean
termination by you of your employment, subsequent to a Change in Control,
because of:
(A) the assignment to you, without your express written consent, of
any duties inconsistent with your positions, duties, responsibilities,
authority and status with the Company and its principal subsidiaries
immediately prior to such Change in Control, or a change in your
reporting responsibilities, titles or offices as in effect immediately
prior to the Change in Control, or any removal of you from or any
failure to re-elect you to any of such positions, except in connection
with the termination of your employment for Cause, Disability,
Retirement, as a result of your death or by you without Good Reason;
(B) a reduction by the Company in your base salary as in effect at
the time of such Change in Control;
(C) a failure by the Company to continue (or to replace with
equivalent plans) the Performance Share Plan, the Annual Incentive
Compensation Plan or any other Bonus Plan in which you participated for
the year immediately preceding such Change in Control (the "Bonus
Plans") which are in effect at the time of such Change in Control or a
failure by the Company to continue you as a participant in such Bonus
Plans (or equivalent plans) on a basis which would entitle you to
receive under such Bonus Plans (or equivalent plans) amounts at least
equal to the average amounts you received pursuant to such Bonus Plans
for the three years preceding such Change in Control;
(D) the Company's requiring you to maintain your principal office
or conduct your principal activities anywhere other than at the
Company's principal executive offices in the New York Metropolitan area,
including Somerset County, New Jersey;
(E) the failure by the Company to continue in effect (or to replace
with equivalent plans) the Company's Capital Accumulation Plan or any
other compensation plan, any stock ownership plan, stock purchase plan,
stock option plan, life insurance plan, health and accident plan,
financial services plan, hospital-medical plan, dental plan, or
10
Xx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 3
disability plan in which you are participating or eligible to
participate at the time of such Change in Control, or the taking of any
action by the Company which would adversely affect your participation in
or materially reduce your benefits under any such plans (or equivalent
plans) or deprive you of any material fringe benefit enjoyed or to be
enjoyed by you at the time of such Change in Control;
(F) the failure by the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as contemplated in
Section 7 hereof;
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the applicable
requirements with respect to such Notice; or
(H) a determination made by you in good faith, whether before or
after the date you are eligible for early retirement under the Company's
pension plan, that as a result of such Change in Control you are not
able to discharge your duties effectively; or
(I) any termination of this Agreement pursuant to Section 6 prior to
the expiration of two years from the occurrence of the Change in
Control.
Termination of your employment for "Cause" shall mean termination
because of (A) the willful and continued failure by you substantially to perform
your duties with the Company and its principal subsidiaries (other than any such
failure resulting from your incapacity due to physical or mental illness), after
a demand for substantial performance is delivered to you by the Chief Executive
Officer of the Company, which specifically identifies the manner in which such
executive believes that you have not substantially performed your duties, or (B)
the willful engaging by you in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable belief that
your action or omission was in or not opposed to the best interests of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
11
Xx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 4
copy of a Notice of Termination from the Chief Executive Officer of the Company
after reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board of Directors, and a finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
clauses (A) or (B) of the first sentence of this paragraph and specifying the
particulars thereof in detail.
Termination of your employment for Disability shall mean termination in
accordance with the provisions of the Company's Long Term Disability Plan as in
effect immediately preceding the Change in Control.
3. Notice of Termination. Any purported termination of your employment
---------------------
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated. No purported termination of your employment by the
Company shall be effective if it is not effected pursuant to a Notice of
Termination satisfying the requirements of this Section 3.
4. Date of Termination. "Date of Termination" shall mean (A) if your
-------------------
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day period) and (B) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
5. Severance Benefits. Subject to the conditions in Section 2, on
------------------
termination of your employment you shall be entitled to the following benefits:
(A) You shall be entitled to an amount (the "Severance
Compensation") equal to 2 times the sum of (i) one year's salary at the
annual rate in effect at the time of the Change in Control and (ii) the
average for the three calendar years preceding such Change in Control of
your bonuses under the Annual Incentive Compensation Plan (1984) (or
successor plan), provided, however, that your Severance Compensation
shall not be greater than the amount you would have received as salary
and such bonuses from the Company had you remained in the employ of the
Company from the Date of Termination until your normal retirement date
12
Xx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 5
under the Company's pension plan (on the assumption that your salary
would remain at the same annual rate as in effect at the time of Change
in Control and that your annual bonuses would be the average for the
three calendar years preceding such Change in Control of such bonuses).
The Severance Compensation will be payable in full on the Date of
Termination.
(B) The Company shall also pay to you an amount equal to all legal
fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce or
retain any right or benefit provided by this Agreement);
(C) The Company shall maintain in full force and effect, for your
continued benefit until the earlier of (a) two years after the Date of
Termination, or (b) your commencement of full time employment with a new
employer, all life insurance, hospital-medical, dental, health and
accident, and disability plans in which you were entitled to participate
immediately prior to such Change in Control, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is barred for any reason
whatsoever, the Company shall arrange to provide you with benefits
substantially similar to those which you are entitled to receive under
such plan or program;
(D) You shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by you as the result of employment by
another employer after the Date of Termination or otherwise.
6. Term of Agreement. This Agreement shall have an initial term of two
-----------------
(2) years from the date hereof and shall be automatically extended at the
expiration of said two-year period for successive two(2) year periods unless the
Company gives you one year's prior written notice that it is terminating this
Agreement at the expiration of the then current two year period.
7. Successors; Binding Agreement.
-----------------------------
(A) The Company will require any purchaser of all or substantially
all of the business or assets of the Company, by agreement in form and
13
Xx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 6
substance satisfactory to you to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such purchase had taken place. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business or assets as aforesaid which
executes and delivers the agreement provided for in this Section 7A or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(B) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, divisees and legatees. If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no such designee, to
your estate.
8. Notices. For the purposes of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the
Chairman of the Company, with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. Miscellaneous. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto, of or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
14
Xxx. Xxxxxxx X. Xxxxx
December 6, 1995
Page 7
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement; provided, however, that this Agreement shall not supersede or in any
way affect the rights, duties or obligations you may have under any other
written agreement with the Company. This Agreement shall be governed by, and
construed in accordance with, the laws (other than principles of conflicts of
laws) of the State of New York.
10. Validity. The invalidity or unenforceability of any provision of
this Agreement in any respect shall not affect the validity or enforceability of
such provision in any other respect or of any other provision of this Agreement,
all of which shall remain in full force and effect.
If the foregoing correctly sets forth our understanding on the subject
matter hereof, kindly sign and return to the Company the enclosed copy hereof,
which will thereupon become our binding agreement.
Sincerely,
THE CHUBB CORPORATION
By /s/ XXXX X. X'XXXX
----------------------
Xxxx X. X'Xxxx
Chairman
Agreed to this 8th day
of December, 1995.
/s/ XXXXXXX X. XXXXX
------------------------
Xxxxxxx X. Xxxxx
