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EXHIBIT NO. 10(C)
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FORM OF NON-QUALIFIED STOCK OPTION
AGREEMENT UNDER THE PROGRESSIVE
CORPORATION 1989 INCENTIVE PLAN
(MULTIPLE AWARDS)
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NON-QUALIFIED STOCK OPTION AGREEMENT
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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
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(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: (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):
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(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;
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(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
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(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 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 t 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.
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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
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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____