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EXHIBIT 4(b)
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Form of Non-Qualified Stock Option Agreement
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NON-QUALIFIED STOCK OPTION AGREEMENT
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This Agreement (the "Agreement") is made as of the _____ day of
___________, 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 on ____________________ and
may be exercised, in whole or in part, at any time thereafter until
_____________, on which date the Option shall expire and no longer be
exercisable.
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:
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(a) due to involuntary termination without Cause or 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 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; and
(d) due to termination for Cause, the Option and all rights to
purchase Common Shares thereunder shall immediately terminate.
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 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 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: BY:
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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 ________________, 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:
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Date:
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