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Exhibit 10(S)
NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement (the "Agreement") is made as of the _______ day of
__________________, 19_____, between The Progressive Corporation, an Ohio
corporation (the "Company"), and {NAME} (the "Optionee"). The Company hereby
grants Optionee an option (the "Option") to purchase {TOTAL_SHARES} Common
Shares, $1.00 par value, (the "Common Shares") of the Company for a per share
purchase price of $____________ (the "Option Price"). The Option has been
granted pursuant to The Progressive Corporation 1989 Incentive Plan (as amended
and restated) (the "Plan") and shall include and be subject to all provisions of
the Plan, which are hereby incorporated herein by reference, and shall be
subject to the following provisions of this Agreement:
1. TERM. The Option shall become exercisable as follows:
___________ Common Shares may be purchased on or after _______________ and until
_______________, at which date the right to purchase such Common Shares shall
expire.
___________ Common Shares may be purchased on or after _______________ and
until _______________, at which date the right to purchase such Common Shares
shall expire.
___________ Common Shares may be purchased on or after _______________ and
until _______________, at which date the right to purchase such Common Shares
shall expire.
The dates set forth above on or after which the Option, or any part thereof, may
be exercised and specified numbers of Common Shares may be purchased hereunder
are referred to herein as "Vesting Dates" and the dates set forth above as of
which such stock purchase rights expire are referred to herein as "Expiration
Dates."
2. METHOD OF EXERCISE. Subject to Section 1 above, the Option shall be
exercisable from time to time by written notice (in form approved or furnished
by the Company) to the Committee which shall:
(a) state that the Option is thereby being exercised, the number of Common
Shares with respect to which the Option is being exercised, each person in
whose name any certificates for the Common Shares should be registered and
his or her address and social security number;
(b) be signed by the person or persons entitled to exercise the Option and,
if the Option is being exercised by anyone other than the Optionee, be
accompanied by proof satisfactory to counsel for the Company of the right
of such person or persons to exercise the Option under the Plan and all
applicable laws and regulations; and
(c) be accompanied by such representations, warranties and agreements, in
form and substance satisfactory to counsel for the Company, with respect to
the investment intent of such person or persons exercising the Option as
the Company may request.
3. PAYMENT OF PRICE. Upon exercise of the Option, the Company shall deliver a
certificate or certificates for the Common Shares purchased thereunder to the
specified person or persons at
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the specified time upon receipt of the full purchase price for such Common
Shares: (a) by certified or bank cashier's check, or (b) by any other method of
payment or combination thereof authorized by the Plan.
4. TRANSFERABILITY. The Option shall not be transferable by the Optionee other
than by will or by the laws of descent and distribution. Subject to the
following sentence, during the lifetime of the Optionee, the Option shall be
exercisable (subject to any other applicable restrictions on exercise) only by
the Optionee for his or her own account. Upon the death or disability of the
Optionee, the Option shall be exercisable (subject to any other applicable
restrictions on exercise) only by the Optionee's estate (acting through its
fiduciary) or by the Optionee's duly authorized legal representative, during the
period and to the extent authorized in the Plan.
5. TERMINATION OF EMPLOYMENT. If the employment of the Optionee by the Company
(or any of its Subsidiaries or Affiliates) terminates:
(a) due to involuntary termination without cause or due to retirement (with
the employer's approval, but subject to Section 5(e) below), the Option may
be exercised to the extent exercisable at the date of such termination,
during the lesser of (i) two months after such date, or (ii) the balance of
the Option's term;
(b) due to death or disability, the provisions of Section 5(b)(6) or
5(b)(7) of the Plan, as applicable, shall apply;
(c) due to resignation by the Optionee (other than by reason of a Qualified
Retirement, as provided at Section 5(e) below), the Optionee may exercise
the Option, to the extent of the lesser of (A) the number of Common Shares
as to which the Option is exercisable on the date the Optionee ceases to be
an employee or (B) the number of Common Shares as to which the Option was
exercisable ninety days prior to such date, reduced by any Common Shares
acquired by exercise of the Option within such ninety day period, at any
time within two (2) months after the date that the Optionee ceases to be an
employee (but in no event after expiration of the original term of the
Option) and the Option shall not be or become exercisable as to any
additional Common Shares after the date that the Optionee ceases to be an
employee;
(d) due to termination for cause, the Option and all rights to purchase
Common Shares thereunder shall immediately terminate; and
(e) due to a Qualified Retirement (as defined below), the following
provisions shall apply (subject in all cases to Section 5(e)(v) hereof):
(i) if and to the extent that any Option Installment (as defined
below) has vested and is exercisable as of the Qualified Retirement
Date (as defined below), such Option Installment shall not terminate
upon the retirement of the Optionee, but may be exercised by the
Optionee, in whole or in part, at any time between the Qualified
Retirement Date and the Expiration Date applicable thereto;
(ii) subject to Section 5(e)(iii) hereof, if and to the extent that
any Option Installment is not vested and exercisable as of the
Qualified Retirement Date, such Option Installment
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(A) shall remain in effect with respect to fifty percent (50%) of the
Common Shares covered thereby and, as to such Common Shares, shall
vest and become exercisable on the Vesting Date applicable thereto and
may be exercised by the Optionee, in whole or in part, at any time
between the Vesting Date and Expiration Date applicable thereto, and
(B) shall terminate, effective as of the Qualified Retirement Date,
with respect to the remaining fifty percent (50%) of the Common Shares
covered by such Option Installment;
(iii) notwithstanding Section 5(e)(ii) above, if and to the extent
that any Option Installment is not vested and exercisable as of the
Qualified Retirement Date, but has a Vesting Date which is no later
than four (4) months after the Qualified Retirement Date, then,
notwithstanding the Optionee's retirement, the Option Installment
which is scheduled to vest on such Vesting Date shall remain in
effect, shall vest on such Vesting Date and may be exercised by the
Optionee, in whole or in part, at any time between such Vesting Date
and the applicable Expiration Date;
(iv) if the Optionee dies after the date of his or her retirement and
has not exercised the Option, in whole or in part, prior to his or her
death, the Optionee's estate shall have the right to exercise the
Option as to (A) all Common Shares, if any, as to which the Option has
vested and is exercisable as of the date of the Optionee's death, plus
(B) the additional Common Shares, if any, as to which the Option would
have become exercisable within one (1) year from the date of the
Optionee's death pursuant to Sections 5 (e)(ii) and/or (iii) hereof,
as applicable, but for the death of the Optionee, at any time during
the one (1) year period beginning on the date of the Optionee's death
(or such other period as the Committee may specify), and the balance
of the Option shall terminate as of the date of the Optionee's death;
(v) if the Committee determines that the Optionee is or has engaged in
any Disqualifying Activity (as defined below), then (1) to the extent
that the Option has vested and is exercisable as of the
Disqualification Date (as defined below), the Optionee shall have the
right to exercise the Option during the lesser of two months from the
Disqualification Date or the balance of the Option's term and (2) to
the extent that the Option is not vested and exercisable as of the
Disqualification Date, the Option shall terminate as of such date. Any
determination by the Committee, which may act upon the recommendation
of the Chief Executive Officer or other senior officer of the Company,
that the Optionee is or has engaged in any Disqualifying Activity, and
as to the Disqualification Date, shall be final and conclusive.
(vi) As used in this Section 5(e), the following terms are defined as
follows:
(A) QUALIFIED RETIREMENT - any termination of the Optionee's
employment with the Company or its Subsidiaries for any reason
(other than death, Disability or an involuntary termination for
Cause) if, at or immediately prior to the date of such
termination, the Optionee satisfies both of the following
conditions:
(1) the Optionee shall be 55 years of age or older; and
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(2) the sum of the Optionee's age and completed years of
service as an employee of the Company or its Subsidiaries
(disregarding fractions, in both cases) shall total 70 or
more.
(B) QUALIFIED RETIREMENT DATE - the date as of which the
Optionee's employment with the Company or its Subsidiaries shall
terminate pursuant to a Qualified Retirement.
(C) DISQUALIFYING ACTIVITY - means and includes each of the
following acts or activities:
(1) directly or indirectly serving as a principal,
shareholder, partner, director, officer, employee or agent
of, or as a consultant, advisor or in any other capacity to,
any business or entity which competes with the Company or
its Subsidiaries in any business or activity then conducted
by the Company or its Subsidiaries to an extent deemed
material by the Committee; or
(2) any disclosure by the Optionee, or any use by the
Optionee for his or her own benefit or for the benefit of
any other person or entity (other than the Company or its
Subsidiaries), of any confidential information or trade
secret of the Company or its Subsidiaries to an extent
deemed material by the Committee; or
(3) any material violation of any of the provisions of the
Company's Code of Conduct or any agreement between the
Optionee and the Company; or
(4) making any other disclosure or taking any other action
which is determined by the Committee to be materially
detrimental to the business, prospects or reputation of the
Company or its Subsidiaries.
The ownership of less than 2% of the outstanding voting
shares of a publicly traded corporation which competes with
the Company or its Subsidiaries shall not constitute a
Disqualifying Activity.
(D) DISQUALIFICATION DATE - the date of any determination by the
Committee that the Optionee is or has engaged in any
Disqualifying Activity.
(E) OPTION INSTALLMENT - if the Option consists of multiple
awards, each with a separate Vesting Date and Expiration Date,
any one of such awards.
6. RESTRICTIONS ON EXERCISE. The Option is subject to all restrictions set forth
in this Agreement or in the Plan. As a condition to any exercise of the Option,
the Company may require the Optionee or his successor to make any representation
and warranty to comply with any applicable law or regulation or to confirm any
factual matters requested by counsel for the Company.
7. TAXES. The Optionee hereby agrees that he or she shall pay to the Company, in
cash, any federal, state and local taxes of any kind required by law to be
withheld with respect to the Option granted to him or her hereunder or the
exercise thereof. If the Optionee does not make
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such payment to the Company, the Company shall have the right to deduct from any
payment of any kind otherwise due to the Optionee from the Company (or from any
Subsidiary or Affiliate of the Company), any federal, state and local taxes of
any kind required by law to be withheld with respect to the Option, the exercise
thereof or the Common Shares to be purchased by the Optionee under this
Agreement. The Option shall not be treated as an incentive stock option under
Section 422 or any successor Section thereto of the Internal Revenue Code of
1986, as amended.
8. DEFINITIONS. Unless otherwise defined in this Agreement, capitalized terms
will have the same meanings given them in the Plan.
THE PROGRESSIVE CORPORATION
DATE OF GRANT: _________, 19____
BY: ______________________________________
TITLE: ___________________________________
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ACCEPTANCE OF AGREEMENT
The Optionee hereby: (a) acknowledges receiving a copy of the Plan Description
dated _______________ (the "Plan Description") relating to the Plan, and
represents that he or she is familiar with all of the material provisions of the
Plan, as set forth in the Plan Description; (b) accepts this Agreement and the
Option granted to him or her under this Agreement subject to all provisions of
the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee relating to the Plan,
this Agreement or the Option granted hereunder.
Optionee: _________________________________________
Date: ______________________________, 19____