Document:

Letter from Microsoft Corporation

 Exhibit 10.1 
  
 July 27, 2005 
  
 VIA AIR COURIER 
 Kevin Turner 
 11220 Talamore Boulevard 
 Bentonville, Arkansas 72712 
  
 Dear Kevin: 
  
 Microsoft Corporation is pleased to confirm our offer for the position of Chief Operating Officer reporting to Steve Ballmer, Chief Executive Officer. We anticipate that you will start your employment on September 8,
2005. 
  
 Microsoft has extended this offer to you based upon your general
knowledge, background, experience and skills and abilities and not because of your knowledge of your current employer’s or any previous employer’s trade secrets or other confidential information. As a condition of employment at Microsoft,
you will be required to sign the standard form Microsoft Corporation Employee Agreement (copy enclosed) in which you agree to, among other things, not disclose to Microsoft or use in your employment with Microsoft any confidential or proprietary
information or trade secrets of any current or prior employer. In this regard, you should be extremely careful not to bring to Microsoft any documents or other materials in tangible form belonging to or acquired from your current or any prior
employer. 
  
 Annual Compensation. Consistent with the company’s
philosophy of pay for performance, a significant portion of your annual compensation will be provided through performance-based components. The compensation package associated with this offer is as follows: 
  
 Your starting salary will be $570,000 per year, equivalent to approximately $47,500 per
month. Currently, our performance review process provides for an annual merit increase opportunity, and any increase would be based on performance. Your first salary review will take place in September 2006. Any subsequent salary reviews will occur
according to the performance review timetable in place for Microsoft employees at that time. 
  
 You also will be eligible for the Partnership bonus program. The bonus is awarded based on performance as evaluated during the performance review process. The bonus potential ranges from 0-100% of your eligible
earnings during the review period. Your first eligibility for a bonus will be September 2006. Any subsequent bonus eligibility will occur according to the performance review timetable in place for Microsoft employees at that time. 
  
 You will participate in Microsoft’s Shared Performance Stock Award (SPSA) program, our
long-term incentive compensation plan for senior managers and officers, with a target SPSA award of 624,000 shares. The actual size of the award will be determined based on the company’s performance against the program measures. One third of
the SPSA award vests on or about August 31, 2006 (following the determination of results for the performance period), with an additional one-third vesting in each of the following two years, subject to continued employment through each vesting date.
Upon vesting, you will be issued shares of Microsoft common stock, with shares withheld to pay required withholding taxes. Your SPSA award is subject to approval by the Compensation Committee of the Microsoft Board of Directors and will be governed
by the terms and conditions of an award agreement that you will be required to sign as a condition of the award and by the terms of the Microsoft Corporation 2001 Stock Plan. Additional materials regarding the SPSA program and your award will be
provided to you approximately 60 days after you commence employment at Microsoft. 
  
 You will be eligible for vacation in accordance with Microsoft policy, as well as participation in the Company’s benefit plans (the company currently provides a flexible benefits plan, 401(k) savings plan and employee stock purchase
plan). In addition you will be eligible to participate in all other executive compensation and/or employee benefit programs on the same terms and conditions that are available to other senior executives at your level. 

 Relocation. Microsoft will provide you with the relocation benefits described in the enclosed Relocation Benefits
Summary. As part of Microsoft’s executive relocation assistance program, you are eligible for a third-party home sale purchase at its appraised value should your primary residence not be otherwise sold as of a mutually agreed date. The benefits
include reimbursement for certain relocation costs in accordance with the company’s reimbursement guidelines. Payroll taxes will be withheld; however, Microsoft will provide a tax gross up to assist you in paying the taxes associated with the
lump sum cash relocation allowance and certain other non-deductible relocation expenses that will be included in your Form W-2 as gross compensation. 
  
 Replacement of Forfeited Compensation. In addition, we recognize you are forfeiting a very significant amount of accumulated equity compensation when you leave
your current employer. Accordingly, as a replacement for that compensation, we offer the following on-hire cash payment and Stock Award grant. 
  
 An on-hire payment of $7,000,000 will be made to you within 14 days after our receipt of your signed letter, Employment Agreement and the other forms enclosed with this
letter. This amount represents our genuine interest in your joining Microsoft. Payroll taxes will be withheld from the on-hire payment. In the unlikely event that you leave the company of your own volition or due to termination for cause by the
company prior to completing 12 months of employment, 100% of the $7,000,000 must be returned to Microsoft. If you leave the company of your own volition or due to termination for cause by the company after completing 12 months but prior to
completing 24 months of employment, $4,700,000 of the signing bonus must be returned to Microsoft. If you leave the company of your own volition or due to termination for cause by the company after completing 24 months but prior to completing 36
months of employment, $2,300,000 of the signing bonus must be returned to Microsoft. You hereby authorize Microsoft to withhold this amount from any monies owed or stock issuable to you. For purposes of this letter, “for cause” means a
good faith determination by the company that: (a) you have engaged in material dishonesty, fraud, or theft in connection with the business of the company or its affiliates; (b) you have engaged in conduct in violation of policies of the company
designed to prevent violations of law, such as, without limitation, policies pertaining to compliance with the laws prohibiting unlawful discrimination, harassment, or insider trading; (c) you have been convicted of, or pled nolo contendere to, a
felony; (d) you have materially breached the terms of your Employee Agreement; (e) your employment with the company violates any obligation to any third party not to engage in such employment; or (f) you fail to perform your material duties as an
employee. 
  
 You will be granted a Stock Award of 320,000 shares in Microsoft
Corporation under the Microsoft Corporation 2001 Stock Plan. Subject to continued employment through each vesting date, this award will vest as follows: 
  

	 	•	 	25% - September 1, 2008 

  

	 	•	 	25% - September 1, 2010 

  

	 	•	 	50% - Upon retirement from the company at age sixty or older. 

  
 Your Stock Award is subject to approval by the Compensation Committee of the Microsoft Board of Directors and will be subject to the terms of the Stock Award Agreement
that you will be required to sign as a condition of the award and by the terms of the Microsoft Corporation 2001 Stock Plan. Additional information regarding this Stock Award, including the Stock Award Agreement, will be provided to you
approximately 60 days after you commence employment with Microsoft. Under our current program, you will not be eligible to be considered for future Stock Awards. 
  
 Termination of Employment by Microsoft. If Microsoft terminates your employment for any reason other than “for cause” as
defined above, the payback provisions of the $7,000,000 on-hire payment will become void (i.e., no payback of any portion of the on-hire payment will be required). Also, in the case of termination of employment by Microsoft for any reason other than
“for cause,” any portion of the Stock Award up to 160,000 shares that had not vested as of the date of such termination, will become immediately vested. 
  
 Death or Disability. If, during your employment, you die or if you become totally and permanently disabled so as to qualify for
Long-Term Disability coverage as determined by Microsoft’s Long-Term Disability policy in effect at the 

  

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time of the disability event (as defined and determined under the policy), any portion of the Stock Award that had not vested will immediately vest. The
forgoing vesting provision supersedes and replaces any provision of the Microsoft Corporation 2001 Stock Plan concerning vesting. 
  
 Please recognize that this offer letter is not a contract of employment for any specific or minimum term and that the employment Microsoft offers you is terminable at
will. This means that our employment relationship is voluntary and based on mutual consent. You may resign your employment, and Microsoft likewise may terminate your employment, at any time, for any reason, with or without cause or notice. Any prior
oral or written representations to the contrary are void, and our at-will relationship may not be modified except by a formal written employment contract signed by an officer of Microsoft. Attached is an addendum which specifies that any dispute
regarding this letter will be resolved through arbitration. 
  
 This offer is
contingent on your providing us with acceptable proof of your identity and authorization to work in the United States and your proper completion of a Form I-9 (Employment Eligibility Verification) as required under U.S. immigration regulations.
Enclosed is a listing provided by the U.S. Immigration and Naturalization Service that describes what will be needed. This offer is also contingent upon the company receiving an acceptable check of your background, to include criminal convictions,
confirmation of identification information, and credit history. 
  
 Please sign
the copy of this letter and the enclosed Employee Agreement and promptly return them in the enclosed envelope. It is important that we receive your letter and the signed Employee Agreement prior to your start date. Please note that you are not
authorized to alter the terms of the Employment Agreement in any manner. You may keep the original of this letter and a copy of the Employee Agreement for your records. 
  
 We believe you will make a substantial impact upon the future direction and success of our company. We look forward to your joining us.
Should you have any questions, please give me a call. 
  

					
	 Sincerely,
	 	 	 	 ACCEPTANCE:

			
	 /s/    LISA BRUMMEL
	 	 	 	 /s/    KEVIN TURNER

	 Lisa Brummel
	 	 	 	 Kevin Turner

	 Vice President, Human Resources
	 	 	 	 
	 	 	 	 	 July 28, 2005 

  

 3Terms of Stock Award Program

 Exhibit 10.3 
  
 TERMS OF STOCK AWARD PROGRAM 
 FOR NON-EMPLOYEE DIRECTORS 
 UNDER THE SAFECO LONG-TERM INCENTIVE PLAN OF 1997 
  
 Adopted by the SAFECO Corporation Board of Directors 
 November 4, 1998 
 and as Amended and
Restated November 6, 2002 
  
 The following provisions set forth the terms of
the stock award program (the “Program”) for non-employee directors of SAFECO Corporation (“Company”) under the SAFECO Long-Term Incentive Plan of 1997 (the “Plan”). The following terms are intended to supplement, not
alter or change, the provisions of the Plan, and in the event of any inconsistency between these terms and those in the Plan, the Plan shall govern. All capitalized terms that are not defined in this Program shall be as defined in the Plan.

  

	1.	Eligibility 

  
 Each director of the Company who is not an employee of the Company or any Subsidiary (an “Eligible Director”) shall be eligible to receive annual awards under the Plan, as described below. 
  

	2.	Annual Award 

  
 Commencing with the 2003 annual meeting of the Company’s shareholders, a restricted stock right (“RSR”) of 2,500 shares of the Company’s common stock shall automatically be granted to each Eligible
Director in office immediately after the annual shareholders’ meeting and, if the initial election of an Eligible Director occurs other than at an annual meeting of shareholders, then the award shall be granted immediately following the initial
election. The terms of the award shall be set forth in an Award Agreement. 
  

	3.	Restricted Period and Settlement 

  
 RSRs granted to Eligible Directors shall be settled upon termination of service as an Eligible Director as described in Section 4, such period of time constituting the
“Restricted Period.” 
  

	4.	Settlement Upon Termination of Service as an Eligible Director 

  

	 	a.	 Death or Disability. If an Eligible Director ceases to serve on the Company’s Board of Directors because of the Eligible Director’s death or a
permanent and total disability within the meaning of Section 22(e)(3) of the Code, all of the Eligible Director’s RSRs shall be settled in shares of the Company’s common stock, regardless of how long such RSRs have been held. Such shares
shall be issued to the Eligible Director or the personal representative of the Eligible Director’s estate, as the case may be, as soon as practical following the date of death or the date of termination of employment due to determination of
disability 

	 	 
(the “Disability Termination Date”). The Eligible Director or personal representative may request a cash payment in lieu of stock, in which case
the cash payment shall equal the fair market value of the shares at the date of death or the Disability Termination Date. 

  

	 	b.	Retirement, Resignation or Other Termination. If an Eligible Director ceases to be a director of the Company for any reason other than the Eligible Director’s death or
disability, then the Eligible Director’s RSR’s to the extent held for at least one year on the Eligible Director’s termination date, shall be settled in shares of the Company’s common stock on that date. 

 

	5.	Non-Transferable 

  
 RSRs granted to Eligible Directors shall not be transferable other than by will or the laws of descent and distribution. 
  

	6.	Deferral of Dividends and RSR Settlement 

  
 An Eligible Director may elect to defer the dividends accrued on any or all RSRs granted to the Eligible Director under this Program and settled RSRs under this Program
as provided in the SAFECO Corporation Deferred Compensation Plan for Directors, as it may be amended from time to time, or any other plan or arrangement under which settled RSRs or dividends accrued on RSRs is permitted to be deferred. 

 

	7.	Corporate Transactions 

  
 In the event of a Change in Control of the Company, all outstanding RSRs shall be settled by a payment in cash. The fair market value of each share shall be equal to the
greater of (i) the fair market value of a share of the Company’s common stock as of the date on which a Change in Control occurs, and (ii) the highest price of a share of Company common stock that is paid or offered to be paid by any Person or
entity in connection with any transaction that constitutes a Change in Control. 
  

	8.	Other Provisions 

  
 Except for certain provisions of the Plan whose application is clearly limited to employee participants, the provisions of the Plan, as it may be amended from time to time, shall apply to Awards granted to Eligible
Directors under this Program. 
  

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