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Exhibit 10(M)
SEPARATION AGREEMENT AND GENERAL RELEASE
1. This Agreement specifies the terms of the separation of XXXXXXX XXXXXX CHOKEL
("Employee") from PROGRESSIVE CASUALTY INSURANCE COMPANY ("Progressive").
In consideration of the payments noted in Paragraphs 3 and 4 below, Employee
hereby releases Progressive, its officers, directors, employees, parent,
subsidiaries, affiliates, agents and assigns (the "Progressive Entities") from
all actions, suits, claims, and demands in law or equity, that Employee ever had
or now has against any of the Progressive Entities, by reason of any matter,
cause, or thing, and particularly any claims relating in any way to Employee's
employment relationship or the termination of Employee's employment relationship
with Progressive, including, without limitation, any claim under the Age
Discrimination in Employment Act, any claim arising under any federal, state, or
local law and any common law claim, but excepting those matters described in
Paragraphs 3 and 4 below.
2. Effective January 31, 2001 (the "Resignation Date"), Employee hereby resigns
as an officer and/or director of The Progressive Corporation, Progressive and of
any Progressive subsidiary or affiliate(s) as is confirmed by Employee's
signature on the resignation letter attached hereto as Exhibit A and hereby
agrees to execute all other documents and undertake any other action(s)
necessary to effect such resignations or any other matters necessary to complete
his obligations as an officer or director of Progressive or any of its
affiliates. Employee agrees to resign his directorships with Plymouth Rock
Assurance Company, G & L Holding Group, Inc., Netrex Holdings L.L.C. and any of
Netrex's subsidiaries or affiliates, and in any other company in which
Progressive has made an equity investment effective the Resignation Date, and to
execute all other documents and undertake any other action(s) necessary to
effect such resignations. Although Employee will remain employed by Progressive
until the Separation Date (as defined below), he will have no authority to make
any commitments or representations or take any action on behalf of any of the
Progressive Entities or to bind any of the Progressive Entities in any way.
Progressive, accordingly, shall have no obligation to defend or indemnify
Employee for any act or omission by Employee after the Resignation Date.
3. In full consideration of Employee signing this Agreement and for the
covenants contained herein, Progressive hereby agrees to the following:
A. Employee shall remain an employee of Progressive through the Separation
Date (as defined below) and shall receive-for the period of time between
the execution of this Agreement and the Separation Date - salary in the
amount of Two Thousand Dollars ($2,000), payable within ten (10) days of
the Separation Date. The Separation Date shall be the earlier of: (a)
January 31, 2002; (b) the date on which Employee begins employment as an
employee on the payroll of another entity; or c) the date of a
"Disqualifying Activity" as defined in Section 4B. below.
B. Within ten (10) days of Employee's execution of this Agreement or upon
the dissolution of all applicable restraining orders, whichever is later,
Employee shall be paid a lump-sum payment of One Million Two Hundred
Forty-four Thousand Dollars ($1,244,000) (the "Severance Amount"), less all
applicable withholding taxes.
C. Employee shall be paid for credited but unused Earned Time Benefit
("ETB") hours determined as of the Resignation Date. Such payment to be
made within ten (10) days of the Resignation Date or upon the dissolution
of all applicable restraining orders, whichever
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is later. Employee agrees that Employee will not be entitled to accrue any
ETB hours subsequent to the Resignation Date.
4.
A. Notwithstanding anything to the contrary provided in any Non-Qualified
Stock Option Agreement ("NQSO Agreement") heretofore entered into between
Employee and Progressive, the parties hereto agree that, subject to the
conditions set forth in Paragraph 4B. below concerning a "Disqualifying
Activity," if and to the extent that any Option Installment (as defined
below) of any non-qualified stock option ("NQSO") heretofore granted to
Employee by Progressive under The Progressive Corporation 1989 Incentive
Plan (the "1989 Plan") or The Progressive Corporation 1995 Incentive Plan
(the "1995 Plan") (collectively, the "Plans") is not vested and exercisable
as of the Resignation Date, such Option Installment (i) shall remain in
effect with respect to fifty percent (50%) of the Common Shares of The
Progressive Corporation ("Common Shares") covered thereby and, as to such
Common Shares, shall vest and become exercisable on the vesting date
applicable thereto, as provided in the applicable NQSO Agreement, and may
be exercised by Employee in whole or in part at any time between such
vesting date and the expiration date applicable thereto (i.e., the tenth
anniversary of the date of grant), as provided in the related NQSO
Agreement, and (ii) shall terminate, effective as of the Resignation Date,
with respect to the remaining fifty percent (50%) of the Common Shares
covered by such Option Installment. In the event that Employee shall engage
in any Disqualifying Activity, Employee shall forfeit all of his rights
under this Paragraph and all NQSOSs then held by Employee which were not
vested as of the Resignation Date (regardless of whether vested at the time
of the Disqualifying Activity), shall immediately terminate and may not
thereafter be exercised in whole or in part. For purposes hereof, an Option
Installment shall mean any NQSO award included within a single grant which
includes multiple NQSO awards, each with a separate vesting date. Except as
herein expressly provided, all NQSOS's awarded to Employee under the Plans
will continue to be governed by all of the terms and conditions of the
Plans and applicable NQSO Agreement.
B. Employee shall forfeit his rights under Paragraph 4A. if Employee
participates in any "Disqualifying Activity" as defined below:
Disqualifying Activity - means any of the following acts or
activities committed during the period beginning on the
Resignation Date and ending January 31, 2004 (the "Restriction
Period"):
- directly or indirectly serving as a principal, shareholder,
partner, of officer, employee or agent of, or as a consultant,
advisor or in any other capacity (other than as a Director) to,
any insurance carrier other than Progressive with more than 1.5%
market share of the U.S. market for private passenger automobile
insurance as of December 31, 1999 as reported by A.M. Best and
specifically listed on the attached Exhibit B. This clause shall
not apply if Employee becomes an employee of one of the entities
listed on Exhibit B solely as a result of actions beyond
Employee's control--such as an acquisition not initiated by
Employee of an entity with a smaller market share then employing
Employee by one of the listed companies; or
- any disclosure by the Employee, or any use by the Employee for
his own benefit or for the benefit of any other person or entity
(other than Progressive, its parent or
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its subsidiaries), of any confidential information or trade secret
of Progressive or its subsidiaries (as defined herein) to an
extent deemed material by Progressive; or
- any violation of Paragraphs 2, 5, 8 or 10 of this Agreement; or
- making any other disclosure or taking any other action which is
materially detrimental to the business, prospects or reputation of
Progressive, its parent or its subsidiaries. The direct ownership
of less than 10% of the outstanding voting shares of a publicly
traded corporation which competes with Progressive or its
subsidiaries shall not constitute a Disqualifying Activity.
5. Employee shall not, during the Restriction Period, hire or solicit to hire
any of Progressive's then current employees (other than Employee's spouse),
either directly or indirectly, to work for Employee or any other entity. This
prohibition is not intended, nor shall it be construed, to prohibit any future
employer of Employee from hiring anyone in the normal course of its business
without assistance from Employee; but, rather, is intended to cover and shall
only be construed to prohibit actions of Employee.
6. With the exception of the rights and benefits contained in this Agreement,
Employee: (a) waives any and all rights Employee now has or might hereafter have
acquired to, and acknowledges the forfeiture of, any and all "NQSOs" under the
Plans which are not vested as of the Resignation Date; and (b) waives any rights
Employee may now have or would have had under Progressive's 2001 Gainsharing
Program, The Progressive Corporation 2001 Executive Bonus Plan, The Progressive
Corporation 1999 Executive Bonus Plan, The Progressive Corporation Separation
Allowance Plan and to any other compensation or bonus Employee may have received
had Employee remained employed by Progressive. Other than is provided for in
paragraph 3, Employee shall not be entitled to any compensation as a Progressive
employee after the Resignation Date, including, but not limited to, NQSOs
granted under the Plans and any other bonus or incentive payment(s).
7. Employee's rights relating to vested, but unexercised NQSOs shall be
determined in accordance with the provisions of the Plans and applicable NQSO
Agreement(s) between Progressive and Employee, and as is specified in those
agreements, the last available date for exercise by Employee of any vested NQSOs
shall be sixty (60) days after the Separation Date. Employee's rights (if any)
under the Executive Deferred Compensation Program (the "Program") shall be
determined in accordance with the governing provisions of the Program.
8. Employee hereby agrees that neither Employee nor any person, organization, or
other entity acting on Employee's behalf will communicate or permit to be
communicated, either directly or indirectly, any information regarding the
financial terms of this Agreement except to Employee's counsel, Employee's
spouse, Employee's accountant, a prospective employer, financial institutions
when needed to demonstrate Employee's personal financial condition, or to any
court involved in any action brought by either party to enforce the terms of
this Agreement.
9. Employee agrees and acknowledges that this Agreement is not and shall not be
construed to be an admission of any violation of any federal, state, or local
law, regulation or of any duty Progressive owed Employee and that the execution
of this Agreement is a voluntary act to provide conclusion to Employee's
employment relationship with Progressive.
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10. Employee agrees that Employee will maintain the confidentiality of
confidential information which Employee has received by virtue of Employee's
employment with Progressive and will refrain from using such information or
disclosing it to anyone other than Progressive or its employees. For purposes of
this Agreement, confidential information is information which Progressive
endeavors to keep confidential, including, without limitation, customer lists,
employee lists, rate schedules, underwriting information, the terms of contracts
and policies, marketing plans, program designs, trade secrets, Progressive's
internal electronic mail distribution lists and addresses, proprietary
information, and any such information provided by a third party to Progressive
in confidence. Employee represents that upon Employee's separation, Employee
will return to Progressive any documents in Employee's possession containing
confidential information of Progressive or documents or other items which are
the property of Progressive.
11. Any notices or matters regarding this Agreement shall be made to
Progressive's Chief Legal Officer, Xxxxxxx X. Xxxxxxx by mail to 000 Xxxxx
Xxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxx 00000, by facsimile transmission to
(000) 000-0000 or by electronic mail to GOTOBUTTON BM_1_
Xxxxx_Xxxxxxx@Xxxxxxxxxxx.xxx or to Employee at his home address.
12. Employee has read and understands all of the terms of this Agreement.
Employee signs this Agreement in exchange for the consideration to be given to
Employee. Neither Progressive nor its agents, representatives, or employees have
made any representations to Employee concerning the terms or effects of this
Agreement other than those contained in the Agreement. This Agreement contains
the entire agreement between Employee and Progressive and supercedes all prior
or contemporaneous discussions or agreements.
13. The terms of this Separation Agreement and General Release are separate and
independent and should any of them be declared invalid or unenforceable by any
court, the remaining provisions and terms of this Agreement shall remain in full
force and effect.
14. This Agreement shall be governed and interpreted in accordance with the laws
of the State of Ohio. Any dispute arising under the terms of this Agreement
shall be resolved by binding arbitration in Cuyahoga County, Ohio in accordance
with the rules of commercial arbitration of the American Arbitration
Association. In any such arbitration proceeding, the tribunal may award only
compensatory damages and is not empowered to award punitive or exemplary
damages, but shall award reasonable attorneys' fees to the prevailing party.
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EMPLOYEE HAS READ AND UNDERSTANDS ALL OF THE TERMS OF THIS AGREEMENT
AND EMPLOYEE HAS BEEN ENCOURAGED TO CONSULT WITH AN ATTORNEY. EMPLOYEE
ACKNOWLEDGES THAT EMPLOYEE HAS BEEN GIVEN A PERIOD OF TWENTY-ONE (21)
DAYS TO REVIEW THIS AGREEMENT WITH AN ATTORNEY AND CONSIDER ITS EFFECT,
INCLUDING EMPLOYEE'S RELEASE OF RIGHTS AND SEPARATION. EMPLOYEE ALSO
ACKNOWLEDGES THAT EMPLOYEE HAS SEVEN (7) DAYS FOLLOWING EXECUTION OF
THIS AGREEMENT TO REVOKE THIS AGREEMENT FOR ANY REASON AND IS HEREBY
ADVISED THAT THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE EXPIRATION OF THE SEVEN (7) DAY REVOCATION PERIOD.
IN WITNESS WHEREOF, the parties have executed this Agreement this 23
day of February, 2001
_________________________________________
XXXXXXX XXXXXX CHOKEL
_______________________________________
Witness
PROGRESSIVE CASUALTY INSURANCE COMPANY
By: _________________________________________
Title: ______________________________________
Witness: ____________________________________
