NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit No. 10(P)
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 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
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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):
(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
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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 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.
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 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: , 19 | ||||
BY: |
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TITLE: |
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ACCEPTANCE OF AGREEMENT
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
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