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Exhibit 10(T)
OBJECTIVE-BASED
NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement (the "Agreement") is made as of the _____ day of
_______________, 20___ 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 1995 Incentive Plan (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 the Vesting
Date (as defined below) and until ___________________________
(the "Expiration Date"), on which date the right to purchase
such Common Shares shall expire.
The Option will vest and become exercisable upon the date (the
"Vesting Date") which is the earlier of (a)
________________________ or (b) the date of the public
dissemination by the Company of a release reporting earnings
for the Company and its subsidiaries for the first calendar
year or quarter as of the end of which the Company and its
subsidiaries have generated net earned premiums of $_________
or more over a period consisting of four consecutive calendar
quarters ("Realization Period") at a combined ratio of less
than _______ for the Realization Period.
2. Method of Exercise. Subject to Section 1 above, the Option
shall be exercisable from time to time after the Vesting Date
by written notice (in form approved or furnished by the
Company) to the Company 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 the specified time upon receipt of the full purchase price
for such Common Shares: (i) by certified or bank cashier's
check, or (ii) by any other method of payment or combination
thereof authorized by the Plan.
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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,
subject to Section 5(e) hereof, due to retirement
(with the employer's approval), 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, 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 on which 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)(iv) hereof):
(i) if and to the extent that the Option has
vested and is exercisable as of the
Qualified Retirement Date (as defined
below), the Option 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) if the Option is not vested and exercisable
as of the Qualified Retirement Date, the
Option (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, and may be
exercised by the Optionee, in whole or in
part, at any time between the Vesting Date
and Expiration Date,
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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 Option;
(iii) 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 within one
(1) year of the date of the Optionee's death
as to (A) all Common Shares as to which the
Option has not been exercised prior to the
date of the Optionee's death, if the Option
has vested and is exercisable as of the date
of the Optionee's death, or (B) if the
Option has not vested prior to the date of
the Optionee's death, the Common Shares, if
any, as to which the Option would have
become exercisable pursuant to Section
5(e)(ii) hereof 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);
(iv) if the Committee determines that the
Optionee is or has engaged in any
Disqualifying Activity (as defined below),
then (1) if 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) if 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.
(v) 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
(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:
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(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.
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 or her successor to make any
representation or 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 or
other items of any kind required by law to be withheld with
respect to the Option granted to him or her hereunder. If the
Optionee does not make 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 or other items 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.
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THE PROGRESSIVE CORPORATION
DATE OF GRANT: __________________________ BY: ________________________________
Charles E. Jarrett, Secretary
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: _________________________________________