Document:

EX-10.18

 

Exhibit 10.18

NON-QUALIFIED STOCK OPTION AGREEMENT

     This Agreement (the “Agreement”) is made as of the ___ day of ______, 200___ 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 purchase price of $______ per share
(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, in installments, as follows:

	 	 	 	 	 
	 

	 	               
	 	Common Shares may be purchased on or after 1/1/200___ and until
12/31/20___, at which date the right to purchase such Common Shares
shall expire.
	 
	 	 	 	 
	 

	 	               
	 	Common Shares may be purchased on or after 1/1/200___ and until
12/31/20___, at which date the right to purchase such Common Shares
shall expire.
	 
	 	 	 	 
	 

	 	               
	 	Common Shares may be purchased on or after 1/1/200___ and until
12/31/20___, at which date the right to purchase such Common Shares
shall expire.

The dates set forth above on or after which the Option, or any part thereof, may be
exercised and specified numbers of Common Shares may be purchased hereunder are referred to
herein as “Vesting Dates” and the dates set forth above as of which such stock purchase
rights expire are referred to herein as “Expiration Dates.”

	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 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 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

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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 (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 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)(v) hereof):

	 	(i)	 	if and to the extent that any Option Installment (as defined
below) has vested and is exercisable as of the Qualified Retirement Date (as
defined below), such Option Installment 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)	 	subject to Section 5(e)(iii) hereof, if and to the extent
that any Option Installment is not vested and exercisable as of the Qualified
Retirement Date, such Option Installment (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 the Vesting Date
applicable thereto and may be exercised by the Optionee, in whole or in part,
at any time between the Vesting Date and Expiration Date applicable thereto,
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
such Option Installment;
	 
	 	(iii)	 	notwithstanding Section 5(e)(ii) above, if and to the extent
that any Option Installment 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 Option Installment 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 applicable 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

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Option would have become exercisable within one (1) year from the date of
the Optionee’s death pursuant to Sections 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
	 
	 	(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

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	 	 	 	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.
	 
	 	(E)	 	Option Installment — if the Option
consists of multiple awards, each with a separate Vesting Date and/or
Expiration Date, any one of such awards.

	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/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.

	 	 	 	 	 
	 	THE PROGRESSIVE CORPORATION

 	 
	DATE OF GRANT:                     , 200_ 	BY:  	 	 
	 	 	Charles E. Jarrett, Secretary 	 
	 	 	 	 

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ACCEPTANCE OF AGREEMENT

     The Optionee hereby: (a) acknowledges receiving a copy of the Plan Description dated November
6, 1997 (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:	 	 	 	 
	 

	 	 	 	 	 	 

5EX-10.54

 

Exhibit 10.54

THIRD AMENDMENT TO THE PROGRESSIVE CORPORATION

EXECUTIVE DEFERRED COMPENSATION TRUST

(November 8, 2002, Amendment and Restatement)

     THIS THIRD AMENDMENT, dated and effective as of the second day of January, 2008, except as
otherwise set forth herein, by and between Fidelity Management Trust Company (the “Trustee”) and
The Progressive Corporation (“Company”);

WITNESSETH:

     WHEREAS, the Trustee and Company heretofore entered into a Trust Agreement dated November 8,
2002, with regard to The Progressive Corporation Executive Deferred Compensation Trust (the
“Trust”); and

     WHEREAS, the Trustee and Company now desire to amend said Trust Agreement as provided for in
Section 12 thereof;

     NOW THEREFORE, in consideration of the above premises, the Trustee and Company hereby amend
the Trust Agreement by:

	 	 	 	 	 
	1.	 	Restating the “Annual Recordkeeping Fee” section of Schedule “B”, in
its entirety, as follows:
	 
	 	 	 	 
	 	 	Annual Recordkeeping Fee $0.
	 
	 	 	 	 
	2.	 	Amending the Schedule “B” to delete the following:
	 
	 	 	 	 
	 

	 	*Trustee Fees
	 	0.10% per year of Trust assets invested in Company Stock payable pro
rata quarterly on the basis of such assets as of the calendar quarter’s last
valuation date, but no less than $5,000.00 nor more than $35,000.00 per year.

     IN WITNESS WHEREOF, the Trustee and Company have caused this Third Amendment to be executed by
their duly authorized officers. By signing below, the undersigned represent that they are
authorized to execute this document on behalf of the respective parties. Notwithstanding any
contradictory provision of the Trust Agreement that this document amends, each party may rely
without duty of inquiry on the foregoing representation.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	THE PROGRESSIVE CORPORATION	 	 	 	FIDELITY MANAGEMENT TRUST COMPANY
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	Its authorized signatory	 	 	 	 	 	Its authorized signatory
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Date:
	 	 	 	 	 	 	 	Date:

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