Document:

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                                                                    EXHIBIT 10.4

26th November 2001

Mr. Peter Bradford                        Mr. Michael Cooke
Golden Star Resources Ltd.                Standard Bank London Limited
Suite 103                                 Cannon Bridge House
10579 Bradford Road                       25 Dowgate Hill
Littleton, Colorado 80127-4274            London EC4R 2SB
U.S.A.

Dear Sirs

PROPOSED SALE OF CERTAIN ASSETS AND THE BUSINESS COMPRISING THE WASSA MINE,
SOUTH WEST GHANA

We refer to our recent negotiations concerning the proposed sale by Satellite
Goldsfields Limited ("Satellite") to Golden Star Resources Ltd ("Golden Star")
of certain of its assets and the business comprising the Wassa Gold Mine, South
West Ghana ("the Sale"). Attached to this letter is a copy of the draft Heads of
Agreement which we have each negotiated and agreed setting out the terms of the
Sale.

We confirm that in order for the Sale to proceed on the terms set out in the
Heads of Agreement, we require the consent of CDC Group plc ("CDC"). We have
been advised by CDC that such consent will not be provided at this time.
Accordingly we are not able to execute the Heads of Agreement.

The purpose of this letter is to record the intent of Satellite's secured
lenders (other than CDC)(the "Senior Lenders") represented by the Standard Bank
London Limited (as Senior Facility Agent) (the "Agent") and Golden Star to
proceed with the Sale to Golden Star on similar terms to those set out in the
Heads of Agreement.
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By signing this letter, the Agent:

1.    confirms that, if necessary, to enable a sale of the assets of Satellite
      as contemplated by the terms of the Heads of Agreement to be effected, it
      is prepared to enforce the various security interests (the "Security")
      held by the Law Debenture Trust Corporation p.l.c. on behalf of all
      Satellite's secured creditors. It is the intention of the Senior Lenders
      to pursue such a sale with Golden Star on similar terms and, subject to
      any necessary court, regulatory approval or other required conditions, to
      commence negotiations with Golden Star to complete a sale of such assets
      on such similar terms;

2.    agrees, on behalf of the Senior Lenders (with the intention of being
      legally bound) to adhere to the provisions of clauses 8, 9 and 10 of the
      Heads of Agreement as if it were the "Seller" as defined therein; provided
      that Golden Star acknowledges that the Agent and the Senior Lenders may
      make any disclosures (a) of information necessary to complete the Sale,
      including any disclosures to any of Wexford Goldfields Limited, any agent
      or trustee acting on behalf of the Senior Lenders, any receiver of
      Satellite or (b) to any court proceedings in connection with Satellite, in
      each case for purposes of negotiating, documenting or otherwise completing
      the Sale.

Golden Star by its signature to this letter agrees that it will continue to
negotiate with each of Satellite and the Agent with a view to effecting a sale
of the assets of Satellite on the terms and conditions set out in this letter.
Golden Star acknowledges, however, that any enforcement of the Security (and the
ability to complete a sale of the assets of Satellite) is subject to, inter
alia, the discretion of the Ghanaian courts, Ghanaian law generally and the
terms of the Security.

We also agree that from the date of receipt of your signed acknowledgement of
the terms of this letter Satellite shall grant to Golden Star each of the rights
set out in Clause 8 and Schedule 3 of the draft Heads of Agreement ("the
Rights"). The Rights are granted to Golden Star on the basis that they shall
terminate upon either (a) the entry into of formal sale documentation or (b) 28
February 2002, which ever shall occur earlier. Additionally each of the terms
set out in Clauses 7 and 9 through 13 shall apply, as necessarily adjusted, as
terms of this letter as if set out and repeated in full in this letter.

The terms of this letter are not intended by any party to be legally binding and
remain subject to the agreement of, and entry into, of the final sale
documentation save and except for the terms of Clauses 8 through 13 of the draft
Heads of Agreement as repeated herein and the adherence of the Agent and the
Senior Lenders to clauses 8, 9, and 10 of the Heads of Agreement as set out
above.
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Please confirm your acceptance of the terms of this letter by signing the
duplicate copy enclosed in the space provided and returning it to us.

Yours sincerely

/s/ HUGH McCULLOUGH

Hugh McCullough
For and on behalf of Satellite Gold Limited

Accepted
Golden Star Resources Ltd

/s/ PETER BRADFORD

By Peter Bradford
Name: President & CEO

/s/ M.R. COOKE
Standard Bank London Limited

By: M.R. Cooke - Assistant General Manager<PAGE>
                                                                    EXHIBIT 10.3

                SAFECO DEFERRED COMPENSATION PLAN FOR EXECUTIVES
                    AS AMENDED AND RESTATED NOVEMBER 4, 1998
                       (AS LAST AMENDED NOVEMBER 7, 2001)

1.      PURPOSE

        The purpose of the SAFECO Deferred Compensation Plan for Executives (the
        "Plan") is to provide a select group of management or highly compensated
        employees of SAFECO Corporation ("SAFECO") and its Subsidiaries with an
        opportunity to defer all or part of the Eligible Compensation payable to
        such employees and all or part of such employees' Excess Contributions
        to the Savings Plan. The Plan shall be unfunded for tax purposes and for
        purposes of Title I of the Employee Retirement Income Security Act of
        1974, as it may be amended from time to time.

2.      DEFINITIONS

        2.01    Account. The term "Account" means a separate deferred
                compensation account established by SAFECO under this Plan in
                the name of a Participant.

        2.02    Administrative Committee. The "Administrative Committee" means
                the three-person committee appointed by the SAFECO Board of
                Directors to administer the Corporation's qualified retirement
                and savings plans.

        2.03    Annual Installment Method. "Annual Installment Method" means a
                distribution of a Participant's Account in annual installments
                over a stated number of years (not to exceed 20), with each
                installment paid in January as soon as practicable after
                year-end. The amount of the installment payable following any
                given year-end shall be determined by valuing the Participant's
                Account as of the close of business on the last business day of
                the year and then multiplying that value by a fraction, the
                numerator of which is one and the denominator of which is the
                remaining number of annual payments. (For example, for an Annual
                Installment Method of 10 years, the first payment will be 1/10
                of the Account, the following year, 1/9 of the Account, etc.)

        2.04    Beneficial Owner. "Beneficial Owner" has the meaning set forth
                in Rule 13d-3 promulgated under the Securities Exchange Act of
                1934, as amended.

        2.05    Beneficiary. "Beneficiary" refers to one or more trusts,
                estates, other entities or individuals designated by the
                Participant to receive certain benefits described in the Plan in
                the event of the Participant's death.

        2.06    Board of Directors or Board. The "Board of Directors" or the
                "Board" refers to the Board of Directors of SAFECO Corporation.

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        2.07    Change in Control. A "Change in Control" shall be deemed to have
                occurred if the event set forth in any one of the following
                paragraphs has occurred:

                (a)     Any Person is or becomes the Beneficial Owner, directly
                        or indirectly, of SAFECO securities (not including in
                        the securities beneficially owned by such Person any
                        securities acquired directly from SAFECO or its
                        affiliates, as defined in Rule 12b-2 adopted under the
                        Exchange Act ("Affiliates")) representing 25% or more of
                        the combined voting power of SAFECO's then outstanding
                        securities, excluding any Person who becomes such a
                        Beneficial Owner in connection with a transaction
                        described in clause (x) of paragraph (c) of this Section
                        2.07; or

                (b)     The following individuals cease for any reason to
                        constitute a majority of the number of directors then
                        serving: individuals who were directors of SAFECO on the
                        date the Plan was adopted by the SAFECO Board of
                        Directors, and any new director (other than a director
                        whose initial assumption of office is in connection with
                        an actual or threatened election contest, including but
                        not limited to a consent solicitation, relating to the
                        election of directors of SAFECO) whose appointment or
                        election by the Board of Directors or nomination for
                        election by SAFECO's shareholders was approved by a vote
                        of at least two-thirds of the directors then still in
                        office who either were directors on the date the Plan
                        was adopted or whose appointment, election or nomination
                        for election was previously so approved or recommended;
                        or

                (c)     There is consummated a merger or consolidation of SAFECO
                        or any Subsidiary with any other corporation, other than
                        (x) a merger or consolidation which would result in the
                        voting securities of SAFECO outstanding immediately
                        prior to such merger or consolidation continuing to
                        represent (either by remaining outstanding or by being
                        converted into voting securities of the surviving entity
                        or any parent thereof), in combination with the
                        ownership of any trustee or other fiduciary holding
                        securities under an employee benefit plan of SAFECO or
                        any Subsidiary, at least 75% of the combined voting
                        power of the securities of SAFECO or such surviving
                        entity or any parent thereof outstanding immediately
                        after such merger or consolidation, or (y) a merger or
                        consolidation effected to implement a recapitalization
                        of SAFECO (or similar transaction) in which no Person is
                        or becomes the Beneficial Owner, directly or indirectly,
                        of securities of SAFECO (not including in the securities
                        beneficially owned by such Person any securities
                        acquired directly from SAFECO or its Affiliates other
                        than in connection with the acquisition by SAFECO or its
                        Affiliates of a business) representing 25% or more of
                        the combined voting power of SAFECO's then outstanding
                        securities; or

                (d)     The shareholders of SAFECO approve a plan of complete
                        liquidation or dissolution or there is consummated an
                        agreement for the sale or disposition

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                        of all or substantially all of SAFECO's assets, other
                        than a sale or disposition by SAFECO of all or
                        substantially all of its assets to an entity of which at
                        least 75% of the combined voting power is owned by
                        shareholders of SAFECO in substantially the same
                        proportions as their ownership of SAFECO immediately
                        prior to such sale.

                Notwithstanding the foregoing, a "Change in Control" shall not
                be deemed to have occurred by virtue of the consummation of any
                transaction or series of integrated transactions immediately
                following which the record holders of the Common Stock
                immediately prior to such transaction or series of transactions
                continue to have substantially the same proportionate ownership
                in an entity which owns all or substantially all of SAFECO's
                assets immediately following such transaction or series of
                transactions.

        2.08    Closing Price. "Closing Price" means the price at which the last
                trade of SAFECO Common Stock was made prior to 1:00 p.m. Pacific
                Coast time on the NASDAQ Stock Market.

        2.09    Code. "Code" means the Internal Revenue Code of 1986, as
                amended.

        2.10    Common Stock. "Common Stock" means SAFECO Corporation common
                stock.

        2.11    Compensation Committee. "Compensation Committee" means the
                Compensation Committee of the Board of Directors.

        2.12    Corporation. "Corporation" means SAFECO Corporation and its
                Subsidiaries, collectively.

        2.13    Deferral Election. "Deferral Election" means a written document
                in the form prescribed by the Administrative Committee which an
                employee of SAFECO or any of its Subsidiaries has signed and
                delivered to the Administrative Committee, and which the
                Administrative Committee has accepted, indicating the employee's
                intent to participate in the Plan and the amount or percentage
                of Eligible Compensation, Qualifying Gains and/or Excess
                Contributions which the employee desires to have credited to his
                or her Account in the Plan.

        2.14    Deferrals. "Deferrals" refers to the Eligible Compensation,
                Qualifying Gains and/or Excess Contributions that a Participant
                designates in his or her Deferral Election(s) pursuant to the
                terms and conditions of the Plan.

        2.15    Disability. "Disability" means a physical or mental condition
                occurring prior to the Participant's Retirement which, in the
                sole judgment of the Administrative Committee, based upon
                medical reports and other evidence satisfactory to the
                Administrative Committee, presumably permanently prevents a
                Participant from satisfactorily performing his or her usual
                duties for the Corporation or the duties of

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                any other position or positions for the Corporation for which
                such Participant is qualified by reason of training, education
                or experience.

        2.16    Eligible Compensation. "Eligible Compensation" means
                compensation payable to a Participant by the Corporation in the
                form of Salary, bonus, settlements of RSRs, dividend equivalents
                payable on RSRs, settlements of PSRs, and any other form that
                the Compensation Committee may determine in its sole discretion,
                excluding gains on the exercise of stock options.

        2.17    Eligible Stock Option. "Eligible Stock Option" means a
                nonqualified stock option to purchase Common Stock exercisable
                under any plan or arrangement designated by the Compensation
                Committee that permits a Participant to defer gain on the
                exercise of the option.

        2.18    Excess Contribution. "Excess Contribution" means the amount of
                Salary (not to exceed 16%) that a Participant has elected to
                contribute to the Savings Plan which is in excess of applicable
                Code limitations on contributions to the Savings Plan.

        2.19    Exchange Act. "Exchange Act" means the Securities Exchange Act
                of 1934, as amended.

        2.20    Hardship. "Hardship" means an unforeseeable emergency resulting
                from a sudden and unexpected illness or accident of the
                Participant or a Participant's dependent (as defined in Section
                152(a) of the Code), loss of the Participant's property due to
                casualty, or other similar extraordinary and unforeseeable
                circumstances arising from events beyond the Participant's
                control.

        2.21    Match. "Match" means, once a Participant becomes eligible for
                employer matching contributions under the Savings Plan, an
                amount, not to exceed 4% of Salary, equal to two-thirds of the
                Excess Contributions which a Participant has elected to defer
                under this Plan.

        2.22    Measurement Fund. "Measurement Fund" means a phantom investment
                designated by the Administrative Committee for use as an index
                to value the portion, if any, of a Participant's Account
                allocated to that phantom investment.

        2.23    Measurement Fund Election. "Measurement Fund Election" means a
                written document in the form prescribed by the Administrative
                Committee that a Participant has signed and delivered to the
                Administrative Committee, and which the Administrative Committee
                has accepted, indicating the manner in which the Participant's
                Deferrals and/or Account are to be allocated among the available
                Measurement Funds.

        2.24    Participant. A "Participant" means an employee eligible to
                participate in the Plan who has timely filed a Deferral Election
                in accordance with Section 3 and whose Deferral Election has
                been accepted by the Administrative Committee. Any such

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                person shall be a Participant as of the effective date of his or
                her first Deferral Election and shall continue until the date
                his or her entire Account has been paid out in accordance with
                the Plan.

        2.25    PSRs. "PSRs" refers to performance stock rights issued under the
                SAFECO Long-Term Incentive Plan of 1997 or any successor
                incentive plan.

        2.26    Person. "Person" for purposes of Section 2.07 means any person
                (as defined in Section 2(a)(9) of the Exchange Act, and as such
                term is modified in Section 13(d) and 14(d) of the Exchange Act)
                other than (i) any employee plan established by SAFECO, (ii)
                SAFECO or any of its Affiliates, (iii) an underwriter
                temporarily holding securities pursuant to an offering of such
                securities, or (iv) a corporation owned, directly or indirectly,
                by SAFECO shareholders in substantially the same proportions as
                their ownership of SAFECO.

        2.27    Phantom Stock Fund. "Phantom Stock Fund" refers to a Measurement
                Fund tied to the performance of the Common Stock, as more
                specifically described in Section 5.06.

        2.28    Qualifying Gain. "Qualifying Gain" means the net value accrued
                upon a stock-for stock exercise of an Eligible Stock Option
                (i.e., the amount by which the total value of the shares
                exercised exceeds the value of the shares used to pay the
                exercise price, where both the shares paid and the shares
                exercised are valued at the Closing Price on the date of
                exercise). For example, a Participant elects to defer the
                Qualifying Gain accrued upon exercise of an Eligible Stock
                Option to purchase 1,000 shares at an exercise price of $20 per
                share. The Closing Price of the Common Stock on the date of
                exercise is $25. The Participant delivers 800 shares of Common
                Stock (worth $20,000) to pay the exercise price. In return, the
                Participant receives 800 shares of Common Stock worth $20,000
                and his or her Account is credited with a Qualifying Gain of
                $5,000.

        2.29    RSRs. "RSRs" refers to restricted stock rights issued under the
                SAFECO Incentive Plan of 1987, the SAFECO Long-Term Incentive
                Plan of 1997, or any successor incentive plan.

        2.30    Retirement. "Retirement" means a Participant's termination of
                employment with the Corporation occurring at or after age 55
                (other than as a result of death or Disability), provided the
                sum of the Participant's age and the Participant's years of
                service with the Corporation equals or exceeds 75.

        2.31    Rollover. "Rollover" means an amount transferred to a
                Participant's Account from another nonqualified plan of SAFECO
                or any Subsidiary, including but not limited to:

                (a)     the 401(a)(17) Savings Plan Benefit under the SAFECO
                        Employees' Supplemental Retirement Plan B, as amended
                        November 4, 1998

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                        ("SRP B"), if any, deemed transferred to a Participant's
                        Account on January 1, 1999 in accordance with Section
                        6.2 of SRP B;

                (b)     the sum of the 401(a)(17) Cash Balance Benefit, the
                        401(a)(17) PSRP Benefit, and the Supplemental Percentage
                        Cash Balance Benefit (as those terms are defined in SRP
                        B) under SRP B, if any, deemed transferred to a
                        Participant's Account in accordance with Section 7.2(a)
                        of SRP B upon the Participant's Retirement;

                (c)     any benefit under the SAFECO Employees' Supplemental
                        Retirement Plan A ("SRP A") deemed transferred in
                        accordance with Section 7.2(a) of SRP A upon the
                        Participant's Retirement; and

                (d)     any other amount deemed transferred from any
                        nonqualified plan of SAFECO or any Subsidiary with the
                        Administrative Committee's permission, which may be
                        unreasonably withheld.

        2.32    Salary. "Salary" means a Participant's base annual salary before
                reduction for (i) compensation voluntarily deferred or
                contributed by the Participant under qualified or nonqualified
                plans of SAFECO or any Subsidiary and (ii) amounts not included
                in the Participant's gross income under Code Sections 125,
                402(e), and 402(h) pursuant to plans established by SAFECO or
                any Subsidiary.

        2.33    Savings Plan. "Savings Plan" means the SAFECO 401(k)/Profit
                Sharing Retirement Plan as presently in effect and as may be
                amended from time to time.

        2.34    Subsidiary. "Subsidiary" means any corporation of which 50% or
                more of the voting stock is owned, directly or indirectly, by
                SAFECO Corporation.

3.      DEFERRAL ELECTIONS

        3.01    Filing of Deferral Election. An eligible employee who wishes to
                participate in the Plan must file a Deferral Election with
                SAFECO on the form(s) prescribed by the Administrative
                Committee. A Participant may elect to defer all or any portion
                of the Participant's Eligible Compensation and/or Qualifying
                Gains. If a Participant elects to defer Excess Contributions,
                100% of the Participant's Excess Contributions must be deferred.

        3.02    Deferral Election Irrevocable.

                (a)     A Deferral Election is irrevocable as to the amount or
                        percentage of Eligible Compensation or Excess
                        Contributions to be deferred for the year or years to
                        which the Deferral Election relates. Any request to
                        change the amount or percentage to be deferred shall not
                        be effective until January 1 of the next calendar year,
                        except that (i) in the case of RSRs, the change request
                        shall not be effective

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                        until the second settlement date following the date of
                        the request, and (ii) an election with respect to a PSR
                        may never be modified or revoked.

                (b)     A Deferral Election to defer Qualifying Gains with
                        respect to a designated Eligible Stock Option is
                        irrevocable.

        3.03    Timing of Deferral Election

                (a)     Except as otherwise provided in this paragraph and in
                        Section 3.04, a Deferral Election for Eligible
                        Compensation shall be filed with the Administrative
                        Committee no later than December 31 and shall be
                        effective for Eligible Compensation earned on or after
                        January 1 of the following calendar year. A Deferral
                        Election to defer amounts payable in settlement of RSRs,
                        however, shall not take effect until one additional year
                        later. A Deferral Election to defer payments in
                        settlement of PSRs must be made within 10 business days
                        of the grant of the PSR. Notwithstanding the foregoing,
                        if in its discretion the Compensation Committee
                        designates as "Eligible Compensation" any form of
                        compensation that is not specifically identified in
                        Section 2.16 or that has not been previously designated
                        as Eligible Compensation, a Deferral Election with
                        respect to the newly designated Eligible Compensation
                        shall be filed with the Administrative Committee by such
                        time as the Administrative Committee shall determine but
                        in no event later than the date the Participant becomes
                        entitled to receive payment of such compensation.
                        Further notwithstanding the foregoing, in the first year
                        in which an employee becomes eligible to participate in
                        the Plan, the newly eligible employee shall have 30 days
                        after becoming eligible in which to make a Deferral
                        Election to defer Eligible Compensation for services to
                        be performed subsequent to the election.

                (b)     A Deferral Election for Excess Contributions shall be
                        filed with the Administrative Committee no later than
                        December 31 of the year prior to the year in which the
                        Excess Contributions will occur; provided, however, that
                        in the first year in which an employee of SAFECO or any
                        Subsidiary becomes eligible to participate in the Plan,
                        the newly eligible employee shall have 30 days after
                        becoming eligible in which to file a Deferral Election
                        for Excess Contributions.

                (c)     A Deferral Election to defer a Rollover described in
                        Section 2.30(d) must be filed with the Administrative
                        Committee no later than one calendar year prior to the
                        date on which the Rollover will be credited to the
                        Participant's Account under the Plan. (No Deferral
                        Election is required for a Rollover described in Section
                        2.30(d) if the Rollover to the Participant's Account is
                        required by the Corporation.)

                (d)     A Deferral Election to defer Qualifying Gain upon
                        exercise of an Eligible Stock Option shall be valid only
                        if: (i) a separate Deferral Election is made by the
                        Participant with respect to the Eligible Stock Option;
                        (ii) the Deferral Election is delivered to and accepted
                        by the Committee at least six months

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                        before the Participant elects to exercise the Eligible
                        Stock Option; and (iii) the exercise price of the
                        Eligible Stock Option is paid in Common Stock (either
                        through physical delivery or attestation).

        3.04    Special Rules. Eligible employees shall have until May 15, 1998
                to file Deferral Elections with respect to Eligible Compensation
                earned and/or Excess Contributions made during the remainder of
                1998 as well as settlements of RSRs payable in February 1999.
                Eligible employees shall have until February 15, 2000 to file
                Deferral Elections with respect to PSRs granted in February 1999
                (excluding any settlements payable under such PSRs in February
                2000).

4.      DEFERRAL ACCOUNTS

        4.01    Establishment of Accounts. An Account shall be established for
                each Participant to which all Deferrals, Matches and Rollovers
                attributable to the Participant, and the earnings thereon, shall
                be credited. A Participant's Account shall at all times be a
                bookkeeping entry only and shall not represent any investment
                made by SAFECO or any Subsidiary on the Participant's behalf.

        4.02    Crediting of Accounts.

                (a)     Deferrals of Eligible Compensation shall be credited to
                        a Participant's Account on the date such Deferrals would
                        otherwise be payable to the Participant.

                (b)     Deferrals of Excess Contributions and the corresponding
                        Match shall be credited to a Participant's Account on
                        the date the Excess Contributions would have been
                        contributed to the Savings Plan but for applicable Code
                        limitations.

                (c)     Qualifying Gains shall be credited to a Participant's
                        Account on the date that the Eligible Stock Option to
                        which they relate is exercised;

                (d)     Rollovers shall be credited to a Participant's Account
                        on the date they are deemed transferred to the Plan.

        4.03    Vesting. A Participant shall be fully vested at all times in his
                or her Deferrals. A Participant shall be vested in Matches
                credited to his or her Account to the same extent that the
                Participant is vested in the employer match provided under the
                Savings Plan. A Participant shall be fully vested in Rollovers
                to the Participant's Account; provided, however, that in the
                case of a Rollover described in Section 2.30(d), the Participant
                initially shall be vested only to the extent the Participant was
                vested in the benefit under the terms of the plan from which it
                was deemed transferred, as determined at the time of deemed
                transfer to the Participant's Account.

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5.      MEASUREMENT FUNDS

        5.01    Measurement Funds. A Participant's Account shall be allocated
                among the Measurement Funds selected by the Participant in
                accordance with the Participant's most recent Measurement Fund
                Election and such rules as the Administrative Committee may
                establish from time to time. The Account of each Participant
                shall be credited (or debited) on a daily basis according to the
                performance of each Measurement Fund selected by the
                Participant. If a Participant fails to file a Measurement Fund
                Election, the Participant's Account shall be allocated to the
                Money Market Portfolio Measurement Fund until such time as the
                Participant files a Measurement Fund Election making a different
                allocation.

        5.02    Measurement Fund Elections. Each time a Participant files a new
                Measurement Fund Election, the Participant shall indicate
                whether his or her new allocation among the various Measurement
                Funds is intended to apply to the Participant's entire Account
                or instead only to future Deferrals, Matches, and Rollovers. A
                Measurement Fund Election will be given effect no later than the
                next business day after it is received by the Administrative
                Committee, subject to the limitation set forth in Section 5.03.

        5.03    Limitation Applicable to Section 16 Reporters. In the case of a
                Participant who is subject to reporting under Section 16(a) of
                the Exchange Act, a Measurement Fund Election applicable to
                amounts already accrued in a Participant's Account will not be
                given effect if it would generate a "non-exempt" transaction for
                purposes of the rules promulgated under Section 16 of the
                Exchange Act. (A "non-exempt" transaction would result if a
                Participant's Measurement Fund Election caused a transfer of all
                or part of the Participant's Account into (or out of) the
                Phantom Stock Fund less than six months after the Participant
                elected an opposite-way transfer into or out of that Fund.)

        5.04    Availability of Measurement Funds. The Measurement Funds
                available to Participants at any given time shall be set forth
                in Appendix A. SAFECO is under no obligation to offer any
                particular investment as a Measurement Fund and reserves the
                right to eliminate, change, and add Measurement Funds at any
                time.

        5.05    No Actual Investment. Notwithstanding any other Plan provision
                that may be interpreted to the contrary, the Measurement Funds
                are to be used for measurement purposes only. Neither a
                Participant's election of any Measurement Fund nor the crediting
                or debiting of amounts to the Participant's Account in
                accordance with that election shall be construed as an actual
                investment of the Participant's Account in any Measurement Fund.

        5.06    Phantom Stock.

                (a)     The portion of a Participant's Account that is allocated
                        to the Phantom Stock Fund, if any, shall be credited or
                        debited, as the case may be, as if it were 100% invested
                        in Common Stock. Each amount credited to the

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                        Phantom Stock Fund shall be credited in units ("Units"
                        or "Phantom Stock Units") based on the Closing Price of
                        the Common Stock on the date of crediting. Fractional
                        Units shall be credited to a minimum of three decimal
                        points.

                (b)     To the extent cash dividends are paid on the Common
                        Stock, a Participant's Account shall be credited with
                        phantom dividends. Phantom dividends shall equal the
                        per-share dividend paid on the Common Stock multiplied
                        by the number of Phantom Stock Units in the
                        Participant's Account on the record date for the cash
                        dividend. Phantom dividends shall be credited to a
                        Participant's Account in the form of additional Phantom
                        Stock Units. The number of additional Units credited
                        shall be determined based on the Closing Price of the
                        Common Stock on the dividend payment date.

                (c)     No actual shares of Common Stock will be issued directly
                        or indirectly under the Plan in respect of Phantom Stock
                        Units. No voting or other rights of any kind associated
                        with ownership of the Common Stock shall inure to a
                        Participant by virtue of the Participant's allocation of
                        all or any portion of his or her Account to the Phantom
                        Stock Fund.

                (d)     In the event of any change in the Common Stock reason of
                        an issuance of additional shares, recapitalization,
                        reclassification, merger, reorganization, stock split,
                        reverse stock split, combination of shares, stock
                        dividend or similar transaction, the number of Phantom
                        Stock Units held by a Participant under the Plan shall
                        be proportionately adjusted by the Administrative
                        Committee.

6.      DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNT

        6.01    General. Except as otherwise expressly provided in this Plan, no
                withdrawal or payment shall be made from a Participant's Account
                except following the earliest to occur of the Participant's
                death, Disability, Retirement or other termination of service
                with the Corporation. Payments shall be made in accordance with
                Sections 6.02 and 6.03 unless the Participant has filed an
                election pursuant to Section 6.04 requesting an alternative
                distribution type and/or time period. The portion, if any, of a
                Participant's Account that is not vested as of the date of the
                Participant's termination of service shall not be distributed to
                the Participant (unless the Participant is terminated following
                a Change in Control, as described in Section 10.01). All
                payments shall be made in cash, regardless of the Measurement
                Funds selected by the Participant.

        6.02    Retirement and Disability Distributions. If a Participant
                terminates service with the Corporation on account of Retirement
                or Disability, the Participant's Account shall be paid to the
                Participant using an Annual Installment Method of 10 years,
                commencing in January of the year following the Participant's
                Retirement or termination on account of Disability.

                                       10
<PAGE>

        6.03    Distributions Following Death. If a Participant dies prior to
                Retirement, the Participant's Account shall be paid out in a
                single lump sum within 30 days of the date the Corporation is
                notified, in a form acceptable to the Administrative Committee,
                of the Participant's death. The value of the Participant's
                Account shall be determined as of the date of the Participant's
                death.

        6.04    Distributions Following Other Terminating Events. If a
                Participant terminates employment with the Corporation for any
                reason other than Retirement, Disability, or death, the
                Participant's Account shall be paid out in a single lump sum
                within 30 days of the Participant's termination of employment,
                with the value of the Participant's Account determined as of the
                termination date.

6.05    Distribution Election.

                (a)     A Participant shall be permitted, in accordance with
                        such rules as the Administrative Committee may establish
                        from time to time, to elect a distribution that is
                        different from the default provisions set forth in
                        Sections 6.02 and 6.03 (but not 6.04) and may revoke his
                        or her distribution election or file a new distribution
                        election with the Administrative Committee at any time,
                        subject to paragraph (b) below. Such distribution may
                        consist of a lump sum, an Annual Installment Method over
                        a stated period of up to 20 years, or a combination of
                        the two. Payments under any alternative distribution
                        elected by a Participant must commence no later than
                        January of the year following the year in which the
                        Participant terminates employment, unless the
                        Administrative Committee permits otherwise in its sole
                        discretion, which may be unreasonably withheld. To be
                        effective, a distribution election must be accepted by
                        the Administrative Committee at least 12 months prior to
                        the Participant's termination of employment. Any
                        distribution election filed by a Participant shall apply
                        to the entire Account, including amounts credited to the
                        Account prior to the date of the election and those
                        credited later, without regard to the way the Account is
                        allocated among Measurement Funds.

                (b)     In the case of a Participant making a Deferral Election
                        to defer Eligible Compensation, Qualifying Gains and/or
                        Excess Contributions for the first time, a distribution
                        election filed at the same time as the Participant's
                        initial Deferral Election shall be given effect even if
                        the Participant terminates employment within 12 months
                        of the filing. A distribution election filed with the
                        Administrative Committee at the same time as the
                        Participant's initial Deferral Election shall be
                        irrevocable for 12 months.

6.06    Distribution in the Event of Taxation. If, for any reason, all or any
        portion of a Participant's Account becomes taxable to the Participant
        prior to distribution in accordance with the Plan, a Participant may
        petition the Administrative Committee for a special distribution of the
        taxable portion. Upon the grant of such a petition,

                                       11
<PAGE>

                which shall not be unreasonably withheld, SAFECO shall promptly
                distribute to the Participant the portion of his or her Account
                that has become taxable.

7.      DESIGNATION OF BENEFICIARY

        A Participant may designate one or more Beneficiaries to receive amounts
        payable under the Plan in the event of the Participant's death. To
        designate a Beneficiary, the Participant shall complete a Beneficiary
        designation form in accordance with the Administrative Committee's rules
        and procedures as in effect from time to time. A Participant may change
        a Beneficiary designation at any time by filing a new Beneficiary
        designation form with the Administrative Committee. Upon acceptance by
        the Administrative Committee of the new form, all Beneficiary
        designations previously filed by the Participant shall be canceled. If
        the Participant names someone other than his or her spouse as primary
        Beneficiary, a spousal consent in the form established by the
        Administrative Committee must be signed by the Participant's spouse and
        returned to the Administrative Committee. If a Participant fails to
        designate a Beneficiary or if the designated Beneficiary predeceases the
        Participant, then the Account of the deceased Participant shall be paid
        to the Participant's surviving spouse, or if none, to the personal
        representative of the Participant's probate estate.

8.      HARDSHIP WITHDRAWALS

        A Participant may petition the Administrative Committee to make an
        immediate, accelerated distribution from his or her Account in the event
        the Participant has incurred a severe financial Hardship. Distributions
        will not be made to the extent the Hardship can be relieved through
        insurance proceeds, liquidation of the Participant's assets (but only to
        the extent that such liquidation would not itself cause a severe
        financial Hardship) or by cessation of deferrals under the Plan.
        Payments for severe financial Hardship under this Plan are limited to
        the amount necessary to relieve an "unforeseeable emergency" as defined
        in Treas. Reg. Section 1.457-2(h)(4) and (5). The Administrative
        Committee shall determine whether the Participant has incurred a severe
        financial Hardship and may, in its sole discretion, grant the immediate,
        accelerated distribution of all or any portion of the Participant's
        Account; provided, however, that such distribution shall not exceed the
        amount determined by the Administrative Committee to be necessary to
        alleviate the severe financial Hardship. Notwithstanding anything in
        this Plan to the contrary, if a Participant obtains a Hardship
        withdrawal, the Participant's Deferral Election will be automatically
        suspended for a period of twelve months, beginning with the first day of
        the next regularly scheduled payroll period.

9.      EARLY WITHDRAWAL SUBJECT TO PENALTY

        A Participant (or, after a Participant's death, his or her Beneficiary)
        may elect, at any time, to withdraw all (but not part) of his or her
        Account, less a withdrawal penalty equal to 10% of such amount. (The net
        amount shall be referred to as the "Withdrawal Amount".) This election
        may be made at any time, before or after the Participant's Retirement,
        death, Disability or termination of employment, and whether or not the
        Participant (or

                                       12
<PAGE>

        Beneficiary) is in the process of being paid pursuant to an Annual
        Installment Method. If the early withdrawal election is made before the
        Participant's Retirement, Disability or death, a Participant's
        Withdrawal Amount shall be his or her Account calculated as if a
        termination of employment had occurred on the date of the election. The
        Participant (or Beneficiary) shall make this election by giving the
        Administrative Committee written notice in the form determined from time
        to time by the Administrative Committee. The Participant (or
        Beneficiary) shall be paid the Withdrawal Amount within 30 days of his
        or her election. Once the Withdrawal Amount is paid, the Participant's
        participation in the Plan shall terminate and the Participant shall not
        be eligible to participate in the Plan in the future.

10.     CHANGE IN CONTROL

        10.01   Termination Following a Change in Control. In the event a
                Participant's employment with SAFECO and all Subsidiaries is
                terminated within two years following a Change in Control, the
                Participant's entire Account, including any unvested portion,
                shall be paid to the Participant (or the Participant's
                Beneficiary) in a single lump sum within 30 days after the
                termination of employment.

        10.02   Distributions Triggered by Termination Following a Change in
                Control. For purposes of calculating the lump sum distribution
                payable under Section 10.01, the Participant's Account shall be
                valued as of the date of his or her termination of employment.
                Phantom Stock units shall be valued at the higher of (x) and
                (y), where (x) equals the Closing Price of the Common Stock on
                the date of termination and (y) equals:

                (a)     If the Change in Control was of the type described in
                        paragraph (a) of Section 2.07, the highest price paid
                        for shares of Common Stock by any Person who became a
                        Beneficial Owner of securities representing 25% or more
                        of the combined voting power of SAFECO's outstanding
                        securities; and

                (b)     If the Change in Control was of any type other than that
                        described in paragraph (a) of Section 2.07, the highest
                        Closing Price of the Common Stock during the last 10
                        trading days prior to and including the date of the
                        Change in Control.

        10.03   Administration. Upon and after the occurrence of a Change in
                Control, the Plan shall be administered by the Administrator
                appointed under Section 11.02.

        10.04   Legal Fees to Enforce Rights After Change in Control. SAFECO is
                aware that upon the occurrence of a Change in Control, the Board
                or a shareholder of SAFECO (or the board of directors or a
                shareholder of a successor corporation) might take action
                adverse to one or more Participants, such as (i) causing or
                attempting to cause SAFECO or such successor to refuse to comply
                with its obligations under the Plan; and (ii) instituting
                litigation or causing or attempting to

                                       13
<PAGE>

                cause SAFECO or such successor to institute litigation seeking
                to deny Participants the benefits intended under the Plan. In
                these circumstances, the purpose of the Plan could be
                frustrated. Accordingly, if, following a Change in Control, (i)
                it should appear to a Participant that SAFECO or any successor
                to SAFECO has failed to comply with its obligations under the
                Plan or (ii) SAFECO or any successor to SAFECO takes any action
                to declare the Plan void or unenforceable or institutes any
                litigation or other legal action designed to deny, diminish or
                recover from any Participant the benefits intended to be
                provided under the Plan, then the Participant shall be
                authorized to retain counsel of his or her choice, at the
                expense of SAFECO or any successor to SAFECO, to represent the
                Participant in connection with the initiation or defense of any
                litigation or other legal action, whether by or against SAFECO,
                such successor, or any director, officer, shareholder or other
                person affiliated with SAFECO or such successor, in any
                jurisdiction.

11.     ADMINISTRATION

        11.01   Committee Duties.

                (a)     Except as otherwise provided in this Section 11, the
                        Plan shall be administered by the Administrative
                        Committee, which shall have exclusive authority over all
                        matters involving administration of the Plan, including
                        the selection of employees eligible to participate and
                        the type or types of Deferrals that a given Participant
                        is permitted to elect. The Administrative Committee
                        shall have the discretion and authority (i) to make,
                        amend, interpret, and enforce such rules as it deems
                        necessary or desirable for the administration of the
                        Plan and (ii) to interpret the Plan and decide or
                        resolve any and all questions that may arise in
                        connection with the Plan from time to time, subject to
                        the Plan's express provisions. The decision or action of
                        the Administrative Committee with respect to any
                        question arising out of or in connection with the
                        administration, interpretation and application of the
                        Plan and the rules it may adopt thereunder shall be
                        final, conclusive and binding upon all persons having
                        any interest in the Plan.

                (b)     The Administrative Committee may make equitable
                        adjustments under the Plan from time to time, including
                        retroactive adjustments, to correct mathematical,
                        accounting, or factual errors made in good faith by
                        SAFECO or a Participant.

                (c)     The Administrative Committee may delegate administrative
                        duties to other persons, including officers of SAFECO,
                        and may retain the services of lawyers, accountants, or
                        other outside third parties to assist with the
                        administration of the Plan.

                (d)     In cases where a decision or Plan interpretation by the
                        Administrative Committee relates specifically to the
                        benefits to which a member of the

                                       14
<PAGE>

                        Administrative Committee may be entitled, the decision
                        or interpretation shall be subject to review and
                        approval by the Compensation Committee.

        11.02   Administration upon a Change in Control. Upon and after a Change
                in Control, the administrative powers and responsibilities of
                the Administrative Committee shall pass to an "Administrator,"
                who shall be an independent third party selected by the
                individual who was the Chief Executive Officer of SAFECO
                immediately prior to the Change in Control (the "Ex-CEO"). The
                Administrator shall have the discretionary power to determine
                all questions arising in connection with the administration and
                interpretation of the Plan, including without limitation benefit
                entitlement determinations. Upon and after a Change in Control,
                SAFECO must: (i) pay all reasonable expenses and fees of the
                Administrator; (ii) indemnify the Administrator against all
                costs, expenses and liabilities, including without limitation
                attorneys' fees, arising in connection with the performance of
                the Administrator's duties hereunder, except with respect to
                matters resulting from the gross negligence or willful
                misconduct of the Administrator or its employees or agents; and
                (iii) supply complete and timely information to the
                Administrator about all matters relating to the Plan, including
                the Participants and their Beneficiaries; Participant Accounts;
                the Retirement, death, Disability or termination of employment
                of Participants; and such other information as the Administrator
                may reasonably require. The Administrator may be terminated (and
                a replacement appointed) only by the Ex-CEO or by such other
                person as the Ex-CEO may designate in writing. SAFECO or any
                successor to SAFECO may not terminate the Administrator.

12.     AMENDMENT OF THE PLAN

        The Compensation Committee may from time to time make such amendments to
        the Plan as it deems appropriate; provided, however, that (i) no
        amendment which cancels or reduces the benefits to which a Participant
        is entitled as of the date of the amendment shall be effective without
        the written consent of the Participant, and (ii) Sections 10 and 11.02
        and this Section 12 shall not be amended following a Change in Control
        without the written consent of 66.67% of the Participants. The
        Administrative Committee shall be authorized to make amendments to the
        Plan which are immaterial or clerical in nature or which are, in the
        opinion of counsel, required by local, state or federal law or
        regulation.

13.     TERMINATION OF THE PLAN

        The Corporation reserves the right to terminate the Plan at any time by
        action of the Board of Directors, subject to the limitations on
        amendments set forth in Section 12. Unless the Board determines
        otherwise, in the event the Plan is terminated, the Account of each
        Participant shall be valued as of the date specified for such purpose by
        the Board, and the value of the Account shall be paid in cash to the
        Participant within 30 days after the valuation date.

                                       15
<PAGE>

14.     CLAIMS PROCEDURES

        14.01   Presentation of Claim. Any Participant or Beneficiary of a
                deceased Participant (such Participant or Beneficiary being
                referred to below as a "Claimant") may deliver to the
                Administrative Committee a written claim for a determination
                with respect to the amounts distributable to such Claimant from
                the Plan. If the claim relates to the contents of a notice
                received by the Claimant, the claim must be made within 60 days
                after the Claimant received such notice. All other claims must
                be made within 180 days of the date on which the event that gave
                rise to the claim occurred. The claim must state with
                particularity the determination desired by the Claimant.

        14.02   Notification of Decision. The Administrative Committee shall
                consider a Claimant's claim within a reasonable time and shall
                notify the Claimant in writing:

                (a)     that the Claimant's requested determination has been
                        made and the claim has been allowed in full; or

                (b)     that the Administrative Committee has reached a
                        conclusion contrary, in whole or in part, to the
                        Claimant's requested determination, in which case the
                        notice must set forth in a manner calculated to be
                        understood by the Claimant:

                        (i)     the specific reason(s) for the denial of the
                                claim (or any part of it);

                        (ii)    specific reference to the provisions of the Plan
                                upon which such denial was based;

                        (iii)   a description of any additional material or
                                information necessary for the Claimant to
                                perfect the claim and an explanation of why such
                                material or information is necessary; and

                        (iv)    an explanation of the claim review procedure set
                                forth in Section 14.03.

        14.03   Review of a Denied Claim. Within 60 days after receiving a
                notice from the Administrative Committee indicating that a claim
                has been denied, in whole or in part, a Claimant may file with
                the Administrative Committee a written request for a review of
                the denial of the claim. Thereafter, but not later than 30 days
                after the review procedure began, the Claimant (or the
                Claimant's duly authorized representative) may review pertinent
                documents, submit written comments or other documents, and/or
                request a hearing, which the Administrative Committee in its
                sole discretion may grant.

        14.04   Decision on Review. The Administrative Committee shall render
                its decision on review promptly and in any case within 60 days
                after the Claimant's filing of a

                                       16
<PAGE>

                written request for review of the denial, unless a hearing is
                held or other special circumstances require additional time, in
                which case the Administrative Committee's decision must be
                rendered within 120 days after such date. The decision must be
                written in a manner calculated to be understood by the Claimant
                and shall contain (i) the specific reasons for the decision,
                (ii) specific reference to the Plan provisions upon which the
                decision was based, and (iii) such other matters as the
                Administrative Committee deems relevant.

        14.05   Legal Action. A Claimant's compliance with the provisions of
                this Section 14 is a mandatory prerequisite to a Claimant's
                right to commence any legal action with respect to any claim for
                benefits under the Plan.

15.     MISCELLANEOUS

        15.01   No Employment Rights. Nothing in the Plan shall confer upon any
                Participant any right to be continued in the employment SAFECO
                or any Subsidiary or to interfere in any way with the right of
                SAFECO or any Subsidiary, in its sole discretion, to terminate a
                Participant's employment at any time.

        15.02   No Right to Assets. Participants shall have no right to any
                assets of the funds selected as Measurement Funds. The rights of
                a Participant (and of his or her Beneficiary) under the Plan
                shall be solely those of an unsecured general creditor of SAFECO
                and shall not constitute an interest in any specific asset of
                SAFECO or any of its Subsidiaries.

        15.03   Employment Taxes; FICA; Withholding. SAFECO will collect
                applicable employment taxes, including FICA, on all Deferrals,
                Rollovers and Matches credited to a Participant's Account;
                provided, however, that in the case of a Rollover or Match in
                which the Participant is not fully vested under Section 4.03 at
                the time the amount is credited to the Participant's Account,
                employment taxes will be collected only as the Match or Rollover
                becomes vested. From distributions under the Plan, SAFECO will
                deduct federal, state, and local taxes and such other amounts as
                may be required by law to be withheld with respect to such
                payments.

        15.04   Governing Law; Severability. This Plan shall be governed by and
                interpreted in accordance with the internal laws of the State of
                Washington without regard to conflicts of law principles. If any
                provision of the Plan is held to be invalid or unenforceable,
                such invalidity or unenforceability shall in no way affect the
                validity or enforceability of any other Plan provision.

        15.05   Binding Provisions. All of the provisions of the Plan, as it may
                be amended from time to time, shall be binding upon and inure to
                the benefit of SAFECO, its successors and assigns, each
                Participant, every Beneficiary or guardian of a Participant, and
                the personal representative or executor of a Participant's
                estate.

                                       17
<PAGE>

        15.06   Transferability. Interests in the Plan may not be transferred,
                assigned, pledged or encumbered. Prior to the time payment of an
                Account is actually made to a Participant, the Participant shall
                have no rights by way of anticipation or otherwise to assign or
                dispose of any interest under the Plan.

        15.07   Effective Date. The effective date of the Plan is May 6, 1998.

                                       18
<PAGE>

                                   Appendix A

                             MEASUREMENT FUNDS UNDER
              THE SAFECO DEFERRED COMPENSATION PLAN FOR EXECUTIVES

The following Measurement Funds shall be available under the Plan:

        a.      Phantom Stock Fund

        b.      Interest-Accruing Fund (interest credited at an annual rate
                equal to the applicable federal long-term rate for purposes of
                Section 1274 of the Internal Revenue Code of 1986, as amended,
                in effect at January 1 of each year)

        c.      SAFECO 401(k) Savings Plan Investment Options:

                o   Diversified Common Stock Portfolio

                o   Intermediate Term Bond Portfolio

                o   Money Market Portfolio

                o   SAFECO Dividend Income Fund

                o   SAFECO Equity Fund

                o   SAFECO Growth Opportunities Fund

                o   SAFECO High-Yield Bond Fund

                o   SAFECO International Stock Fund

                o   SAFECO Small Company Value Fund

                o   Fidelity Growth Company Fund

                o   RS Emerging Growth Fund

                o   Vanguard Balanced Index Fund

                o   Vanguard Growth Index Fund

                o   Vanguard Total Bond Market Index Fund

                o   Vanguard Total Stock Market Index Fund

                                       19
<PAGE>

                                       20

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