Document:

exv10w204

	 	 	 	 	 

Exhibit 10.204

September 15, 2008                    

Michael H. Hughes

Safeco Corporation

1001 4th Avenue,
Suite 4700

Seattle, WA 98154

	Re:	 	 Confirmation of Change in Control Severance Agreement Terms Dear
Michael:

Reference is hereby made to the change in control severance agreement, dated as of March 28, 2007,
by and between Safeco Corporation (the “Company”) and you (the “CIC Agreement”) and the
Agreement and Plan of Merger, dated as of April 23, 2008 (the “Merger Agreement”), by and
between Liberty Mutual Insurance Company, Big Apple Merger Corporation and the Company. The purpose
of this letter (“Letter Agreement”) is to clarify and modify certain terms of the CIC
Agreement in advance of the consummation of the transactions contemplated by the Merger Agreement
(the “Merger”). Capitalized terms that are not defined in this Letter Agreement shall have
the meaning set forth in the CIC Agreement. Except to the extent specifically modified by this
Letter Agreement, the CIC Agreement remains in full force and effect.

1. You acknowledge and agree that for purposes of the CIC Agreement, with respect to determining
the cash equivalent value of any outstanding Company equity award in connection with the Merger,
the fair market value of a share of the Company’s stock shall be equal to $68.25, the amount paid
per share to the Company’s stockholders under the Merger Agreement, without interest and subject to
any applicable withholding taxes.

2. You further acknowledge and agree that as of the date hereof Section 5.5 of the CIC Agreement,
which addresses your ability to elect to defer all or a portion of the payments made under the CIC
Agreement, is deleted in its entirety, and, accordingly, Section 15 of the CIC Agreement is amended
by deleting the defined terms “Deferred Benefit” and “Deferred Benefit Commencement Date.”

3. You further acknowledge and agree that, with respect to the Gross-Up Payment provided for in
Section 6.2, that notwithstanding anything in the CIC Agreement to the contrary, the Company shall
pay the Gross-Up Payment to you within five business days after the date of payment of compensation
triggering the related Excise Tax and in no event shall the Gross-Up Payment be made later than the
end of your taxable year following the taxable year in which you remit the related Excise Tax. Any
such payment shall be net of any applicable withholding required under federal, state or local law
and any additional withholding to which you have agreed.

 

 

4. You further acknowledge and agree that, notwithstanding anything in the CIC Agreement to
the contrary, failure of Safeco to obtain assumption of the CIC Agreement by its successor as
required by Section 9.1 of the CIC Agreement, shall constitute Good Reason under the CIC
Agreement (but shall not entitle you to any payment prior to the termination of your
employment related to such Good Reason).

5. You further acknowledge and agree that as of the date hereof, the CIC Agreement shall be amended
by adding a new Section 16 to the end thereof which shall read as follows:

“Code Section 409A. The parties intend that the payments and benefits provided
for in this Agreement to either be exempt from Section 409A of the Code or be provided
in a manner that complies with Section 409A of the Code. Notwithstanding anything
contained herein to the contrary, all payments and benefits which are payable upon
termination of employment hereunder shall be paid or provided only when those
terminations of employment constitute “separation from service” from the Company
within the meaning of Section 409A of the Code. Notwithstanding anything contained
herein to the contrary, RSRs shall only be settled in cash upon a Change in Control if
the Change in Control is also a ‘change in the ownership or effective control of the
corporation or in the ownership of a substantial portion of the assets of the
corporation’ within the meaning of Section 409A of the Code.

If the Company reimburses the Executive for (x) the amount of any benefit under
Section 6 or (y) any other amount to which the Executive is entitled to reimbursement
pursuant to this Agreement, such reimbursement shall be made promptly in accordance
with Company policy, but in any event on or before the last day of the Executive’s
taxable year following the taxable year in which the expense or cost was incurred. In
no event shall the amount that the Company pays for any such benefit or reimbursement
in any one year affect the amount that it will pay in any other year and in no event
shall the amounts and benefits described in this paragraph be subject to liquidation
or exchange, except, in each case, to the extent that the right to reimbursement does
not provide for a “deferral of compensation” within the meaning of Section 409A of the
Code.”

 

 

Your execution of this Letter Agreement shall serve as your agreement to the foregoing matters and
shall serve as an amendment to the CIC Agreement. This Letter Agreement may be executed in one or
more counterparts, each of which shall constitute an original, and all of which together shall
constitute one and the same agreement.

	 	 	 	 	 
	 	Sincerely yours,

SAFECO CORPORATION

 	 
	 	/s/ Stephanie Daley-Watson
 	 
	 	Name:  	Stephanie Daley-Watson 	 
	 	Title:  	Vice President, Secretary
 and Associate General Counsel 	 
	 

Accepted and agreed to as of the first date written above:

	 	 	 	 	 
	EXECUTIVE

 	 	 
	By:  	/s/ Michael H. Hughes
 	 	 
	 	Name:  	Michael H. Hughes 	 	 
	 	Title:  	EVP, Insurance Operationsexv10w205

Exhibit 10.205

EXECUTION VERSION

AMENDMENT

TO

CHANGE IN CONTROL SEVERANCE AGREEMENT

     THIS AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (the “Amendment”) is made May 15, 2009
(the “Amendment Date”), by and between Safeco Corporation (the “Company”) and Michael H. Hughes
(the “Executive”).

     WHEREAS, the Company and the Executive entered into that certain Change in Control
Severance Agreement effective March 28, 2007 (the “CIC Agreement”);

     WHEREAS, the Company and the Executive have executed that certain Confirmation of Change in
Control Severance Agreement Terms dated as of September 15, 2008 (the “Letter Agreement”);

     WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of April 23, 2008
among Liberty Mutual Insurance Company (“Liberty Mutual”), Big Apple Merger Corporation, and the
Company, a Change in Control (as such term is defined in the CIC Agreement) occurred and the
Company became a subsidiary of Liberty Mutual; and

     WHEREAS, in light of the foregoing, the Company and the Executive now desire to amend the CIC
Agreement as provided herein;

     NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is acknowledged,
the parties hereto agree the CIC Agreement as follows:

	1.	 	Section 2 of the CIC Agreement is amended in its entirety to read as follows:
	 
	 	 	“The term of this Agreement, as amended and restated, (the “Term”) shall continue in
effect until the earlier of (i) the date it is terminated by written agreement between
the Company and the Executive and (ii) September 22, 2011.”
	 
	2.	 	The first and second sentences of Section 3 of the CIC Agreement are amended in their
entirety to read as follows:
	 
	 	 	“In order to induce the Executive to remain in the employ of the Company and in
consideration of the Executive’s covenants stated in Section 4, the Company agrees, under
the conditions described herein, to pay and provide the Executive the payments and benefits
described herein. Except as provided in Section 5.1, Section 5.4, Section 6.1(A)(i), Section
6.2 and Section 9.1, no amount or benefit shall be payable under this Agreement unless there
shall have been a termination of the Executive’s employment with the Company during the
Term.”

 

 

	3.	 	Section 6.1 of the CIC Agreement is amended in its entirety to read as follows:
	 
	 	 	“6.1 Designated Payment and Severance Payments: The Company shall pay or provide the
Executive with the following payments and benefits on the terms set forth below in lieu of
any compensation or benefits that the Executive otherwise may have been entitled to receive
under Section 6.1 of the CIC Agreement prior to its amendment pursuant to that certain
Amendment to Change in Control Severance Agreement dated September 22, 2008:

	 	(A)	 	Designated Payment.
	 
	 	 	 	(i) The Company shall pay the Executive $5,372,325 in cash (the ‘Designated
Payment’) twenty business days after the first anniversary of the Merger (as defined
below) (the ‘Designated Payment Date’), provided that he is then employed by the
Company and contemporaneously executes and files a release agreement in
substantially the form attached hereto as Exhibit A-l that is not subsequently
revoked. “Merger” means the merger of a subsidiary of Liberty Mutual Insurance
Company (“Liberty Mutual”) into the Company pursuant to that certain Agreement and
Plan of Merger dated as of April 23, 2008 among Liberty Mutual, Big Apple Merger
Corporation and the Company. Failure to timely execute and file a release will
result in forfeiture of the Designated Payment.
	 
	 	 	 	(ii) In the event that prior to the Designated Payment Date the Executive dies or
the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason or as a result of Executive’s Disability, then the Company
shall pay the Executive or his estate, as applicable, the Designated Payment twenty
business days after (a) the date of his death or (b) the date on which any such
termination constitutes a “separation from service” (as that term is defined under
Section 409A of the Code), as applicable, provided that, in the event his employment
is terminated other than as a result of his death, he timely executes and files with
the Company a release agreement in substantially the form attached hereto as Exhibit
A-2 that is not subsequently revoked. For purposes of this Section 6.1(A)(ii), a
release will only be timely filed if an executed copy of the release is delivered or
tendered to the President of the Company or his or her designee not later than 21
days after the Executive’s “separation from service” as that term is defined under
Section 409A of the Code. Failure to timely execute and file a release will result
in forfeiture of the Designated Payment.

	 	(B)	 	Severance Payments. Upon a termination of the Executive’s employment by the
Company without Cause or by the Executive for Good Reason after the Designated Payment Date
and during the Term, the Executive shall be entitled to receive (i) severance in an amount
and in such form as determined under the Liberty Mutual Severance Pay Plan, as such plan may
be amended from time to time, in accordance

2

 

	 	 	 	with the terms of such plan and (ii) for the thirty-six month (36) month period immediately
following the Date of Termination (the “Severance Period”), the Company shall arrange to
provide Executive with life, disability, accident and health insurance benefits
substantially similar to those the Executive is receiving immediately prior to the Date of
Termination; provided, however, that unless Executive consents to a different method, such
health insurance benefits shall be provided through a third-party insurer. Benefits
otherwise receivable by the Executive pursuant to Section 6.1(B)(i) shall be reduced to the
extent comparable benefits are actually received by or made available to the Executive
(other than benefits available pursuant to the Consolidated Omnibus Budget Reform Act of
1985) during the Severance Period in connection with subsequent employment (and any such
benefits actually received by or made available to the Executive shall be reported to the
Company by the Executive). Benefits provided pursuant to Section 6.1(B)(ii) shall cease on
the first day on which Executive is elegible to participate in substantially equivalent
benefits in connection with subsequent employment. Severance payments as described in this
Section 6.1(B) shall be made on the schedule set forth in the Liberty Mutual Severance Pay
Plan and shall be conditioned upon timely filing an executed release as required under that
plan and does not subsequently revoke such release. Upon any termination of the Executive’s
employment, other than a termination by the Company without Cause or a termination by the
Executive for Good Reason, the Executive shall be entitled to the payments and benefits set
forth in Section 5 of this Agreement and the Executive’s rights and benefits under any other
applicable plans, programs or agreements of or with the Company or Liberty Mutual shall be
as provided in such plans, programs or agreements.

	4.	 	The first sentence of Section 6.2(A) of the CIC Agreement is amended by deleting the phrase:
	 
	 	 	“Whether or not the Executive becomes entitled to the Severance Payments,” and
replacing it with the following:
	 
	 	 	“Whether or not the Executive becomes entitled to any payments or benefits under
Section 6.1,”
	 
	5.	 	Section 6.3 of the CIC Agreement is deleted in its entirety.
	 
	6.	 	Section 6.4 of the CIC Agreement is renumbered Section 6.3 and is amended by inserting the
following after the words “provided by this Agreement” in the fourth line thereof:
	 
	 	 	“, in connection with negotiating any amendment to this Agreement”
	 
	7.	 	The second sentence of Section 8 of the CIC Agreement is amended by deleting the
parenthetical “(other than Section 6.1(B))”.

3

 

	8.	 	Section 9.1 of the CIC Agreement is amended by replacing the term “Safeco” with the term
“Liberty Mutual” throughout such Section 9.1 and by adding the following sentence to the end
of Section 9.1:

“No assignment of this Agreement by Liberty Mutual, or succession of any affiliate of Liberty
Mutual or any other person or entity to rights and obligations of Liberty Mutual under this
Agreement shall release Liberty Mutual from any liability or obligation hereunder and, Liberty
Mutual shall remain liable such that if any amount is not paid when due by the assignee or
successor then Executive may proceed against Liberty Mutual without obligation for presentment and
demand.”

	9.	 	Section 15 of the CIC Agreement is amended by deleting the following defined terms:
“Severance Payments” and “Severance Period.”
	 
	10.	 	Section 15(R)(v) and Section 15R(vi) of the CIC Agreement are deleted in their entirety, and
Section 15(R)(vii) is renumbered Section 15(R)(v).
	 
	11.	 	Section 15(R) of the CIC Agreement is further amended by adding the following sentence to the
end of Section 15(R):
	 
	 	 	“Executive acknowledges and agrees that neither the fact of the Merger, the consummation of
the Merger, the fact of Liberty Mutual or any of its affiliates being a successor to the
Company as a result of the Merger (provided, however, that, if any affiliate of Liberty Mutual
becomes a successor to the Company, Liberty Mutual guarantees the full and prompt payment of
all obligations and liabilities under this Agreement to the Executive), nor the change in the
Executive’s duties, titles, responsibilities, compensation, benefits or the elements or
structure thereof in connection with the Merger shall constitute ‘Good Reason’ for purposes of
this Agreement; provided, however, that any material reduction in the Executive’s duties,
titles, responsibilities, compensation, benefits or the elements or structure thereof on or
after the Amendment Date shall constitute ‘Good Reason,’ other than any reduction in
accordance with the Executive’s written consent or that is part of a salary reduction plan
implemented by the Board and applicable on a proportionate basis to all officers of the
Company (and not the Executive singly). The Executive further acknowledges and agrees that he
does not have a right to terminate his employment for Good Reason under Section 9.1 of the
Agreement as of the Amendment Date.”
	 
	12.	 	All other terms of the CIC Agreement shall remain in full force and effect.
	 
	13.	 	This instrument, together with the CIC Agreement and the Letter Agreement, contains the entire
agreement of the parties with respect to the subject matter hereof.

4

 

IN WITNESS WHEREOF, the executive and the Company have caused this Agreement to be executed as of
the day and year written above.

	 	 	 	 	 
	 	SAFECO CORPORATION

 	 
	 	By:  	/s/ Gary R. Gregg
 	 
	 	 	Gary R. Gregg 	 
	 	 	Executive Vice President, Liberty Mutual and

President, Agency Markets 	 
	 
	 	 	 
	 	/s/ Michael H. Hughes
 	 
	 	Michael H. Hughes 	 
	 	 	 

5

 

EXHIBIT A-2

GENERAL RELEASE

The
following General Release (the “Agreement”) sets forth the agreement between Liberty Mutual
Insurance Company on behalf of itself and its subsidiaries, parent companies, and affiliates,
including but not limited to Safeco Insurance Company and Safeco Corporation (collectively,
“Liberty Mutual”), and Michael H. Hughes (“Employee”) concerning Liberty Mutual’s payment of certain
compensation and benefits to Employee pursuant to the Change in Control Severance Agreement by and
between Safeco Corporation and Employee effective March 28, 2007 (as amended by that certain
Amendment to Change in Control Severance Agreement dated May 15, 2009 and that certain
Confirmation of Change in Control Severance Agreement Terms dated as of September 15, 2008, as so
amended the “CIC Agreement”).

     1. Termination Date. This confirms the termination of your employment with Liberty
Mutual effective [DATE] (the “Date of Termination”).

     2. CIC Payment. Employee acknowledges that the payments referred to in Section 6.1 and 6.2 of
the CIC Agreement are the only payments that are due to the Employee upon his termination of
employment with Liberty Mutual pursuant to the CIC Agreement. The amount that is due to Employee
pursuant to Section 6.1 of the CIC Agreement is $5,372,325 (the
“CIC Payment”), minus applicable
withholdings required by federal, state and local laws.

          (a) Liberty Mutual shall not be obligated pursuant to the CIC Agreement to pay Employee or
provide Employee with any compensation other than the CIC Payment and any payment required under
Section 6.2 of the CIC Agreement, including, but not limited to, under Section 6.1(B) of the CIC
Agreement.

          (b) Employee agrees that the payments made by Liberty Mutual under this Agreement and any
other applicable plans, programs or agreements of or with Liberty Mutual constitute adequate
consideration for the general release of claims set forth in Section 4 below.

     3. Conditions Applying to CIC Payment. Employee acknowledges and agrees that the CIC Payment
set forth in Section 2 of this Agreement is, for purposes of any and all compensation plans,
programs or other agreements or arrangements of Liberty Mutual, a welfare benefit and does not
constitute a wage earned by Employee by virtue of Employee’s employment with Liberty Mutual. None
of the payments described in this Agreement shall be subject to matching contributions or included
as benefits eligible earnings under any Liberty Mutual benefit plan or policy.

     4. General Release of Claims. Employee hereby knowingly and voluntarily releases and forever
discharges Liberty Mutual and its respective subsidiaries, parent, affiliates and related
entities, including but not limited to Safeco Insurance Company and Safeco Corporation
(collectively, “Liberty Mutual”) and its or their present and former officers, directors,
employees, agents, successors and assigns, of and from any and all claims, known or unknown that
Employee (including Employee’s heirs, executors, administrators, successors, and assigns) has or
may have as of the date of Employee’s execution of this Agreement. This includes but is not
limited to a release of (i) any claims arising out of Employees employment with Liberty Mutual or

			
	 	 	 
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	 	Employee’s Initials                     

 

 

Employee’s separation from that employment; (ii) all claims brought by Employee or on Employee’s
behalf in any pending lawsuits; (iii) any rights or claims that Employee may have pursuant to the
Severance Guidelines, other than for the CIC Payment described in Section 2 of this Agreement;
(iv) any rights or claims that Employee may have pursuant to the Safeco Long Term Incentive Plan,
Safeco Leadership Performance Plan, Safeco Performance Incentive Compensation Plan, Safeco Success
Sharing Plan, Safeco Sales Incentive Plan, Surety Plan, and/or any other compensation, incentive
and/or bonus plans in which Employee may claim to have participated; and (v) any rights or claims
that Employee may have pursuant to:

	 	•	 	The National Labor Relations Act, as amended;
	 
	 	•	 	Title VII of the Civil Rights Act of 1964, as amended;
	 
	 	•	 	The Civil Rights Act of 1991;
	 
	 	•	 	Sections 1981 through 1988 of Title 42 of the United States Code, as amended;
	 
	 	•	 	The Employee Retirement Income Security Act of 1974, as
amended, but only with
respect to the Safeco Executive Severance Guidelines, the Liberty Mutual
Severance Pay Plan, the Liberty Mutual Short-Term Disability Plan, the Liberty
Mutual Long-Term Disability Plan, the Liberty Mutual Executive Long-Term
Disability Plan; Safeco Group Short Term Disability Plan; and Safeco Group
Long Term Disability Plan;
	 
	 	•	 	The Immigration Reform and Control Act, as amended;
	 
	 	•	 	The Occupational Safety and Health Act, as amended;
	 
	 	•	 	The Americans With Disabilities Act, as amended;
	 
	 	•	 	The Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq.;
	 
	 	•	 	The federal Equal Pay Act, as amended;
	 
	 	•	 	The Uniformed Services Employment and Reemployment Rights Act, as amended;
	 
	 	•	 	The Worker Adjustment and Retraining Notification Act, as amended;
	 
	 	•	 	State or municipal wage and hour laws or regulations including, but not limited
to, laws or regulations pertaining to wages, hours, overtime compensation, meal
and/or rest periods, payroll record-keeping, and employee paystubs;
	 
	 	•	 	Any federal, state or municipal “unfair practices” “unlawful practices” or “Private
Attorneys General Act” laws that provide the ability to bring claims for
violations of other laws or public policies (e.g. California Business and
Professions Code Section 17200 et seq. and California Labor Code Section 2698 et
seq.);
	 
	 	•	 	Any other federal, state or local civil or human rights law or any other local; state
or federal law, regulation or ordinance, including without limitation laws
authorizing claims based upon race, national origin, gender, age,
sexual orientation, pregnancy, color, marital status, religion, creed,
veteran status, disability, medical condition, leave of absence
requirements, retaliation, or perceived protected class status;
	 
	 	•	 	Any company policy, practice or procedure, or any express or implied public
policy, contract, tort, or common law;
	 
	 	•	 	Any claim for penalties; or
	 
	 	•	 	Any claim for costs, fees, or other expenses including attorney’s fees.

Notwithstanding the foregoing or Section 5 below, Employee is not waiving (i) his right to bring
claims that cannot be released as a matter of law; (ii) his rights to receive benefits or payments

			
	 	 	 
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	 	Employee’s Initials                     

 

 

pursuant to the terms of any Safeco Insurance Company Retirement Plan, Safeco Cash Balance Plan, or
Safeco’s Deferred Compensation Plan for Executives, or any other Liberty Mutual benefit plan, (iii)
any claim for workers compensation benefits, (iv) his rights under the Liberty Mutual’s certificate
of incorporation, By-Laws, insurance policies or other written agreements with respect to
indemnification or any similar policy, document or agreement of any affiliate of Liberty Mutual as
applicable to him immediately prior to termination; or (v) any claims to enforce rights arising
under the ADEA or other civil rights statute after the effective date of this Agreement.

     5. California Employees. Without limitation to the foregoing, an employee working in
California expressly recognizes that this Agreement includes a release of any rights or claims
under the California Labor Code, the California Wage Orders, the Prudence K. Poppnick Act of 2001,
which prohibits discrimination against individuals with difficulties in achieving one or more major
life activities; and the California Fair Employment and Housing Act, which prohibits discrimination
in employment, and the California Unruh Civil Rights Act. An employee working in California
expressly recognizes that this release includes a release of all claims which the employee may have
as of the date of the release whether known or unknown to the employee, who hereby waives all
rights which he may have under Section 1542 of the California
Civil Code, which states: “A general
release does not extend to claims which the creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by him must have materially affected his
settlement with the debtor.”

     6. No Other Payments Due. Employee affirms that Employee has been paid and/or has received all
compensation and benefits which were due and payable to Employee under the CIC Agreement as of the
Date of Termination. In the event that any claim, charge, complaint or action is filed on
Employee’s behalf against Liberty Mutual that is subject to the general release set forth in
Section 4 of this Agreement, Employee agrees to waive and hereby waives any and all rights to any
monetary relief or monetary recovery therefrom, except as prohibited by law.

     7. Nonadmission of Wrongdoing. Employee agrees that neither this Agreement nor the furnishing
of the consideration for the release set forth in this Agreement shall be deemed or construed at
any time for any purpose as an admission by Liberty Mutual of any liability or unlawful conduct of
any kind.

     8. Non-disparagement. Employee agrees not to disparage or defame Liberty Mutual, its
management, employees, publications, products, services, practices, or reputation.

     9. Confidentiality. Employee represents that prior to the execution of this
Agreement he held it as strictly confidential and did not disclose the terms or fact of this
Agreement to anyone other than his immediate family, his attorney(s) and/or his financial
advisor(s), who first agreed not to communicate information provided by Employee to any third
parties. Employee further agrees that upon the Agreement’s execution, neither he not anyone acting
on his behalf will, in any manner, voluntarily inform, disclose, or discuss with any person the
terms, fact of or amounts paid pursuant to this Agreement, except that Employee may disclose any
such information to his immediate family, his attorney(s) and/or his financial advisor(s), but
only if he first obtains their assent to be bound by this confidentiality provision.

     10. Confidential Information & Return of Materials. Employee acknowledges that in connection
with his role as [Manager, Agency Market Systems], and in any previous positions with Liberty
Mutual, Employee had access to a wide range of proprietary and/or confidential

			
	 	 	 
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	 	Employee’s Initials                     

 

 

information regarding Liberty Mutual, including, but not limited to information concerning its
strategic direction; financial affairs; business plans; underwriting, claims, sales or marketing
strategy; underwriting processes; pricing and profit margins; employees; customers and/or
prospective customers; and intellectual property owned by or licensed to Liberty Mutual. Employee
further acknowledges and agrees that all such proprietary and/or confidential information,
including documents, computer software, electronic information or copies thereof, is and shall
remain the property of Liberty Mutual. Furthermore, Employee acknowledges and reaffirms Employee’s
continuing obligation to preserve as confidential all such proprietary and/or confidential
information obtained by Employee during, or by reason of, employment with Liberty Mutual and
agrees that it will not be disclosed by Employee to any person, firm or corporation or otherwise
utilized by Employee.

     11. Confidential Information and Inventions Assignment Agreement. Employee specifically
reaffirms that Employee will continue to abide by the provisions, restrictions and non-solicitation
agreement set for in the Confidential Information and Inventions Assignment Agreement signed by the
Employee and with which Employee is familiar. The Confidential Information and Inventions
Assignment Agreement remains in full force and effect, and nothing in this Agreement is intended to
supersede that agreement.

     12. Governing Law and Interpretation. Employee agrees that this Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to its conflict of laws provisions. Notwithstanding the foregoing, in the event a
court of competent jurisdiction declares that this Agreement is governed by the law of another
state, the Agreement shall remain in full force and effect. Should any provision of the Agreement
be declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to
be enforceable, excluding the general release of claims language, such provision shall immediately
become null and void, leaving the remainder of this Agreement in full force and effect. If the
general release of claims language is found by a court of competent jurisdiction to be
unenforceable, Employee agrees that the remainder of Section 4 shall remain in full force and
effect, that Liberty Mutual may rewrite this Agreement to cure the defect, and that Employee shall
execute the rewritten agreement upon request of liberty Mutual without any additional monies,
benefits and/or compensation therefor.

     13. Entire Agreement. This Agreement sets forth the entire agreement between Employee and
Liberty Mutual and shall supersede any and all prior agreements or
understandings, express or implied, whether written or oral, between the parties, except that, if
Employee previously entered into any agreement(s) with Liberty Mutual containing provisions
governing confidential information and assignment of inventions, trade secrets, non-competition or
non-solicitation, such provisions shall remain in full force and effect,
Employee acknowledges that Employee has not relied on any representations, promises, or agreements
of any kind made to Employee in connection with Employee’s decision to sign this Agreement which
are not reflected in this Agreement.

     14. Amendment. This Agreement may not be amended except by a written agreement signed by
both parties.

     15. Right to Revoke. Employee understands that Employee has the right to revoke this Agreement
at any time during the seven (7) calendar day period following the date on which Employee first
signs the Agreement. If Employee wants to revoke, Employee must make a revocation in writing which
states: “I hereby revoke my acceptance of the General Release.” This written revocation must be

			
	 	 	 
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	 	Employee’s Initials                     

 

 

delivered by hand within the seven-day revocation period, or sent by overnight service or
certified mail with a postmark dated before the end of the seven-day revocation period to: Francis
Hyatt, Vice President and Manager, Benefits ad Employee Relations, 175 Berkeley Street, Boston, MA
02117; otherwise the revocation will not be effective. If Employee revokes this Agreement, Employee
will not be entitled to receive the consideration referenced in Section 2.

     16. Effective Date. This Agreement shall not become effective or enforceable until the
expiration of the 7-day revocation period described in Section 15 above.

Executed this                      day of                     , 20     .

EMPLOYEE UNDERSTANDS THAT EMPLOYEE’S RIGHT TO RECEIVE THE CIC PAYMENT REFERENCED IN THIS AGREEMENT
IS SUBJECT TO EMPLOYEE’S COMPLIANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT.
EMPLOYEE ALSO UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE WELL BE WAIVING EMPLOYEE’S
RIGHTS UNDER FEDERAL, STATE AND LOCAL LAW TO BRING ANY CLAIMS THAT EMPLOYEE HAS OR MIGHT HAVE
AGAINST LIBERTY MUTUAL.

EMPLOYEE HAS 21 DAYS TO CONSIDER THIS AGREEMENT. LIBERTY MUTUAL ADVISES EMPLOYEE TO CONSULT WITH
AN ATTORNEY (AT EMPLOYEE’S OWN EXPENSE) PRIOR TO SIGNING THIS AGREEMENT. EMPLOYEE’S SIGNATURE
BELOW CONSTITUTES EMPLOYEE’S ACKNOWLEDGEMENT THAT EMPLOYEE HAS BEEN SO ADVISED, THAT EMPLOYEE HAS
READ THE AGREEMENT, THAT EMPLOYEE FULLY UNDERSTANDS ITS TERMS, AND THAT EMPLOYEE KNOWINGLY AND
VOLUNTARILY AGREES TO BE BOUND BY IT.

IN WITNESS WHEREOF, Employee has executed this General Release as of the date set forth below.
UNDERSTOOD, ACCEPTED AND AGREED Signed:

Name [please print]:

Date:

	 	 	 	 	 
	Liberty Mutual Insurance Company

 	 	 
	By:  	 	 	 
	 	Francis J. Hyatt 	 	 
	 	Vice President & Manager

Employee Relations and Benefits 	 	 
	 

Please mail all pages of the original release, including your initials on all pages and your dated

			
	 	 	 
	Page 5 of 6
	 	Employee’s Initials                     

 

 

signature to:

Francis Hyatt, Liberty Mutual Group, 175 Berkeley Street, Boston, MA

			
	 	 	 
	Page 6 of 6
	 	Employee’s Initials                     

 

 

EXHIBIT A-1

RELEASE

The following Release (the “Agreement”) sets forth the agreement between Liberty Mutual Insurance
Company on behalf of itself and its subsidiaries, parent companies, and affiliates, including but
not limited to Safeco Insurance Company and Safeco Corporation (collectively, “Liberty Mutual”),
and Michael H. Hughes (“Employee”) concerning Liberty Mutual’s payment of certain compensation and
benefits to Employee pursuant to the Change in Control Severance Agreement by and between Safeco
Corporation and Employee effective March 28, 2007 (as amended by that certain Amendment to Change
in Control Severance Agreement dated May 15, 2009, and that certain Confirmation of Change in
Control Severance Agreement Terms dated as of September 15, 2008, as so amended the “CIC
Agreement”).

     1. CIC Payment. Employee acknowledges that the payments referred to in Section 6.1(A) of the
CIC Agreement are the only payments that are due to the Employee as of the date of Employee’s
execution of this Agreement pursuant to Section 6.1(A) of the CIC Agreement. The amount that is due
to Employee pursuant to Section 6.1(A) of the CIC Agreement is $5,372,325 (the “CIC Payment”),
minus applicable withholdings required by federal, state and local laws.

          (a) Liberty Mutual shall not be obligated pursuant to Section 6.1(A) of the CIC Agreement to
pay Employee or provide Employee with any compensation other than the CIC Payment.

          (b) Employee agrees that the payments made by Liberty Mutual under this Agreement constitute
adequate consideration for the release of claims set forth in Section 4 below.

     2. Conditions Applying to CIC Payment. Employee acknowledges and agrees that the CIC Payment
set forth in Section 2 of this Agreement is, for purposes of any and all compensation plans,
programs or other agreements or arrangements of Liberty Mutual, a welfare benefit and does not
constitute a wage earned by Employee by virtue of Employee’s employment with Liberty Mutual. None
of the payments described in this Agreement shall be subject to matching contributions or included
as benefits eligible earnings under any Liberty Mutual benefit plan or policy.

     3. Release of Claims. Employee hereby knowingly and voluntarily releases and forever
discharges Liberty Mutual and its respective subsidiaries, parent, affiliates and related
entities, including but not limited to Safeco Insurance Company and Safeco Corporation
(collectively, “Liberty Mutual”) and its or their present and former officers, directors,
employees, agents, successors and assigns, of and from any and all claims, known or unknown that
Employee, (including Employee’s heirs, executors, administrators, successors, and assigns) has or
may have under Section 6.1(A) of the CIC Agreement as of the date of Employees execution of this
Agreement. This includes a release of

			
	 	 	 
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     (a) any rights or claims that Employee may have pursuant to the [Safeco Executive]
Severance Guidelines, other than for the CIC Payment described in Section 2 of this Agreement;

     (b) any rights or claims that Employee may have pursuant to the Safeco Long Term Incentive
Plan, Safeco Leadership Performance Plan, Safeco Performance Incentive Compensation Plan,
Safeco Success Sharing Plan, Safeco Sales Incentive Plan, Surety Plan, and/or any other
compensation, incentive and/or bonus plans in which Employee may claim to have participated;
and

     (c) any rights or claims that Employee may have pursuant to the Employee Retirement Income
Security Act of 1974, as amended, but only with respect to the Safeco Executive Severance
Guidelines, Safeco Group Short Term Disability Plan, and Safeco Group Long Term Disability
Plan.

Notwithstanding the foregoing, Employee is not waiving his right to bring claims that cannot be
released as a matter of law. Further, nothing in this Agreement, including the release of claims
set forth in this Section 4, shall be construed to have any effect upon Employee’s receipt of
benefits for which Employee is otherwise eligible or entitled to receive (i) pursuant to the terms
of any Safeco Insurance Company Retirement Plan, Safeco Cash Balance Plan, or Safeco’s Deferred
Compensation Plan for Executives, (ii) any other Liberty Mutual benefit plan, (iii) any provision
of the CIC Agreement other than Section 6.1(A) or (iv) any claim for workers compensation
benefits.

     4. No Other Payments Due. Employee affirms that Employee has been paid and/or has received all
compensation and benefits which were due and payable to Employee under Section 6.1(A) of the CIC
Agreement as of the date of Employee’s execution of this Agreement.

     5. Non-admission of Wrongdoing. Employee agrees that neither this Agreement
nor the furnishing of the consideration for the release set forth in this Agreement shall be deemed
or construed at any time for any purpose as an admission by Liberty Mutual of any liability or
unlawful conduct of any kind.

     6. Governing Law and Interpretation. Employee agrees that this Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts without regard to
its conflict of laws provisions. Notwithstanding the foregoing, in the event a court of
competent jurisdiction declares that this Agreement is governed by the law of another state, the
Agreement shall remain in full force and effect. Should any provision of the Agreement be declared
illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be
enforceable, excluding the release of claims language, such provision shall immediately become
null and void, leaving the remainder of this Agreement in full force and effect. If the release of
claims language is found by a court of competent jurisdiction to be unenforceable, Employee agrees
that the remainder of Section 4 shall remain in full force and effect, that Liberty Mutual may
rewrite this Agreement to cure the defect, and that Employee shall execute the rewritten agreement
upon request of Liberty Mutual without any additional monies, benefits and/or compensation
therefor.

     7. Entire Agreement. This Agreement sets forth the entire agreement between Employee and
Liberty Mutual and shall supersede any and all prior agreements or understandings,
express or implied, whether written or oral, between the parties, except that, if

			
	 	 	 
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Employee previously entered into any agreement(s) with Liberty Mutual containing provisions
governing confidential information and assignment of inventions, trade secrets, non-competition or
non-solicitation, such provisions shall remain in full force and effect, Employee acknowledges
that Employee has not relied on any representations, promises, or agreements of any kind made to
Employee in connection with Employee’s decision to sign this Agreement which are not reflected in
this Agreement.

     8. Amendment. This Agreement may not be amended except by a written agreement signed by both
parties.

     9. Right to Revoke. Employee understands that Employee has the right to revoke this Agreement
at any time during the seven (7) calendar day period following the date on which Employee first
signs the Agreement. If Employee wants to revoke, Employee must make a revocation in writing which
states: “I hereby revoke my acceptance of the Release”. This written revocation must be delivered by
hand within the seven-day revocation period, or sent by overnight service or certified mail with a
postmark dated before the end of the seven-day revocation period to: Francis Hyatt, Vice President
and Manager, Benefits and Employee Relations, 175 Berkeley Street, Boston, MA 02117; otherwise the
revocation will not be effective. If Employee revokes this Agreement, Employee will not be entitled
to receive the consideration referenced in Section 2 unless he thereafter executes a release
substantially in the form hereof.

     10. Effective Date. This Agreement shall not become effective or enforceable until the
expiration of the 7-day revocation period described in Section 13 above.

EMPLOYEE UNDERSTANDS THAT EMPLOYEE’S RIGHT TO RECEIVE THE CIC PAYMENT REFERENCED IN THIS AGREEMENT
IS SUBJECT TO EMPLOYEE’S COMPLIANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT.
EMPLOYEE ALSO UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE WILL BE WAIVING EMPLOYEE’S
RIGHTS UNDER FEDERAL, STATE AND LOCAL LAW TO BRING ANY CLAIMS THAT EMPLOYEE HAS OR MIGHT HAVE
AGAINST LIBERTY MUTUAL UNDER SECTION 6.1(A) OF THE CIC AGREEMENT.

EMPLOYEE HAS 21 DAYS TO CONSIDER THIS AGREEMENT. LIBERTY MUTUAL ADVISES EMPLOYEE TO CONSULT WITH
AN ATTORNEY (AT EMPLOYEE’S OWN EXPENSE) PRIOR TO SIGNING THIS AGREEMENT. EMPLOYEE’S SIGNATURE
BELOW CONSTITUTES EMPLOYEE’S ACKNOWLEDGEMENT THAT EMPLOYEE HAS BEEN SO ADVISED, THAT EMPLOYEE HAS
READ THE AGREEMENT, THAT EMPLOYEE FULLY UNDERSTANDS ITS TERMS, AND THAT EMPLOYEE KNOWINGLY AND
VOLUNTARILY AGREES TO BE BOUND BY IT.

			
	 	 	 
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Executed this                      day of                     , 20     .

IN WITNESS WHEREOF, Employee has executed this Release as of the date set forth below.

UNDERSTOOD, ACCEPTED AND AGREED Signed:

Name [please print]:

Date: Liberty Mutual Insurance Company

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Francis J. Hyatt 	 	 
	 	Vice President & Manager

Employee Relations and Benefits 	 	 
	 

Please mail all pages of the original release, including your initials on all pages and your dated
signature to:

Francis Hyatt, Liberty Mutual Group, 175 Berkeley Street, Boston, MA

			
	 	 	 
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	 	Employee’s Initials

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