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EXHIBIT 4(c)
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Form of Non-Qualified Stock Option Agreement
with Qualified Retirement provisions
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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 _______________ (the
"Vesting Date") and may be exercised, in whole or in part, at any time
thereafter until ______________ (the "Expiration Date"), 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 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
(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;
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(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):
(i) if 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, and, to the extent that it has not been
previously exercised, may be exercised by the
Optionee, in whole or in part, at any time between
the Qualified Retirement Date and the Expiration
Date;
(ii) subject to Section 5(e)(iii) hereof, if the Option is
not vested and exercisable as of the Qualified
Retirement Date, the Option shall not terminate in
its entirety upon the retirement of the Optionee;
instead, the Option (A) shall remain in effect with
respect to fifty percent (50%) of the Common Shares
which are subject to the Option as of the Qualified
Retirement Date 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 the
Expiration Date, and (B) shall terminate, effective
as of the Qualified Retirement Date, with respect to
the remaining fifty percent (50%) of the Common
Shares that are subject to the Option as of the
Qualified Retirement Date;
(iii) notwithstanding Section 5(e)(ii) above, if the Option
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 full Option (or, if the Option is
subject to installment vesting, that portion thereof
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 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 Section
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
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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.
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.
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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
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 _______________________ (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:
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Date:
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