STOCK AWARD PROGRAM FOR NON-EMPLOYEE DIRECTORS
Insert 10.6
STOCK AWARD PROGRAM
FOR NON-EMPLOYEE DIRECTORS
UNDER THE SAFECO LONG-TERM INCENTIVE PLAN OF 1997, AS AMENDED
Adopted by the Safeco Corporation Board of Directors
November 4, 1998
and as Amended and Restated February 7, 2007
The following provisions set forth the terms of the stock award program (the “Program”) for non-employee directors of Safeco Corporation (“Company”) under the Safeco Long-Term Incentive Plan of 1997, as amended (the “Plan”). The following terms are intended to supplement, not alter or change, the provisions of the Plan, and in the event of any inconsistency between these terms and those in the Plan, the Plan shall govern. All capitalized terms that are not defined in this Program shall be as defined in the Plan.
| 1. | Eligibility |
Each director of the Company who is not an employee of the Company or any Subsidiary (an “Eligible Director”) shall be eligible to receive annual awards under the Plan, as described below.
| 2. | Annual Award |
Commencing with the 2007 annual meeting of the Company’s shareholders, a restricted stock right (“RSR”) of the Company’s common stock with an economic value as may be determined by the Company’s Board of Directors, shall automatically be granted to each Eligible Director in office immediately after the annual shareholders’ meeting. The number of RSRs granted will be based on the same methodology and measurement period used to convert the economic value of the Company employees’ equity grants into RSRs. The terms of the award shall be set forth in an Award Agreement.
| 3. | Restricted Period and Settlement |
RSRs granted to Eligible Directors shall be settled upon termination of service as an Eligible Director as described in Section 4, the director’s period of service preceding such termination constituting the “Restricted Period.”
| 4. | Settlement Upon Termination of Service as an Eligible Director |
| a. | Death or Disability. If an Eligible Director ceases to serve on the Company’s Board of Directors because of the Eligible Director’s death or a permanent and total disability within the meaning of Section 22(e)(3) of the Code, all of the Eligible Director’s RSRs shall be settled in shares of the Company’s common stock, regardless of how long such RSRs have been held. Such shares shall be issued to the Eligible Director or the personal representative of the Eligible Director’s estate, as the case may be, as soon as practical following the date of death or the date of termination of service due to determination of disability (the “Disability Termination Date”). |
| b. | Retirement, Resignation or Other Termination. If an Eligible Director ceases to be a director of the Company for any reason other than the Eligible Director’s death or disability, then the |
| Eligible Director’s RSRs, to the extent held through the date of the first annual shareholders’ meeting following the grant of such RSRs, shall be settled in shares of the Company’s common stock on that date. |
| 5. | Non-Transferable |
RSRs granted to Eligible Directors shall not be transferable other than by will or the laws of descent and distribution.
| 6. | Deferral of Dividends and RSR Settlement |
An Eligible Director may elect to defer the dividends accrued on any or all RSRs granted to the Eligible Director under this Program and settled RSRs under this Program as provided in the Safeco Corporation Deferred Compensation Plan for Directors, as it may be amended from time to time (“DCP”), or any other plan or arrangement under which settled RSRs or dividends accrued on RSRs are permitted to be deferred. [Deferral of dividends and RSR settlements are permitted only to the extent permitted under the American Jobs Creation Act, regulations issued thereunder, and other applicable law. ]
| 7. | Corporate Transactions |
In the event of a Change in Control of the Company, all outstanding RSRs shall be settled by a payment in cash. The fair market value of each share shall be equal to the greater of (i) the fair market value of a share of the Company’s common stock as of the date on which a Change in Control occurs, and (ii) the highest price of a share of Company common stock that is paid or offered to be paid by any Person or entity in connection with any transaction that constitutes a Change in Control.
| 8. | Other Provisions |
Except for certain provisions of the Plan whose application is clearly limited to employee participants, the provisions of the Plan, as it may be amended from time to time, shall apply to Awards granted to Eligible Directors under this Program.
