Exhibit No. 10(M)
NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement (the "Agreement") is made as of the ____ day of __________,
200__ 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 purchase price of $_______ per share (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, in installments, as follows:
_____Common Shares may be purchased on or after 1/1/200__ and until
12/31/20___, at which date the right to purchase such Common
Shares shall expire.
_____Common Shares may be purchased on or after 1/1/200__ and until
12/31/20___, at which date the right to purchase such Common
Shares shall expire.
_____Common Shares may be purchased on or after 1/1/200__ and until
12/31/20___, 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 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.
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 (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 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)(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 (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
(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/or
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/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.
THE PROGRESSIVE CORPORATION
DATE OF GRANT: __________, 200_ BY:_______________________________
Charles E. Jarrett, Secretary
ACCEPTANCE OF AGREEMENT
The Optionee hereby: (a) acknowledges receiving a copy of the Plan
Description dated November 6, 1997 (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: ____________________, 200__