SEPARATION AND GENERAL RELEASE AGREEMENT
This Separation and General Release Agreement (this "Agreement") is made
and entered into by and between Bruce Allenbaugh ("Employee") and Safeco
Corporation (the "Company").
RECITALS
A. Employee has been employed by Company as its Senior Vice President of
Marketing and Communications. Employee has tendered his notice of resignation
from employment with the Company effective January 31, 2004, which resignation
is accepted by the Company.
B. To resolve any issues between Employee and the Company or any of its
affiliates arising out of Employee's employment, Employee and the Company have
voluntarily agreed to enter into this Agreement. This Agreement sets forth the
complete understanding between Employee and the Company regarding Employee's
resignation as an officer of any of the Safeco group of companies and his
resignation as an employee of the Company, and the commitments and obligations
arising out of the termination of the employment relationship between Employee
and the Company.
AGREEMENT
1. Employment Termination.
1.1 Resignation. In consideration of the Severance Payment and other
compensation and benefits described herein, Employee tenders his resignation of
employment, including resignation as an officer of the Company and its
affiliates, effective January 31, 2004 (the "Termination Date").
1.2 Compensation Through Termination Date. The Company shall pay Employee
all base salary through the Termination Date. Until the Termination Date,
Employee shall continue to be eligible for employee benefit plan coverages
available to employees of the Company and for continued vesting under the Safeco
Incentive Stock Option Plan of 1987 (the "1987 Plan") and/or the Safeco
Long-Term Incentive Plan of 1997 (the "LTIP").
1.3 Group Medical Benefits Coverage. The Company shall continue to provide
coverage under any group medical benefits plan under which Employee and/or his
dependents were covered on the date hereof, through and including the
Termination Date. Employee shall be responsible to pay any amounts chargeable as
"employee premium contribution" amounts with respect to any such coverage. From
and after the Termination Date, the Company shall provide Employee and/or
Employee's dependents with such benefits continuation or conversion coverage as
may be available or required under the terms of the Company's benefits plans or
policies (understanding that the Company retains the right to modify, amend or
terminate any of the plans at any time without advance notice). Employee and/or
Employee's covered spouse and dependents may be eligible to elect a temporary
extension of group health plan coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as subsequently amended ("COBRA").
1.4 Payment for Accrued Vacation. On the Termination Date, the Company
shall pay Employee for accrued but unused vacation that exists as of the
Termination Date, which amount the parties agree equals Five Thousand Five
Hundred, Fifty-Two Dollars ($5,552.00).
1.5 Reimbursement for Expenses Incurred. The Company shall reimburse
Employee for reasonable and necessary business expenses incurred by Employee on
or before the Termination Date to the extent such expenses are reimbursable
under the Company's normal expense reimbursement policies and procedures, and
provided that receipts or other acceptable documentation for such expenses are
submitted to Human Resources by the Termination Date.
1.6 Acknowledgment of Full Compensation to Date. Employee acknowledges and
agrees that, with the payment of his salary through the Termination Date, he
will have received all compensation due and owing him (including base salary,
bonus or other incentive payments) for services performed through the
Termination Date.
1.7 No Authority To Act or Represent the Company. From and after the
Termination Date, Employee shall have no further authority to bind the Company
or any of its affiliates to any contract or agreement or to act on behalf of the
Company or to represent the Company at any industry or business functions.
1.8 Return of Materials. On or before the Termination Date, Employee shall
return to the Company all Company-owned equipment and materials, including, but
not limited to, any computers, mobile phones, all documents (whether existing in
paper or electronic/digital media), compilations of data, files, manuals,
letters, notebooks, reports, diskettes and all other materials and records of
any kind, and any copies or other reproductions thereof, owned by the Company or
its affiliates and used by Employee in the course of Employee's employment.
1.9 Agreement to Cooperate. Employee agrees to respond promptly, and to
cooperate with, reasonable requests for information that the Company may make
relating to matters on which Employee worked while he was employed by the
Company.
1.10 Continued Service on Alliance for Education Board. The Company agrees
that Employee may continue to serve on the Board of Directors of the Alliance
for Education through the end of his existing term.
2. Payments; Contributions.
2.1 Severance Payment. As compensation to Employee, and in consideration of
the termination of Employee's role as an officer and Employee's resignation as
an employee of the Company and its affiliates, Employee's release agreement in
Section 4 and other agreements made herein, in addition to the benefits provided
under Section 1 above and the further consideration provided under Section 3
below, the Company agrees to pay Employee a total sum of Four Hundred Fifty-One
Thousand, Seventy-Five Dollars ($451,075) as a severance payment (the "Severance
Payment"). The Severance Payment shall be subject to withholding and deduction
for payroll taxes and other deductions as are required by federal and state law.
The Severance Payment shall be paid in a lump sum within ten (10) business days
of the Effective Date of the Agreement (see Paragraph 11.4). Employee and the
Company agree that the Severance Payment represents sufficient consideration for
the potential claims being released.
2.2 Payment in Lieu of Leadership Performance Plan Incentive. The Company
agrees to pay Employee the sum of Three Hundred Fifty Thousand Dollars
($350,000) in lieu of any annual incentive payment Employee might have received
in 2004 under the Leadership Performance Plan. Employee shall not be entitled to
any other bonus, incentive payment or other variable pay for past services or
the current calendar year.
2.3 Benefit Plan Contributions. Employee shall continue to be eligible as
an "employee" of the Company through the Termination Date for employer
contributions paid under the Company's employee benefit plans. Employee shall be
eligible to participate in and shall receive pro rata contributions to the
Safeco 401(k)/Profit Sharing Retirement Plan, as the same may be available to
other employees of the Company. Employee acknowledges that any employer
contributions to, or interest or other income credited to, any of the Safeco
401(k)/Profit Sharing Retirement Plan or Safeco Employees' Cash Balance Plan
shall be additional compensation to Employee in excess of the total Severance
Payment amount described above.
2.4 Stock Options and Accelerated Vesting of Unvested Options. The
Compensation Committee of the Safeco Board of Directors has approved accelerated
vesting of all of Employee's outstanding Non-Qualified Stock Options and
Incentive Stock Options, such that each such Stock Option shall be fully vested,
fully exercisable, and wholly non-forfeitable as of the Termination Date,
contingent upon Employee's execution of this Agreement and the expiration of the
revocation period. Pursuant to the provisions of the 1987 Plan and the LTIP
relating to the termination of employment, each outstanding Stock Option shall,
to the extent that it is or becomes exercisable as of the Termination Date,
remain exercisable for three months thereafter, until April 30, 2004; provided,
however, that no Stock Option shall remain exercisable beyond its maximum stated
term. In the event that Employee accepts competitive employment that would
result in forfeiture of gains from exercise of her Stock Options, the Company
agrees that it will not seek or require forfeiture of Employee's gains so long
as Employee is in full compliance with Employee's obligations under this
Agreement.
2.5 Compensation for Restricted Stock Rights ("RSR"). Employee acknowledges
and agrees that he shall have no rights in,
or be entitled to any compensation for, any RSRs.
2.6 Performance Stock Rights ("PSR"). Employee acknowledges and agrees that
he shall have no rights in, or be entitled to any compensation for, any PSRs.
3. Transition Services.
As further consideration to Employee for the agreements hereunder,
including the release granted under Section 5 of this Agreement, the Company
agrees to provide Employee with transition services through David Nelson and
Associates for a period of up to one year from January 31, 2004. Employee and
the Company shall direct that invoices for services obtained by Employee from
David Nelson and Associates be forwarded directly to the Company for payment.
4. Release and Settlement.
4.1 Release. In consideration of the Company's delivery of the Severance
Payment and other consideration and benefits provided to Employee under this
Agreement, Employee hereby releases the Company and its affiliated companies,
insurers, employee benefit or stock option plans in which Employee participates,
and the employees, agents, officers, directors and shareholders of any of them
(including their respective spouses and marital communities), from all claims,
demands, actions, causes of action, or damages, of any kind or nature whatsoever
that Employee may now have or may ever have had against any of them, whether
such claims are known or unknown, and including but not limited to the Claims as
described below. However, nothing in this Agreement shall create or imply any
waiver by Employee of any claims (a) with respect to Employee's entitlement to
compensation for vested benefits arising under any Company pension, retirement
or welfare benefit plan, program or agreement, in accordance with the terms and
conditions of such plans, (b) arising under any insurance or investor account or
similar client relationship, (c) with respect to any breach by the Company of
its obligations under this Agreement, all of which rights shall be preserved and
unaffected by this release, or (d) with respect to indemnification by the
Company, to the extent that such indemnification rights may arise or be provided
under the Company's Articles of Incorporation or Bylaws, in connection with
Employee's official actions (or omissions) on behalf of the Company during the
period Employee served as an officer of the Company. EMPLOYEE ACKNOWLEDGES AND
AGREES THAT THROUGH THIS RELEASE EMPLOYEE IS GIVING UP ALL RIGHTS AND CLAIMS OF
EVERY KIND AND NATURE WHATSOEVER, KNOWN OR UNKNOWN, CONTINGENT OR LIQUIDATED,
THAT EMPLOYEE MAY HAVE AGAINST THE COMPANY, AND THE OTHER PERSONS REFERENCED
ABOVE, EXCEPT FOR THE RIGHTS SPECIFICALLY EXCLUDED ABOVE.
4.2 The Claims. For the purposes of this Agreement, "Claims" shall mean and
include, without limitation, Claims with respect to any of the following: (i)
breach of contract; (ii) discrimination, retaliation, or constructive or
wrongful discharge; (iii) lost wages, lost employee benefits, physical and
personal injury, stress, mental distress, or impaired reputation; (iv) Claims
arising under the Age Discrimination in Employment Act ("ADEA"), the Older
Workers Benefit Protection Act, the Washington State Law Against Discrimination,
Title VII of the Civil Rights Act, the Equal Pay Act, the Americans with
Disabilities Act, the Family Medical Leave Act, or any other federal, state or
local laws or regulations prohibiting employment discrimination; (v) attorneys'
fees; and (vi) any other Claim arising from or relating to Employee's employment
with the Company and/or Employee's separation from service.
4.3 Consideration for Release. The Company represents, and Employee
acknowledges, that the Severance Payment and the other consideration and
benefits provided hereunder exceed any amount the Company may arguably be
required to pay under any agreement or arrangement to which Employee is a party
or under which Employee claims some benefit, or under the standard policies and
procedures of the Company, and represents valuable consideration to Employee for
the release of the Claims described above.
5. No Admission.
Employee understands and acknowledges that neither the Severance Payment
nor the other benefits provided hereunder, nor the execution and delivery of
this Agreement by the Company, constitutes an admission by the Company to (i)
any breach of an agreement with Employee, (ii) any violation of a federal, state
or local statute, regulation or ordinance, or (iii) any other wrongdoing. The
Company understands and acknowledges that neither Employee's acceptance of the
Severance Payment and other benefits provided hereunder, nor Employee's
execution and delivery of this Agreement, constitutes an admission by Employee
to (i) any breach of an agreement with the Company, (ii) any violation of a
federal, state or local statute, regulation or ordinance, or (iii) any other
wrongdoing.
6. Confidential Information.
6.1 Possession of Non-Public Information. Employee recognizes that by
virtue of Employee's employment by the Company, Employee has acquired
significant non-public information and trade secrets with respect to the Company
and its affiliated companies, and their operations (the "Confidential
Information"). Employee recognizes and acknowledges that the Confidential
Information constitutes valuable, special and unique assets of the Company and
its affiliates, access to and knowledge of which were essential to the
performance of Employee's duties during Employee's employment.
6.2 Non-Disclosure. Employee agrees to hold the Confidential Information in
trust and confidence. Employee agrees not to (i) directly or indirectly make use
of the Confidential Information, (ii) reveal any Confidential Information to any
other party, or (iii) divulge or use any Confidential Information for any
purpose other than for the benefit of the Company, except to the extent that
Employee may be required to disclose such Confidential Information by lawful
order or process of a court (in which event Employee will provide reasonable
advance notice of such disclosure to the Company and will cooperate with the
Company's efforts to obtain protective treatment for such Confidential
Information).
6.3 Materials. Employee shall not remove from the Company's premises or
possession any documents, compilations of data or other files or records of any
nature, or any copy or reproduction thereof, that contain Confidential
Information or that belong to the Company.
7. Non-Disparagement/Non-Solicitation.
Employee agrees not to make any disparaging or derogatory remarks about the
Company, its affiliated companies or any of their officers, directors, employees
or agents at any time. This Section 7 shall not be construed to prohibit
Employee from responding truthfully and publicly to incorrect public statements
or from making truthful statements when required by law or order of a court or
other person or body having jurisdiction. Employee agrees that for six (6)
months following the Termination Date, Employee will not directly or indirectly
solicit or entice any person who is an employee, partner, affiliate, agent or
prospective partner or agent of the Company to cease, terminate or reduce any
relationship with the Company.
8. Legal Action.
8.1 No Claims. Employee represents that Employee has not filed a Claim or
complaint against the Company or any of its affiliated companies, or any of
their employees, agents, officers, directors or shareholders with any court or
agency. The Company represents that it is not aware of any legal action pending
or potentially pending against Employee for acts or omissions as an employee of
the Company.
8.2 Indemnification. To the extent provided as of the Termination Date in
the indemnification provisions of the Company's articles of incorporation and
bylaws and to the maximum extent permitted under the laws of the state of
Washington, Employee shall be entitled to indemnification, and advancement of
expenses, in respect of matters that occurred during the time that he was an
officer of the company.
8.3 No Action on Released Claims. Employee agrees not to sue or pursue any
court or administrative action against the Company or any of its affiliates, or
any of their employees, agents, officers, directors or shareholders, to the
extent allowed by applicable law, regarding any Claims released herein or
otherwise arising from Employee's employment with the Company or Employee's
separation from service, except with respect to any breach by the Company of its
obligations under this Agreement. If any government agency brings any claim or
conducts any investigation against the Company, Employee waives and agrees to
relinquish any damages or other individual relief that may be awarded as a
result of any such proceedings.
8.4 Liability for Defense Costs. If, notwithstanding this Agreement,
Employee should file any lawsuit or other proceeding based on legal claims that
Employee has released herein, Employee agrees to pay or reimburse the Company
for all reasonable costs, including attorneys' fees, that it, or its affiliates,
or their employees, agents, officers or directors, incur in defending against
Employee's claims. This paragraph shall not apply to any claimed breach by the
Company of any of the terms or conditions of this Agreement.
9. Agreement Confidential.
9.1 Terms of Agreement. Employee and the Company agree that neither of them
shall reveal or publicize the existence of this Agreement or its terms,
including but not limited to the amount of the Severance Payment, except as
required by law, including as required by annual financial and other corporate
reporting requirements. Further, the parties agree that they shall not discuss
with or make to the public at large or to any individual person or persons any
statements with regard to this Agreement, or matters relating to its terms.
Notwithstanding the foregoing, the parties may discuss the existence and terms
of this Agreement with their respective attorneys, accountants, financial
advisors to obtain counsel and advice, and, in Employee's case, with members of
Employee's immediate family, and, in the Company's case, with members of the
Company's Senior Leadership Team. Nothing in this confidentiality provision
prohibits Employee from representing to third parties that Employee "resigned
from the Company on mutually agreeable terms" or that the parties "parted
amicably."
9.2 Employment References. Employee agrees to direct all requests for
employment references from prospective employers to the attention of Allie
Mysliwy, Senior Vice President and head of Human Resources for the Company. If a
prospective employer contacts the Company for an employment reference with
respect to Employee, the Company will provide, unless required otherwise by law,
only the following information: Employee's dates of employment, and Employee's
title and salary at the Termination Date.
10. Costs.
No later than the Termination Date, the Company shall pay Employee a lump
sum of One Thousand Five Hundred Dollars ($1,500) to defray any attorney and tax
advisor fees incurred in connection with Employee's separation from employment
with the Company. Except for this payment to Employee, each party shall
separately bear their costs and expenses incurred in connection with the
negotiation and preparation of this Agreement.
11. Acknowledgment.
11.1 Informed Agreement. Employee declares that Employee has read and fully
understands the terms of this Agreement and its significance and consequence.
Employee further declares that this Agreement is the product of good faith
negotiations between Employee and the Company, and that Employee voluntarily
accepts the same for the purpose of resolving arrangements with respect to
Employee's resignation.
11.2 Attorney. Employee acknowledges that the Company has advised Employee
to review the terms of this Agreement with an attorney of Employee's own
choosing and that Employee has done so or knowingly waived Employee's right to
do so.
11.3 Voluntary Act. Employee acknowledges that this Agreement is voluntary
and has not been given as a result or any coercion.
11.4 Review and Revocation Periods, Effective Date. Employee acknowledges
that the Company has given Employee at least twenty-one (21) days during which
to consider this Agreement prior to signing. Negotiations about the terms or
language of this Agreement shall not re-start the 21-day consideration period.
Employee has seven (7) days after signing in which Employee may revoke this
Agreement. This Agreement shall not become effective or enforceable until such
seven-day period has expired (the "Effective Date of the Agreement"). Employee
understands that she may revoke this Agreement by delivering a written notice to
the attention of Allie Mysliwy at Safeco Plaza, T-17, Seattle, WA 98185, no
later than the close of business on the seventh day after Employee signs this
Agreement. Employee understands and acknowledges that if Employee revokes this
Agreement it will not be effective or enforceable and Employee will not receive
the payments or other benefits described herein.
12. Entire Agreement.
This Agreement along with the Product Ownership Agreement, a copy of which
is attached as Exhibit A, constitute the entire agreement between Employee and
the Company, and they supersede and replaces all prior written and oral
agreements and understandings between the parties with respect to their subject
matter. Neither the Company nor any affiliate has made any promises to Employee
other than those included within this Agreement.
13. Waiver.
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
14. Injunctive Relief.
Employee recognizes that irreparable and continuing injury for which there
is not adequate remedy at law will result to the Company and its business and
property if Employee breaches Employee's obligations under this Agreement. In
the event of any such breach or threatened breach, the Company shall be entitled
to seek temporary injunctive relief upon a showing of such breach or threatened
breach without proof of actual damage and without posting a bond therefore,
and/or an order of temporary and permanent specific performance enforcing this
Agreement, and any other remedies provided by applicable law. Employee agrees
that in the event of any such proven breach, the Company shall be entitled to
recover its costs associated with enforcing this Agreement, including reasonable
attorney's fees. Employee further understands and agrees that the word
"temporary" as used herein shall include both temporary and preliminary relief
and/or remedies available.
15. Amendment.
No supplement, modification, or amendment of this Agreement shall be valid,
unless it is made in writing and signed by both parties hereto.
16. Severability.
In the event any provision or portion of this Agreement is held to be
unenforceable or invalid by any court of competent jurisdiction, the remainder
of this Agreement shall remain in full force and effect and shall in no way be
affected or invalidated thereby.
17. Governing Law; Jurisdiction and Venue.
The parties acknowledge that this Agreement shall be governed, interpreted
and enforced in accordance with the laws of the state of Washington, without
regard to its conflict of law principles. Any suit or action arising out of or
in connection with this Agreement, or any breach hereof, shall be brought and
maintained in the federal or state courts located in Seattle, Washington. The
parties irrevocably submit to the jurisdiction and venue of such courts for the
purpose of such suit or action and hereby expressly and irrevocably waive, to
the fullest extent permitted by law, any objection they may now or hereafter
have to the venue of any such suit or action in any such court and any claim
that any such suit or action has been brought in an inconvenient forum.
(signature page follows)
PLEASE READ CAREFULLY.
THIS SEPARATION AND GENERAL RELEASE AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
/s/ Bruce Allenbaugh
------------------------------
BRUCE ALLENBAUGH
Date: January 31, 2004
SAFECO CORPORATION
By /s/ Michael S. McGavick
------------------------------
MICHAEL S. MCGAVICK
Its President and Chief Executive Officer
Date: January 31, 2004