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EXHIBIT 10.1
RETIREMENT AGREEMENT
This Retirement Agreement (including its Exhibits, the "AGREEMENT") is
made and entered into as of January 29, 2001 (the "EFFECTIVE DATE") by and
between BOH X. XXXXXX (the "EXECUTIVE") and SAFECO CORPORATION, a Washington
corporation (together with its successors and assigns, the "COMPANY").
RECITALS
WHEREAS, the Executive is employed by the Company as President and Chief
Operating Officer, has had significant responsibilities as an executive of the
Company since 1982, and has discharged those responsibilities admirably and
effectively;
WHEREAS, after his long service to the Company, the Executive has decided
to pursue other opportunities;
WHEREAS, the Executive and the Company (the "PARTIES") have mutually
agreed to the Executive's retirement from the Company and resignation as an
officer, employee and member of the Board of Directors (the "BOARD") of the
Company; and
WHEREAS, the Parties have mutually agreed to the final terms and
conditions of such retirement.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth in this Agreement, the Parties hereby agree as follows:
AGREEMENT
1. CONTINUED EMPLOYMENT.
1.1 EMPLOYMENT PERIOD. Under the terms and subject to the conditions of
this Agreement, the Executive's status as an employee of the Company shall
continue through February 7, 2001 (the "RETIREMENT DATE"), and he shall be paid
his current salary through such date. The Executive shall retire from employment
with the Company effective at the close of business on the Retirement Date.
1.2 GROUP INSURANCE BENEFITS COVERAGE. The Company shall continue to
provide, through the Retirement Date, coverage to the Executive and his
dependents under any group insurance benefits plan under which they were covered
on the Effective Date. The Executive shall remain responsible, in accordance
with past practice, to pay any amounts chargeable as "employee premium
contribution" amounts with respect to any such coverage. After the Retirement
Date, the Executive and his dependents shall be eligible for such benefits
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continuation, or conversion coverage, as may be available under the terms of the
Company's benefits plans or policies, or as may be required under the provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as subsequently
amended ("COBRA"), or other applicable federal or state law. In addition, the
Executive shall, at his election, be entitled to benefits under the Company's
post-retirement welfare benefit plans and arrangements that apply to retired
senior executives of the Company, and in this connection shall be deemed to have
satisfied any "rule of 75" eligibility criteria that may apply to any such plans
or arrangements.
1.3 ELIGIBILITY FOR OTHER GROUP BENEFITS. As an employee of the Company
through the Retirement Date, the Executive (a) shall be entitled to participate
in any group benefit under the Company's employee benefit plans and (b) shall be
entitled to participate in, and shall be the beneficiary of pro rata Company
contributions to, the SAFECO Employees' Profit Sharing Retirement Plan, Savings
Plan, and Cash Balance Plan, as well as any "supplemental" or "excess benefit"
plans that relate to such plans and (c) shall be entitled to receive a Profit
Sharing Bonus for the period through the Retirement Date (based on the
Executive's annual salary of $625,000) on no less favorable a basis (except for
the proration) than that applying to senior-level executives who continue to be
employed by the Company.
1.4 PAYMENT FOR ACCRUED SICK LEAVE AND VACATION UNITS. The Company shall
promptly pay the Executive for any vested sick leave units and vacation pay
accrued, but unused, by him as of the Retirement Date, but only to the extent
compensable under the Company's normal sick leave and vacation policies and
procedures.
1.5 REIMBURSEMENT FOR EXPENSES INCURRED. The Company shall promptly
reimburse the Executive for business expenses reasonably incurred by him on or
before the Retirement Date, but not submitted for reimbursement at such date, to
the extent reimbursable under the Company's normal expense reimbursement
policies and procedures, provided that such expenses are submitted for
reimbursement either within fifteen calendar days of the Retirement Date, or as
promptly as reasonably practicable thereafter, but in no event later than thirty
calendar days following the Retirement Date.
1.6 RESTRICTED STOCK RIGHTS AND PERFORMANCE STOCK RIGHTS. The Executive
acknowledges and agrees that, as a consequence of his retirement on the
Retirement Date, any unvested rights he may have under any restricted stock
right award (an "RSR") or performance stock right award (a "PSR") granted under
the SAFECO Incentive Plan of 1987 (the "1987 PLAN") or the SAFECO Long-Term
Incentive Plan of 1997 (the "1997 PLAN") shall expire as of such date, and that
he shall not be entitled to any payment in respect of any RSR or PSR that
remains unvested as of such date.
1.7 STOCK OPTIONS. Each of the Executive's stock options, other than the
60,000 share "hurdle" option granted to the Executive in November of 1999 (the
"NOVEMBER 1999 OPTION"), shall be fully vested, fully exercisable, and wholly
non-forfeitable as of the Retirement Date. The November 1999 Option shall become
vested, exercisable and non-forfeitable pursuant to its terms to the extent that
the relevant "price hurdles" are satisfied on or before the Retirement Date.
Pursuant to the provisions of the 1987 Plan and 1997 Plan relating to the
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termination of employment by retirement and to the provisions of Section 3.1
below, each outstanding stock option shall, to the extent that it is or becomes
exercisable as of the Retirement Date, remain exercisable (a) for three months
following the Retirement Date (in the case of options was granted under the 1987
Plan) and (b) through the third anniversary of the Retirement Date (in the case
of options granted under the 1997 Plan, other than the November 1999 Option);
provided, however, that no stock option shall remain exercisable beyond its
maximum stated term. Exhibit A to this Agreement lists the Executive's
outstanding options and their post-retirement exercise periods.
2. PAYMENTS. As compensation to the Executive, and in consideration of his
retirement as an employee and his resignation as a director and officer of the
Company and the release he is granting in Section 5 below, the Company
unconditionally and irrevocably agrees (subject only to the Executive's not
revoking this Agreement during the seven-day revocation period described in
Section 16.3) to pay an amount equal to the sum of (a) $2,110,000 plus (b) an
amount equal to the product obtained by multiplying (i) 5,844 times (ii) the
closing price of SAFECO Corporation common stock as reported on NASDAQ on the
Retirement Date (such product being the "CALCULATED PAYMENT"). This sum shall be
allocated and paid as follows:
2.1 RELEASE PAYMENT. $625,000 shall be allocated as consideration for the
Executive's release of claims as set forth in Section 5 below (the "RELEASE
PAYMENT"). The Parties agree that $250,000 of the Release Payment represents
liquidated damages for potential wage-related claims and shall be subject to
withholding and deduction for payroll taxes and other deductions as are required
by federal and state law. The Parties agree that $375,000 of the Release Payment
represents liquidated damages for other potential claims being released, does
not constitute wages or a wage substitute, and shall not be subject to payroll
deductions or wage withholding. The Release Payment shall be made within 15 days
following the expiration of the seven-day revocation period described in Section
16.3 ("Revocation Period" in the form of three checks, one payable to the
Executive in the amount of $250,000 (less applicable withholding and deduction
for payroll taxes), one payable to the Executive in the amount of $270,000 (72%
of $375,000 of the Release Payment) and one payable to the Internal Revenue
Service on behalf of the Executive in the amount of $105,000 (28% of $375,000 of
the Release Payment).
2.2 ADDITIONAL PAYMENTS. In consideration of his agreements set forth in
Sections 8.1, 8.2, 8.3 and 8.4 (which agreements relate to restraints on
competition, solicitation, disparagement and matters adverse to the Company),
the Company shall pay the Executive $625,000 on or before February 15, 2002,
$625,000 on or before February 15, 2003, the Calculated Payment on or before
February 28, 2001, and $135,000 on or before February 28, 2001, respectively.
Each of these payments shall be made in the form of two checks, one payable to
the Executive in the amount of 72% of the specified payment and the second
payable to the Internal Revenue Service on behalf of the Executive in the amount
of 28% of the specified payment.
2.3 SPECIAL PAYMENT. In recognition of the Executive being appointed by
the Company in March of 2000 to have direct responsibility for the Company's
property and casualty subsidiaries and of his service as President of such
subsidiaries from August through January 30,
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2001, the Company shall pay the Executive $100,000 on or before February 28,
2001. This payment shall be made in the form of a check to the Executive less
applicable withholding and deduction for payroll taxes.
3. FURTHER CONSIDERATION. As further consideration to the Executive for the
release granted by him under Section 5, the Company unconditionally and
irrevocably agrees (subject only to the Executive not revoking this Agreement
during the seven-day revocation period described in Section 16.3) to provide the
following benefits to the Executive, at no cost to the Executive:
3.1 SAFECO STOCK OPTION EXTENSION. The Company, through the Compensation
Committee of its Board of Directors (the "COMPENSATION COMMITTEE"), has approved
the Executive's retirement for purposes of the 1987 Plan and 1997 Plan. As a
retiree, the Executive shall be entitled (a) to exercise any outstanding stock
option issued under the 1987 Plan for three months following the Retirement Date
and (b) to exercise any outstanding and vested stock option issued under the
1997 Plan (other than the November 1999 Option) through the third anniversary
of the Retirement Date; provided, however, that no stock option shall remain
exercisable beyond its maximum stated term. Contingent upon the Executive's
execution of this Agreement and the expiration of the Revocation Period, the
Compensation Committee has agreed to amend the terms of all Company stock
options that have been granted to the Executive and that will not otherwise be
fully vested and exercisable as of the Retirement Date (other than the November
1999 Option), so that each such stock option shall, as of such date, be fully
vested, fully exercisable and non-forfeitable.
3.2 ATTORNEY AND TAX CONSULTANT FEES. Contingent upon the Executive's
execution of this Agreement and the expiration of the seven-day revocation
period described in Section 16.3, the Company agrees to pay all attorneys' and
tax consultants' fees and charges incurred by the Executive on or before the
expiration of the Revocation Period in connection with entering into this
Agreement, up to a maximum of $15,000.
3.3 SPECIAL BONUS PAYMENT. The Executive has agreed (a) to remain in the
employ of the Company from January 16, 2001 through the Retirement Date (or such
other date as the Parties may agree upon in writing) (the "SPECIAL BONUS
PERIOD"), (b) to facilitate a smooth and positive transition to a new chief
executive officer of the Company during the Special Bonus Period and (c) to
reaffirm, along with the Company and promptly following the Special Bonus
Period, that the release of claims in Section 5 applies to claims that arise
during the Special Bonus Period. If the Executive fulfills the conditions of
this Section 3.3 as determined in good faith by the Chair of the Executive
Committee of the Board and the Executive has not revoked this Agreement during
the seven-day revocation period described in Section 16.3, then, the Company
shall pay, in addition to salary earned by the Executive pursuant to Section
1.1, a special bonus of $88,000 on February 28, 2001.
3.4 Country Club Membership. The Executive may continue the use of the
country club to which he belongs without any further payment to the Company. The
Executive
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acknowledges that as a result he will incur an obligation to pay ordinary income
tax on a value of $40,000.
4. RETIREMENT AND RESIGNATION.
4.1 RETIREMENT AND RESIGNATION AS AN OFFICER AND DIRECTOR. In
consideration of the payments and other compensation described above, the
Executive (a) notifies the Company of his retirement as an employee of the
Company, effective on the Retirement Date, and (b) tenders his resignations as
an officer and director of the Company and of any and all of its subsidiaries,
effective January 30, 2001.
4.2 NO AUTHORITY TO ACT. After January 30, 2001, the Executive shall have
no further authority to bind the Company to any contract or agreement or to act
on its behalf. The Company shall have no obligation to reimburse the Executive
for any expenses incurred by him after the Retirement Date, except as expressly
provided in this Agreement or as otherwise agreed in writing by the Company.
4.3 RETURN OF MATERIALS. No later than seven days after the Retirement
Date, the Executive shall return all devices and materials in his possession
that are owned by the Company and were used by the Executive in the course of
his employment. Anything to the contrary notwithstanding, nothing in this
Section 4.3 or in Section 7.3 shall prevent the Executive from retaining papers
and other materials of a personal nature, including personal diaries, calendars
and Rolodexes, information showing his compensation or relating to reimbursement
of expenses, information that may be needed for tax purposes, or copies of
plans, programs and agreements relating to his employment or compensation.
5. RELEASES AND SETTLEMENT.
5.1 RELEASE PAYMENT. For the purposes of this Agreement, "RELEASE PAYMENT"
means the payment specified in Section 2.1.
5.2 RELEASE BY THE EXECUTIVE. In consideration of the Company's delivery
of the Release Payment to the Executive in accordance with the terms of Section
2.1, the Executive hereby releases the Company and its affiliated companies, and
the employees, agents, officers, directors and shareholders of any of them, from
all claims, demands, actions or causes of action of any kind or nature
whatsoever which the Executive may now have or may ever have had against any of
them, whether such claims are known or unknown, and including but not limited to
the "Claims" as defined in Section 5.3, based upon any matter, cause or thing
whatsoever related to or arising out of the Executive's employment with the
Company or the termination thereof, provided, however, that this release shall
not apply to any rights (a) relating to indemnification (or advancement of
expenses) under this Agreement, the Articles of Incorporation or By-Laws of the
Company, or under any applicable insurance policy, or to obtain contribution as
permitted by law in the event of entry of judgment against the Executive as a
result of any act or failure to act for which the Executive and any released
person are jointly liable, (b) arising under, or preserved by, this Agreement,
(c) arising after the Retirement Date,
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(d) under any Company stock option, restricted stock right, performance share
right, stock purchase, deferred compensation or other similar plan, program,
agreement or agreement, (e) under any Company pension, retirement or welfare
benefit plan, program, agreement or arrangement or (f) arising out of any
investor, account, insurance or client relationship, which rights shall be
preserved, unaffected by this release.
5.3 THE CLAIMS. For the purposes of this Agreement, "CLAIMS" shall mean
claims with respect to any of the following: (a) breach of contract; (b)
discrimination, retaliation, or constructive or wrongful discharge; (c) lost
wages, lost employee benefits, physical and personal injury, stress, mental
distress, or impaired reputation; (d) claims arising under the Age
Discrimination in Employment Act ("ADEA"), Title VII of the Civil Rights Act,
the Equal Pay Act, or any other federal, state or local laws or regulations
prohibiting employment discrimination; (e) attorneys' fees or (f) any other
claim arising from or relating to the Executive's employment with the Company
and/or his separation from service, including claims with respect to the
Severance Agreement dated May 5, 1999 between the Executive and the Company,
which the Parties agree is terminated by mutual consent as of the date of the
expiration of the seven-day revocation period described in Section 16.3,
provided, however, that the term "Claim" shall not include any claims reserved
by the Executive pursuant to Section 5.2 above.
5.4 CONSIDERATION FOR RELEASE. The Company represents, and the Executive
acknowledges, that the Release Payment and the further consideration described
in Section 3 exceed any amount the Company may arguably be required to pay under
any agreement or arrangement to which the Executive is a party or under which he
claims some benefit, or under the standard policies and procedures of the
Company, and represents valuable consideration to him for the release of his
ADEA and other claims described above.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION. To the extent (x) provided as of the Effective Date
in the indemnification provisions of the Company's bylaws and (y) permitted
under the laws of the State of Washington, the Executive shall be entitled to
indemnification, and advancement of expenses, in respect of matters that
occurred during the time he was an officer or director of the Company.
6.2 DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company agrees to
continue and maintain directors' and officers' liability insurance coverage for
the Executive that is no less favorable in any respect than the coverage then
provided to any present or former senior executive officer or director of the
Company.
7. CONFIDENTIAL INFORMATION.
7.1 CONFIDENTIAL INFORMATION. The Executive recognizes that, by virtue of
his employment by the Company, he has acquired certain non-public, proprietary
information with respect to the Company and its operations (the "CONFIDENTIAL
INFORMATION"). The Executive recognizes and acknowledges that the Confidential
Information constitutes valuable, special and
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unique assets of the Company, access to and knowledge of which were essential to
the performance of the Executive's duties during his employment.
7.2 NON-DISCLOSURE. The Executive agrees to hold the Confidential
Information in trust and confidence. The Executive agrees not to (a) reveal any
Confidential Information to any other person or (b) divulge or use any
Confidential Information for any purpose other than for the benefit of the
Company or with the written authorization of the Company, provided, however,
this Section 7.2 shall not apply (i) when disclosure is required by law or by
any court, arbitrator, or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order the Executive to disclose
or make accessible any information (in which event, the Executive shall, to the
extent practicable, provide reasonable advance notice of such disclosure to the
Company and shall cooperate reasonably, at the Company's sole expense, with the
Company's efforts to obtain protective treatment for such information), (ii) to
disclosure or use in connection with enforcing this Agreement, (iii) to
Confidential Information that becomes generally known to the public or within
the relevant trade or industry other than due to the Executive's violation of
this Section 7.2 or (iv) to disclosures in confidence to counsel for the purpose
of obtaining legal advice.
7.3 MATERIALS. Unless the Company otherwise agrees and except as provided
for in Section 4.3 above, the Executive shall not remove from the Company's
premises or possession any documents, compilations of data or other files or
records of any nature, or any copy or reproduction thereof, that contain
Confidential Information or that belong to the Company.
8. NO COMPETING EMPLOYMENT; NO SOLICITATION OF EMPLOYEES.
8.1 NO COMPETING EMPLOYMENT. The Executive agrees that until the first
anniversary of the Retirement Date, without the prior written consent of the
chief executive officer of the Company, he shall not work for, or consult with,
any person or entity that competes directly and materially with the Company in
any of the Company's principal lines of business (i.e., the property and
casualty insurance business, including surety, the life and health insurance
business and the asset management business) or in the Company's insurance
brokerage business.
8.2 NO SOLICITATION OF EMPLOYEES. The Executive agrees that until February
15, 2003, without the prior written consent of the chief executive officer of
the Company, he shall at no time solicit, directly or indirectly, any individual
who he knows is then an employee of the Company (or of any of its affiliates) to
leave such employment and/or to become an employee, officer or consultant of or
to any other enterprise. Anything to the contrary notwithstanding, the Company
agrees that neither (a) the Executive's responding to an unsolicited request
from an employee of the Company (or any of its affiliates) nor (b) the
Executive's responding to an unsolicited request for an employment reference
regarding an employee of the Company (or any of its affiliates) from such
employee, or from a third party, by providing a reference setting forth his
personal views about such employee, shall be deemed a violation of this Section
8.2.
8.3 NON-DISPARAGEMENT. The Executive agrees that he shall not
intentionally make any public statement that is intended to criticize or
disparage the Company, its affiliates, or
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any of its or their directors, officers or employees. The Company agrees that it
shall use its best efforts to cause its senior executive officers (senior vice
presidents and above) and directors not to make any public statement that is
intended to criticize or disparage the Executive. This Section 8.3 shall not be
construed to prohibit either Party from responding publicly to incorrect public
statements or from making truthful statements when required by law or order of a
court or other person or body having jurisdiction.
8.4 CONDUCT ADVERSE TO THE COMPANY. The Executive agrees that until the
first anniversary of the Retirement date, without the prior written consent of
the chief executive officer of the Company, he shall not work for or consult
with any person or entity with respect to any claim such person or entity may
have that is adverse to the interests of the Company or with respect to any
offer to acquire, or to merge with, the Company that such person or entity is
considering making, is preparing to make or is making.
9. PRE-EMPTION AND ENFORCEMENT. Sections 7 and 8 of this Agreement shall
supersede, to the extent less favorable to the Executive than the provisions in
such Sections, any provision in any plan, policy, agreement, award or other
arrangement of the Company or any of its predecessors or affiliates relating to
non-competition, non-solicitation, non-hire, confidentiality, disparagement or
other restrictions on conduct. Such Sections, and other surviving restrictions,
may be enforced through injunction and claims for damages. Each Party shall be
entitled to seek injunctive relief against breaches of Section 7 or Section 8 in
any court of competent jurisdiction.
10. NO ADMISSION. Each Party understands and acknowledges that neither the
Release Payment, nor the execution and delivery of this Agreement, constitutes
an admission by the other Party to (a) any breach of any agreement between them,
(b) any violation of any federal, state or local statute, regulation or
ordinance or (c) any other wrongdoing.
11. LIABILITY FOR DEFENSE COSTS. If, notwithstanding the release in Section 5,
the Executive should pursue, in any forum, any claim released by the Executive
in Section 5 above, the Executive agrees to pay, or reimburse, the Company for
all reasonable costs incurred in defending against such released claim.
12. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants to the
Executive that (a) all corporate action required to be taken by the Company to
authorize fully the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby has been duly and
effectively taken, (b) the execution, delivery and performance of this Agreement
does not violate any applicable law, regulation, order, judgment or decree or
any agreement, arrangement, plan or corporate governance document to which the
Company is a party or by which it is bound and (c) upon the execution and
delivery of this Agreement by the Parties, it shall be a valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally. The Company acknowledges that the Executive has relied upon
the foregoing representations and warranties in entering into this Agreement.
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13. ARBITRATION.
13.1 NOTICE AND SELECTION OF ARBITRATOR. The Parties agree that any claim
or dispute arising under or relating to this Agreement, the Executive's
employment with the Company, or the termination thereof (a "COVERED CLAIM")
shall, except to the extent otherwise provided in Section 9 above, be resolved
through binding confidential arbitration in Seattle, Washington, before a
disinterested arbitrator. Arbitration shall be commenced by service on the other
party to the dispute by a written request for arbitration, containing a brief
description of the matter at issue and the names and addresses of three
arbitrators acceptable to the petitioner. The other party shall, within thirty
(30) days following receipt of such notice, either select one of the proposed
arbitrators or provide the names and addresses of three other arbitrators
acceptable to the proposing party. If the parties are unable to select an
impartial arbitrator in the foregoing fashion, an impartial arbitrator shall be
chosen by the American Arbitration Association.
13.2 RULES OF PROCEEDING. Arbitration proceedings shall be conducted under
the Commercial Arbitration Rules (and not the National Rules for the Resolution
of Employment Disputes) of the American Arbitration Association. The arbitrator
shall not be bound to any formal rules of evidence.
13.3 DECISION FINAL AND BINDING. The decision of the arbitrator shall be
final and binding on the parties, and may be entered and enforced in any court
of competent jurisdiction.
13.4 EXPENSES. Each Party shall share equally the expenses of the
arbitrator and other arbitration expenses. Attorney fees, witness fees and other
expenses incurred by a Party in preparing for the arbitration are not
"arbitration expenses" and shall be paid by the Party incurring them.
14. PUBLICITY.
14.1 TERMS OF AGREEMENT. The Parties agree that neither of them shall
reveal or publicize the existence of this Agreement or its terms, including but
not limited to the amount of the Release Payment, except under compulsion of law
or as required under the rules and regulations of the Securities and Exchange
Commission ("SEC"). The Executive acknowledges that a copy of this Agreement
will be filed as an exhibit to a filing made by the Company with the SEC and
that a description of compensation paid or to be paid to him under this
Agreement will be included in the Company's proxy statement. The Executive shall
be afforded an opportunity to review, and promptly comment upon, any statement
relating to his retirement (other than factual statements with respect to any
compensation paid or to be paid to him under this Agreement) that is included in
the Company's proxy statement. Further, the Parties agree that they shall not
discuss with or make to the public at large or to any individual person or
persons any statements about this Agreement, or matters relating to its terms.
Notwithstanding the provisions of this Section 14.1, each Party may disclose the
terms of this Agreement to such Party's attorneys, accountants and financial and
tax advisors to the extent necessary to obtain counsel and advice therefrom. The
Executive may also disclose the terms of this Agreement in
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confidence to the members of his immediate family and may disclose the terms of
Sections 7 through 9 in confidence to any prospective employer.
14.2 ANNOUNCEMENT CONCERNING RETIREMENT FROM SERVICE. The Parties shall
discuss and coordinate with respect to any public announcement, or any internal
or private announcement, concerning the severance of their employment
relationship. Any initial public or internal announcement on the subject from
the Company shall include the themes set forth in Exhibit B. No announcement on
the subject, and no response by the Company (or any of its directors or senior
executives) to requests for any employment reference from any prospective new
employer of the Executive, shall be inconsistent with the themes set forth in
Exhibit B.
15. COSTS. Except for the Company's agreement to pay for the Executive's legal
and tax consultation fees and charges as stated and limited in Section 3.2, each
Party shall bear its and his own costs and expenses incurred in connection with
the negotiation and preparation of this Agreement.
16. ACKNOWLEDGMENT.
16.1 INFORMED AGREEMENT. The Executive declares that he has read and fully
understands the terms of this Agreement, and its significance and consequence.
The Executive further declares that this Agreement is the product of good faith
negotiations between himself and the Company, and that he voluntarily accepts
the same for the purpose of resolving arrangements with respect to his
retirement. The Executive understands and acknowledges that, in exchange for the
Release Payment he is waiving and giving up, to the extent provided in Section
5, claims arising out of his employment with the Company and/or his separation
from service.
16.2 ATTORNEY REVIEW. The Executive acknowledges that the Company has
advised him to review the terms of this Agreement with an attorney and that he
has done so.
16.3 REVIEW AND REVOCATION PERIODS. The Executive acknowledges that the
Company has given him at least 21 days during which to consider this Agreement
prior to signing, and understands that he has seven days after signing in which
he may revoke this Agreement. This Agreement shall not become effective or
enforceable until such seven-day period has expired. The Executive understands
that he may revoke this Agreement by delivering a written notice to Xxxxx
Xxxxxxx at SAFECO Plaza, Seattle, WA 98185, no later than the close of business
on the seventh day after his execution hereof. The Executive understands and
acknowledges that if he revokes this Agreement it shall not be effective or
enforceable and he shall not receive the payments described herein.
17. NOTICES. Any notice, request, or other communication given in connection
with this Agreement shall be in writing and shall be deemed to have been given
(a) when delivered personally to the recipient or (b) if written acknowledgment
of receipt is obtained, five days after being sent by prepaid certified or
registered mail, or two days after being sent by a nationally recognized
overnight courier. Any notice, request or other communication shall, if to the
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Executive, be addressed to him at his principal residence and, if to the Company
and except to the extent otherwise provided in Section 16.3, shall be addressed
to the Company at its corporate headquarters, to the attention of its General
Counsel.
18. SUCCESSORS AND ASSIGNS.
18.1 EFFECT ON SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors, heirs (in the
case of the Executive) and assigns.
18.2 LIMITATIONS ON ASSIGNMENT BY THE COMPANY. 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, consolidation or other combination in which the Company is not the
continuing entity, or a sale or liquidation of all or substantially all of the
business and assets of the Company, provided that the assignee or transferee is
the successor to all or substantially all of the business and assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company as set forth in this Agreement, either expressly or by
operation of law.
18.3 LIMITATIONS ON ASSIGNMENT BY THE EXECUTIVE. No rights or obligations
of the Executive under this Agreement may be assigned or transferred by the
Executive other than his rights to compensation and benefits, which may be
transferred only by will or operation of law, except as provided in Section
19.4.
19. MISCELLANEOUS.
19.1 ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, term sheets, discussions,
negotiations and undertakings, whether written or oral, between them relating to
this Agreement. In the event of any inconsistency between any provision of this
Agreement and any provision of any plan, employee handbook, personnel manual,
program, policy, arrangement or agreement of the Company or any of its
affiliates, the provisions of this Agreement shall control.
19.2 AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is set forth in a writing that expressly refers to this
Agreement and that is signed by the Executive and by an authorized (or
apparently authorized) officer of the Company. No waiver by any person of any
breach of any condition or provision contained in this Agreement shall be deemed
a waiver of any similar or dissimilar condition or provision at the same or any
prior or subsequent time. To be effective, any waiver must be set forth in a
writing signed by the waiving person and must specifically refer to the
condition(s) or provision(s) of this Agreement being waived.
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19.3 HEADINGS. The headings of the Sections and sub-sections contained in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.
19.4 BENEFICIARIES/REFERENCES. The Executive shall be entitled, to the
extent permitted under applicable law and applicable plans of the Company, to
select and change a beneficiary or beneficiaries to receive any compensation or
benefit hereunder following the Executive's death by giving the Company written
notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, references in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
19.5 NO MITIGATION; NO OFFSET. The Executive shall be under no obligation
to seek other employment or to become self-employed and there shall be no offset
against amounts due the Executive, under this Agreement or otherwise, on account
of any remuneration attributable to any subsequent employment that he may obtain
or any claims the Company may have against him.
19.6 WITHHOLDING TAXES. The Company may withhold from any amounts or
benefits payable under this Agreement taxes that are required to be withheld
pursuant to any applicable law or regulation.
19.7 SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
19.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument.
19.9 GOVERNING LAW. The Parties acknowledge that this Agreement shall be
interpreted under and enforced by and consistent with the laws of the State of
Washington.
SAFECO CORPORATION
By
----------------------------------- -------------------------------------
BOH X. XXXXXX X.X. Xxxx, Xx.,
Chairman of the Board of Directors
Dated: Dated:
------------ -----------
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REAFFIRMATION OF RELEASE PURSUANT TO SECTION 3.3
SAFECO CORPORATION
By
----------------------------------- -------------------------------------
BOH X. XXXXXX Name:
Title:
Dated: Dated:
------------------ ---------------------
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EXHIBIT A
THE EXECUTIVE'S FULLY VESTED STOCK OPTIONS
(AS OF THE RETIREMENT DATE)
-------------------------------------------------------------------------------
GRANT DATE NUMBER EXERCISE PRICE POST-TERMINATION EXERCISE
OF VESTED PERIOD
OPTION SHARES
-------------------------------------------------------------------------------
4/30/91 2,900 $19.625 THROUGH 04/30/01
-------------------------------------------------------------------------------
4/30/91 8,700 $19.625 THROUGH 04/30/01
-------------------------------------------------------------------------------
05/06/92 14,024 $23.9375 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/06/92 5,976 $23.9375 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/05/93 16,462 $28.2500 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/05/93 3,538 $28.2500 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/04/94 20,322 $27.1875 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/04/94 3,678 $27.1875 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/03/95 3,396 $29.4375 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/03/95 26,604 $29.4375 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/01/96 30,000 $32.1250 THROUGH 05/07/01
-------------------------------------------------------------------------------
04/28/97 27,477 $39.6250 THROUGH 05/07/01
-------------------------------------------------------------------------------
04/28/97 2,523 $39.6250 THROUGH 05/07/01
-------------------------------------------------------------------------------
05/06/98 27,944 $48.6250 THROUGH 02/07/04
-------------------------------------------------------------------------------
05/06/98 2,056 $48.6250 THROUGH 02/07/04
-------------------------------------------------------------------------------
05/05/99 27,539 $40.6250 THROUGH 02/07/04
-------------------------------------------------------------------------------
05/05/99 2,461 $40.6250 THROUGH 02/07/04
-------------------------------------------------------------------------------
05/03/00 25,000 $20.0000 THROUGH 02/07/04
-------------------------------------------------------------------------------
05/03/00 5,000 $20.0000 THROUGH 02/07/04
-------------------------------------------------------------------------------
NOTE: THE "HURDLE" OPTION GRANTED AS OF 11/03/99 SHALL BE TREATED AS PROVIDED IN
THE BODY OF THE RETIREMENT AGREEMENT.
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EXHIBIT B
THEMES FOR ANNOUNCEMENTS
1. The Executive has served the Company long and well.
2. The Executive has decided to resign as a director and officer of the
Company in light of the appointment of a new CEO.
3. The Company and its Board hold the Executive in highest regard.
4. The Executive holds the Company and its Board in highest regard.
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