Executive Transition Services Agreement



 Exhibit 10.1 
  
 EXECUTIVE TRANSITION SERVICES AGREEMENT 
  
 SAFECO CORPORATION 
  
 and 
  
 CHRISTINE B. MEAD 
  
 Dated as of August 11, 2005 







 EXECUTIVE TRANSITION SERVICES AGREEMENT 
  
 This Executive Transition Services Agreement (this “Agreement”), dated as of August 11, 2005 (“Effective
Date”), is made between Safeco Corporation, a Washington corporation (“Safeco”), and Christine B. Mead (“Executive”). 
  
 Recitals 
  
 A. Executive has been and is currently employed as Safeco’s Executive Vice President and Chief Financial Officer and is Co-President of the Safeco
insurance companies. Executive has notified Safeco of her desire to voluntarily resign from her positions effective December 31, 2005. 
  
 B. Executive and Safeco have voluntarily agreed to enter into this Agreement, which sets forth the complete understanding between Executive and Safeco
regarding Executive’s voluntary resignation effective December 31, 2005 and the commitments and obligations arising out of the termination of the employment relationship between Executive and Safeco. 
  
 Agreement 
  
 In consideration of the foregoing premises and for other good and valuable consideration, the sufficiency and receipt of
which are acknowledged, Safeco and Executive agree as follows: 
  

	1.	EMPLOYMENT TRANSITION 

  
 Executive and Safeco agree that Executive shall serve in her existing role as Chief Financial Officer until the earlier of December 31, 2005 or a
replacement is named and shall serve in her position as Co-President of the Safeco insurance subsidiaries until December 31, 2005. 
  

	2.	SERVICES 

  
 Until the earlier of December 31, 2005 or a successor is appointed, Executive will serve as the Chief Financial Officer of Safeco and will perform the duties and have the responsibilities customarily performed by
the Chief Financial Officer of a corporation that is, in all respects, similar to Safeco. Furthermore, until December 31, 2005, Executive will perform the duties and have the responsibilities customarily performed by a president of a
corporation that is, in all respects, similar to Safeco and such other duties as may be assigned from time to time by the Board of Directors of Safeco, which relate to the business of Safeco, its subsidiaries, or any business ventures in which
Safeco or its subsidiaries may participate. 
  

 -1- 









	3.	COMPENSATION 

  
 Until December 31, 2005, Safeco agrees to pay or cause to be paid to Executive, and Executive agrees to accept in exchange for the services rendered
by her, the following compensation: 
  
 3.1 Base Salary

  
 Executive’s annual base salary will remain unchanged at
the current rate of $600,000 before all customary payroll deductions. Such annual base salary will be paid in substantially equal installments and at the same intervals as other officers of Safeco are paid. 
  
 3.2 Bonus 
  
 Executive will also be eligible to receive, in addition to the base salary described above, an annual bonus in an amount to
be determined by the Board of Directors of Safeco or under the Board’s delegated authority by the Compensation Committee of the Board (the “Committee”), in its or their sole discretion. Executive’s bonus will be based on
(i) a smooth and orderly transition of the responsibilities of the Chief Financial Officer, (ii) the Executive’s commitment to remain employed with Safeco until December 31, 2005, (iii) the performance of Executive’s
duties as described in Section 2 above, and (iv) Safeco’s financial and operating performance for fiscal year 2005. 
  
 3.3 Equity Grants 
  
 (a) Vested Options. Executive shall be considered an “employee” of Safeco through December 31, 2005 for compensation purposes and
under all employee benefit plans, programs, and arrangements, including without limitation the Safeco Long-Term Incentive Plan of 1997, as amended (the “LTIP”). All stock options granted to Executive under the LTIP, which are fully vested
and non-forfeitable as of December 31, 2005, will be exercisable for three (3) months from December 31, 2005. 
  
 (b) Unvested Equity Awards. To the extent Executive remains employed by Safeco and performs the duties described in Section 2 above, Safeco
shall accelerate and fully vest, on December 31, 2005, the following equity awards (the “Awards”): 
  

					
	 Type

	 	 No. of Shares

	 	 Grant Date


	 ISO
	 	  2,743	 	1/24/02
	 NQ
	 	  8,397	 	1/24/02
	 NQ
	 	22,000	 	  5/1/02
	 ISO
	 	  2,094	 	  5/7/03
	 NQ
	 	38,906	 	  5/7/03
	 RSR
	 	  1,116	 	1/24/02
	 RSR
	 	  1,022	 	  2/6/02
	 RSR
	 	  1,630	 	  5/7/03
	 RSR
	 	19,294	 	  5/5/04
	 RSR
	 	19,571	 	3/11/05

  

 -2- 








 The terms and conditions of the LTIP and Executive’s award agreements, pursuant to which the Awards
were granted, will continue to govern such Awards. Except for the Awards, all equity awards that are granted to Executive that are not fully vested on December 31, 2005 shall be deemed to have expired without vesting. 
  
 Executive acknowledges that accelerated stock options may not qualify for
preferential income tax treatment as an incentive stock option under the Internal Revenue Code. 
  

	4.	BENEFITS 

  
 4.1 Retirement and Savings Plans 
  
 Until December 31, 2005, Executive shall be entitled to continue to participate in all defined contribution plans and defined benefit plans, including excess benefit or supplemental retirement plans or agreements, maintained by Safeco,
as now or hereinafter in effect, that are applicable to Safeco’s employees generally or to its executive officers, subject to and on a basis consistent with the terms, conditions and overall administration of such plans, programs and
arrangements. Benefits payable under such plans shall commence pursuant to the terms of such plans. 
  
 4.2 Other Benefit Programs 
  
 Until December 31, 2005, Executive will be entitled to continue to participate, subject to and in accordance with applicable eligibility
requirements, in all other employee benefit plans, programs and arrangements of Safeco, as now or hereinafter in effect, that are applicable to Safeco’s employees generally or to its executive officers, as the case may be, subject to and on a
basis consistent with the terms, conditions and overall administration of such plans, programs and arrangements, and subject to Section 4.1. 
  
 4.3 Housing Loan 
  
 In connection with Executive’s relocation to Seattle in 2002 Safeco provided Executive with a home purchase loan in an amount of $900,000. The
principal amount will be due one (1) year after December 31, 2005. This is consistent with the original loan terms and nothing contained in this Agreement or otherwise amends this loan in any manner. 
  
 4.4 Vacation and Other Leaves 
  
 Executive shall be entitled to use any accrued but unused vacation and other
paid absences during this calendar year and for unused vacation carried over from the previous calendar year, whether for holidays, illness, or any similar purposes, in accordance with policies applicable generally to executive officers of Safeco.
Earned but unused vacation will be paid upon termination of Executive’s employment. After December 31, 2005, no vacation or other paid absences shall accrue. 
  

 -3- 








 4.5 Expenses 
  
 Executive shall be entitled to receive reimbursement for all reasonable and customary expenses incurred by her in performing services under this
Agreement, including all expenses of travel and accommodations while away from her residence on business or at the request of and in the service of Safeco; provided, however, that such expenses are incurred, accounted for and approved in accordance
with the policies and procedures established from time-to-time by Safeco. 
  

	5.	TERMINATION UPON DEATH OR DISABILITY 

  
 This Agreement and Executive’s employment hereunder shall terminate automatically upon the death or total disability of Executive. The term
“total disability” as used herein shall mean Executive’s inability to perform the duties set forth in Section 2 hereof for a period of sixty (60) consecutive days as a result of physical or mental illness, loss of
legal capacity or any other cause beyond Executive’s control. Executive and Safeco acknowledge that Executive’s ability to perform the duties specified in Section 2 is of the essence of this Agreement. Termination hereunder shall be
deemed to be effective (a) on the day Executive’s death occurs or (b) immediately upon a determination by the Board of Directors of Safeco of Executive’s total disability, as defined herein. At December 31, 2005, all
compensation and benefits set forth in this Agreement shall cease. 
  

	6.	RELEASE 

  
 In consideration of the acceleration of the Awards pursuant to Section 3.3(b) and other consideration and benefits provided to Executive under this Agreement, Executive agrees to sign a general release and
settlement agreement on December 31, 2005 in a form that is satisfactory to Safeco. 
  

	7.	NONCOMPETITION AND NONSOLICITATION 

  
 7.1 Applicability 
  
 This Section 7 shall survive the termination of Executive’s employment with Safeco. 
  
 7.2 Scope of Competition 
  
 Executive agrees that she will not, directly or indirectly, during her
employment and for a period of two (2) years from December 31, 2005, be employed by, consult with or otherwise perform services for, own, manage, operate, join, control or participate in the ownership, management, operation or control of
or be connected with, in any manner, any Competitor. A “Competitor” shall include any entity which, directly or indirectly, competes with Safeco or produces, markets, distributes or otherwise derives benefit from the production,
marketing or distribution of products or services which compete with products then produced or services then being provided or marketed, by Safeco or the feasibility for production of which Safeco is then actually studying, or which is preparing to
market or is developing products or services that will be in competition with the products or services then produced or being studied or developed by 

  

 -4- 








 
Safeco, in each case within the geographical area of the United States, unless released from such obligation in writing by Safeco’s Board of Directors.
Executive shall be deemed to be related to or connected with a Competitor if such Competitor is (a) a partnership in which she is a general or limited partner or employee, (b) a corporation or association of which she is a shareholder,
officer, employee, or (c) a partnership, corporation or association of which she is a member, consultant or agent; provided, however, that nothing in this Agreement shall prevent the purchase or ownership by Executive of shares
that constitute less than one percent of the outstanding equity securities of a publicly or privately held corporation, if Executive had no other relationship with such corporation. 
  
 7.3 Scope of Nonsolicitation 
  
 Executive shall not directly or indirectly solicit, influence or entice, or attempt to solicit, influence or entice, any employee or consultant of Safeco
to cease his or her relationship with Safeco or solicit, influence, entice or in any way divert any customer, distributor, partner, joint venturer or supplier of Safeco to do business or in any way become associated with any Competitor. This
Section 7.3 shall apply during the time period and geographical area described in Section 7.2. 
  
 7.4 Assignment of Intellectual Property 
  
 All concepts, designs, machines, devices, uses, processes, technology, trade secrets, works of authorship, customer lists, plans, embodiments, inventions,
improvements or related work product (collectively “Intellectual Property”) that Executive has developed or develops, has conceived or conceives or first reduces to practice during the term of her employment with Safeco or within
one year after the termination of her employment with Safeco or the expiration of this Agreement, whether working alone or with others, shall be the sole and exclusive property of Safeco (and to the fullest extent permitted by law shall be deemed
“works made for hire” under federal copyright law), together with any and all Intellectual Property rights, including, without limitation, patent or copyright rights, related thereto, and Executive hereby assigns to Safeco all of such
Intellectual Property. “Intellectual Property” shall include only such concepts, designs, machines, devices, uses, processes, technology, trade secrets, customer lists, plans, embodiments, inventions, improvements and work product
which (a) relate to Executive’s performance of services under this Agreement, to Safeco’s field of business or to Safeco’s actual or demonstrably anticipated research or development, whether or not developed, conceived or first
reduced to practice during normal business hours or with the use of any equipment, supplies, facilities or trade secret information or other resource of Safeco or (b) are developed in whole or in part on Safeco’s time or developed using
Safeco’s equipment, supplies, facilities or trade secret information, or other resources of Safeco, whether or not the work product relates to Safeco’s field of business or Safeco’s actual or demonstrably anticipated research. The
provisions of this Section 7.4 do not apply to any inventions for which no Safeco equipment, supplies, facilities, or trade secret information was used and that were developed entirely on Executive’s own time, unless: (i) the
invention relates directly to Safeco’s business; (ii) the invention relates directly to Safeco’s actual or demonstrably anticipated research or development; or (iii) the invention results from any work Executive performed for
Safeco. This constitutes notice pursuant to Revised Code of Washington Section 49.44.140. 
  

 -5- 








 7.5 Disclosure and Protection of Inventions 
  
 Executive hereby represents that she has previously disclosed or shall disclose in writing before December 31, 2005 all
concepts, designs, processes, technology, plans, embodiments, inventions or improvements constituting Intellectual Property to Safeco promptly after its or their development. At Safeco’s request and at Safeco’s expense, Executive will
assist Safeco or its designee in efforts to protect all rights relating to such Intellectual Property. Such assistance may include, without limitation, the following: (a) making application in the United States and in foreign countries for a
patent or copyright on any work products specified by Safeco; (b) executing documents of assignment to Safeco or its designee of all of Executive’s right, title and interest in and to any work product and related intellectual property
rights; and (c) taking such additional action (including, without limitation, the execution and delivery of documents) to perfect, evidence or vest in Safeco or its designee all right, title and interest in and to any Intellectual Property and
any rights related thereto. 
  
 7.6 Nondisclosure; Return of
Materials 
  
 During the term and following termination of
Executive’s employment with Safeco, Executive will not disclose (except as required by her duties to Safeco) any concept, design, process, technology, trade secret, customer list, plan, embodiment, or invention, any other Intellectual Property
or any other confidential information, whether patentable or not, of Safeco of which Executive becomes informed or aware during her employment, whether or not developed by Executive. On or before December 31, 2005, Executive will return all
documents, data and other materials of whatever nature, including, without limitation, drawings, specifications, research, reports, embodiments, software and manuals to Safeco which pertain to her employment with Safeco or to any Intellectual
Property and shall not retain or cause or allow any third party to retain photocopies or other reproductions of the foregoing. 
  
 7.7 Equitable Relief 
  
 Executive acknowledges that the provisions of this Section 7 are essential to Safeco, that Safeco would not enter into this Agreement if it did not
include this Section 7 and that damages sustained by Safeco as a result of a breach of this Section 7 cannot be adequately remedied by damages, and Executive agrees that Safeco, notwithstanding any other provision of this Agreement,
including, without limitation, Section 13 hereof, and in addition to any other remedy it may have under this Agreement or at law, shall be entitled to injunctive and other equitable relief to prevent or curtail any breach of any provision of
this Agreement, including, without limitation, this Section 7. 
  
 7.8 Effect of Violation 
  
 Executive and Safeco
acknowledge and agree that additional consideration has been given for Executive entering into this Section 7, such additional consideration including, without limitation, certain provisions for acceleration of the Awards pursuant to
Section 3.3(b) of this Agreement. Violation by Executive of this Section 7 shall result in the forfeiture of any gain 

  

 -6- 








 
realized by Executive from exercising all or any portion of the Awards, which shall be immediately payable to Safeco; provided however Executive shall not be
relieved of her obligations, as required hereunder. 
  
 7.9
Non-Disparagement. 
  
 Executive agrees that she shall not
intentionally make any public statement that is intended to criticize or disparage Safeco, its affiliates, or any of its or their directors, officers or employees. Safeco agrees it shall use its best efforts to cause its senior 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 7.9 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. 
  
 7.10 Definition of Safeco 
  
 For purposes of subsection 7.2 and subsection 7.3 hereof, “Safeco” shall include all subsidiaries of Safeco and any business ventures in
which Safeco or its subsidiaries may participate. 
  

	8.	REPRESENTATIONS AND WARRANTIES 

  
 In order to induce Safeco to enter into this Agreement, Executive represents and warrants to Safeco as follows: 
  
 8.1 No Violation of Other Agreements 
  
 Neither the execution nor the performance of this Agreement by Executive will
violate or conflict in any way with any other agreement by which Executive may be bound, or with any other duties imposed upon Executive by corporate or other statutory or common law. 
  
 8.2 Patents, Etc. 
  
 Executive has prepared and attached hereto as Schedule 1 a list of all inventions, patent applications and patents made or conceived by Executive
prior to the date hereof, which are subject to prior agreement or which Executive desires to exclude from this Agreement, or, if no such list is attached, Executive hereby represents and warrants to Safeco that there are no such inventions, patent
applications or patents. 
  

	9.	INDEMNIFICATION 

  
 Executive shall be indemnified by Safeco to the extent permitted by applicable law and as provided by Article XII of Safeco’s Bylaws. 
  

 -7- 









	10.	FORM OF NOTICE 

  
 All notices given hereunder shall be given in writing, shall specifically refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail, return receipt requested, at the address set forth below or at such other address as may hereafter be designated by notice given in compliance with the terms hereof:

  

			
	 If to Executive:
	 	 Christine B. Mead
 [such address as may appear in the
personnel
 records of Safeco or such other address as
 Executive
may specify in writing]

		
	 If to Safeco:
	 	 Secretary
 Safeco Corporation
 Safeco Plaza
 Seattle, WA 98185

		
	 Copy to:
	 	 General Counsel
 Safeco Corporation
 Safeco Plaza
 Seattle, Washington 98185


  
 If notice is mailed,
such notice shall be effective upon mailing, or if notice is personally delivered or sent by telecopy or other electronic facsimile transmission, it shall be effective upon receipt. 
  

	11.	ASSIGNMENT 

  
 This Agreement is personal to Executive and shall not be assignable by Executive. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns. 
  

	12.	WAIVERS 

  
 No delay or failure by either party in exercising, protecting or enforcing any of its or her rights, titles, interests or remedies under this Agreement, and no course of dealing or performance with respect thereto,
shall constitute a waiver. The express waiver by a party of any right, title, interest or remedy in a particular instance or circumstance shall not constitute a waiver thereof in any other instance or circumstance. All rights and remedies shall be
cumulative and not exclusive of any other rights or remedies. 
  

	13.	ARBITRATION 

  
 Subject to the provisions of Section 7.7 of this Agreement, any controversies or claims arising out of or relating to this Agreement shall be fully and finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then 

  

 -8- 








 
in effect (the “AAA Rules”), conducted by one arbitrator either mutually agreed upon by Safeco and Executive or chosen in accordance with
the AAA Rules, except that the parties thereto shall have any right to discovery as would be permitted by the Federal Rules of Civil Procedure for a period of 90 days following the commencement of such arbitration and the arbitrator thereof shall
resolve any dispute which arises in connection with such discovery. The prevailing party shall be entitled to costs, expenses and reasonable attorneys’ fees, and judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. 
  

	14.	AMENDMENTS IN WRITING 

  
 No amendment, modification, waiver, termination or discharge of any provision of this Agreement, nor consent to any departure therefrom by either party,
shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by Safeco and Executive, and each such
amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an agreement in writing and signed by Safeco and Executive. 
  

	15.	APPLICABLE LAW 

  
 This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the state of Washington, without regard to any rules governing conflicts of laws. 
  

	16.	SEVERABILITY 

  
 If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including, without limitation, the
duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full extent permitted by law (a) all other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the intent of the parties hereto as nearly as may be possible, (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of
any other provision hereof, and (c) any court or arbitrator having jurisdiction thereover shall have the power to reform such provision to the extent necessary for such provision to be enforceable under applicable law. 
  

	17.	HEADINGS 

  
 All headings used are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement. 
  

	18.	COUNTERPARTS 

  
 This Agreement, and any amendment or modification entered into pursuant to Section 14 hereof, may be executed in any number of counterparts, each of
which counterparts, when so 

  

 -9- 








 
executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

  

	19.	ENTIRE AGREEMENT 

  
 This Agreement on and as of the date hereof constitutes the entire agreement between Safeco and Executive with respect to the subject matter hereof and
all prior or contemporaneous oral or written communications, understandings or agreements between Safeco and Executive with respect to such subject matter are superseded and nullified in their entireties. 
  
 IN WITNESS WHEREOF, the parties have executed and entered into this Agreement
on the date set forth above. 
  

	
	
	 /s/ Christine B. Mead

	 Christine B. Mead



  

			
	 Safeco Corporation

		
	 By
	 	 /s/ Michael S. McGavick

	 	 	       Michael S. McGavick

	 	 	       Chief Executive Officer



  

 -10- 








 SCHEDULE 1 
  
 None.