EX-10(T) NONQUAIFIED STOCK OPTION-OBJECT BASED



 





Exhibit No. 10(T)




OBJECTIVE-BASED

NON-QUALIFIED STOCK OPTION AGREEMENT




     This Agreement (the “Agreement”) is made as of the                      day of                                         , 20                    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 as follows:






                     Common Shares may be purchased on or after the Vesting Date (as defined
below) and until                                                              (the “Expiration Date”), on which date
the right to purchase such Common Shares shall expire.




The Option will vest and become exercisable upon the date (the “Vesting Date”)
which is the earlier of (a)                                          or (b) the date of the public
dissemination by the Company of a release reporting earnings for the Company and
its subsidiaries for the first calendar year or quarter as of the end of which the
Company and its subsidiaries have generated net earned premiums of $                     or
more over a period consisting of four consecutive calendar quarters (“Realization
Period”) at a combined ratio of less than                      for the Realization Period.




	 	2.	 	Method of Exercise. Subject to Section 1 above, the Option shall be
exercisable from time to time after the Vesting Date 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




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	 	 	 	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:






	 	(a)	 	due to involuntary termination without Cause or, subject to
Section 5(e) hereof, 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 on which 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)(iv) hereof):






	 	(i)	 	if and to the extent that 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, but may be exercised by the Optionee, in whole or in
part, at any time between the Qualified Retirement Date and the
Expiration Date applicable thereto;
	 
	 	(ii)	 	if the Option is not vested and exercisable as of the
Qualified Retirement Date, the Option (A) shall remain in effect
with respect to fifty percent (50%) of the Common Shares covered
thereby and, as to such Common Shares, shall vest and become
exercisable on 




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	 	 	 	the Vesting Date, and may be exercised by the Optionee, in whole or in part, at any time between the Vesting
Date and 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 covered by Option;






	 	(iii)	 	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 within one (1) year of the date of
the Optionee’s death as to (A) all Common Shares as to which the
Option has not been exercised prior to the date of the Optionee’s
death, if the Option has vested and is exercisable as of the date
of the Optionee’s death, or (B) if the Option has not vested prior
to the date of the Optionee’s death, the Common Shares, if any, as
to which the Option would have become exercisable pursuant to
Section 5(e)(ii) hereof 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);
	 
	 	(iv)	 	if the Committee determines that the Optionee is or has
engaged in any Disqualifying Activity (as defined below), then (1)
if 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) if 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.
	 
	 	(v)	 	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.




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	 	(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 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 or other items 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 or other items 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.




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THE PROGRESSIVE CORPORATION




	 	 	 	 	 	 	 	 	 
	DATE OF GRANT:

	 	 	 	BY:	 	 	 	 
	 

	 	 

	 	 	 	 

Charles E. Jarrett, Secretary
	 	 






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:                                                                                




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