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EXHIBIT 10(H)
AGREEMENT
THIS AGREEMENT is made on March 11, 1996, effective as of February 1, 1996,
by and between THE PROGRESSIVE CORPORATION, an Ohio corporation (which,
together with its direct and indirect subsidiaries, is referred to herein as
"Company"), and XXXXX X. XXXXXX ("Employee").
W I T N E S S E T H :
WHEREAS, Employee is currently an employee and Chief Operating Officer of
Company; and
WHEREAS, Employee has been assigned the responsibility, among others, of
developing a plan to reorganize the management structure of Company
("Reorganization Plan"); and
WHEREAS, Company desires to provide Employee with assurances of financial
security in connection with the development of the Reorganization Plan; and
WHEREAS, the parties desire to set forth the terms and scope of such
assurances;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, which consideration both parties
recognize as adequate and sufficient to support this agreement, the parties
hereto agree as follows:
1. Financial Assurances.
(a) If, at any time during the term of this Agreement, Employee's
employment with Company ends, by decision of the Company or voluntary
departure or resignation by the Employee, but only in the event the
end of such employment is not due to Employee's death or total
disability or a decision by the Company based on justifiable cause (as
hereinafter defined), then, upon any such termination as qualified
above (a "Covered Termination"):
(i) Salary Factor. Beginning forty-five (45) days after the
Termination Date (as hereinafter defined), Employee shall
receive twelve (12) quarterly payments, each in an amount equal
to 25% of Employee's annual salary three days before the
Termination Date (but not less than $139,500 each); and
(ii) Bonus Factor. Beginning six (6) months after the Termination
Date, Employee shall receive three annual payments of $558,000
each; and
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(iii)Stock Options. Company and Employee shall promptly amend all such
stock option agreements in effect on the Termination Date between
Company and Employee as shall be necessary so that all unvested
stock options held by Employee on the Termination Date which, but
for the Covered Termination, would have vested within three (3)
years of the Termination Date, shall vest on the Termination Date
and shall be exercisable, in whole or in part, by Employee at any
time on or before the fifth anniversary thereof.
b) Any notice of the termination of Employee's employment with Company
given by either party shall be in writing and shall be effective two
(2) business days after the date such notice is received by the other
party (such effective date being herein referred to as the "Termination
Date"). Notice to Employee shall be deemed received when received by
Employee and notice to the Company shall be deemed received when
received by the Company's Chief Executive Officer (provided such person
is a person other than Employee), its Chief Human Resources Officer,
its Chief Legal Officer or the respective persons holding equivalent
positions if such titles are not in use at the time such delivery is
made.
(c) For purposes of this Agreement, "justifiable cause" means the
commission of a felony, theft of or intentional significant damage to
the property or business of Company, gross dereliction of duty, or
fraud.
2. Reduction in Benefits.
Notwithstanding anything herein to the contrary, the amounts to be paid to
Employee pursuant to Sections 1(a)(i) and (ii) hereof, and the number of
stock options held by Employee that will become subject to accelerated
vesting as provided in Section 1(a)(iii), upon any Covered Termination will
be reduced by one-half (1/2) if the Termination Date occurs at any time
after January 31, 1999 and before the Expiration Date (as hereinafter
defined).
3. Other Stock Options.
Any stock options held by Employee which are vested and exercisable on the
Termination Date other than by reason of Section 1(a)(iii) shall not be
affected by this Agreement, but shall continue to be governed by and subject
to the terms of the related incentive plan and stock option agreement(s).
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4. Other Separation Benefits.
Employee agrees that if a Covered Termination should occur, the payments and
benefits provided for hereunder shall be accepted in lieu of any payments or
benefits to which Employee might otherwise be entitled under Company's
Separation Allowance Plan or any other plan or arrangement which provides
for severance or separation payments or allowances ("Other Separation
Benefits") and hereby waives, if a Covered Termination should occur, any and
all rights and claims that he may now or hereafter have to any Other
Separation Benefits; provided, however, that such waiver shall terminate on
the Expiration Date without further action of the parties if Employee
remains in the employ of the Company through such Expiration Date. This
agreement shall not affect Employee's rights under COBRA or any of the
Company's savings or retirement plans, to wit: its Pension Plan, Retirement
Security Program and Executive Deferred Compensation Plan, and any
successors thereto, to or in which Employee may be or become a party or
participant.
5. Public Announcements.
In the event of a Covered Termination, the text of any related public
announcement or communication regarding such termination, and of any letter
or letters of reference requested by Employee, shall be subject to the prior
approval of both of the parties hereto, subject to all applicable legal
requirements. The parties each agree to cooperate fully to complete all of
such materials in an expeditious manner and to ensure the fairness and
reasonableness of all statements contained therein.
6. Expiration.
This Agreement shall commence as of February 1, 1996, and terminate and
expire on January 31, 2000 (the "Expiration Date"). Neither of the parties
hereto shall have any rights or obligations hereunder on or after the
Expiration Date; except that if a Covered Termination occurs prior to the
Expiration Date, Employee shall be entitled to the benefits provided for at
Sections 1(a)(I)-(iii) hereof with respect to such Covered Termination and
Company shall be entitled to the benefits provided for at Sections 7 and 8
hereof, to the extent therein provided.
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7. Confidential Information.
(a) Employee acknowledges that, as an employee and Chief Operating Officer
of the Company, he owes the Company the duties of undivided loyalty and
good faith. Accordingly, and in consideration of the commitments made
to Employee hereunder, Employee agrees that he will not, directly or
indirectly, at any time during the three year period (if any) beginning
on the Termination Date (the "Designated Period"), reveal or disclose
to any person or entity (other than Company) any Confidential
Information (as defined below); nor, during such period, shall he use
any Confidential Information for his own benefit or for the benefit of
any other person or entity (other than the Company).
(b) For purposes hereof, "Confidential Information" shall mean and include
all information relating to Company, its business or operations,
including, without limitation, customer and prospect lists, strategic
plans and initiatives, rating methods, underwriting and marketing
techniques and strategies, and similarly proprietary ideas, concepts,
"know-how", and methods employed by Company in the conduct of its
insurance business. Notwithstanding the foregoing, it is agreed and
understood that Confidential Information shall not include information
that:
(i) is a matter of public knowledge or becomes publicly known or
within the public domain other than as a result of any breach of
this Agreement;
(ii) has been or is subsequently disclosed to Employee by a third
party who is not under an obligation to maintain its
confidentiality;
(iii)was known by Employee prior to the date of his employment by
Company; or
(iv) has been disclosed by Company to others on an unrestricted basis.
8. Non-Competition. In further consideration of the commitments made to
Employee hereunder, Employee hereby covenants and agrees that, during
the Designated Period, he will not, directly or indirectly, for himself
or on behalf of any other person or entity (other than the Company), as
employee, owner, partner, principal, stockholder, advisor, consultant or
otherwise,
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(a) compete with Company in the personal lines automobile insurance
business, or in any other line of business in which Company is
actively engaged to a financially significant extent as of the
Termination Date, in any county or municipality anywhere within the
continental United States in which Company is then engaged in such
business, or (b) hire, solicit or entice away any of Company's
officers or employees, without the Company's prior written consent.
Notwithstanding the foregoing, Employee may own, of record or
beneficially, up to two percent (2%) of the outstanding voting
securities of any publicly traded corporation that competes with
Company without being deemed to be in violation of this Section.
9. Remedies.
(a) Any breach of this Agreement on the part of either party will entitle
the other party to damages, injunctive relief and/or forfeiture of
any remaining rights, payments and benefits under this Agreement,
except that, with respect to any forfeiture asserted by either party,
the party asserting that a forfeiture has occurred shall give the
other party written notice of the nature of any alleged breach by
such other party and if such other party fails to cure such alleged
breach within seven (7) days after receipt of such notice, then the
forfeiture shall occur. If such forfeiture shall have arisen due to
a breach by Employee, then Employee shall not be entitled to receive
any of the then unpaid amounts to be paid to Employee pursuant to
Sections 1(a)(I) and
(ii) hereof, and any stock options then held by Employee that became
subject to accelerated vesting as provided in Section 1(a)(iii)
shall immediately terminate as of the date of such breach.
In the event Company gives Employee notice of any such alleged
breach, as provided in this Section, then Employee's right to
exercise those stock options that will be terminated if such
alleged breach is not cured as provided above, shall be
suspended for the aforesaid seven (7) day cure period.
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(b) The parties hereto agree that, in the event there is any breach of
the terms, covenants or conditions of this Agreement, injunctive
relief shall lie for the enforcement of this Agreement, in addition
to any and all other remedies that may be available in law or in
equity, which other remedies shall be retained without waiver or
release regardless of whether an injunction shall be issued. Each
party waives, to the extent permitted by law, any claim or defense
that there is an adequate remedy at law. The prevailing party in any
action by a party hereto to compel compliance with this Agreement
shall be entitled to recover its reasonable costs and attorney fees
in such proceeding.
10. Savings Clause. If either party shall institute any action or
proceeding to enforce any of the provisions of this Agreement, and if such
provision is deemed unenforceable by the court or other tribunal having
jurisdiction over such action or proceeding, the parties hereto agree that
such provision shall be deemed to be restricted or modified to the extent
necessary to render same enforceable by such court or other tribunal and,
to that end, such court or tribunal is hereby authorized to "re-write"
such provision in order to provide for the enforceability thereof to the
maximum extent permissible under Ohio law and the parties hereto agree to
abide by such court's determination.
11. Withholding. All payments to be made by Company under this Agreement
are subject to applicable tax withholding and other legally required
deductions.
12. Complete Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties hereto with respect to the
subject matter hereof and no representations, undertakings or agreements
in relation thereto exist except as herein expressly set forth. This
Agreement may not be amended or modified orally, but only by an instrument
in writing duly executed by or on behalf of both parties hereto.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties, and their respective heirs, legal
representatives, successors and permitted assigns. Neither party may
assign or transfer this Agreement, or any of its/his rights or obligations
hereunder, without the prior written consent of the other party. Employee
shall not have any right to pledge or encumber any amounts payable
hereunder, and no amounts payable hereunder shall be assignable or
transferable in anticipation of payment.
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14. Choice of Law. This Agreement has been made in the State of Ohio and
shall in all respects be interpreted in accordance with and governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE PROGRESSIVE CORPORATION ("Company")
By:_/s/__David M. Schneider____________
Title:_____Sec'y_______________________
XXXXX X. XXXXXX ("Employee")
____/s/_Bruce W. Marlow_________________
