Exhibit 10.1

 

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RESTRICTED STOCK RIGHTS

AWARD AGREEMENT

 

Issued under the Safeco Long-Term Incentive Plan of 1997

 

VESTING OF YOUR RESTRICTED STOCK RIGHTS WILL BE A TAXABLE EVENT AND WILL RESULT
IN THE RECOGNITION BY YOU OF ORDINARY INCOME IN AN AMOUNT EQUAL TO THE FAIR
MARKET VALUE OF THE SHARES SETTLED. ON EACH SETTLEMENT DATE SAFECO WILL BE
REQUIRED TO COLLECT FROM YOU FEDERAL INCOME TAX WITHHOLDING AS WELL AS OTHER
PAYROLL TAXES REQUIRED TO BE WITHHELD.

 

May 5, 2004

 

«First_Name» «Last_Name»

«Address1» «Address2»

«City», «St» «Zip»

 

Safeco Corporation (“Safeco”) hereby grants to «First_Name» «Last_Name»
(“Employee”) the following restricted stock rights pursuant to, and in
accordance with the provisions of, the Safeco Long-Term Incentive Plan of 1997
(the “Plan”).

 

1. Shares Subject to Rights. Safeco shall (i) issue to Employee the respective
number of shares of Safeco common stock (the “Shares”) listed in the following
schedule of dates (the “Settlement Dates”), (ii) at the discretion of the
committee designated by the Board of Directors to administer the Plan (the
“Committee”), make a payment in U.S. dollars of an amount equal to the fair
market value of the Shares attributable to the respective Settlement Date (or
any portion thereof) or (iii) if eligible and at the election of the Employee,
defer the settlement of the Shares pursuant to the terms and conditions of the
Plan and the Deferred Compensation Plan for Executives if, and only if, Employee
remains continuously employed by Safeco or a Safeco subsidiary, as defined in
the Plan, up to and including the respective Settlement Date. If a designated
Settlement Date falls on a weekend, or is otherwise not a date when investment
markets are open, the immediately preceding regular business date will be the
Settlement Date.

 

Settlement Date

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Shares to be Issued

on Settlement Date

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February 15, 2005

   «Vest_1»

February 15, 2006

   «Vest_2»

February 15, 2007

   «Vest_3»

February 15, 2008

   «Vest_4»

Total:

   «Shares»

 

2. Tax Withholding. As a condition to receiving the Shares attributable to a
Settlement Date or payment for such Shares, as the case may be, employee must
tender to Safeco on the respective Settlement Date an amount sufficient to
satisfy all applicable federal, state and local tax withholding requirements
(“Tax Requirements”). Unless Employee pays Safeco an amount equal to the Tax
Requirements as of the Settlement Date, Safeco shall reduce the number of Shares
issued to Employee by the number of Shares which, on the Settlement Date, has a
fair market value equal to the Tax Requirements.

 

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«First_Name» «Last_Name»

Restricted Stock Rights Agreement

May 5, 2004

 

3. Termination of Employment. If Employee voluntarily or involuntarily ceases to
be an employee of Safeco or a Safeco subsidiary for any reason other than (i) a
Change in Control, (ii) Employee’s death or disability or (iii) Employee’s
retirement (as defined in paragraph 4 below), Employee shall have no rights to
receive any Shares attributable to Settlement Dates occurring after the date of
termination of employment. Nothing herein shall be construed or interpreted to
confer upon Employee any rights to continued employment by Safeco or a Safeco
subsidiary or to interfere in any way with the right of Safeco, in its sole
discretion, to terminate Employee at any time.

 

4. Death or Disability; Retirement; Change in Control. If (i) Employee’s
employment by Safeco or a Safeco subsidiary terminates by reason of Employee’s
death or disability (as disability is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended, or any successor Code provision),
(ii) Employee’s employment by Safeco or a Safeco subsidiary terminates by reason
of Employee’s retirement or (iii) there is a Change in Control of Safeco, then
as soon as practical following the Change in Control or the date of employment
termination due to death, disability or retirement, Safeco shall issue to
Employee or the personal representative of Employee’s estate all of the unissued
Shares covered by this Award or, in lieu thereof, at the request of Employee or
the personal representative, make a cash payment equal to the fair market value
of such Shares established as of the date of employment termination due to
death, disability or retirement or the date of the Change in Control, as the
case may be. Such Shares shall be issued or payment made without regard to any
employment or other service requirement stated in this Award Agreement. For
purposes of this Award Agreement, an Employee shall be eligible for retirement
if the Employee retires with ten or more years of service to Safeco or a Safeco
subsidiary and is (i) 55 or older on the retirement date and (ii) the Employee’s
age plus years of service add up to at least 75.

 

5. Additional Compensation Payments. So long as Employee remains in the
continuous employ of Safeco or a Safeco subsidiary, then, with respect to the
Shares that are to be issued on each Settlement Date hereunder, Safeco shall (i)
pay to Employee during the period commencing with the date hereof and ending on
such Settlement Date, as additional compensation, an amount of cash equal to the
dividends that would have been payable to Employee during such period if
Employee had owned such Shares (“Dividend Equivalents”) or (ii) if eligible and
at the election of the Employee, defer the Dividend Equivalents pursuant to the
terms and conditions of the Plan and the Deferred Compensation Plan for
Executives. Such amounts shall be paid on the regular payroll date that
coincides with, or next follows, the applicable dividend payment dates. Upon
termination of employment, Employee’s right to receive Dividend Equivalents
under this paragraph shall immediately cease; provided; however, that if the
termination of employment was due to Employee’s death or disability (as defined
in paragraph 4 above) and occurred after an ex-dividend date but prior to
payment of the dividend, Employee or the personal representative of Employee’s
estate shall be entitled to payment under this paragraph of an amount equivalent
to such dividend.

 

6. Rights Not Transferable. The rights granted to Employee hereunder shall not
be subject to execution, attachment or similar process. Except to the extent the
Plan or the Committee may permit, the rights evidenced by this Award Agreement
may not be assigned, pledged or transferred in any manner, by operation of law
or otherwise, except by will or by the laws of descent and distribution. During
Employee’s lifetime, only Employee or Employee’s guardian may exercise any right
granted hereunder.

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«First_Name» «Last_Name»

Restricted Stock Rights Agreement

May 5, 2004

 

7. Forfeiture.

 

(a) If, at any time within (i) one year after the issuance of Shares or the cash
settlement of rights granted by this Award or (ii) one year after termination of
employment, whichever is later (the “Restricted Period”), Employee engages in
any activity harmful to Safeco’s interests or which is in competition with any
of Safeco’s operations, then Safeco reserves the right to (i) terminate
Employee’s rights under this Award Agreement effective as of the date that
Employee commences such activity (unless terminated sooner by operation of
another term or condition of this Award), and (ii) seek repayment for the value
on the issuance date of the Shares issued during the Restricted Period (or the
cash equivalent paid in lieu thereof).

 

(b) Such harmful or competitive activities include, without limitation, (i)
engaging in conduct related to Employee’s job responsibilities for which either
criminal or civil penalties may be sought; (ii) accepting employment with or
serving as a consultant, advisor or in any other capacity, without Safeco’s
prior written consent, to any party which is in competition with any member or
members of the Safeco group of companies in any of their lines of business;
(iii) disclosing or misusing any confidential information concerning any of the
Safeco companies; and (iv) participating in a hostile attempt to acquire control
of Safeco.

 

(c) Safeco shall have the right to reduce payment of any amounts owed to
Employee (for wages, fringe benefits, unused vacation or any other reason except
as may be prohibited by law) to the extent any amounts are owed to Safeco by
Employee under the foregoing forfeiture provisions.

 

8. Rights as Stockholder. Neither Employee, nor Employee’s personal
representative, heir, legatee or distributee, shall be deemed to be a holder of,
or to have any rights with respect to, any Shares subject to the rights granted
hereunder until such Shares are issued.

 

9. No Separate Fund. Safeco has not set aside or segregated any assets or
established any separate account or fund to insure payment of its obligations
hereunder.

 

10. Provisions of the Safeco Long-Term Incentive Plan of 1997. This Award is
subject to all of the provisions of the Safeco Long-Term Incentive Plan of 1997,
as it may be amended from time to time and, to the extent provided in the Plan,
to all constructions, interpretations, rules and guidelines which the
Compensation Committee may adopt from time to time pursuant to or in connection
with the Plan. Capitalized terms not otherwise defined in this Award Agreement
shall have the meanings assigned to them in the Plan.

 

11. Plan Document. By signing in the space provided below to acknowledge
acceptance of this Award, Employee further acknowledges that Employee has
received a plan summary which includes the text of the Plan and has been
afforded an opportunity to ask any questions that he or she may have regarding
the Plan or the rights granted hereunder.

 

Accepted:

     

Safeco Corporation:

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«First_Name» «Last_Name»

Employee ID: «Emp_ID»

     

Michael S. McGavick,

Chairman of the Board, President and CEO

Date:

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